St George result shaken by interest rate rise
(7th November 2003 – Australia) St George Bank posted a record post-tax profit of $606 million for 2003 but saw its share price drop to its lowest point in seven months after the Reserve Bank of Australia’s interest rate rise.
With home loans accounting for almost 70 percent of St George’s lending portfolio, investors feared the bank could be exposed to a softening housing market.
However, analysts differed on the bank’s earnings per share (EPS) growth prospects for 2003/04 with UBS downgrading its forecast by about two percentage points to 7.7 percent, while Goldman Sachs JB Were upgraded its forecast by one percentage point to 10.6 percent.
St George said its "continuous service improvement" and "strong underlying momentum" saw it heading for 10 to 11 percent EPS growth in 2004 followed by double digit growth in 2005.
St George managing director Gail Kelly said the bank had the opportunity to grow through deepening its relationship with existing customers and implementing new business strategies in states where the bank had traditionally been underweight.
Following the announcement of St George’s result, ratings agency Standard & Poor’s gave the bank the thumbs up, saying it was supportive of the bank’s sound credit profile.
"The good profit result was particularly underpinned by the bank’s success in organically growing its home mortgage and commercial lending portfolios in a favourable credit environment while maintaining stable interest margins," S&P credit analyst Peter Sikora said.
However, analysts differed on the bank’s earnings per share (EPS) growth prospects for 2003/04 with UBS downgrading its forecast by about two percentage points to 7.7 percent, while Goldman Sachs JB Were upgraded its forecast by one percentage point to 10.6 percent.
St George said its "continuous service improvement" and "strong underlying momentum" saw it heading for 10 to 11 percent EPS growth in 2004 followed by double digit growth in 2005.
St George managing director Gail Kelly said the bank had the opportunity to grow through deepening its relationship with existing customers and implementing new business strategies in states where the bank had traditionally been underweight.
Following the announcement of St George’s result, ratings agency Standard & Poor’s gave the bank the thumbs up, saying it was supportive of the bank’s sound credit profile.
"The good profit result was particularly underpinned by the bank’s success in organically growing its home mortgage and commercial lending portfolios in a favourable credit environment while maintaining stable interest margins," S&P credit analyst Peter Sikora said.
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