Australia’s Westpac reports small fall in stressed assets, raising $590 million in capital

By Paulina Duran

SYDNEY (Reuters) - Westpac Banking Corp reported on Monday its stressed assets fell slightly in the three months to December 31 and also announced plans to raise A$750 million ($592 million) 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 percent at end-December, lower than the 10.6 percent reported at Sept. 30, 2017.

Australian mortgage delinquencies, in aggregate, were largely unchanged for the quarter at 0.67 percent, 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 $6.1 billion, 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 2 basis points to 1.03 percent 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 percent in March and September.

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

The notes would pay an annual margin of between 3.20 percent and 3.40 percent, 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 percent.

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.

($1 = 1.2649 Australian dollars)

(Reporting by Paulina Duran in Sydney; additional reporting by Ambar Warrick and Susan Mathew in Bengaluru; Editing by Jane Wardell and Stephen Coates)