Westpac Chairman Expects Modest Pickup in Lending Growth in 2014

Westpac Banking Corp. (WBC), Australia’s second-largest lender by market value, expects a modest pickup in lending in the year to September 2014 as business and consumer sentiment improve.

Mortgage demand is rising and businesses are more interested in investing following a federal election in September and a weakening of the Australian currency, Chairman Lindsay Maxsted said in a statement before the Sydney-based bank’s annual shareholder meeting.

Australian lenders are witnessing a pickup in mortgages as declining interest rates and rising home prices spur buying. Employers boosted payrolls in November, a government report showed yesterday, adding to evidence that a two-year interest-rate-cutting cycle by the Reserve Bank of Australia to a record low is lifting demand.

“Stronger housing activity has already been well documented, as historically low interest rates have encouraged buyers,” Maxsted said. “More interest is beginning to emerge from businesses as they think about investing again. This interest has yet to translate to real activity and new lending, but is a welcome sign.”

The value of outstanding mortgages climbed 5 percent in the year to October, the highest in 16 months, central bank data show. Business lending expanded 1.4 percent in the same period, the data show. An easing currency is expected to add to loan demand, Maxsted said. The Australian dollar touched 89.14 U.S. cents today, the lowest since Aug. 30.

Chief Executive Officer Gail Kelly said Nov. 4 that the bank was tilting toward growth in 2014. The bank reported record 2013 earnings of A$7.1 billion ($6.3 billion).

Westpac shares fell 0.3 percent to A$30.74 at 11:19 a.m. in Sydney trading compared with a 0.1 percent decline in the benchmark S&P/ASX 200 (AS51) index.

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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