News: UPDATE 1-Australia's Westpac Q3 stressed loans rise, shares skid

• Stressed assets up 12 basis points
• Bad debt charges for Q3 below H1 quarterly average
• Shares down 3.4 pct to one-month lows

(Adds analyst comment, updates shares)

Australia's No.3 lender Westpac Banking Corp (WBC) on Thursday said stressed assets edged up during the third quarter as a mining downturn led to higher corporate and consumer defaults, sending its shares skidding to one-month lows.

In a limited third-quarter update, Westpac said stressed assets inched up 12 basis points although it set aside less money for bad debts compared with the quarterly average in the first half to March.

Westpac's disclosure underscores the pressure that Australian banks are under after larger rival Commonwealth Bank of Australia (CBA) this week posted a rise in bad debts led by a commodity slump, while ANZ Banking Group (ANZ) signalled the need for more capital.

Australian banks have had a dream run since the 2008/09 global financial crisis, posting record profits and doling out chunky dividends, but they are now facing higher loan defaults, slowing revenue growth and mounting regulatory costs.

"The numbers are all weaker than I had thought," said Bell Potter banking analyst TS Lim. "Overall, I think their second half is going to be weak. It's a reflection of the economy."

Westpac will report second-half results in November. Its shares were among the top losers on the benchmark S&P/ASX 200 index (xjo), down more than 3 percent to a near one-month low. The broader market was down about 1 percent.

The Sydney-based lender doubled bad debt charges in the first half to a six-year high of A$667 million ($514.59 million).

Westpac, which posted a 3 percent rise in first-half cash earnings to A$3.9 billion, did not disclose profit or revenue numbers in its limited third-quarter update.

But it said non-interest income from fees and commissions during the quarter was 5 percent below the first-half quarterly average due to lower markets-related income and a decline in fees from debt market activity.

Westpac's common equity Tier-1 capital ratio slipped to 10.1 percent at the end of June from 10.5 percent in March. The bank said it expected the ratio to drop by another 110 basis points, thanks to a regulatory change to the treatment of Australian mortgages. ($1 = 1.2962 Australian dollars)