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- Banking and insurance giant Suncorp (SUN) has recorded $509 million in cash earnings for the first half of the 2021 financial year
- This 39.5 per cent increase was driven by higher earnings and a stronger alignment across its divisions
- The Insurance (Australia) division saw an increase of 109.8 per cent in profit after tax
- Similarly, its New Zealand and Banking and Wealth divisions recorded a 19.4 per cent and 11.1 per cent growth, respectively
- Due to there being 12 hazardous events across Australia and New Zealand during the period, Suncorp went over its allowance by $86 million to $561 million
- Looking ahead, the ASX 200-lister is focused on its three-year plan which will improve the customer experience, digitise and automate its core businesses, and generate sustainable returns
- Suncorp is up 3.16 per cent and shares are trading at $10.77
Suncorp (SUN) has announced its financial results from the first half of the 2021 financial year.
A stand-out was a 39.5 per cent increase to $509 million in cash earnings which was driven by higher earnings across its Australian insurance, banking and wealth, and Suncorp New Zealand businesses.
The banking and insurance company claims the positive performance was driven by a higher focus on its core businesses and a stronger alignment across the organisation’s priorities.
“Over the past year, we have refocused our strategy, continued to implement the ongoing regulatory program of work, improved our customer service, reinvigorated our brands, further digitised our business and become more efficient,” CEO Steve Johnston said.
“I am proud of how the group has delivered on these commitments and been true to our purpose in a challenging year,” he added.
Insurance (Australia)
Suncorp’s Insurance (Australia) division has delivered strong growth with profit after tax up 109.8 per cent on the prior corresponding period (pcp) to $258 million.
Home and Motor Gross Written Premium (GWP) grew 5.2 per cent with positive unit count and rate growth and so did Commercial GWP with a 3.2 per cent growth.
The company focused on taking a ‘digital-first’ approach to customer channels and on optimising the claims supply chain. This led to Home and Motor digital policy sales increasing by 10 per cent on the pcp.
General Insurance
Natural hazard costs across Australia and New Zealand for the first half of FY21 accumulated to $561 million which is $86 million above the allowance for the period and $42 million more than the pcp.
Suncorp was expecting this however as there were 12 recorded hazardous events during the period. This included the hail which devastated Queensland and New South Wales in October.
Suncorp New Zealand
The New Zealand division recorded a 19.4 per cent growth in profit after tax of NZ$129 million (roughly A$120.9 million).
General Insurance GWP grew 5.4 per cent to NZ$923 million (roughly A$865.3 million). The ASX 200-lister says this was driven by strong performance in the Motor and Home portfolios.
Additionally, the NZ Life Insurance business resulted in a profit after tax of NZ$29 million (roughly A$27.2 million), NZ$15 million (roughly A$14 million) above the pcp, which was caused by an improved claims experience and investment market returns.
Banking and Wealth
The Banking and Wealth division performed well with profit after tax of $190 million — an 11.1 per cent increase on the pcp.
The bank also delivered a strong net interest margin (NIM) of 2.04 per cent which is up eight basis points (bps) and reflects an ongoing at-call deposit growth and lower benchmark rates.
Suncorp saw a 30 per cent increase in the number of home loan applications lodged. Furthermore, the proportion of home lending initiated through its digital channel almost doubled to 13.9 per cent in 1H21, compared to 7.1 per cent in 1H20.
The bank has continued to streamline its home lending process to simplify and improve the customer and broker experience.
Outlook
Despite the positive results in profits for the individual business, Suncorp reported a 23.7 per cent decrease in group net profit after tax of $490 million on the pcp.
Looking ahead, Suncorp is focused on executing its three-year plan which will include improving the customer experience, further digitising and automating the core businesses, driving growth and generating sustainable returns above the through-the-cycle cost of equity.
Suncorp is up 3.16 per cent and shares are trading at $10.77 at 1:10 pm AEDT.
