An internal review revealed that Westpac incorrectly classified almost $29 billion in mortgages over the past three years.
Since November 2008, the bank had recorded some home loans as belonging to owner-occupiers rather than investment purposes. The mix-up occurred in cases whereby a borrower paid down their owner-occupied mortgages and used that equity to buy investment properties.
When the misclassification was discovered, Westpac alerted the Australian Prudential Regulation Authority (APRA). The bank has said that the reclassification will not have any material impact on its risk profile and the bank will not need to amend its financial reports.
Westpac told shareholders in an ASX filing that the error was a “legacy issue” – corporate jargon meaning the mistake was the result of teething pains from the St George acquisition in 2008.