St George Profit Meets Forecasts; Flags Growth
Australia's St George Bank met expectations with 13.1 percent rise in full-year cash profit on strong growth in business lending and wealth management division, and maintained its forecast for 2008 earnings per share (EPS) growth of 10 percent.
Australian banks are benefiting from 16 straight years of economic growth while three-decade low unemployment has kept bad debts in check, but increased competition from non-bank lenders and foreign banks such as ING Groep and HBOS is increasing costs.
St George, Australia's fifth-biggest lender, reported cash profit of A$1.160 billion ($1.06 billion) for the fiscal year ended September from A$1.026 billion a year ago. Six analysts on average had projected profit to rise 13.6 percent to A$1.162.
"St George continues to reap the benefits of an exceptionally strong franchise -- a well diversified retain bank and outperforming business banking and wealth management businesses, with many more growth opportunities," acting Chief Executive Officer Paul Fegan said in a statement.
Fegan was named acting CEO after Gail Kelly left St George to become the CEO of bigger rival Westpac Banking.
St George's loan growth to small and medium businesses jumped 26.5 percent to A$24.1 billion last fiscal year, nearly double industry growth, while funds under management climbed about 27 percent to A$49.7 billion.
To bolster its capital, St George said it would issue A$400 million in hybrid capital and underwrite up to 100 percent of its dividend.
St George's profit comes nearly a week after bigger rival Australia and New Zealand Banking Group missed analysts forecasts due to higher costs and provisions.
Last month St George had reiterated its EPS growth forecast of 11-12 percent for the year just ended after a global credit squeeze raised concerns about its ability to securitize loans.
St George Bank shares are up 7.1 percent so far this year, underperforming a 19 percent rise in benchmark S&P/ASX 200 Index.