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Westpac cautions that between 2% and 3% of its mortgages are exposed to sea level rise, including 2.3% of the bank’s $ 55.2 billion in residential mortgages.
The bank also says that 2.9 percent of its agricultural mortgage portfolio and 2.1 percent of its commercial portfolio are vulnerable to sea level rise.
The statement is part of Westpac’s first climate risk report. It is the first bank in New Zealand to publish such a report and comes as the Government implements changes so that all large organizations publish similar reports.
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Westpac’s analysis looked at possible global warming from 1.5 degrees Celsius to 4 ° C by 2050. The bank wanted to know how much of its loans would be vulnerable to a shock of one in 10 years.
It found that $ 1.2 billion from the bank’s residential mortgage book was vulnerable to rising sea levels.
Karen Silk, general manager of Westpac’s customer experience center, said the report would encourage the bank’s clients to think about their own personal risk.
Ross Giblin / Stuff
Westpac has revealed the cost of climate change to the bank.
The bank did not have access to property-by-property data, so it was unable to model climate risks for individual properties. He said he expected concerned customers to speak to their city councils about the level of risk posed by climate change.
“What we are doing here … is trying to create information that allows people to start making decisions about the individual or the properties they own,” Silk said.
Another concern for homeowners will be rising insurance premiums.
“Through risk-based pricing, we anticipate that many of these properties will see an increase in insurance premiums in the coming years. In some cases, insurance can become unaffordable or impossible to obtain, “Silk said.
“When and how insurers adjust prices is uncertain, but it is a key risk factor for the bank, as we require that the houses we lend are adequately insured.
Silk said she hoped the report would provide information to people and make them think about their continued ability to buy insurance and pay increasing premiums.
A report by insurance and weather specialist Belinda Storey for the Deep South National Science Challenge, published this week, found that average expected premiums for flood coverage would rise to $ 10,000 in Auckland, $ 8,700 in Wellington, $ 7,600 in Christchurch and $ 7900 in Dunedin.
The bank is concerned about the ability of borrowers to pay these premiums.
“Higher premiums can affect clients’ ability to pay their debts, while the inability to properly insure properties could reduce their value. This represents a credit risk for Westpac NZ, ”says the report.
