Just going back over the numbers in Westpac's last 3 Pillars report that somebody posted a link to a while ago, and probably reiterating their observations but here goes...
year on year from Sep 08 to Sep 09 the numbers are a little bit concerning, especially if things get worse:
Actual losses incurred by the bank for 12 months on residential mortgages has more than tripled. $21m up to $77m.
And as an indicator, perhaps of employment in the future: Actual losses in corporate lending has blown out from $17m to $655m. Wow
Even business lending losses have increased by a factor of 2. Same with small business lending losses.
Overall WBC's actual losses have blown out from $439m in 08 to $1,874m in 09.
It's not the dollar amounts, it is the rate of increase in the annualised actual losses that must send a warning signal.
Has the economy improved significantly since September? Is all now well in the employment and residential mortgage sectors?
Don't think property will crash, there's too much cash around to pick up the slack. If things go from bad to worse in the economy generally, it will slide down the slope, backstopped by investors pulling cash from equity markets and buying affordable, income generating assets.
