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Genworth reported a statutory net profit after tax of $135.8 million for the six months to 30 June, up 20.2 per cent on the same half last year.
The listed mortgage insurer’s portfolio delinquency rate increased by 3 basis points to 0.43 per cent, reflecting 513 delinquencies for the half.
“The overall portfolio continues to be supported by strong performance in New South Wales and Victoria,” Genworth said in a trading update.
“However, the performance in Queensland and Western Australia is still challenging, reflecting increased delinquencies, particularly in regions exposed to the slowdown in the resources sector as the economy in those areas navigates through a period of transition.”
New business volume, as measured by New Insurance Written (NIW), of $14.0 billion in 1H16, decreased 20.9 per cent compared with the previous corresponding period (pcp). Gross Written Premiums (GWP) decreased 33.5 per cent to $189.8 million.
Genworth said this reflects a number of factors including reduced high-LVR penetration in the market, a lower LVR mix of business, as well as the full impact of the changes in customers in the six months to 30 June last year.
Genworth managing director and CEO Georgette Nicholas said the group has posted a “solid first half result”, which reflects the resilience of the business and its focus on maintaining risk management discipline in a dynamic market.
“Overall economic conditions are supportive and the fundamentals of the residential mortgage market are sound, but there is pressure in some areas of the market.
It is clear that the business is navigating through some variability and changes in the residential mortgage market,” she said.
“In particular, there has been a significant decline in the proportion of high loan-to-value ratio (LVR) loans originated given regulatory changes and changes in lender risk appetite.
“We continue to work on strengthening our value proposition focused on meeting our customers’ strategic capital and risk management needs as well as working with various stakeholders to address the issue of housing affordability.”
Genworth predicts that the high LVR market will continue to be constrained in 2016. The mortgage insurer continues to expect GWP to decline by approximately 20 per cent for the year due to market conditions.