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Suncorp Group Ltd FY19 Profit Result

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

Suncorp Group Ltd (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-group-share-price

 

What are the results from Suncorp’s Fy19 results? 

 On Wednesday 7 August 2019 Suncorp Group released its FY19 annual results. The main points of the results are as follows:

  1. Cash earnings for FY19 is A$1,115 million, up 1.5 per cent from A$1,098 million in FY18. This is slightly ahead of market expectations.
  2. NPAT for FY19 is A$175 million, down 83.5 per cent from $1,059 million in FY18. The fall is due to the loss of A$899 million on sale of its Australian Life Insurance and Wealth Business.
  3. Suncorp will pay a fully franked final dividend of 44 cps. This makes the total dividend for FY19 70 cps. This represents a total FY19 pay-out ratio of 81.2 per cent of cash earnings.
  4. Suncorp has proposed a capital return of 39 cps through a share consolidation. However, this is subject to shareholder approval.

Specific results on company operations:

  1. Insurance Australia – profit after tax A$588 million, down 13.7 per cent from FY18.
  2. Banking and wealth Australia – profit after tax A$364 million, down from 1.4 per cent FY18
  3. Bank and wealth New Zealand – profit after tax $245 million, up strongly 81.5 per cent from FY18.

What is the Outlook for Suncorp?

In FY20 Suncorp will face further regulatory costs involved with the banking royal commission. The cost of these regulatory projects will be around A$155 million in FY20 compared with A$60 million in FY19. Annual regulatory project costs are expected to peak in FY20 and decline to approximately A$100 million in FY21.

Suncorp announced that they remain committed to ensuring overall returns on capital exceed the cost of capital. However, management indicates that it will be “difficult to achieve an ROE target of 10 per cent in FY20”.

Market reaction to Suncorp’s FY19 results

On the opening of trading, Suncorp share price has increased from A$12.75 to A$13.24 (10.40am), which is a 4.3 per cent increase. This is a positive result in the share price movement as the ASX200 is flat. Suncorp is trading at a P/E ratio in the high teens and has an annual dividend yield of 5 per cent.

 


 

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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