This article is from the Australian Property Journal archive
GENWORTH Mortgage Insurance Australia has reported a weaker underlying net profit in the first half of the year, down from $50.3 million to $43.1 million.
The company’s statutory net profit increased from $41.9 million to $88.1 million, which includes unrealised gain of $45.4 million on the investment portfolio compared to a loss of $8.4 million in 1H18.
The company announced a fully franked interim ordinary dividend of 9.0 cents per share and unfranked special dividend of 21.9 cps. As a result, its shares skyrocketed by 44 cents to $3.39 yesterday, just shy of its 52-week high price of $3.40.
The interim and special dividend are both payable on 28 August 2019 to shareholders registered as at 14 August 2019.
CEO Georgette Nicholas said the 1H19 financial performance is in line with the full year guidance.
“Over this period we have maintained the momentum of our strategic program of work, particularly around product innovation and enhancement and have delivered growth in our traditional lenders mortgage insurance (LMI) business despite the prevailing tight credit and moderating market conditions.
“We have also remained vigilant in actively managing our capital position. On 21 February 2019 we commenced a $100 million on-market share buy-back and as at 30 June 2019 had acquired 25 million shares for a consideration of $63.9 million,”
Nicholas said economic growth in 1H19 continued to slow, weighed down by subdued household consumption, tight credit conditions, ongoing slow growth in household income coupled with cost of living pressures and heightened uncertainty in the lead up to the federal election in May 2019.
The company’s portfolio delinquency rate increased from 0.54% in 1H18 to 0.60% in 1H19, reflecting the continued extended ageing of delinquencies due to slower loss management processing by lenders over the past 12-18 months and to a lesser extent the reduction in the number of policies in force as a result of the lapsed policy initiative.
New delinquencies were down slightly from 5,565 to 5,515, broadly in line with seasonal expectations. However, the trend of softening cure rates continued in 1H19 with the number of cures decreasing from 4,289 to 4,154. The number of paid claims were also down from 666 to 615, as was the average quantum paid per claim from $116,700 to $94,200.
Although the loss ratio climbed to 54.1% from 53.3%, due to seasonal factors. Excluding NEP relating to the lapsed policy initiative the loss ratio would be 55.8%.
Looking ahead, Nicholas said the effect of stimuli on multiple fronts notably RBA cash rate cuts, APRA changes to serviceability, government tax cuts and continued infrastructure investment, will provide support to the economy.
Genworth expects the moderating trend in metropolitan housing markets to slow in the second half of the year, particularly in Sydney and Melbourne with increased stability in house prices heading into the latter part of the year. The exception to this is Perth where challenging market conditions are expected to continue throughout the year, reflecting the ongoing impact of the end of the mining boom.
“Our company is well capitalised, with a solid balance sheet and net tangible assets of approximately $4.14 per share as at 30 June 2019. We have a track record of delivering solid profits and attractive shareholder returns which we are well placed to continue through our strategic program of work and the implementation of capital management initiatives that return excess capital to shareholders in a timely manner.” Nicholas said.
