Suncorp battered as weather events blow hole in first-half profits
Suncorp’s half-year net profit was down almost $100 million from last year as weather events forced a blowout in its insurance division.
Hail damage in southern Australia have blown a hole in Suncorp's natural hazard impacts. (File image)
The company posted a profit of $388 million after tax, down from $490 million for the first half last year.
It also sliced its dividend down to 23 cents a share, from 26 cents. However, investors were initially unconcerned about the result and shares increased by 3 per cent.
Managing director Steve Johnston said it was a credible result given the increased impact from weather events and lower investment returns.
He said the frequency and severity of weather impacts was likely to extend into the future.
The company was at least upbeat about its results in banking business where home lending grew at an annualised 5.3 per cent. That lifted the banking profit to $200 million, from $190 million last year.
Its home lending portfolio grew by $1.2 billion as Australia went through a real estate boom, particularly in its home market of Queensland.
Johnston said that “winning in home lending” remained a top priority and it was well on the way to achieving market share growth.
He said Suncorp was “broadly in line” with system growth towards the end of the half year.
The insurance division result was $114 million from $258 million last year.
Its New Zealand operations also performed badly with earnings of $81 million compared with $120 million last year.
Johnston said there were 19 separate weather events during the first half compared with seven last year. That led to 50,000 natural hazard claims at an estimated cost of $695 million, $205 million above the company’s provisioning for the period.
Hail damage grew by 37 per cent, wind damage was up 19 per cent and rain damage was up 17 per cent.
“This, and significantly lower investment income, has had a material impact on profits in out insurance businesses here in Australia and New Zealand,” Johnston said.
The increasing impact of weather events meant the bank increased its full year provisioning by almost $100 million to $1.075 billion.
“It’s clear that the frequency and severity of natural hazard events has been increasing over recent years with that trend likely to extend into the future,” Johnston said.
“This year will be critical for the group as we continue to deliver on our 2023 plan and strategic initiatives. We have momentum across our three businesses and focus is on continued execution to ensure we hit our targets.”
