Suncorp Group Lim ited Asia Debt Investor Creating value for - PowerPoint PPT Presentation

Suncorp Group Lim ited Asia Debt Investor “Creating value for Update April 20 16 our custom ers”

Suncorp Debt Investor Update Agenda 3 Suncorp Group 6 Group Financial Results Capital 12 17 Suncorp Bank Funding & Liquidity 27 31 Economy 39 Appendix – Mortgage Origination 44 Appendix – General Insurance Suncorp Group Lim ited 0 7 April 20 16 2

Suncorp Group Leading financial services brands in Australia and New Zealand Top 20 ASX listed company $15.4 billion market capitalisation at 07 April 2016 $94 billion in group assets 13,400 employees in Australia and New Zealand 9 million customers End to end ownership of brands Suncorp Group Lim ited 0 7 April 20 16 3

Group Capital Structure Shareholders Ordinary dividend – 60-80% of cash earnings Surplus returned to shareholders 100% of distributable earnings Maintain capital targets Surplus assets Suncorp Group GI Life Bank General Bank Life Insurance (Suncorp Metway Ltd) • Suncorp Metway Ltd is the entity that issues senior debt instruments on behalf of the Bank • AAI Limited and SIF Limited are the entities that typically issue sub-debt instruments on behalf of General Insurance • Suncorp Group Limited is typically the entity that issues Basel III compliant CPS and T2 sub-debt Suncorp Group Lim ited 0 7 April 20 16 4

Strategic Refinem ents Priorities Key Targets • Broadening of customer relationships 1. Maintain stability and momentum • Improving underlying NPAT 2. Elevate the customer • Sustainable ROE of at least 10%, which implies an underlying ITR of at least 3. Recalibrate costs 12% • Maintaining a dividend payout ratio of 60% to 80% of cash earnings • Returning excess capital Suncorp Group Lim ited 0 7 April 20 16 5

Group Financial Results “Creating value for our custom ers”

HY16 Results Overview ($m ) Natural hazards and investm ent incom e im pact on the GI NPAT HY16 HY15 % change General Insurance 297 419 (29) Bank 176 10 194 Suncorp Life 86 (39) 53 Business lines NPAT 544 681 (20) Other 12 (21) - Cash earnings 660 (16) 556 Acquisition amortisation (29) - (26) Reported NPAT 530 631 (16) External impacts: Pre-tax Post-tax Pre-tax Post-tax Investment returns 133 93 348 244 Natural hazards (362) (253) (470) (329) Reserve releases 137 96 214 150 Suncorp Life market adjustments - (5) - 34 Suncorp Group Lim ited 0 7 April 20 16 7

Suncorp Group Business Line NPAT ($m ) Diversification of earnings 681 544 597 397 52 619 41 58 69 105 61 176 194 144 156 470 419 564 162 297 64 -10 34 -54 -5 -19 -140 1H12 1H13 1H14 1H15 1H16 ■ ■ Life underlying NPAT Bank ■ ■ Life market adjustments Non-core Bank Suncorp Group Lim ited ■ General Insurance 0 7 April 20 16 8

General Insurance Claim s inflation and lower investm ent returns reducing profitability HY16 HY15 %change Key highlights GWP 4,417 4,357 1.4 • GWP up 1.4% Net earned premium 3,992 3,947 1.1 • Return to top-line growth Net incurred claims (2,822) (2,805) 0.6 across all portfolios Operating expenses (892) (902) (1.1) • Claims inflation challenges reducing Underwriting result 278 240 15.8 underlying margin Investment income – insurance funds 99 266 (62.8) • Underlying ITR 10.1% Insurance trading result 377 506 (25.5) • Lower investment returns Investment income –shareholder funds 34 82 (58.5) and MTM adjustments Managed schemes, JVs and funding costs 1 6 (83.3) • Reserve releases of Income tax (115) (175) (34.3) $137 million or 3.4% of NEP NPAT 297 419 (29.1) Suncorp Group Lim ited 0 7 April 20 16 9

Suncorp Bank Im proving credit quality driving im proved profit Key highlights HY16 HY15 %change Net interest income 566 553 2.4 • 5.1% lending growth • Ongoing improvement in Net non-interest income 49 64 (23.4) credit quality with non- Total income 615 617 (0.3) performing loans down 15.1% Total operating expenses (326) (322) 1.2 • NIM of 1.85% at the top end of the target range Profit before impairment losses 289 295 (2.0) • Cost to income reducing to Impairment losses on loans and (11) (43) (74.4) 53% advances • Good progress with key Bank profit before tax 278 252 10.3 projects, Ignite and Income tax (84) (76) 10.5 Advanced accreditation Suncorp Bank NPAT 194 176 10.2 Suncorp Group Lim ited 0 7 April 20 16 10

Suncorp Life Insurance Underlying profit increase of 11.5% Key highlights HY16 HY15 %change • In-force premium Planned profit margin release 22 17 29.4 growth of 5.2% Claims experience 3 6 (50.0) • Direct growth via GI Lapse experience 5 1 400.0 brands up 20% • Embedded Value of Other experience (6) (5) 20.0 $1,936 million up 4.9% Underlying investment income 16 15 6.7 • Value of One Year Sales up 28% to $23 Superannuation 18 18 - million 58 52 11.5 Suncorp Life underlying profit after tax • Third successive half of positive claims and Market adjustments (5) 34 n/a lapse experience 53 86 (38.4) Suncorp Life NPAT Suncorp Group Lim ited 0 7 April 20 16 11

