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Suncorp Group posted $1 billion in group cash earnings for the 2021 financial year, 42.1 per cent more than the year before, as it rolled out a $250 million buyback.
Shareholders also benefitted from a fully franked final dividend of 40 cents per share, bringing the FY21 total payouts to 66 cents per share.
Suncorp had made $1 billion in group net profit after tax (NPAT), a rise of 13.1 per cent from the previous year.
The boost in earnings had been driven by a rise in profit after tax across its businesses in Australian insurance (up 42.4 per cent to $547 million) and banking (up 69 per cent to $419 million).
Meanwhile, profit in New Zealand fell by 18.4 per cent to $200 million for FY21, largely as a result of increased natural hazard costs.
Suncorp Group chief executive Steve Johnston commented the group had struck the right balance between returning capital to shareholders and retaining buffers for uncertainty.
“After the proposed returns, we will continue to hold almost $400 million in excess capital at the group level,” Mr Johnston said.
He also said the result had been delivered against a challenging backdrop, pointing to the pandemic and drastic weather up north.
“During this time, our focus has been on supporting our insurance and banking customers and executing our strategic priorities,” Mr Johnston said.
Lending dips, home loan lodgements rise
Total lending stayed mostly flat, declining by 0.8 per cent to $57.5 billion in FY21, although the segment had seen a 0.4 per cent rise in the second half of the year – reflecting positive momentum in mortgages as business loans dipped.
Overall retail loans (including personal, housing loans, securitised housing loans and covered bonds) dropped by 1 per cent to $46.1 billion, from FY20’s $46.6 billion.
Housing loans (excluding securitised loans), rose to $41.6 billion, up 3.2 per cent from FY20’s $40.4 billion. Including securitised loans, total housing loans stayed mostly flat, dipping by 0.9 per cent to $46 billion.
The housing loan segment had inclined by 0.8 per cent in the second half of the year, which Suncorp credited to improved broker lodgements and settlements, as well as slimmed down approval turnaround times.
There had been a 51 per cent surge in home loan lodgements year on year, while settlements were up by 27 per cent. But the momentum was offset by a rise in customer repayments, external refinances and property sales - resulting in a 10 per cent rise in portfolio outflows on FY20.
Troy Fedder, Suncorp Bank head of broker partnerships, reported that around 70 per cent of the bank’s flows had been generated via the broker channel.
He reflected on the bank’s investment in improving broker business, commenting Suncorp had made a number of process changes throughout the year.
“We’ve reduced turnaround times and refreshed our broker portal, which has everything brokers need to lodge an application with us,” Mr Fedder said.
“We’re growing our BDM team in key Australian markets, including Victoria, New South Wales and Queensland, and we continue to see momentum in these regions.”
The bank also saw movement in its digital channel, with the proportion of products originated online rising to 15 per cent of home loans from 8 per cent the year before.
Branch transactions on the other hand plunged by a fifth during FY21 – although Suncorp had closed 29 branches over the course of the year.
Suncorp reported that it had given 14,000 customers loan repayment deferrals through COVID-19 – covering a tenth of its overall customer base.
On the other hand, business lending slipped by 0.1 per cent to a total of $11.3 billion, although the fall was partly offset by the agribusiness portfolio growing by 3.6 per cent to $4.2 billion, with Suncorp citing increased cropping activity, restocking and asset purchases.
Suncorp has also continued on its simplification plans, after recently indicating that it will sell its 50 per cent stake in RACT Insurance. The group also exited its wealth business earlier in the year, selling its superannuation arm to LGIAsuper, following on from other segments such as travel insurance and personal loans.
“We believe each of these divestments has made strategic sense and represent good outcomes for our shareholders, customers and employees,” Mr Johnston said.
Former NAB wealth head joins board
Duncan West will join the Suncorp Group board, bringing close to 40 years’ experience in the general insurance and broader financial services industries.
His appointment will be effective from 23 September, following registration under the Banking Executive Accountability Regime (BEAR). Mr West will stand for election by shareholders at Suncorp’s annual meeting, on the same day.
When he begins at Suncorp, Mr West will step down from his current roles as chair of the Hollard Insurance Company and Lawcover Insurance – although he will remain a director of Genworth Mortgage Insurance, Challenger, Avant Group Holdings and Avant Insurance.
He will also continue as chair of Habitat for Humanity Australia.
Previously, Mr West held a range of senior roles such as executive general manager for retail wealth at NAB and CEO of MLC. He has also been CEO of CGU Insurance and Vero Insurance.
Suncorp chair Christine McLoughlin commented Mr West will bring a wealth of industry knowledge to the board.
“The board will benefit from Duncan’s perspective and firsthand experience in financial services, notably in commercial and personal lines insurance, reinsurance and banking, as well as his deep understanding of the regulatory environments in Australia and New Zealand,” she said.