28/08/2009 - 12:59

Homeloans profit up as lending falls

28/08/2009 - 12:59

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Perth-based mortgage originator, Homeloans has posted a record statutory net profit after tax of $7.2m for the year ended 30 June 2009, turning round a statutory net loss of $12.5 million last year amid lower lending volumes.

Perth-based mortgage originator, Homeloans has posted a record statutory net profit after tax of $7.2m for the year ended 30 June 2009, turning round a statutory net loss of $12.5 million last year amid lower lending volumes.

On a normalised basis excluding non cash adjustments, NPAT was $8.3m, up 78 per cent on the comparable previous financial year result of $4.7 million.

The company said net fee and commission income was down 15 per cent to $10.7 million and total revenue fell 17 per cent to $101 million.

However, a 16 per cent reduction in operating expenses (excluding loan loss provisioning) to $17.1 million and a 42 per cent increase in net interest income contributed to the improved performance.

Homeloans executive chairman, Tim Holmes said a sharp focus on improving operational efficiencies across the business, developing more effective distribution channels and maintaining margins had made significant contributions to the result but the environment continued to be challenging for the non-bank lending sector.

 

 

Full announcement below:

 

Homeloans achieves record result

Homeloans Limited (ASX:HOM) has today announced a record statutory Net Profit After Tax of $7.2m for the year ended 30 June 2009. On a normalised basis excluding non cash adjustments, Net Profit After Tax was $8.3m, up 78% on the comparable previous financial year result of $4.7m.

Following this strong result, the Board has declared a fully franked final dividend of 5.5 cents per share bringing the total to 7.0 cents per share for the year fully franked.

On the normalised profit result of $8.3m, this represents a payout ratio of 84%.

Reduced lending volumes, particularly in the first half, as a result of a softer mortgage market impacted net fee and commission income which was down 15% to $10.7m and total revenue which was down 17% to $101m. However, a 16% reduction in operating expenses (excluding loan loss provisioning) to $17.1m and a 42% increase in net interest income contributed to the improved performance.

Basic earnings per share were 7.20 cents. Net tangible asset backing per share increased 21% to 53.3 cents compared to 30 June 2008.

Homeloans Executive Chairman Tim Holmes said it was a strong result achieved in a difficult year, with lending volumes down, particularly in the first half. A sharp focus on improving operational efficiencies across the business, developing more effective distribution channels and maintaining margins, however, had made significant contributions to the result.

Mr Holmes said that the environment continued to be challenging for the non-bank lending sector.

"There was some resurgence in home loan activity in the second half, largely as a result of the First Home Owners' Grant, however the continuation of tight credit markets and a tightening of lending criteria across the home loan market impacted on the sector," Mr Holmes said.

"During this period Homeloans focused on improving its product offering and expanding its distribution capabilities. This, together with our continued access to a diversified funding base, places Homeloans in a very sound position as economic conditions improve."

Mr Holmes said that the Group had further consolidated its capital position, had significant surplus cash reserves and would continue to seek opportunities for strategic acquisitions to add value to the business.

Mr Holmes said the proposed acquisition of Challenger's shareholding in Homeloans by the National Australia Bank would be very beneficial for the group and the Company is looking forward to ongoing growth with their support.

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