Suncorp delivers strong profit and returns capital to shareholders
The Group has announced a strong FY21 result that demonstrates the program of simplifying and refocusing Suncorp is gaining traction.
Suncorp Group has announced a strong FY21 result with cash earnings of $1,064 million, up 42.1%. Group net profit after tax increased by 13.1% to $1,033 million.
The significant improvement in cash earnings was driven by increased Profit After Tax in Insurance Australia (up 42.4%) and Suncorp Bank (up 69.0%). Profit in New Zealand fell by 18.4%, largely as a result of increased natural hazard costs.
The Board has declared a final ordinary dividend of 40 cents per share and an 8 cent special dividend, both fully franked. Total FY21 ordinary dividend was 66 cents per share. In addition, up to $250 million of capital will be returned to shareholders through an on-market buyback.
Insurance (Australia) delivered its strongest top-line growth since 2013, with Gross Written Premium (GWP) up 5.5%. As part of the business' focus on revitalising growth, its customer value propositions have been refined, new product features have been introduced and an additional investment has been made in marketing.
In the Bank, home lending grew by 0.8% in the second half of the year, reflecting improvements in broker lodgements and settlements, and improved approval turnaround times.
Net Interest Margin increased 13 bps in FY21 to 2.07%, attributable to growth in retail deposits and lower benchmark interest rates.
New Zealand GWP grew 9.2%, driven by performance in the AA Insurance channel and growth in the intermediated commercial portfolios. This top-line growth was partly offset by higher natural hazard costs, lower investment returns and a normalisation in working claims.
The La Niña weather pattern resulted in a higher number of events during FY21, with Group natural hazard costs of $1,010 million. This was $60 million above the Group's FY21 allowance of $950 million.
Group operating expenses were $2.80 billion, up from $2.75 billion, due to the temporary increase in spending on strategic initiatives, technology upgrades and increased spending on marketing.
#Group CEO commentary
Suncorp Group CEO Steve Johnston said the result had been delivered against a challenging external backdrop of COVID-19 and the La Niña weather pattern.
“During this time our focus has been on supporting our insurance and banking customers and executing our strategic priorities."
Mr Johnston said over the course of the year, the Group had provided COVID-19 support to more than 85,000 customers and contributed $9 million on a range of community programs.
"While COVID-19 and the weather will continue to challenge our customers and our team, we know we have good momentum and a program of work that will further improve outcomes for our customers and shareholders.”