Financial results for the Half Year 31 December 2016 Debt Investor Update HY17 1
Suncorp Group Top 20 ASX listed company $17 billion market capitalisation Leading financial services brands at 31 December 2016 in Australia and New Zealand $97 billion in group assets 13,500 employees in Australia and New Zealand Approximately 9 million customers End-to-end ownership of brands HY17 2
̶ ̶ ̶ ̶ ̶ ̶ ̶ ̶ Suncorp’s shareholder promise Growth Yield Simplified, de-risked ‘Above system’ growth financial services group Dividend payout ratio of in key markets 60% to 80% Multi-brand, multi- Strategy focused channel approach exclusively in Australia providing greater value and New Zealand to the Group’s De-risked and simplified 9 million customers business model Efficiency-led profit Return surplus capital to growth shareholders Incremental market opportunities such as South Australia CTP HY17 3 3
Strategy HY17 4
Suncorp Group Create a better today HY17 5
Chart Title Profit after tax from business lines ($m) 613 Diversification of earnings 36 544 78 208 207 369 259 1H16 1H17 Insurance Banking & Wealth New Zealand HY17 SUNCORP GROUP 6
As at 31 December 2016 Capital position SGL, Total as Corp at ($m) GI Bank Life Total Services 30 Jun & Consol 2016 CET1 2,848 2,913 525 121 6,407 6,338 CET1 Target 2,440 2,772 358 6 5,576 5,552 Excess to CET1 Target (pre div) 408 141 167 115 831 786 Group Dividend (383) (440) Group Excess to CET1 Target (ex div) 448 346 Common Equity Tier 1 Ratio 1.23x 9.20% 2.03x Total Capital 4,133 4,270 625 121 9,149 8,860 Total Capital Target 3,486 3,880 424 (11) 7,779 7,743 Excess to Target (pre div) 647 390 201 132 1,370 1,117 Group Dividend (383) (440) Group Excess to Target (ex div) 987 677 Total Capital Ratio 1.78x 13.48% 2.42x HY17 SUNCORP GROUP 7
Bank capital Risk weighted assets ($m) Capital ratios vs peers Total capital ($m) 4,270 31,675 1.96% 2.53% 13.48% RWA 3,391 2.01% 1.95% 907 2.86% 98 1.69% 1.81% 2.42% 2.21% 1.75% 1.69% 450 1.42% 1.60% 2.31% CET1 Target 9.20% RWA (8.5% – 9.0% RWA) 28,186 2,913 9.77% 9.61% 9.48% 9.20% 9.56% 9.00% 8.09% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 Standardised Advanced ■ Common Equity Tier 1 ■ Tier 2 ■ Credit risk ■ Operational risk ■ Common Equity Tier 1 ■ Tier 2 ■ Additional Tier 1 ■ Market risk ■ Additional Tier 1 Source: Latest published company reports HY17 SUNCORP GROUP 8 8
Banking & Wealth Create a better today HY17 9
̶ ̶ ̶ ̶ ̶ HY17 HY16 Change Banking & Wealth ($m) ($m) (%) NPAT Bank Net interest income 558 566 (1.4) Net non-interest income 39 49 (20.4) Operating expenses (307) (326) (5.8) Strong capital & balance sheet Profit before impairment losses on loans Disciplined cost management 290 289 0.3 and advances Improved credit quality Impairment losses on loans and advances (1) (11) (90.9) Resilient funding profile Income tax (86) (84) 2.4 Progress on strategic projects Bank profit after tax 203 194 4.6 Wealth profit after tax 5 13 (61.5) Banking & Wealth NPAT 208 207 0.5 HY17 BANKING & WEALTH 10
Total lending portfolio Lending assets by portfolio Portfolio by geography Total assets of $54.2 billion 1% 7% 4% 8% 10% 10% 53% 26% 81% ■ Housing ■ Agribusiness ■ Queensland ■ Western Australia ■ Commercial (SME) ■ Consumer ■ New South Wales ■ South Australia ■ Victoria and other HY17 BANKING & WEALTH 11 11
Bank key ratios Lending growth (annualised) Net interest margin Cost to income ratio (interest-earning assets) 59.6% 4.06% 3.58% 1.86% 1.85% 1.78% 1.37% 1.66% 53.0% 52.2% 51.4% (0.34%) 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 Return on Common Equity Tier 1 Deposit to loan ratio Impairment losses to gross loans 67.2% and advances (annualised) 66.6% 13.5% 13.1% 0.18% 0.17% 12.1% 66.1% 65.7% 7.6% 0.04% <0.01% 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 HY17 BANKING & WEALTH 12
Home lending portfolio Total assets of $44.1 billion Portfolio by borrower type Portfolio by geography Portfolio by channel 4% 8% 30% 35% 11% 50% 65% 70% 27% ■ Owner occupied ■ Investor ■ Queensland ■ Western Australia ■ Direct ■ Intermediaries ■ New South Wales ■ South Australia ■ Victoria and other HY17 BANKING & WEALTH 13
