… are now coming out. Westpac looks to be the first off the block, so I will go through their report first – comparing them to their prior results.

When they are out, the ANZ’s should appear here, the NAB ones may appear here (but I cannot be sure they will be explicitly linked as the NAB do not appear to be particularly clear about where they will go) and the CBA’s here, although, like the NAB, they do not appear to be completely sure about the location yet.

On to WBC, then. First thing to note, and a good one at that, is that they seem to be erring a little more on the side of putting more qualitative information out than in their previous, rather terse, report – not, mind you, that this is a model for open disclosure. The second thing to note is that the numbers are directly comparable, as the St. George prudential numbers (except for the capital ratios) are not actually in here. Presumably this is because the St. George Pillar III report will be issued seperately.

One other point to note is that I have taken the opportunity to correct a couple of small inconsistencies in my previous treatments out of the updated spreadsheet. The “Small Business” category is now consistently treated in the way the banks treat them – as retail loans, so they are now in the “Other Retail” category.

Last thing to note, before getting onto the numbers, is that Westpac seem to be doing well in their program to get more “Advanced” approvals for their book. The amount covered under their Standardised (with the exception of Specialised Lending, with they cannot until APRA allows it for all banks) is down from $10.4Bn to $6.6Bn. As they have not broken this out amongst the categories I cannot see where the improvements are, but this is good nonetheless. My guess is that this is in the “Other Retail” category, perhaps with the personal lending business now in the Advanced category, but this is just a guess.

The Numbers

The numbers are quite interesting. WBC has greatly reduced lending to governments, with more than half of that portfolio gone. This seems to be as a result of a massive sell-off of government bonds, as the major part of the drop has been in the “Market-related” section of the portfolio. My guess is that this is profit-taking in a reducing interest rate environment – but I cannot be sure as the results announcement makes no mention of it.

On the other hand, lending to other banks is massively up, with a halving of the holdings of other bank’s bands being overwhelmed by an increase in normal inter-bank lending from $2.9bn to $43.8bn. As the regulatory capital impact is minimal, this must have (nearly all) been lent to others of the Big 4. I await their reports to check on this. If theirs look similar then we may have a big money-go-round happening.

With the exception of residential lending (up 9% in a quarter), the rest of the business seems to be in gentle decline, with securitisation and credit cards (QRR) slightly down and other lending only slightly up.

Passt Due and Impaired

As has already been heavily trailed, the past due and impaired numbers are up and, in the case of corporate lending, heavily up. Many of the problem loans do not even seem to have gone overdue before being counted as “Impaired” as last the disclosures’ “Corporate” 90 dpd number was only $157m and the impaired number this time has gone up by nearly $700m – and some of the $513m reported last time should have been written off by now.

The rest of the movements are what could be expected at this point in the cycle, with the “Residential Mortgage” impaired number implying that something around 700 residential mortgages are likely to cause the bank some losses. In this market that is a good result and reflects the strength of the normal lending policies.


Overall, the capital numbers are largely unchanged, but there has been a significant shift to Tier One from Tier Two. Like the losses, this has been well trailed in the announcements and really needs no further comment.

I await the announcements from the other banks.


I received an email on this one – I missed one thing and need to correct another. The Sovereign and Bank numbers changes are explained on page 4 of the release – they have changed their EAD calculation methodology for these and it resulted in the numbers changing. As they note in the release, though, this has little impact on the actual capital numbers as neither of them receive much capital weight.

The correction is to my calculation of the Standardised portfolio. Previously, following a methodology for calculation where I have worked in the past, the “Other Assets” were thrown into the Standardised bucket. I will pull them out and do those seperately from now on.

I will incorporate this change into my analysis of future numbers from all the Banks.