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Suncorp profits drop in ‘challenging’ year

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3 minute read

Volatile markets and natural hazard costs weighed on the firm’s annual results.

Suncorp Group has reported a 34.1 per cent decline in net profit after tax to $681 million and a 36.7 per cent fall in cash earnings to $673 million for the 2022 financial year.

In a statement to the ASX on Monday, the firm said that its results were impacted by volatile investment markets as well as higher natural hazard costs, with 35 separate weather events and around 130,000 natural hazard claims linked to the La Niña weather pattern.

The profit after tax of the firm’s insurance operations in Australia was down by 68.2 per cent, while gross written premium growth of 9.2 per cent was recorded.

Meanwhile, Suncorp Bank’s profit after tax was down by 12.2 per cent to $368 million and its net interest margin dropped by 14 basis points to 1.93 per cent.

Home lending increased by 9.0 per cent or $4.1 billion, total bank deposits lifted 15.9 per cent to $48.1 billion and its at-call transaction portfolio grew by 20.6 per cent to $20.8 billion.

As announced last month, ANZ has agreed to buy Suncorp’s banking business for $4.9 billion. The deal, which remains subject to regulatory and government approvals, is expected to be completed in the second half of 2023.

Suncorp CEO Steve Johnston said that the strategic rationale for the sale was compelling.

“With the ability to focus exclusively on our insurance businesses, Suncorp will become a leading trans-Tasman insurer and have a louder voice in advocating for greater resilience and mitigation measures to better protect our customers and the community,” he said.

“Our insurance strategy is delivering and once the sale process is complete we will be able to do more, and faster.”

Operating expenses were reported to be up by 3.2 per cent to $2.78 billion, which Suncorp said largely reflected the temporary increase in strategic investment and growth-related costs.

The firm declared a fully franked final ordinary dividend of $0.17 per share, which will bring its dividend for the full financial year to $0.40 per share.

While acknowledging that the period had been challenging, Mr Johnston said that Suncorp had maintained momentum and delivered on key strategic initiatives over the financial year.

“First and foremost, we have thrown our full support behind our customers, many of whom have been displaced by the far-reaching impacts of the La Niña weather pattern,” he said.

“At the same time, we have maintained our focus on executing our strategic initiatives and this has allowed us to offset increasing inflationary pressures, particularly in home and motor vehicle repairs.”

Looking ahead, Suncorp stated that the operating environment remained challenging and flagged the likelihood of a third consecutive La Niña year.

Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.