NEWCASTLE Permanent's after-tax profit has fallen by 15 per cent to $30.1 million in a COVID-dominated year that its annual report describes as "like no other".
Its previous year's profit was $35.7 million. With its annual general meeting due on Thursday, November 5, the Perm's annual report, released yesterday, describes its financial position as "strong, built up over many years of considered action and solid returns".
"The primary driver of the lower profit this year was the impact of the COVID-19 pandemic on our provision for impairment of our loan book," chairman Jeff Eather and chief executive Bernadette Inglis wrote in their summary of the year.
"While our actual loss experience remained stable, the weak outlook for house prices, economic growth and employment resulted in an increase in our impairment provision to $8.5 million (an increase of $5.5 million year-on-year)."
This figure represented just 0.08 per cent of the total amount lent by the Perm and was "well below" the industry average.
The report said that in the period before JobKeeper and JobSeeker were announced at the end of March, more than 3000 customers asked about "hardship support packages", with more than 2200 customers pausing their loan repayments.
In an interview with the Newcastle Herald, Mr Eather said this meant that about 5 per cent of the Perm's 45,000 home loan customers had paused their repayments at the end of the financial year on June 30.
He said those 2300 accounts represented about $463 million in loans.
About two-thirds of those account-holders had resumed their repayments after June 30, with the latest figures showing 796 "paused" loans with a total value of $207 million.
The report says that at the same time, other customers "took advantage of low interest rates to pay down their loans at an accelerated pace, with new loans for 2019-20 totalling $1.6 billion, and the overall loan book down 2.5 per cent to $8.7 billion.
The report says the Perm's total assets rose by 2.5 per cent to $11.1 billion, driven by a "strong increase" in customer deposits, up 3.5 per cent to $8.5 billion, representing 84 per cent of the Perm's "funding base".
Mr Eather said that 90 per cent of the Perm's loans were residential mortgages with about half of its business now outside of the Hunter, after a decade of "diversification".
Mr Eather said the Perm remained committed to its branch network, although it had closed four outlets during the year, leaving a total of 50.
He said only 4 per cent of customer transactions were done through branches, down from 5.5 per cent the previous year.
