We're more focused on loan pricing and the impact on Westpac which will be the biggest loser in an all out price war on Australian residential mortgages

We're more focused on loan pricing and the impact on Westpac which will be the biggest loser in an all out price war on Australian residential mortgages. As a completely domestic lending, residential home-loans represent a greater proportion of Westpac's earnings when compared to its peers. Net interest margins fell 2 basis points to 2.14% when compared to last year but this is still a very good number. There is scope for downside in Australia - perhaps sub 2% - and we think 2013 has so far been a low competition environment, regardless of what bank bosses say. The market will like this result because it is clean and doesn't contain any nasties but with Westpac trading on a price to earnings ratio of around 15x this number - we're a little cautious on where margins are going next year. (VIEW LINK)