Suncorp expects to spend an extra $50 million on responding to regulatory issues raised by the royal commission following its preliminary assessment of Kenneth Hayne’s final report.
Suncorp, which reported a 45 per cent decline in first-half profit following a jump in weather-related claims, said on Thursday that the estimated cost of what it calls ‘regulatory projects and system enhancements’ had increased from about $90 million to about $140 million.
Suncorp said it was still working through the matters raised by Commissioner Hayne, and that it would take time for it to properly assess their impact on the business.
‘The financial services industry today faces a great deal of change: this includes future policy settings, shifts in regulation, and material impacts on business distribution models,’ chief executive Michael Cameron said.
‘I acknowledge the importance of the royal commission process, and accept that Suncorp has, at times, fallen short of community expectations.’
Meanwhile, Suncorp cited the impact of natural hazards and volatile investment markets as profit from ongoing operations for the six months to December 31 declined 11 per cent.
Profit from continuing operations at Suncorp’s banking and wealth unit fell three per cent to $183 million, driven by a decline in net interest margin partly related to rivals’ aggressive mortgage pricing.
On a statutory basis, a $145 million writedown on the sale of Suncorp’s Australian life insurance business contributed to the 45 per cent fall from $452 million in the prior corresponding period.
At 1140 AEDT, Suncorp shares were down 50 cents, or 3.7 per cent, at $12.99.
That’s down from August’s post-GFC high of $15.96.
SUNCORP’S SIX MONTHS
* Net profit down 45pct to $250m
* Revenue up 4.3pct to $7.509b
* Fully franked interim dividend down 7.0 cents to 26 cents