Eric Johnston Business day August 23, 2012
SUNCORP Group has tried to win back the faith of investors with a $200 million capital return, as chief executive Patrick Snowball said the bancassurer had finally changed gears since its comeback from the financial crisis.
He also said corporate Australia could no longer blame the choppy global environment for problems. Rather, businesses needed to adapt to issues such as stresses in Europe or slowing growth.
''The economic factors are here to stay,''Mr Snowball told BusinessDay. ''We've just got to live with it.''
Suncorp yesterday reported a 60 per cent lift in full-year net profit to $724 million, buoyed by a rebound in insurance earnings.
The latest annual result - the third for Mr Snowball - marks something of a turning point for the financial services house, which sells insurance under brands such as GIO and AAMI, as well as overseeing a regional bank.
Suncorp's banking arm took a hit in late 2008 when global funding markets froze. It was also overexposed to some of the more heated parts of the commercial property market. Suncorp has since split its banking arm into a core bank and a non-core bank that houses the worst of the commercial property exposures. The non-core book is still causing headaches across the broader Suncorp, posting a bigger than expected loss of $263 million for the past year.
But the banking lending book of $4.5 billion is being run off and is well down from a peak of $17 billion.
Suncorp's core bank, which sells mortgages and lends to small and mid-size business, increased profit by 11.5 per cent to $289 million over the past year.
But like most banks across the sector, it is battling subdued lending growth and higher funding costs.
Elsewhere, Suncorp's general insurance arm posted a 25 per cent rise in full-year earnings to $493 million, helped by a drop in the rate and frequency of natural disasters.
Gross written premiums were up 9 per cent, largely as the insurer pushed through a swath of pricing increases. Life insurance earnings also rebounded sharply, finishing 68.5 per cent higher at $251 million.
After years of flat dividends, Suncorp declared a 15¢-a-share special dividend on top of a 20¢ final dividend.
This took the full-year payout to 55¢, compared with last year's 35¢. Mr Snowball detailed plans to boost Suncorp's payout 10 percentage points higher to a new target of between 60 per cent and 80 per cent.
This means a greater proportion of future profit will find its way to shareholders. Since taking charge, Mr Snowball has been trying to simplify the business, countering criticism that having a general insurer, a life insurer and bank under the one roof failed to live up the promises of superior shareholder returns.
Even with the deeper banking write-downs, Suncorp shares ended 6¢ higher at $8.88 yesterday.