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Preliminary Final Report & On-Market Buy-Back

Document date:  Wed 03 Nov 1999
Published:  Wed 03 Nov 1999 00:00:00
Document No:  154638
Document part:  L
Market Flag:  Y
Classification: 

HOMEX - Melbourne                                                     

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GEOGRAPHIC SEGMENT - AUSTRALIA

                                    1999            1998         Movt
                                     $M             $M             %

Net interest Income                2,447           2,271          8%
Fee income                         1,188           1,032         15%
Other operating income               308             395        -22%
Net operating income               3,943           3,698          7%
Operating expenses                (2,161)         (2,288)        -6%
Operating profit before 
debt provisions                    1,782           1,410         26%
Provision for doubtful debts        (280)           (264)         6%
Income tax expense                  (460)           (327)        41%
Operating profit after income 
tax before abnormal items          1,042             819         27%
Net abnormal loss after tax            -             (11)        n/a
Operating profit after income 
tax and abnormal items             1,042             808         29%
Net interest average margin         3.17%           3.38%        n/a
Return on ordinary book 
equity (before abnormals)           18.5%           16.8%        n/a
Operating profit after 
tax as a % of average
risk weighted assets 
(before abnormals)                   1.3%            1.2%        n/a
Operating expenses to net 
operating income                    54.6%           61.9%        n/a
Operating expenses to average 
assets                               2.2%            2.6%        n/a
Net specific provision as a %
of average net advances              0.2%            0.2%        n/a
Net non-accrual loans                345             561        -39%
Net non-accrual loans 
as a % of net advances               0.4%            0.7%        n/a
Employees (FTE ) - Permanent      16,248          17,395         -7%
Employees (FTE) - Temporary          899             756         19%
Total employees                   17,147          18,151         -6%
Lending growth                      12.6%           13.8%        n/a
Total assets                     103,757          94,194         10%
Risk weighted assets              80,462          75,063          7% 

Profit after tax before abnormals increased 27% in 1999 reflecting:

* strong growth in net interest income as mortgages increased 16%
through both organic growth and acquisition of a mortgage origination
business, partially offset by a contraction in margins reflecting
competitive pressures

* the net interest funding benefit of issuing preference share
capital

*growth in fee income in Personal Financial Services due to volume
growth as well as revised fee structures, and in Corporate Financial
Services, due to increased commercial bill volumes, and a new fee
structure in Esanda offset by

* lower other operating income due to less "one-off" items and exit
from institutional stockbroking.

The cost income ratio reduced from 61.9% to 54.6%, with operating
expenses down 6% as a result of.

* lower personnel and premises expenses following continued cost
containment and benefits of restructuring programs (lower FTEs, down
6%)

*the impact of the adoption of software capitalisation ($57 million)
and netting of sub-rental income

*cost savings from centralisation of functions and back office
re-engineering offset by

* higher computer costs due to Year 2000 compliance testing and
e-Commerce development.

The increase in the economic loss provision charge reflects volume
growth partially offset by improved credit quality,

GEOGRAPHIC SEGMENT - NEW ZEALAND

                                            1999       1998       Movt
                                             $M          $M         %

Net interest income                         477        479          0%
Fee income                                  240        212         13%
Other operating income                       71        102        -30%
Net operating income                        788        793         -1%
Operating expenses                         (469)      (511)        -8%
Operating profit before debt provisions     319        282         13%
Provision for doubtful debts                (37)       (40)        -8%
Income tax expense                          (82)       (75)         9%
Operating profit after income tax           200        167         20%
Net interest average margin                2.73%      2.70%        n/a
Return on ordinary book 
equity (before abnormals)                  24.5%      22.3%        n/a
Operating profit after tax 
as a % of average risk weighted 
assets (before abnormals)                   1.4%       1.2%        n/a
Operating expenses to net 
operating income                           59.4%      64.4%        n/a
Operating expenses to average assets        2.4%       2.6%        n/a
Net specific provision as a %
of average net advances                     0.1%       0.2%        n/a
Net non-accrual loans                        30         83        -64%
Net non-accrual loans 
as a % of net advances                      0.2%       0.5%        n/a
Employees (FTE) - Permanent               3,949      4,273         -8%
Employees (FTE) -Temporary                  341        226         51%
Total Employees                           4,290      4,499         -5%
Lending growth (including FX impact)        1.4%       2.0%        n/a
Lending growth (excluding FX impact)        7.7%       7.4%        n/a
Total assets                             19,730     20,155         -2%
Risk weighted assets                     13,546     13,766         -2%

A weakening in the average NZD/AUD exchange rate has masked a strong
underlying New Zealand result.

The 20% increase in profits over 1998 reflects: 

* stable net interest income with lower cost of funding structured 
financial activities being offset by higher long term funding costs 

* lending volume growth offset by foreign exchange impact increased 
fee income, reflecting growth in lending and funds under management, 
new services and revised fee structures 

* reduced other operating income from lower net payments from 
derivatives associated with structured financing
activities (offset in net interest income) and lower gains on foreign
exchange trading 

* lower operating costs, in particular personnel costs, reflecting 
the benefits of restructuring undertaken in the past two years 

* improved credit quality resulting in a lower economic
loss provision charge.
                 


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