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Suncorp confirms ‘review’ of banking operations

The group has confirmed that it is currently reviewing “strategic alternatives” for its banking operations, following media reports that it is considering a sale.

Suncorp Group has issued a statement to market confirming that it is reviewing its banking operations, after a report on Australian Financial Review’s rumour column, Street Talk, suggested it was considering selling its retail unit.

According to the column, published on Sunday (26 June), the group has begun “assessing options to split the group’s banking and insurance arms” in a bid to focus on its larger insurance business.

In a statement, Suncorp Group noted the recent media commentary regarding Suncorp’s banking operations, adding: “As previously advised, Suncorp, from time to time, reviews its strategic alternatives in relation to all of its businesses and is currently doing so in respect of its banking operations.”

Following the announcement, Suncorp’s share price rose from $10.84 per share, to $11.20.

The move marks a new direction for the group, which had stated in its half-year results that the bank’s strategic initiative was to:

  • “Win in home lending”
  • “Accelerate everyday banking”
  • “Grow business customers”
  • “Lead with digital”
  • “Optimise distribution”

The retail arm has been growing recently, with the group’s most recent quarterly update (for the three months to March) stating that the bank had been making “strong progress against its strategic priorities”.

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According to the figures, released last month, the bank had seen $803 million of growth in its home lending portfolio (up 1.7 per cent) over the March quarter, to $48 billion, and a further $550 million increase in April. Total housing loans ended March 5 per cent higher year-on-year.

Total home loan lodgements were also 21 per cent higher than the previous quarter.

The bank had returned to above-system growth in February (1.1 times system) and March (1.4 times system).

The bank has been building and expanding its retail offering in recent weeks, too. Earlier this month, the bank released a new Green Upgrades Home Loan product to help customers “save money on their power bill, and increased its terms on business loans.

However, the bank has been closing a number of bank branches recently, with a spokesperson for the bank stating in March that the closures were due to the bank moving “to adapt and change with its customers’ behaviours”.

“With foot traffic in some branches down over 40 per cent and digital engagement up dramatically over the last few years, we are closing some metropolitan branches,” the spokesperson said.

“Where this is happening, we proactively contact all impacted customers including providing support on how to do their banking online, at another branch, by phone or at a nearby Australia Post.”

The rumour of a bank sale comes after Suncorp last year offloaded its wealth business (which was completed in April of this year), and follows a strategic review of the group’s wealth position, which commenced in February 2020.

The group had also pulled back from personal lending, which it said was part of its “simplification” strategy including a renewed focus on home lending.

Suncorp’s alleged move to consider a sale of its retail business comes after another non-major bank – Citi Bank – sold its Australian consumer bank for $1.2 billion to NAB.

The sale, which was completed earlier this year, will eventually see the Citi consumer business integrate into NAB.

The major bank first reached the agreement with Citi in August last year, securing its home loan portfolio, unsecured lending business, retail deposits business and the private wealth management segment.

Citi’s white label credit card business in particular was a key piece, as a provider for major brands including Bank of Queensland, Coles, Kogan, Qantas, Suncorp and Virgin Money.

[Related: Suncorp BNPL product hits market]

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