Australia’s Westpac reports small fall in stressed assets, raises US$590mil

SYDNEY: Westpac Banking Corp reported on its stressed assets fell slightly in the three months to Dec 31 and also announced plans to raise A$750mil (US$592mil) in capital through the launch of new hybrid securities.

Australia’s second-biggest bank by market value said its common equity Tier-1 capital ratio was 10.1% at end-December, lower than the 10.6% reported at Sept 30, 2017.

Australian mortgage delinquencies, in aggregate, were largely unchanged for the quarter at 0.67%, while the bank’s smaller mining and New Zealand dairy sectors reduced their exposure to impaired assets.

“During the quarter, risk-weighted assets (RWA) increased US$6.1bil, primarily due to modelling changes for credit risk

RWA and portfolio growth,” the bank said in a statement. ”Credit quality improved across the portfolio partially offsetting these impacts.”

Stressed assets slipped about two basis points to 1.03% in the first quarter of its financial year, which began on Oct 1.

The bank said it would seek to operate with a common equity Tier-1 ratio of at least 10.5% in March and September.

A new A$750mil capital notes launch would replace similar convertible notes due to expire in April, it said.

The notes would pay an annual margin of between 3.2% and 3.4%, and was timed to coincide with the expected redemption and conversion of existing preference shares on April 3 that paid a margin of 3.25%.

Westpac does not disclose profit or revenue numbers in its limited quarterly updates. In November, Westpac’s annual cash profit missed estimates, while full-year net interest margin slipped. — Reuters