Suncorp Group Limited Suncorp Group Limited Financial results for the full year ended 30 June 2015 1 Suncorp Group Limited 4 August 2015
Suncorp FY15 results presentation Introduction Conclusion 1 3 Patrick Snowball Patrick Snowball CFO report Q&A 2 4 Business NPAT | Group capital | Outlook Steve Johnston Suncorp Leadership Team 2 Suncorp Group Limited 4 August 2015
Introduction Patrick Snowball Suncorp Group CEO 3 Suncorp Group Limited 4 August 2015
FY15 result overview ($m) FY15 FY14 %∆ General Insurance NPAT 756 1,010 (25.1) Bank NPAT 354 228 55.3 Suncorp Life NPAT 125 92 35.9 Business lines NPAT 1,235 1,330 (7.1) Other (44) (26) 69.2 Cash earnings 1,191 1,304 (8.7) Life Insurance write-down - (496) n/a Other profit and acquisition amortisation (58) (78) (25.6) NPAT 1,133 730 55.2 4 Suncorp Group Limited 4 August 2015
Suncorp Group business line NPAT ($m) Profit diversification FY12 FY13 FY14 FY15 770 600 1,330 1,235 8 12 105 883 756 1010 493 113 146 120 84 354 289 289 228 (263) (632) General Insurance Bank Life underlying NPAT Non-core Bank (60) Life market adjustments 5 Suncorp Group Limited 4 August 2015
Dividend 38 cent final dividend and 12 cent special dividend Special dividend Final dividend 30 Interim dividend 12 20 38 40 15 30 20 20 20 38 35 25 20 15 15 FY10 FY11 FY12 FY13 FY14 FY15 6 Suncorp Group Limited 4 August 2015
Top line growth Growth in key target segments 1.9% -0.5% Short tail GWP* Long tail GWP* 2,041 6,722 6,690 2,003 6,391 1,911 1,810 5,842 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 3.9% Bank lending Life individual in-force policies 5.6% 51,918 49,956 900 852 47,463^ 785 722 43,356^ FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 7 *Excluding Fire Service Levies Suncorp Group Limited ^Core Bank lending only. 4 August 2015
Underlying and Reported ITR Building Blocks and Simplification continue to deliver Underlying ITR Reported ITR 18.6% 17.0% 14.8% 14.6% 14.0% 13.6% 13.4% 13.1% 14.7% 10.5% 11.2% 11.1% 13.9% 12.8% 11.1% 9.9% 10.9% 7.8% 3.8% 1.9% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 8 Suncorp Group Limited 4 August 2015
Group operating expenses Less than 1% annual increase Life Bank General Insurance 2,703 2,710 2,663 281 303 291 646 624 619 1783 1753 1776 FY13 FY14 FY15 9 Suncorp Group Limited 4 August 2015
Customer A strengthened customer franchise Strong outcomes across the Group Industry leading customer satisfaction • Industry leading satisfaction in key Industry average Jun 14 Jun 15 88 87 business lines 85 84 84 • 4 of the top 5 most advocated national 83 82 82 insurance brands 79 • Improved retention • Deeper relationships • Attracting new customers Motor Home Bank 10 Suncorp Group Limited 4 August 2015
Optimised Platform Unlocking the value of our 9 million customers Connected customers Simplified systems BANK LIFE GENERAL INSURANCE CORPORATE Underpinned by SUNCORP DATA DATA LAKE SERVICES Business Intelligence Sitting within a secure and scalable cloud CLOUD ENVIRONMENT Supported by a unique way of working SERVICE RELENTLESS INNOVATION AGILE/ LEAN PARTNERING CULTURE EXECUTION 11 Suncorp Group Limited 4 August 2015
CFO Report Steve Johnston Suncorp Group CFO Suncorp Group Limited 4 August 2015
Suncorp’s shareholder promise Simplified, de-risked financial services group Yield Growth • Efficiency-led profit growth • Dividend payout ratio of 60% to 80% and return of surplus capital • ‘Above system’ growth in key markets • Organic strategy, focused exclusively in Australia and New • Multi-brand, multi-channel Zealand approach leveraging the Group’s 9 million customers • De-risked and simplified business model 13 Suncorp Group Limited 4 August 2015
General Insurance % Δ $m FY15 General Insurance profit after tax 756 (25.1) Reserve releases of $427 million Underlying ITR of 14.7% exceeding commitment to ‘meet or beat’ 12% Natural hazards $473 million above allowance Reported ITR of 11.4% GWP up 0.1% with positive unit GI CET1 1.40x PCA growth in Personal lines 14 Suncorp Group Limited 4 August 2015
Gross Written Premium Passing on efficiency benefits Product FY15 ($m) %∆ Factors Customer unit growth offset by reduction in average written premiums Motor 2,770 (2.1) Home 2,449 0.4 Targeted reductions driving high retention rates and moderated unit losses Disciplined underwriting and focus on margin Commercial 2,326 (0.1) CTP 1,112 5.9 Good growth across Qld, NSW and ACT Other 74 (5.1) Total 8,731 0.1 Australia 7,526 (0.8) New Zealand 1,205 5.7 2.9% in NZD terms 15 Suncorp Group Limited 4 August 2015