Commercial (SME) portfolio Total assets of $5.5 billion Portfolio by geography Portfolio by exposure size Portfolio by industry 4% 10% 13% 12% 7% 35% 14% 18% 54% 19% 74% 15% 16% 9% ■ Property investment ■ Retail ■ Queensland ■ Other ■ $5 - $10 million ■ $10 - $25 million ■ <$5 million ■ Hospitality & accommodation ■ Other ■ New South Wales ■ $25 - $50 million ■ Construction & development ■ Services (including professional services) ■ Manufacturing & mining HY17 BANKING & WEALTH 14
Agribusiness portfolio Total assets of $4.4 billion Portfolio by industry Portfolio by geography Portfolio by exposure size 6% 10% 15% 3% 29% 3% 25% 49% 29% 8% 61% 11% 20% 31% ■ Beef ■ Sugar ■ Queensland ■ Other ■ $5 - $10 million ■ $10 - $25 million ■ <$5 million ■ Grain & mixed farming ■ Fruit ■ New South Wales ■ $25 - $50 million ■ Sheep & mixed livestock ■ Other ■ Cotton HY17 BANKING & WEALTH 15
̶ ̶ ̶ ̶ 416 Gross impaired 206 loans by segment 262 Credit quality ($m) 185 67 176 59 42 182 162 109 96 33 30 28 25 Continued focus on credit quality 1H14 1H15 1H16 1H17 and risk management ■ Retail ■ Agribusiness ■ Commercial (SME) Impairment losses <0.01% of GLA Limited exposure to resources 0.98% and inner-city apartments Home lending 0.74% credit quality 0.69% 0.67% Improving agribusiness conditions (% gross home loans) 0.07% 0.02% 1H14 1H15 1H16 1H17 Past due loans Impaired assets Loss rate HY17 BANKING & WEALTH 16
5% 9% 12% 17% 22% Home lending 22% Loan to value ratio 24% 22% assets by LVR (LVR) 73% 69% 64% Total home lending assets of 61% $44.1 billion 1H14 1H15 1H16 1H17 ■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+ 2% 3% 5% 10% Home lending new 12% 18% 26% business by LVR 8% 88% 83% 79% 66% 1H14 1H15 1H16 1H17 ■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+ HY17 BANKING & WEALTH 17
Impairment losses 0.35% to gross loans Credit quality 0.20% 0.14% 0.16% 0.16% Relativity to peers 0.11% <0.01% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 0.39% Net impaired 0.35% 0.32% loans to gross 0.28% loans 0.26% 0.27% 0.16% Source: Latest peer financial reports SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 HY17 BANKING & WEALTH 18 18
Portfolio credit quality Commercial (SME) portfolio Agribusiness portfolio 5,964 5,593 5,462 6,000 5,203 15.00% 4,624 4,534 4,484 4,400 4,383 4,360 12.00% 4,311 5,000 4,258 13.00% 4,039 5,000 10.00% 11.00% 4,000 4.50% 4.06% 4,000 3.45% 3.58% 3.22% 9.00% 8.00% 2.83% 2.68% 2.56% 2.46% 3,000 2.19% 1.20% 1.08% 3,000 7.00% 0.81% 6.00% 5.00% 2,000 2,000 4.00% 3.00% 1,000 1,000 2.00% 1.00% - -1.00% - 0.00% 1H14 1H15 1H16 1H17 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Commercial portfolio ($m) Agribusiness portfolio ($m) Gross impaired assets/Total portfolio (%) Gross impaired assets/Total portfolio (%) HY17 BANKING & WEALTH 19
Bank market share NT 0.0% Retail banking market share QLD 8.8% 14 and Suncorp footprint 106 11 516 WA 0.5% 2 1 123 SA 0.3% 1 1 125 NSW & ACT 0.8% 36 2 330 VIC 0.4% 8 1 440 Source: Roy Morgan, December 2016 TAS 0.4% Branch Business centre ATM 1 39 HY17 BANKING & WEALTH 20
Funding & Liquidity Create a better today HY17
Suncorp Bank Long Term Funding profile ($m) 1,500. $m Covered Bond Domestic Senior Unsecured Offshore Senior Unsecured (A$ equiv) 1,250. 1,000. 750. 10yr Covered Bond 500. 250. . Jan 17 Feb 17 Mar 17 Apr 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Sep 18 Oct 18 Apr 19 May 19 Aug 19 Nov 19 Apr 20 Oct 20 Apr 21 Jun 21 Jun 23 Jun 25 Aug 26 Nov 26 HY17 FUNDING & LIQUIDITY 22
Issue Date Amount Tenor Ratings & Funding strength Covered Bond Dec 2016 A$100m Tap 10yr Fixed • Strong Bank issuer credit rating of Aug 2016 A$350m 10yr Fixed A+/A1/A+ creates genuine competitive Jun 2016 A$500m 5yr FRN advantage to other regional banks Oct 2014 A$950m 5yr FRN/5yr Fixed • Ratings re-affirmed by S&P Oct 2016, unlike Nov 2012 A$600m 5yr Fixed many peers. Senior Unsecured Private Placements • Suncorp Bank has historically issued in A$1,250m various (current outstandings) multiple currencies with all funds swapped May 2016 US$500m 3yr Fixed into A$ Apr 2016 A$750m 5yr FRN/Fixed • Modest term funding requirements for Oct 2015 A$750m 5yr FRN/Fixed FY17/18 Apr 2015 US$600m 5yr Fixed Sep 2014 GBP250m 3yr FRN Ratings Agency Short Term Long Term Apr 2014 A$750m 5yr FRN Standard & Poors A-1 A+ (stable) RMBS Fitch F1 A+ (stable) Mar 2015 A$1.25bn 4yrs Weighted Average May 2013 A$1.15bn 4yrs Weighted Average Moodys P-1 A1 (stable) HY17 FUNDING & LIQUIDITY 23
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