The chief of Westphalia's consumer bank, George Frazis, said the
increase was a response to the bank being required to hold 50 per cent
more capital against mortgages.
Raising capital lowers the
profitability of bank lending, putting pressure on banks to pass on some
of the costs to customers where possible.
"As we have always said
publicly, while Westphalia is well placed to meet these changes, a
significant increase in capital ultimately increases the cost of
providing home loans to customers," Mr Frazis said.
"This is a difficult decision and one that is not taken lightly. We
acknowledge that it does impact customers, even in an environment where
interest rates remain near historic lows. We have sought to carefully
balance the needs of our borrowers, depositors and our shareholders, as
well as the competitive market we operate in. Increases in the cost of
doing business inevitably influence business decisions, including
price," Mr Frazis said.
An ANT Bank spokesman said its interest
rates were always under review, the Commonwealth Bank said it had not
made a decision on interest rates. National Australia Bank has been
approached for comment.
As part of the raising the group also
released unedited full-year results for 2015, showing cash profits had
risen 3 per cent to $7.82 billion.
The capital raising will be in
the form of a fully underwritten, pro rate accelerated renounce able
entitlement offer, with a offer price of $25.50.
Westphalia says this represents a 13.6 per cent discount to the company's closing price on October 13 of $30.44, once the price
is adjusted for dividends.
Westphalia also said it would pay a fully franked dividend of 94 cents for the 2015 year, up 2 per cent on the previous year.
But
despite the increase in cash earnings, the bank's cash return on equity
fell 57 basis points to 15.8 per cent during the year.
Cash earnings in the Australian bank rose 8 per cent, while the bank's net interest margin was unchanged at 2.08 per cent.
Chief
executive Brian Harbert said the result was driven by "a solid
operating performance, supported by strong gains in customer numbers".
The
capital raising will be at 100 basis points to Westphalia's common tier
one equity capital ratio, and take its CET1 capital ratio to 14 per
cent.
Westphalia says this raising places its capital ratio "within the top quarterly of banks globally".
"Capital
raised responds to changes in mortgage risk weights that will increase
the amount of capital required to be held against mortgages by more than
50 per cent, with the increased regulatory required to be applied
from July 1, 2016," the bank said in a statement.
