(AFP) -Westpac Banking (NYSE:WBK) Corp, Australia’s third-largest mortgage lender, reported bad debt decreased to a multi-year low in the June quarter, creating a financial buffer as the property market declines.
The Sydney-based firm said mortgages with 30 or 90-day late payments have decreased to their lowest since early 2020. Non-residential consumer late payments rose marginally from three months ago.
The results, which were released in an update on restricted trading, give Australia’s main retail lenders more reason to believe that the savings customers made during the COVID-19 epidemic restrictions will protect their bank accounts as the economy slows.
Since May, interest rates have gone up for four months in a row, making loan payments more expensive. Since then, the prices of Australian homes have started to go down.
“The data shows credit quality is sound and we continue to see provision released,” said Azib Khan of E&P Financial Group.
Ord Minett analysts said Westpac’s update, which lacked earnings statistics and predictions, showed “strong and rising credit quality trends.”
Westpac shares fell 0.8% in morning trading, compared to the market’s 0.5% gain.
Many analysts and banks say the impact of rapid interest rate hikes since May on people’s capacity to service loans may take months.
Westpac’s total “stressed exposures,” which include non-residential consumer loans, dropped to 1.06% in the June quarter, the bank said. This measure comprises “substandard,” 90-day-late, and impaired loans.