Suncorp Group reports earnings growth

Bank's home lending up $1.2 billion

Suncorp Group reports earnings growth

Suncorp Group has announced a 5.4% increase in its group net profit after tax (NPAT) to $582 million, alongside a 13.8% rise in cash earnings to $660 million.

The growth has been attributed to a notable rise in investment returns, with net investment income climbing to $396 million from $167 million in the first half of the 2023 financial year.

Meanwhile, Suncorp Bank’s home lending portfolio saw a 2.2%, or $1.2 billion, increase, balancing growth with competitive pressures affecting the net interest margin (NIM), which decreased 23 basis points to 1.80%. Cost to income ratio increased to 58.4%.

Operating expenses for the group rose by 7% to $1.21 billion, reflecting inflation and growth-related spending, while insurance expense ratios saw a decline, benefiting from productivity and strategic initiatives.

The company, in its results announcement, also reported a $28 million increase in other losses after tax to $55 million, partly due to $11 million in restructuring costs linked to the implementation of a new operating model and higher joint venture profit shares.

Suncorp’s board has declared a fully franked interim ordinary dividend of 34 cents per share, aligning with a dividend payout ratio of 65% of cash earnings, within the targeted range of 60% to 80%. The group’s common equity tier 1 (CET1) capital stood at $237 million, with noted improvements in capital ratios for both general insurance and banking sectors.

According to Steve Johnston (pictured), chief executive at Suncorp Group, the period presented challenges for the group and its customers, citing inflationary pressures and severe weather events in Australia.

“Against this backdrop, the group has continued to work hard to support its customers while also delivering improved earnings driven by increased customer demand for our products and services and positive investment performance over the half,” Johnston said in the announcement.

Johnston also mentioned the strategic price adjustments in response to various pressures and the company’s commitment to efficiency and advocacy for policy reforms to mitigate weather-related risks. He underscored the bank’s sound asset quality and the ongoing management of competitive pressures in the banking sector.

“We continue to see intense industry-wide competitive pressure in both deposits and lending, which we are carefully balancing,” he said.

“Last week, we welcomed the Australian Competition Tribunal’s decision to grant authorisation for the proposed sale of Suncorp Bank to ANZ Banking Group, which acknowledged the competitive banking environment for customers. The decision brings us one step closer to becoming a dedicated Trans-Tasman insurer proudly headquartered in Queensland.”

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