St George profit up by 15.5pc

SYDNEY - Australia's fifth largest bank, St George, yesterday announced a net profit of $A828 million ($885 million) for 2004-2005, up 15.5 per cent from $A717 million in the previous financial year.

The result for the year to September 30 also exceeded the market consensus forecast of an $A815 million annual net profit.

Looking ahead, St George forecast 10 per cent earnings per share growth for the next two years. The bank had previously forecast double-digit earnings growth for 2005-2006.

St George Bank said second-half profit rose 13 per cent to a record after it loaned more to businesses.

Net income rose to A$412 million in the six months ended September 30, from A$363 million a year earlier, the Sydney-based bank said.

Chief executive Gail Kelly is benefiting from an economy in its 14th consecutive year of growth, with unemployment near a 30-year low.

ANZ Banking Group, the third-largest lender, reported record profit last week, and Westpac Banking Corp has forecast it will do the same on Thursday.

"St George has sufficient momentum in its business to be confident about double-digit earnings guidance for the next two years, which is pretty rare these days," said Steve Marsh, who helps manage A$550 million at Trust Co of Australia in Sydney, which holds St George shares.

Kelly is adding bankers to sell more loans to businesses, mainly small to medium-sized companies borrowing between A$1 million and A$5 million. She is also expanding outside her home state of New South Wales into Victoria, Australia's second-most populous state, and Queensland, the nation's fastest growing.

Loans to businesses jumped 17.4 per cent to A$20.4 billion during the year, and mortgages rose 13 per cent to A$56.3 billion.

St George is the second-best performer among Australia's five biggest bank stocks in the past six months, rising 10 per cent. Its shares closed down 30c at A$27.24 in Sydney.

- BLOOMBERG, REUTERS