Westpac takes a pounding

WESTPAC shares plunged to a two-year low yesterday after investment bank UBS cut the stock to a “sell” rating on concerns over the quality of the lender’s mortgage book.

Internal Westpac documents released by the banking royal commission were analysed by UBS banking analyst Jonathan Mott, who said there were now questions over the quality of Westpac’s $400 billion mortgage book.

“We see significantly higher risks than we had previously incorporated into our assessment of the stock,” Mr Mott said in his research note.

Westpac shares closed down $1.05, or 3.6 per cent, at $28.13.

Investor worries extended across the heavyweight banking sector, with Commonwealth, ANZ and NAB all heavily down in the wake of the UBS report into Westpac.

Yesterday afternoon Westpac issued a statement defending the quality of its loan book, saying its mortgages were performing well with delinquencies low by industry and historical averages. AAP