Message from the Group CEO and MD
Steve Johnston, Chief Executive Officer
21 August 2020
Over the past decade our business has confronted its fair share of disasters – the global financial crisis, Brisbane and Townsville floods, prolonged drought across Australia, and earthquakes in New Zealand, to name just a few.
On every occasion our team has risen to the challenge of supporting our customers and communities when they needed us most, while also taking the opportunity to emerge stronger and with a greater sense of purpose.
While 2019–20 has been another year of extraordinary change and opportunity for Suncorp, it stands apart from our recent history in terms of the enormity of the circumstances which have confronted us. When I addressed you at our Annual General Meeting last September, none of us could have anticipated the unprecedented set of circumstances spanning bushfires, floods and storms, followed by the global COVID-19 health and economic crisis.
As a purpose-led organisation we understand that when purchasing our products, customers are seeking to build their futures and protect what matters. This purpose has been the driving force behind our response to these extraordinary events.
COVID-19 forced us to fundamentally change the way we operate. Keeping our people safe, and customers looked after with a range of relief measures for those in need, was our top priority, while simultaneously ensuring our business remained financially and operationally strong.
COVID-19 also showed us that it was possible to quickly adapt to a new working environment and meet the dramatic shift in customer needs, including new online solutions and agile ways of working to meet the increasing demand for digital products and solutions.
#Strength in our foundations
At the start of this financial year, I set out the Group’s four key priorities: improving the performance of our core businesses, improving operational efficiency, leveraging our investments in data and digital, and embracing regulatory change to build trust and improve customer outcomes.
While much has changed over the past year, the progress made against these priorities means our business has been well positioned during a period of significant change, and to accelerate opportunities for further efficiency and innovation.
Our results, particularly during the second half, highlight that we haven’t escaped the challenges of this environment. We delivered a net profit after tax of $913 million, which included the $285 million profit after tax from the sale of Capital S.M.A.R.T and ACM Parts. The Group’s cash earnings of $749 million were impacted by one-off expenses, as well as higher provisioning for COVID-19 impacts.
Despite the challenges there were a number of highlights including favourable underlying performance in our core businesses with positive growth in our Australian insurance consumer portfolios; investments in digital that supported an industry-leading response to one of the most severe seasons of natural disasters; improvements in customer satisfaction and retention across the organisation; and a significant 11-point increase in employee engagement in a company-wide biennial survey completed in March 2020.
The Group also maintains a strong capital position with excess Common Equity Tier 1 capital of $823 million (after adjusting for the final dividend), and our conservative risk margins will continue to give us the flexibility to respond to future volatility. A fully franked final ordinary dividend of 10 cents per share will be paid to shareholders.
#Pay and leave entitlements review
This year Suncorp initiated an internal review of pay and leave entitlements which identified inconsistencies in the Group’s rostering and pay systems.
I am disappointed deficiencies in our systems and processes may have let our people down and had a detrimental impact on our 2019–20 results. The review is ongoing, and the management team and Board Risk Committee are working closely to ensure a timely and accurate remediation process, and to oversee the implementation of new robust processes to prevent this happening again.
#Looking to the future
The events of 2019–20 have fundamentally changed our perspective on what is possible. While we acknowledge the health and economic impacts of COVID-19 will be long lasting, the challenges have also created opportunities to accelerate our transformation plans.
The Group’s new operating model, announced on 1 July 2020, recognises this opportunity and the need for change – to improve the performance of our core insurance and banking businesses, and to speed up the execution of our priorities, particularly our digital transformation.
We have reduced areas of duplication by combining layers within our Insurance Australia and Group functions, as well as aligning key support functions to the Bank and New Zealand businesses. We are creating a more streamlined, efficient way of working, clearly focused on the priorities that will set up our business for success.
At the same time, we haven’t lost sight of the critical role we play in reducing the impact of natural disasters on our customers and communities. The bushfires, floods and severe storms of this past summer have again reinforced the impacts of a changing climate and the need for greater attention and investment in natural hazard resilience. We will continue to take a leadership role in this very important debate.
Suncorp is an organisation I care about deeply, and I would like to thank my colleagues and acknowledge the hard work and determination of our people. I am extremely proud of the way our teams at all levels of the organisation adapted to new working conditions and continued to support our customers, each other and our business.
I am confident we have the right team in place to navigate the current uncertain environment, deliver on our refocused strategy and progress our long-term goal to deliver sustainable returns to shareholders. I thank all our shareholders for the confidence and trust you have in our company.