Suncorp chairman Ziggy Switkowski announced the $1.133 billion after tax net profit, with the banking division contributing $354 million to the result. That figure was up 55.3 per cent on the $228 million in post-tax banking profits recorded a year earlier.
“This significant increase was achieved through an improved NIM and lower impairment charges,” Suncorp said in a statement.
“Home lending growth of 7.1 per cent reflects the success of the bank’s improved product offering, while also maintaining conservative lending standards and focusing on the ‘below 80 per cent’ loan-to-value ratio (LVR) market.”
The bank's insurance arm, Suncorp Life, also delivered a strong increase in profits, up 35.9 per cent to $125 million.
The significant rise in Suncorp's overall group profit came despite the drag on earnings from the group’s worst year for natural disaster claims. Five serious weather-related events in Queensland and NSW helped to generate a net impact of $1.068 billion, and cut after tax profits in the insurance division to $756 million, down from last year’s $1.01 billion result.
“I’m proud that Suncorp has been able to increase profit and dividend in a year of terrible weather events and, at the same time, deliver exceptional customer service,” said Suncorp Group’s CEO, Patrick Snowball.
“This demonstrates that Suncorp’s diversification across general insurance, banking and [Suncorp] Life is delivering a resilient earnings profile.”
While larger banks have raised interest rates on investor loans in recent weeks to meet APRA’s aggressive new capitalisation requirements, Suncorp noted that it remains well capitalised. Its Bank CET1 is currently sitting at 9.15 per cent, and as of 30 June (on an ex-dividend basis), the group was holding $570 million of capital above its operating targets.
The group announced total ordinary dividends of 76 cents per share – up 1 cent per share on last financial year. A special dividend of 12 cents per share fully franked was also confirmed – down on last year’s 30 cents per share.
Looking ahead, Suncorp is forecasting simplification initiatives to deliver cost savings of $265 million in the current financial year. The group will invest $75 million in its Optimisation program to deliver further efficiencies, and has said it remains committed to building “a simple, low-risk financial services group that delivers both high yield and above-system growth”.
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