Suncorp’s businesses fire on all cylinders as group profit surges 68pc to $1.15b

Suncorp’s businesses fire on all cylinders as group profit surges 68pc to $1.15b

Photo credit: Vlad Kutepov via Unsplash

A massive surge in investment returns, growth in home lending and a rebound in insurance earnings despite a raft of claims from the New Zealand floods have helped Suncorp Group (ASX: SUN) post a 68.6 per cent increase in net profit to $1.148 billion for FY23.

The Brisbane-based financial services group’s profit result benefitted the most from investment returns of $724 million, which is a marked turnaround from a $190 million loss in FY22.

The previous year was also impacted by a rain hazards that hit the insurance business in Australia and New Zealand.

While New Zealand saw the company exceed its natural hazard allowance by $97 million, the company’s insurance business benefitted from an increase in gross written premiums of 10.6 per cent in Australia and 14.3 per cent in New Zealand amid rising costs in reinsurance and natural hazard costs.

The Australian insurance division posted a $755 million profit after tax, compared to $174 million this time last year, while the insurance business in New Zealand delivered a $105 million profit, down from $155 million.

In the banking division, Suncorp benefited from a 9.1 per cent increase in home lending volumes to $54.8 billion that CEO Steve Johnston says ‘demonstrates the benefits of improved broker and customer experiences’.

“These outcomes are particularly pleasing given the challenging backdrop over the FY23 plan period, including the global pandemic, social and economic disruption and market volatility, supply chain inflationary challenges and unprecedented natural hazard events from three consecutive La Niña weather patterns,” Johnston says. 

“This is testament to the dedication of our people, strength and resilience of our business, and ability to create long-term shareholder value while meeting the evolving needs of our customers.

“Our underlying business is significantly more resilient today than it was when we laid out the three-year plan in 2020.”

Johnston has declared Suncorp has successfully completed its three-year plan unveiled in 2020 to improve the way the company delivers insurance and banking products to customers.

“We have maintained a strong focus on supporting our customers impacted by extreme weather events throughout the year, including the more than 32,000 impacted by the flooding and cyclone events on the North Island of New Zealand in early 2023, while also finalising more than 90 per cent of claims following the 2022 Australian east coast floods, and supporting those impacted in flooding across NSW, South Australia and Victoria,” Johnston says.   

“While Suncorp Group remains well protected through its comprehensive reinsurance program, over the last few years floods, fires and other natural disasters has resulted in a continued reassessment of risk by our reinsurance partners.

“This, combined with broader inflationary pressures across the economy, continues to impact the cost of reinsurance across the industry, and is a major contributor to the rising costs of everyone’s insurance premiums, particularly when household budgets are under pressure.”

Meanwhile, Suncorp has confirmed it will support its thwarted suitor Australia and New Zealand Banking Group (ASX: ANZ) as it goes through the Australian Competition Tribunal process to review the Australian Competition and Consumer Commission’s rejection of its $4.9 billion takeover bid of the Brisbane company’s banking arm.

The ACCC smacked down the bid after raising concerns that it would lessen competition in the home loan market nationally and the SME and agribusiness market in Queensland.

Suncorp has been keen to offload its banking division in order to focus on its insurance operations.

“Suncorp will support ANZ through the next step of the merger authorisation process as it relates to the sale of Suncorp Bank,” Johnston says.

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