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REPORTING SEASON: Suncorp Group (SUN)

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Figure 1: Suncorp Group 12 month chart

 

QLD based financial services company, Suncorp (SUN) reported a worse than expected 4.5% slip in half year profit to $548m.

The result was supported by an 18% rise in insurance premiums received and a continued focus on costs.

Profit was held back by higher natural hazard claims, which were $49m above SUN’s $270m first half allowance.

In a previous company announcement SUN said it received around 400 NSW bushfire claims in Oct, costing between $60m-$70m.

Of SUN’s three principal units (General Insurance (GI), Banking and Life Insurance), GI contributed close to 80% of earnings; while the unit’s earnings slipped by 16%. A $105m NPAT was recorded in its Banking division ($101m rise from 2012).

This year is one of transition for the bank as it exits its Non-Core bank and is likely to be hit by ongoing costs in the short term.

Suncorp Life posted NPAT of $22m and continues to be hurt by poor lapse rates (people either reducing or cancelling policies to save money).

SUN’s fully franked interim dividend rose by 40% to $0.35/share and will be paid out to eligible investors on 1st April.

Looking ahead, SUN is targeting 7-9% group annual growth through to 2015. It is maintaining its 60-80% dividend payout ratio.

SUN fell following the result and has underperformed the broader market since Jan.

 

You can see all of CommSec’s reporting season analysis by clicking here.

Steven Daghlian, Market Analyst,