Genworth Mortgage Insurance stocks have leapt after investors seemed to brush aside a dividend cut and sagging full-year profit to focus on news of a fresh $100 million share buyback.
The company announced on Wednesday that a subdued housing market, tightening lending conditions, and a significant accounting adjustment had pushed net profit down – as expected – nearly 50 per cent to $75.7 million for the 12 months to December 31.
But the Genworth share price was buoyant after the company announced a new on-market buyback, trading 3.98 per cent higher at $2.35 after markets closed on Wednesday.
Genworth already purchased $149 million worth of investors’ shares in 2018.
Executive officer and managing director Georgette Nicholas said Genworth remained focused on capital management activities despite a full-year result tempered by a softening housing market.
“Our FY18 financial performance is in line with our guidance and our expectation of a transitionary year for Genworth,” she said.
“Our result reflects … [issues including] moderating housing market conditions, tightening credit standards and increases in mortgage interest rates during the year.”
Underlying net profit dipped more than 45 per cent to $93.9 million, new insurance written decreased 7.1 per cent to $22.2 billion, while gross written premium increased 24.7 per cent to $460.2 million.
Genworth will pay a final, fully franked dividend of 9 cents per share, down from 12 cents a year ago.