Westpac has booked A$230 million (NZ$280 million) worth of provisions for bad loans in New Zealand in the June quarter, including loans from just two borrowers worth A$135 million (NZ$165 million). Westpac disclosed the details in filing its Pillar 3 trading update to Australian regulators in this release here. The full document is also reproduced below. Westpac did not detail which borrowers were involved in the two bad loans and a Westpac spokesman was not immediately available for comment. However, Westpac is thought to have lent to NZ$48 million to the failed Albany City property development. Elsewhere, the Westpac Group, which includes New Zealand, Australia and the Pacific, reported its cash earnings were likely to be consistent at around A$1.1 billion in the third quarter, despite further bad loan provisions in Australian corporate lending and in New Zealand, which made up around a third of Westpac's provisions for the quarter. Westpac Group CEO Gail Kelly said Westpac continued to perform solidly despite the "challenging operating conditions." Group revenue was around levels recorded in the first two quarters of the year, Westpac said. "Net interest income was higher with support from improved volumes and stable customer net interest margins. This was partially offset by lower non-interest income mainly due to the flagged pull-back in financial markets income," Westpac said. Bad loan charges for the group were A$865 million for the June quarter, up from A$811 million in the March quarter. The June quarter rise was due to the continued deterioration in the Australian commercial sector and in New Zealand, Westpac said. Westpac New Zealand's tier 1 capital ratio rose to 9.4% in the June quarter from 9.3% in the March quarter. Elsewhere the percentage of Westpac's consumer loans in New Zealand that were delinquent was basically steady at 1.89% in the quarter from 1.91% in the first half of the financial year. The delinquency rate for mortgages in New Zealand rose only slightly to 0.85% from 0.82% in the first half. WestpacJuneQtrResultPresentation
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