Capital “Creating value for our custom ers”

Suncorp Capital Ratios Strong General Insurance and Bank capital ratios against peers Bank capital ratios * General Insurance capital ratios* CET1 AT1 Tier 2 CET1 AT1 Tier 2 14.15% 14.08% 13.97% 1.73x 1.70x 13.29% 13.26% 1.67x 12.72% 12.57% 10.24% 10.24% 1.25x 1.25x 9.45% 9.59% 9.50% 8.91% 1.14x 8.17% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 SUN Peer 1 Peer 2 Standardised Advanced basis * Ratios listed relate to Prescribed Capital Amount (PCA). * Peer bank ratios exclude impacts of post balance date capital raisings and transactions. Source: Latest published company reports. Source: Latest published company reports. Additional $243 m illion capital held at Suncorp Group level Suncorp Group Lim ited 0 7 April 20 16 13

Capital Instrum ents Outstanding at 31 Decem ber 20 15 31 DECEMBER 2015 Total Regulatory Semi-annual coupon rate / Optional Call / Balance Capital Issue Date GI Bank Life SGL margin above 90 day BBSW Exchange Date $M $M $M $M $M $M AAIL Subordinated Debt 330 bps Nov 2020 Nov 2015 225 - - - 225 225 AAIL Subordinated Debt 6.75% Oct 2016 Oct 2006 101 - - - 101 108 AAIL Subordinated Debt - June 2017 Oct 2007 265 - - - 265 220 SGL Subordinated Debt 285 bps Nov 2018 May 2013 - 670 100 - 770 770 SML FRCN 75 bps Perpetual Dec 1998 - 72 - - 72 72 Total subordinated debt 591 742 100 - 1,433 1,395 SGL CPS2 465 bps Dec 2017 Nov 2012 110 450 - - 560 560 SGL CPS3 340 bps June 2020 May 2014 400 - - - 400 400 Total Additional Tier 1 510 450 - - 960 960 Capital Total 1,101 1,192 100 - 2,393 2,355 Suncorp Group Lim ited 0 7 April 20 16 14

Capital Increased sophistication due to Risk Based Capital m odelling Group Diversification Surplus Potential* • Simplification and NOHC de-risking have supported capital returns Life • Balance sheet Group Group strong Bank Total Total • Risk Based Capital embedded • Enhancing decision making GI Regulatory minimum Operating target Surplus to operating target Suncorp Group Lim ited 0 7 April 20 16 15 *Chart not to scale

Group Risk Based Capital Capital volatility by key risk type GI Bank Suncorp Group 3% 8% 3% 21% 27% Insurance risk 3% 65% 73% 24% Operational risk Market risk Life Corporate 7% 62% Counterparty 11% 14% credit risk 36% 57% 86% Suncorp Group Lim ited 0 7 April 20 16 16

Suncorp Bank “Creating value for our custom ers”

Suncorp Bank Key ratios Lending growth (annualised) Net interest margin Cost to income ratio (interest-earning assets) 59.57% 6.49% 1.86% 1.85% 1.83% 1.78% 55.48% 4.06% 54.64% 3.58% 3.17% 53.01% 1.66% 52.19% 1.37% 1H14 2H14 1H15 2H15 1H16 1H14 2H14 1H15 2H15 1H16 1H14 2H14 1H15 2H15 1H16 Impairment losses to gross Return on Common Equity Deposit to loan ratio loans and advances Tier 1 66.10% (annualised) 13.11% 12.21% 12.13% 65.80% 65.70% 65.60% 0.32% 8.78% 7.59% 65.30% 0.18% 0.17% 0.06% 0.04% 1H14 2H14 1H15 2H15 1H16 1H14 2H14 1H15 2H15 1H16 1H14 2H14 1H15 2H15 1H16 Suncorp Group Lim ited 0 7 April 20 16 18

Suncorp Bank Total lending assets $52.9 billion Retail banking m arket share 208 Points of Presence Portfolio ■ Commercial (SME) 1% ■ Branch Housing ■ Agribusiness 8% Business centre ■ Consumer 10% 1.8% ATM 19 122 11 9 10.0% 81% 0.8% 1 524 151 Geography 1 4% 0.3% 7% 0.8% 1 40 10% 245 3 54% 25% 414 ■ NSW 9 0.5% ■ QLD ■ VIC ■ SA & Other 1 ■ WA 1 0.3% Suncorp Group Lim ited 545 Source: Roy Morgan 0 7 April 20 16 48 19

Suncorp Bank Hom e lending assets $43 billion Borrower type Geography Channel 8% 13% 30% 37% 51% 63% 70% 28% ■ ■ ■ ■ Investor New South Wales Victoria, South Intermediary ■ ■ Owner occupied and ACT Australia and Other Direct ■ ■ Queensland Western Australia Suncorp Group Lim ited 0 7 April 20 16 20