Genworth (ASX:GMA) share price jumps 7% on half-year earnings

High LVR mortgages have propelled the Genworth share price higher, largely driven by high property prices and first home buyers.

| More on:
happy investor, share price rise, increase, up

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Genworth Mortgage Insurance Australia Ltd (ASX: GMA) share price has jumped 7.55% higher on Wednesday morning after announcing its half-year earnings result.

Genworth shares are currently trading hands at $2.28 apiece.

Genworth share price jumps as dividend returns

Shares in the Aussie mortgage insurer are on the move after reporting results for the period ended 30 June 2021 (1H 2021).

A few key highlights from Genworth's results are:

  • Gross written premium revenue up 21.1% to $289.7 million
  • Net earned premium of $170.9 million, up 13.3% from $150.8 million reported in 1H 2020
  • Statutory net profit of $59.4 million compared to a $90.0 million net loss in 1H 2020
  • Insurance profit of $71.5 million versus a $128.1 million loss in 1H 2020
  • The board declared a 5 cents per share dividend after declining to pay an interim dividend in 1H 2020

The Genworth share price is climbing higher in early trade following the earnings result and dividend announcement.

What happened in 1H 2021 for Genworth?

The Genworth share price has climbed 27% higher in the last 12 months, prior to this morning's open. Shares in the Aussie mortgage insurer have been boosted by strong underwriting volumes and significant government incentives for home ownership.

High loan-to-value mortgages have propelled the Genworth share price higher, largely driven by high property prices and first home buyers.

Genworth Financial Inc sold its entire holding of shares in Genworth back in March. The separation is expected to occur by 31 March 2022 with one-off costs of $15 million to $19 million, largely to be incurred in FY 2021.

What did management say?

Genworth CEO and managing director Pauline Blight-Johnston described the first-half result as "pleasing".

"The result reflects the improved economy, housing market appreciation, and low interest rates experienced during the half", Blight-Johnston said.

"The stronger economy over the first half has provided good momentum for the company, however, the recent COVID-19 restrictions in some states will affect the ongoing economic recovery and have created renewed uncertainty," she added.

What's next for Genworth shares?

Genworth expects the low delinquency rates (0.60% in 1H 2021) to remain, thanks to ongoing borrower support programs.

Ongoing COVID-19 disruptions have made FY 2022 forecasting difficult for the company. However, it remains well capitalised with a prescribed capital coverage ratio of 1.74 times.

The Genworth share price has jumped 7.55% higher following this morning's result but remains down 4.6% in 2021.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Earnings Results

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer.
Earnings Results

Graincorp share price lifts off as dividend is maintained and debts plunge

ASX 200 investors are bidding up the Graincorp share price today. But why?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Earnings Results

Why is this ASX 200 stock avoiding the market selloff and pushing higher?

Not all shares are falling with the market on Thursday.

Read more »