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| Profit after tax | $8,824,966 | 26.5 per cent increase over previous corresponding period |
| Final dividend | 16 cents per share (payable 27 September, 2002) | Total dividend 32 cents per share (up from 27.5 cents per share in 2001) |
| Assets and loans under management | $1,177,494,488 | An increase of 15.21 per cent over the 2001 financial year |
| Lending for full financial year | $305,140,406 | An increase of 22.43 per cent over 2001 financial year |
Wide Bay Capricorn Building Society Ltd (WBB), rated as Australia’s best performing financial sector stock in 2001, continued to enjoy strong performances for the six months ended December 2001. The Society has posted an after tax profit from ordinary activities of $4,176,502 million – an increase of 24.14% over the previous corresponding period.
The result, achieved on the back of strong lending over recent years, has been boosted by a further $155.7 million in lending for the six months - compared with $111.5 million for the corresponding period for 2000 - an increase of 39.64%.
After allowing for dividends on recently issued resettable convertible preference shares, this represents earnings of 20 cents per ordinary share. The Board has resolved to pay an interim dividend of 16 cents per share on 8th March 2002.
Wide Bay Capricorn Building Society’s Managing Director, Ron Hancock attributes much of the growth to a focus on building a stable, secure home loan book.
“No doubt a significant contribution to our loan approvals has been the Government’s First Home Owners Grant, and while we believe its reduction will impact on lending, we are broadening our lending operations and expect our loan growth to continue,” Mr Hancock said.
“This is the fourth consecutive reporting period that has seen an increase in profitability, the loans portfolio and assets under management."
“Since 30 June 2001 we have also seen our share price increase by approximately $1.90, which, coupled with dividend payments, represents a growth in value to shareholders of $38 million.
Since 30 June 2001 we have seen our share price increase by approximately $1.90, representing, in addition to our dividends, added value to shareholders reflected in their share value to the extent of $38 million.
“The bonus of being rated as the top performing stock in the sector for 2001 was very pleasing and provided recognition of our strength, growth and stability.”
Mr Hancock said the highlight of the past six months was the Society’s issue of resettable convertible preference shares. An amount of $35 million was allocated after receiving overwhelming support from institutional and professional investors far in excess of this amount, and which required scaling back in the allocation process.
“This issue has enabled us to maintain a high level of capital adequacy and we will be looking, wherever possible, at reducing our reliance on subordinated debt,” he said.
“Despite intense competition throughout the period, we have been able to maintain our operating margin, although we believe this will be under further pressure in the ensuing six months.”
Society assets and loans under management grew to $1,137 billion – an increase of 13.38% over the six months.During the year, the Society developed its own financial planning activities through its joint venture Wide Bay Capricorn Financial Planning Services Pty Ltd.
The Society and also reviewed the market in respect to its interest in a small lease/rental operation, Wide Bay Capricorn Mini-Lease Pty Ltd, based in Brisbane.
“Our mortgage insurance captive, Mortgage Risk Management Pty Ltd, continues to perform well and while requiring some additional restructuring in capital under the new Insurance Standards, will we believe provide a significant contribution to the Society’s operations in future years,” Mr Hancock said.
“We have continued to fund our growth mainly through securitisation programs with SG Australia, with whom we have developed a very strong association and have an ongoing warehouse facility ensuring us continual access to funding as required,” he said.
The Board is also considering opportunities to take its securitisation program off the balance sheet in the ensuing period. If this is achieved it will ease demands on the Society’s future capital requirements.
The Society’s telephone and internet banking facilities including an on-line loans capability are now fully functional and are receiving exceptional support from our customers.
“We continue to expand our branches network and have resolved to develop our branch representation in Mackay. We are also reviewing Townsville as a further expansion possibility,” Mr Hancock said.
Wide Bay Capricorn’s operations in Sydney, Melbourne and Adelaide continue to perform to expectations and are contributing to the Society’s overall strength by broadening the geographical spread to its portfolio.
