Liberty shares steady as dividend beats expectations
A better-than-expected final dividend has helped keepLiberty Financial’s share price relatively stable despite tougher lending conditions pushing after-tax profits nearly 20 per cent lower and an uncertain outlook.
Chief executive James Boyle told The Australian Financial Review that the 2023 financial year result was “solid”, even as margins deteriorated under intense competitive pressure and higher funding costs.
“While the economic conditions have been difficult, we’ve arguably managed them better than anybody,” Liberty CEO James Boyle said. Eamon Gallagher
While the so-called “mortgage wars” have now abated, the early part of the year was dominated by banks offering cashback offers and writing unprofitable loans to win customers. Meanwhile, higher official interest rates has made wholesale funding more expensive for non-bank lenders.
Liberty’s net-interest margins – a key measure of lending profitability –fell 0.3 percentage points to 2.76 per cent, but Mr Boyle said this was still ahead of his peers.
“We are growing the portfolio, the fact that NIMs are being compressed is just a function of the environment we are trading in. That goes both ways – sometimes you get expansion because you get tailwinds, and sometimes you get contraction because you get headwinds,” he said.
Falling NIMs have been a theme of reporting season so far for lenders big and small. CBA revealed its margins had fallen 0.5 percentage points in the six months to June, while non-bank lender Pepper Money saw its margin contract 0.23 per cent to 2.06 per cent over the same period of time.
Overall, Liberty’s after-tax profits fell 17.1 per cent to $181.1 million in the 2023 financial year.
While operating income was up nearly 42 per cent to $1.25
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