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Medibank profit up but core business slows

 

Medibank Private has lifted half-year profit 1.9 per cent to $231.9 million as higher investment income offset lower returns from its core health insurance business.

Health insurance premium revenue for the six months to December 31 rose 1.2 per cent to $3.12 billion.

Operating profit in its main health insurance business slipped to $249.4 million from $271.7 million a year earlier because of increased investment in customer initiatives, amortisation of its new IT system and moderately higher growth in utilisation rates.

The company said, while volume growth in the industry continued to slow because of challenging conditions, it had underperformed relative to the market in both customer acquisition and lapse.

"In the first half we have reorientated Medibank to sharpen the focus on our customers. I'm encouraged by the early progress we have made, but we recognise there is more to do," chief executive Craig Drummond said.

Health claims rose 1.5 per cent to $2,59 billion during the six months, and gross margin in the business slipped to 16.9 per cent, from 17.2 per cent a year ago.

The shortfall was made up by a sharp increase in net investment income, which rose to $76.8 million, helped by higher equity market returns and stronger credit markets.

The health insurer has declared a fully franked interim dividend of 5.25 cents a share, up from 5.0 cents a year earlier.

MEDIBANK HALF-YEAR PERFORMANCE

* Net profit up 1.9pct to $231.9m

* Revenue up 0.5pct to $3.39b

* Interim dividend up 0.25 cents to 5.25 cents, fully franked