Medibank Private has posted a maiden full-year profit of $285.3 million, well ahead of the prospectus forecast of $251 million when it was floated late last year.

The company’s shares surged 16 per cent to $2.33 in the first 10 minutes of trade in response to the better-than-expected profit.

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However, while the bottom line was strong and driven by cost cutting, the company’s key top line revenue growth was weaker than forecast.

Medibank’s revenue stream from health insurance grew by 5.1 per cent against a prospectus forecast 6.2 per cent growth this year.

Much of the revenue growth in health insurance – which contributes 90 per cent of the Medibank’s total revenue – was underpinned by the Federal Government approved 6.5 per cent increase premiums in April.

Medibank grew its membership base by just 0.3 per cent – up from 3.87 million members to 3.9 million – a number Medibank concedes is below the industry average.

The bulk of Medibank’s growth in new members came in its low-margin, budget “ahm” brand.

“The sales performance of the Medibank brand is being addressed through product optimisation and customer engagement programs, while maintaining a focus on profitable growth,” the company said in a statement to the market.

As expected Medibank made significant inroads in cutting management expenses, which were down $3.9 million – or 0.8 per cent – over the year.

Medibank confirmed it will pay a fully-franked 5.3 cents per share dividend to shareholders on September 28.