Investment assets Low yield environment reducing underlying yield Insurance funds ($9+bn) Shareholder funds ($3+bn) • Investment income $399 million • Investment income $163 million • MTM gains of $176 million from decreases • Total returns on cash and interest bearing in risk-free rates securities of $115 million • MTM losses of $30 million from widening of • Total returns on Equities and Infrastructure credit spreads assets of $48 million • MTM losses of $56 million from decreases in • Annualised return of 5.2% break-even inflation • Underlying yield of 3.3% reflects low yield environment Total investment income of $562 million – annualised return 4.4% 16 Suncorp Group Limited 4 August 2015
General Insurance Event costs for FY15 Date Event Gross costs $m Net Costs $m Sep 2014 East Melbourne Storm 17 17 Oct 2014 Sydney Storm 22 22 Nov 2014 Brisbane Hailstorms 361 250 Dec 2014 East Coast Storms 34 34 Jan 2015 South Brisbane Hail 13 13 Feb 2015 Cyclone Marcia 149 149 Mar 2015 Narrabri Chinchilla Hail 33 33 Apr 2015 NSW Low Storms 250 135 Apr 2015 NSW ANZAC Day Hail 84 62 May 2015 QLD NSW Low Storms 55 52 May/Jun 2015 New Zealand events 28 16 Other smaller natural hazard claims 285 285 Total 1,331 1,068 Less: FY15 allowance for natural hazards 595 Natural hazards costs above allowance 473 17 Suncorp Group Limited 4 August 2015
New Zealand Earthquake Good progress being made Historical total claims development Risk of further increases diminishing $6bn • In total, $4.5 billion or 85% of total claims paid. 39k $5bn • Commercial claims: 92% contracted or settled 35k with only five outstanding claims exceeding $10 $4bn million $3bn 31k • Residential claims: 77% of reported incurred claims cost paid, significantly higher than $2bn industry 27k $1bn • New Adverse Development Cover provides $0bn 23k additional protection Jun-11 Mar-12 Dec-12 Sep-13 Jun-14 Mar-15 Total Claims (NZ$) February 2011 Claims (NZ$) Claims Lodged (RHS) 18 Suncorp Group Limited 4 August 2015
General Insurance reserve releases FY15 net reserve release of $427 million or 5.4% of NEP Management Absence of Building Blocks Simplification have reduced wage and delivered one reduced legal superimposed settlements and claims system costs inflation duration Optimised claims processes Reserve releases well above 1.5% of NEP 19 Suncorp Group Limited 4 August 2015
Underlying ITR and Operating Expense Ratio Building Blocks and Simplification continuing to deliver Underlying ITR Operating Expense Ratio 26.5% 14.7% 25.8% 14.3% 13.5% 12.1% 10.8% 24.0% 23.7% 9.0% 23.0% 22.6% FY10 FY11 FY12 FY13 FY14 FY15 20 Suncorp Group Limited 4 August 2015
Suncorp Bank % Δ $m FY15 Bank profit after tax 354 55.3 NIM improved to 1.85% Cost to income ratio down to 53.4% Bank CET1 increased to 9.15% Deposit to loan ratio 65.3% Home lending up 7.1% Non performing loans down 20.1% Business lending down 7.3% Gross impaired assets down 34.5% 21 Suncorp Group Limited 4 August 2015
Suncorp Bank lending portfolio Conservative approach to growth 69% of business lending exposures Lending assets $51.9 billion <$10m $50m-$100m 1% $25-$50m , Com/SME 9% 10% (down 9.3%) Housing $10-$25m , < $5m , 80% 21% Agri 52% (up 7.1%) 9% (down 4.8%) $5-$10m , 17% Consumer 1% (down 11.8%) 22 Suncorp Group Limited 4 August 2015
Funding and Liquidity Conservative balance sheet Long term funding profile ($m) Deposit to loan ratio 1,200 83% 1,000 71% 69% 67% 65% 61% 800 55% 600 400 200 0 SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 Aug 15 Jan 16 May 16 Mar 17 Nov 17 Aug 19 Source: Most recent company reports. Regional Bank data includes data for the Group, Major Bank Covered Senior Unsecured (Domestic) Senior Unsecured (Offshore) data includes Retail and Business Bank divisions only 23 Suncorp Group Limited 4 August 2015
Credit quality Impaired and non-performing loans both down significantly Gross impaired loans by segment Total non-performing loans by segment Retail Agribusiness Retail Agribusiness Commercial (SME) Commercial (SME) 258 154 206 125 99 95 193 226 67 160 199 62 208 182 162 409 392 125 362 332 33 28 31 26 Dec-13 Jun-14 Dec-14 Jun-15 Dec-13 Jun-14 Dec-14 Jun-15 24 Suncorp Group Limited 4 August 2015
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