“Overall, with Wide Bay Capricorn maintaining a solid growth and with our products and services continuing to be well supported, the Board and Management look forward to a continuing successful growth pattern for the remainder of this financial year,” Mr Hancock said.
| Profit after tax | $4,176,502 million | 24.14 per cent increase over previous corresponding period |
| Interim dividend | 16 cents per share (payable 8th March, 2002) | |
| Assets and loans under management | $1,137,077,008 | An increase of 13.38 per cent over the six months |
| Lending for six months | $155.7 million | An increase 39.64 per cent over previous corresponding period in 2000 |
| Closing Share price | $5.85 (13 February 2002) | $3.92 (2 July 2001) – an increase of $1.94 |
Small six beat the big four to best returns in bank shares
For the best return on Australian bank stocks last year, investors had to look beyond the nation's largest lenders - far beyond them.
Australia's best-performing bank last year was Wide Bay Capricorn Building Society, a regional home lender capitalised at just $113 million and based in Bundaberg - 1100 kilometres north of Sydney and better known as the home of Bundaberg Rum.
Its share price rose 56 per cent in the 12 months to December, making it one of six smaller banks to outperform the nation's big four lenders.
The gains came amid a surge in home loans and growing disenchantment with the service provided by bigger banks, a trend analysts say may continue.
"That performance could have something to do with customer dissatisfaction with the big banks," said Andrew Cain, portfolio manager at Dimensional Fund Advisors, who invest in small, closely held companies and holds 58,000 Wide Bay shares.
"We're certainly very happy with its performance." Of the big four banks, ANZ and Westpac were among the top three best-performing global big bank stocks in 2001.
ANZ, Australia's No 4 lender, was the second-best performing global bank stock of those of those capitalised at more than $US10 billion ($19 billion). It gained 24 per cent in 2001 and Westpac rose 19 per cent. They were beaten by Bank of America, the No 3 US lender, which added 37 per cent to its share price during the year. National Australia Bank gained 11 per cent, while Commonwealth Bank shed 3 per cent.
In the same period, Bendigo Bank, capitalised at just $917 million and based in central Victoria, rose 41 per cent and Adelaide Bank, with a market value of $612 million, jumped 33 per cent.
While the big four banks have delivered investors record operating profits for the past nine years, they're bracing for a leaner 2002 as the economy slows, bad debts rise and regulators move to limit income from fees and charges.
Australia's largest lenders, which account for nearly a fifth of the nation's benchmark stock index, have warned they face more than $1.92 billion exposure to three corporate failures. They are owed $673 million by failed US energy trader Enron, $1.165 billion by collapsed zinc miner Pasminco and more than $192 million by failed airline Ansett.
Australian bank stocks "now seem fairly valued to overvalued", said Ajay Kapur, Asian equity strategist at Morgan Stanley Dean Witser.
In contrast, Wide Bay and other regional home lenders - which benefited from interest rate cuts and subsidy to home buyers - are more sheltered from large corporate failures.
Wide Bay's loan approvals in the four months to October 31 jumped by a third from a year earlier to $124 million as six interest rate cuts during the year and the $14,000 federal government subsidy to first-time new home buyers boosted mortgage lending.
Brisbane based brokerage Wilson HTM expects Wide Bay's fiscal 2002 earnings to rise 18 percent to $8.3 million. It has an "add" recommendation on the stock.
Wide Bay earned $2.8 million in the four months to October 31, nearly 50 per cent up on a year earlier.
The strong result flows directly from the very robust growth experienced over recent years and reflects a 34 per cent increase in lending approvals to date," Wide Bay's Managing Director, Ron Hancock said in November.
The group sold $35 million of convertible preference shares last year to pay off debt and boost capital as it seeks to expand in Sydney, Melbourne and Northern Queensland.
Wide Bay stock rose 15c to close at a record $5.75 yesterday.
Bloomberg
Reproduced from The Sydney Morning Herald - 8/01/02
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