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