Westpac Bank's mortgage lending to people with small deposits shrank in the September quarter even though growth in its overall mortgage lending accelerated.
Westpac lent $60 million less to people with small deposits in the three months, while its lending to those with more than a 20% deposit grew by $585 million.
It was the fifth successive quarter in which Westpac has pulled back on the riskiest type of lending, so the change cannot be attributed to the Reserve Bank's new lending restrictions which came into force on 1 October.
However, it will take some time for attrition to lessen the bank's exposure to riskier loans.
Westpac's lending to people with less than a 20% deposit still totalled 22.76% of its mortgage book at the end of September.
That's down from 24.3% in June last year, the last quarter in which Westpac's lending to people with small deposits increased.
Westpac is, though, still promising to lend to people with small deposits, and at the end of September it was committed to lending $604 million to such customers.
The net growth in Westpac's mortgage book in the September quarter was up from $518 million in the June quarter.