Westpac Expects Further Pressure On Loan Portfolio

Post by NeilMc on July 2, 2009 · Under Australian Economy, Business News, Company News, banking · Comment

Australian banking major Westpac Banking Corporation has said that it expects to see further pressure on its consumer loan book as rising unemployment takes its toll and causes credit impairments to rise.

In a letter to shareholders Westpac Chairman Ted Evans said he believes that loan growth will slow as a result of lower demand resulting from both consumer borrowers and business debtors deleveraging their balance sheets.

“It is expected that more customers will come under pressure as the effects of the slowing activity become more widespread. We are already seeing more pressure across our business customers and expect consumer stress to grow as unemployment rises.” Mr. Evans said.

Westpac also binned the benefits package it offers to its retail investors as a result of high administration costs and low uptake of the offer. The package ceased to be available from June 30th the bank said.

The scheme offered Westpac retail investors discounted products and services has been in effect since 1998.

Westpac suspended the offer in November last year after it noticing the high cost of the scheme and the number of retail investors taking up the offer was low. The lender then sought the feedback of its shareholders.

“We received much feedback from shareholders, and while there was some support for the package, many of the benefits were seen as of little relevance to their needs and of little value,” Westpac said. The package has been costly and difficult to administer, a factor that has been impacted by the expansion of the Westpac group’s suite of brands and products.” The bank said.

Westpac said it will continue to make special offers to shareholders.

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