Westpac said it has cut commercial property lending, as a proportion of its portfolio, by three percentage points over 12 months, with this industry sector now representing 9.6 per cent of all lending as of March 2010.Commercial property was the chief source of new troubled loans for the group over the March 2010 half, with the net rise in stressed exposures around $600 million within the "property and business services" segment according to one slide published as part of the bank's profit pack yesterday.This is a drastic improvement on the September 2009 half when the rise in stressed exposures was more than $3.5 billion, but it's also really the only sector where new stressed loans continue to emerge in any great volume for the bank.The bank identified most of the new stressed assets within its St George Bank division. Westpac classifies forty per cent of loans of $10 million or more as stressed.Most troubled loans are for $10 million or more, and obviously to property developers. Even among large development groups and real estate trusts the percentage of stressed loans is 11 per cent.Among more mundane property investments (but still for loans of more than $10 million) the stressed percentage is eight per cent.For loans of less than $10 million, 13 per cent of loans are stressed.Chief financial officer Phil Coffey did say at the investor briefing that "we are still lending to this sector, and in fact, we've approved over $1 billion of commercial property lending over the past six months."Westpac yesterday was attempting to push a message of "stabilisation" in impaired assets, and but the more detailed data published by the bank may not support that conclusion.Impaired assets as a percentage of total exposure increased six basis points to 63 basis points, and followed a rise of seven basis points in the September 2009 half.The stabilisation is in the "watchlist and substandard assets", where the ratio was 255 basis points at March 2010, up three basis points over six months (and compared with a rise of 94 basis points six months before).