Following on from the May announcement that its home loan portfolio had decreased by 0.7 per cent in the third quarter of 2019, the bank has now revealed that the mortgage portfolio increased by just 0.4 per cent in the full financial year 2019.
As at 30 June 2019, the home lending portfolio was $47.8 billion, up marginally from its FY18 closing figure of $47.6 billion.
The vast majority (82 per cent) of its mortgages were for principal and interest loans (P&I), with interest-only loans making up the remaining 18 per cent of its new loans.
Owner-occupiers made up nearly three-quarters of the mortgage portfolio, with just 28 per cent being investor loans.
Nearly half (48 per cent) of its mortgage book is for home loans in the group’s home state of Queensland.
According to the bank, the marginal mortgage growth was due to “an increasingly competitive and slowing mortgage market”.
On an annualised basis, lending growth was just under 1 per cent (0.98 per cent) at $59.2, down from the 6.13 per cent growth the lender experienced in the previous financial year.
This was largely due to growth in business lending, which grew by 3.6 per cent from $10.9 billion to $11.3 billion at the end of FY19.
Given the results, the acting CEO Steve Johnston outlined that a major stream of work for the year ahead would include growth in the mortgage channel, particularly through process automation and enhanced digital functionality.
Mr Johnston commented: “To create a more sustainable company which delivers high yield and above-system growth, Suncorp is focused on improving the performance of its core banking and insurance businesses. We are embracing regulatory change to strengthen trust and improve customer outcomes, leveraging our investments in digital and data, and driving efficiencies to optimise the group’s cost base.”
As part of the move to scale digital solutions, the group announced that it would be establishing a new customer and digital function to “develop innovative, digital-first customer propositions, building on Suncorp’s strong digital foundations”.
The new function will have responsibility for group, customer and digital strategy; digital distribution; brand and marketing; and the enterprise portfolio management office.
This will align its Australian contact centres, stores and intermediary distribution teams with its banking and insurance operations.
Given these changes, it was also announced that Pip Marlow – who joined Suncorp in March 2017 to lead its digital marketplace strategy – will leave the business at the end of August 2019.
The new customer and digital function will be led by Suncorp’s current chief program excellence officer, Lisa Harrison, who will become Suncorp's chief customer and digital officer.
Mr Johnston commented: “Pip has made a significant contribution as part of the senior leadership team. She has been instrumental in creating a customer-centric culture, including the way we recognise and reward our customers. She has helped embed strong digital foundations, which has reshaped the way we support our customers.”
“I would like to thank Pip for her strong leadership in driving innovation and change, and I wish her every success in the future.”
Ms Marlow commented: “I’m proud of the team’s achievements in driving an innovation lens and improvements in customer experiences that we’ve introduced to Suncorp, over nearly three years. This, together with our investment in digital has helped us adapt to changing customer needs. Suncorp is a fantastic company. It’s been a privilege to have worked with so many inspiring people.”
Speaking of Ms Harrison’s new role, Mr Johnston continued: “Lisa’s appointment reflects the depth of talent at Suncorp. She brings deep marketing, digital and insurance domain experience to this new role.
“The new function will leverage the proven expertise of our technology data and labs team to take our customer and digital strategy to a new level, enabling us to embrace all of the opportunities that digitisation offers our customers and business.”
Overall, the Suncorp Group results show that net profit after tax was $175 million, down a whopping 83.5 per cent from $1.05 billion in FY19 – largely impacted by the non-cash loss on the sale of the Australian Life Insurance business.
However, cash earnings were up 1.5 per cent to $1.1 billion.
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.