Suncorp says COVID-19 impact has been ‘broadly neutral’ on business

Suncorp says the financial ramifications of the coronavirus pandemic have been “broadly neutral”, revealing a strong cash profit surge for the first half of the 2021 financial year.

Releasing its interim results on Tuesday, the major insurer and banking group posted cash earnings of $509m for the six months ending December 31, a 39.5 per cent jump on the previous corresponding period.

The group flagged its bumper result was due to higher earnings across its insurance, banking and wealth businesses in both Australia and New Zealand.

Suncorp in its results said the impact of the pandemic had been limited, as the increased provisions from the financial downturn were largely offset by a lower number of insurance claims being made.

Its net profit after tax for the period was down 23.7 per cent to $490m, and its net interest margin rose 8 basis points to 2.04 per cent.

Major storm and hail events over the last six months of 2020 caused the insurer’s natural hazard bill to blow out beyond its allowance by $86m.

The group said hail events in October across NSW and Queensland were primary drivers for the $561m damage bill.

Suncorp chief executive Steve Johnston said the insurer was entering the second half of the financial year in a strong position.

“Suncorp enters the second half of FY21 in good shape, with momentum starting to build across our businesses and our balance sheet remaining very strong,” Mr Johnston said.

“The group’s three-year plan addresses customers’ growing preference for digital and evolves how we work and serve our customers as technology changes.”

The group announced shareholders would receive an interim dividend of 26 cents per share, with the board committing to maintain a dividend payout ratio of 60 to 80 per cent of cash earnings.

Suncorp’s banking arm recorded a 1.6 per cent contraction in the size of its lending book but noted new applications lodged for residential lending were up 30 per cent compared with a year ago.

Gross written premiums in its home and motor insurance business grew 5.2 per cent over the six months, while workers compensation premiums increased 13.7 per cent.

The group also said it would maintain strong pressure on federal and state governments to support natural hazard mitigation strategies that would assist in combating the rising cost of insurance.

“Suncorp will keep advocating for an urgent co-ordinated response from all levels of government to make our communities more resilient to natural disasters and ensure that insurance is affordable and accessible,” Mr Johnston said.

“We are calling on the federal government to invest in well-chosen infrastructure projects that can protect communities in the long term and provide a kickstart to jobs in the short term.”

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