Newcastle Permanent has released its results for the 2020 financial year (FY20), posting a net profit after tax of $30.1 million, down 15.6 per cent on the previous corresponding period.
The result was underpinned by an $8.5 million in collective provisioning in anticipation of a COVID-induced deterioration in credit quality.
“Had it not been for COVID-19, our net profit after tax for the year would have been materially consistent with last year,” Newcastle Permanent CEO Bernadette Inglis said.
But the result was also impacted by a contraction in the lender’s mortgage portfolio, down 2.5 per cent to $8.7 billion, despite over $1.6 billion in settlements over FY20.
Ms Inglis attributed the contraction to an increase in paydowns off the back of mortgage rate reductions.
“We actively passed on interest rate cuts to our home loan customers who wisely took advantage of the low rates to pay down their loans at an accelerated rate,” she said.
The mortgage portfolio contraction was offset by total assets growth of 2.5 per cent to $11.1 billion and a 3.5 per cent increase in customer deposits to $8.5 billion.
The lender’s consolidated equity position also closed FY20 above $1 billion, while its capital ratio increased to 21.3 per cent.
Chair Jeff Eather observed: “While the forward environment remains uncertain, our exceptional capitalisation, liquidity and credit quality metrics position us well to navigate any challenges ahead, pursue our strategic objectives and leverage any opportunities.”
Ms Inglis concluded by noting she was pleased with the result, given unforeseen headwinds in the operating environment.
“In the first six months of the year, we executed our strategic program to plan, and then along came the bushfires and global pandemic and our playbook was beingå written day-by-day,” she said.
“I am proud of how the entire team responded.
“We were and continue to be well positioned to weather the impacts of COVID-19 and help our customers during uncertainty and in times of hardship.”