Powered by MOMENTUM MEDIA
subscribe to our newsletter

Suncorp’s loan book contracts, bank earnings slide

“Elevated” turnaround times have contributed to a contraction in the non-major bank’s home lending portfolio, driving a 33 per cent fall in the bank’s underlying earnings.

Suncorp Group has published its full-year results for the 2020 financial year (FY20), posting a statutory net profit after tax (NPAT) of $913 million, up from $175 million in FY19.

This was despite a 33 per cent decline in the group’s cash earnings, with the NPAT result reflecting a $285 million after-tax profit from the sale of the group’s former Capital SMART and ACM Parts businesses, and the $89-million non-cash impairment charge relating to the core banking platform.

The cash earnings slide was partly driven by a 33.5 per cent decline in the banking and wealth division’s net profit after tax, from $364 million to $242 million.

The bank’s earnings result was impacted by a spike in collective provisions in response to the COVID-19 crisis and subdued lending growth.

Advertisement
Advertisement

Suncorp Bank’s collective provisions totalled $255 million as of 30 June, up from $111 million in June 2019.

The bank’s home lending portfolio contracted 2.8 per cent, down from $47.8 billion to $46.5 billion.

According to the group’s chief financial officer, Jeremy Robson, the contraction reflected “slow system growth, strong competition for new and existing business, and elevated, albeit recently improving, loan processing turnaround times”. 

This resulted in a 2.1 per cent contraction in the bank’s total lending portfolio, from $59.3 billion in FY19 to $58 billion.

Suncorp’s subdued lending performance was offset by deposit growth, up 2.7 per cent to $39.9 billion.

PROMOTED CONTENT


Mortgage deferral breakdown

Suncorp revealed that as of 31 July 2020, approximately 7,700 home loan accounts were under deferral arrangements, representing $2.4 billion in home loans or 5 per cent of the mortgage portfolio.

According to Suncorp, 50 per cent of deferral customers opted to resume full repayments following the bank’s three-month check-in, reducing the total from a peak of 13,200 customers, which equated to 8 per cent of the mortgage book.

Owner-occupiers represent approximately 68 per cent of mortgage deferrals, with 85 per cent of deferral customers paying principal and interest.

Most of the bank’s deferral customers are from Queensland (41 per cent), followed by NSW (34 per cent), Victoria (13 per cent), and the remaining states and territories (12 per cent).

Outlook

Looking ahead, Suncorp Group CEO Steve Johnston said that while the COVID-19 pandemic would have “long-lasting health and economic implications”, it would “present opportunities to accelerate the pace of organisational transformation”.

“The growing preference for digital and reliance on technology is shifting the way we work and the way we support customers,” he said.

“Our teams embraced more agile ways of working to fast-track digital solutions, including enhanced webchat capabilities, online claims functionality and virtual claims assessments.”

Mr Johnston concluded: “This period has fundamentally changed our perspective on what’s possible, and how quickly and efficiently we can adapt to deliver new customer experiences and drive greater efficiencies within the organisation.”

[Related: COVID crisis to spur market evolution]

Suncorp’s loan book contracts, bank earnings slide
Suncorp’s mortgage book contracts, bank earnings slide
mortgagebusiness

If you have ever considered how you could better service your SME clients but lack the knowledge or confidence to do this beyond referring them on, this is a must-attend event for you. Don't miss SME Broker Bootcamp, a jam-packed, free-to-attend, practical workshop. Register today and secure your place at this interactive, flexible, must-attend event.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

Sales of new detached homes continued to increase for five consecutive months, despite the end of HomeBuilder grants, confirming a strong d...

An economist with Bluestone has responded to predictions that the cash rate will increase in August, calling the notion “nonsensical”. ...

The Real Estate Institute of Australia (REIA) said it’s expecting demand for sustainable homes and living to increase over 2022. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

When do you expect the cash rate to start increasing?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.