Kieth,
Thanks for linking. A couple of other points in WBC's update I would note are:
p.19:
Active management of credit portfolio:
• Westpac’s underlying exposures through
CDSs, CDOs and CLOs are either:
- Global and Australian corporate risk
- Australian AA or AAA rated RMBS
- UK AAA Prime RMBS ($61m)
-
No direct exposure to US mortgages or
other US ABS product
CDSs
• Around 60 counterparties –
no US monolines
• Netting and collateral agreements in place
CDOs and CLOs
• Portfolio of AAA rated assets with underlying
corporate risk
p.27:
Response to current environment:
• Remain “open for business”
• No distraction from portfolio issues
• Maintaining risk disciplines
• Active management of transaction flow and pricing
• Reviewed and acted on key portfolios:
- Finance sector – impact of both offshore credit crunch and the flight to quality
- Property sector – asset valuation issues coupled with significant cost of debt
- Retail sector – softening consumer demand
- Margin lending
• Refinance risk generally – particularly for higher geared companies
•
Seeking opportunities to enhance competitive position
p.31:
Funding Composition to the end June 08:
•
52% Customer Deposits
• A$32bn raised in term funding to date –
keeping ahead of plans
• 2008 term issuance average duration 2.9
years
• Strong liquidity position around $30bn
• FY09 term funding expected to be lower:
- ~A$20bn to $25bn (pre SGB merger)
- Expect merger to add around $10bn in
term funding
-
No reliance on securitisation
p.36:
Mortgages:
• Continuing low unemployment supporting customers’ ability to repay
• 73% of amortising borrowers repay in excess of required minimum
• Strong security –
46% average LVR based on current balance and value at origination;<10% of mortgages written above 90% LVR.
Very interesting reading indeed. Days like today I'm glad to be a WBC pro pack customer on 80bp discount 100% variable. They've got a very strong balance sheet and are actively seeking opportunities to enhance their competitive position...
Bring on the RBA rate cuts I say!
Cheers,
Michael