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SUN

Suncorp Group - No Growth In Banking, Wealth Management & General Insurance Businesses

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Suncorp Group Limited (ASX: SUN) is an Australian and New Zealand company that specialises in providing financial service to consumers (banking, insurance and superannuation). Suncorp has a market capitalisation of A$16.5 billion.

 

SUNCORP

 

What are the ley features of Suncorp’s HY20 results?

  • Total revenue for HY20 is A$7,054 million, down 6.1% compared with the corresponding period.
  • Group Net profit after tax (NPAT) for HY20 is A$642 million (including the A$293 million after tax profit on sale of Capital SMART and ACM parts), up 156.8% compared with the corresponding period.
  • Group NPAT for HY20 (from ongoing functions) is A$396 million, down 6.2% compared with the corresponding period.
  • Insurance (Australia) NPAT for HY20 is A$123 million, down 3.9% compared with the corresponding period.
  • Banking and Wealth NPAT for HY20 is A$171 million, down 6.6% compared with the corresponding period.
  • New Zealand NPAT for HY20 is A$108 million, down 10% compared with the corresponding period.

 

What are the drivers of this result?

Suncorp’s banking and wealth business remains sluggish. The low interests rate environment it’s not likely to change over the short-term, which could keep Suncorp’s net interest rate margin towards the lower end.

Suncorp’s management notes:

The low-yield environment is expected to continue for the foreseeable future. While further RBA policy easing would lead to mark-to-market gains in the near term, this would drive lower running yield income in future periods.

 

Suncorp’s insurance business in Australia and New Zealand has not performed well this half year. The group general Insurance underlying insurance trading ratio was 9.3%, impacted primarily by the increase in the natural hazard allowance, an increase in reinsurance costs, and the impact of lower yields and higher regulatory costs.

 

What is the market reaction to Suncorp HY20 results?

The market reaction to Suncorp is negative. Suncorp is down 2% and is currently trading at A$12.27. Suncorp has a forward P/E ratio in the mid-teens and an annual dividend ratio of 5.7%.


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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