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St George to take A$63 million hit

St George to take A$63 million hit

(Australia) - Sydney-based regional player St George Bank has said its second half 2002 profit will be hit by a A$63 million after tax charge from restructuring costs related to its "Even Better Bank" program. The announcement, which came during an analysts' briefing, prompted a warning from ratings agency Standard & Poor's, which said the write-down had "negatively affected the bank's earnings and ultimately its internal capital generation."

S&P would not, however, downgrade the bank's ratings, saying its "very good business franchise, robust asset quality and good underlying earnings momentum" justified its 'A' rated credit standing.

St George chief executive Gail Kelly told the briefing she expected a 10 percent growth in earnings per share in the 2003 financial year, and had targeted double digit EPS growth and a cost-to-income ratio of under 50 percent in 2004.

Largely through the "Even Better Bank" program, Kelly said St George would reap productivity gains of A$60 million before tax in 2003, building to A$80 million the following year.

Analysts, and the market, were unimpressed, and St George shares were sharply lower.

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