Slide 1: Financial results for the half-year ended 31 December 2014
Suncorp Group Limited For personal use only Suncorp Group Limited Financial results for the half-year ended 31 December 2014 1 Suncorp Group Limited 11 February 2015
Slide 2: Agenda
Suncorp HY15 results presentation Agenda For personal use only Results and Outlook 1 operational highlights 3 Patrick Snowball Patrick Snowball CFO report Q&A 2 Business lines | Group capital 4 Steve Johnston Suncorp Leadership Team 2 Suncorp Group Limited 11 February 2015
Slide 3: Introduction
For personal use only Introduction Patrick Snowball Suncorp Group CEO 3 Suncorp Group Limited 11 February 2015
Slide 4: HY15 result overview ($m)
HY15 result overview ($m) For personal use only HY15 HY14 %∆ General Insurance NPAT 419 470 (11) Bank NPAT 176 105 68 Suncorp Life NPAT 86 22 291 Business lines NPAT 681 597 14 Other (21) (10) 110 Cash earnings 660 587 12 Other profit and acquisition amortisation (29) (39) (26) NPAT 631 548 15 4 Sun
Slide 5: Top line growth
Top line growth Reduced target of ‘low single digits’ ($m) For personal use only Short tail GWP* Long tail GWP* -0.6% 0.6% 3,364 3,344 938 944 2,890 815 HY12 HY13 HY14 HY15 HY12 HY13 HY14 HY15 Bank lending Suncorp Life individual in-force business 2.3% 50,300 8.6% 49,184 892 821 693 40,774 HY12 HY13
Slide 6: Suncorp Group NPAT ($m)
Suncorp Group NPAT ($m) Diversification of earnings For personal use only Business line NPAT 373 619 (19) 597 237 681 27 34 General Insurance 41 331 564 Bank 540 419 319 470 61 59 52 Life underlying 77 41 43 133 144 145 105 123 176 NPAT (209) (140) (19) Non-core Bank/ (10) (492) (496) Life write-off
Slide 7: Dividend
Dividend 38 cent interim dividend, up 8.6% For personal use only Special dividend Final dividend Interim dividend 30 20 40 15 30 20 20 20 8.6% 35 38 20 25 15 15 FY10 FY11 FY12 FY13 FY14 HY15 7 Suncorp Group Limited 11 February 2015
Slide 8: Group operating expenses
Group operating expenses Sub-inflation increase For personal use only General Insurance Bank Life 1,332 1,331 1,354 1,349 1,366 1,272 147 144 150 153 142 134 303 316 305 319 322 306 832 882 871 899 877 902 2H12 1H13 2H13 1H14 2H14 1H15 8 Suncorp Group Limited 11 February 2015
Slide 9: CFO Report
For personal use only CFO Report Steve Johnston Suncorp Group CFO 9 Suncorp Group Limited 11 February 2015
Slide 10: Suncorp's shareholder promise
Suncorp’s shareholder promise Simplified, de-risked financial services group For personal use only Yield Growth • Dividend payout ratio of 60% to • Efficiency-led profit growth 80% and return of surplus capital • FY15 top-line growth of ‘low • Organic strategy, focused single digits’ exclusively in
Slide 11: General Insurance
General Insurance For personal use only $m HY15 %Δ General Insurance profit after tax 419 (11) Underlying ITR of 14.8% exceeding Reserve releases of $214 million commitment to ‘meet or beat’ 12% Natural hazards $172 million Reported ITR of 12.8% above allowance GWP down 0.3% (ex FSL) GI CET1 1.44x P
Slide 12: Gross Written Premium
Gross Written Premium Passing on efficiency benefits For personal use only Product HY15 ($m) %∆ Factors Motor 1,385 (1.9) Lower average written premiums and 1.1% reduction in units Targeted premium reductions driving high retention rates and Home 1,227 0.3 moderated unit losses Commercial 1,108 (1.2
Slide 13: Investment assets
Investment assets Low yield environment reducing underlying yield For personal use only Insurance funds ($9+bn) Shareholder funds ($3+bn) • Investment income $266 million • Investment income $82 million • MTM gains of $207 million from decreases • MTM gains of $40 million from decreases in in risk-f
Slide 14: Long-tail claims
Long-tail claims Ongoing systems improvement delivering For personal use only 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 ab
Slide 15: Underlying and Reported ITR
Underlying and Reported ITR Building Blocks and Simplification delivering For personal use only Underlying ITR 18.6% Reported ITR 17.0% 14.7% 14.8% 13.6% 14.0% 13.1% 13.4% 12% 11.2% 11.1% 12.8% 13.9% 10.9% 11.1% 10.5% 7.8% 3.8% 1.9% 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 15 Suncorp Group Limit
Slide 16: Suncorp Bank
Suncorp Bank For personal use only $m HY15 %Δ Bank profit after tax 176 68 NIM improved to 1.86% Cost to income ratio down to 52.2% Bank CET1 increased to 8.82% Deposit to loan ratio 66.1% Home lending up 3.9% Non performing loans down 23.8% Agribusiness portfolio up 1.1% Gross impaired assets down
Slide 17: Suncorp Bank lending portfolio
Suncorp Bank lending portfolio Conservative approach to growth For personal use only LendingSummary assets $50.3 billion 68% of business lending exposures <$10m $50-$100m 1% $25- $50m Com/SME 11% 11% (down 6.2%) Housing < $5m $10-$25m 79% 51% Agri 9% 20% (up 3.9%) (up 1.1%) $5-$10m Consumer 17% 1% (
Slide 18: Funding and Liquidity
Funding and Liquidity Conservative balance sheet For personal use only Deposit to loan ratio Long term funding profile ($m) 84% Covered Senior Unsecured (Domestic) Senior Unsecured (Offshore) 70% 72% 66% 66% 1,200 60% 56% 1,000 800 600 400 200 0 Oct-17 Mar-15 Mar-17 Apr-15 Apr-16 Apr-17 Apr-19 Jun-1
Slide 19: Credit quality
Credit quality Reduced non performing loans For personal use only Gross impaired loans by segment Past due home loans (% gross home loans) Retail Agribusiness Commercial (SME) Total Past due Impaired Past due non-hardship 1.03% 0.98% 0.92% 0.93% 206 0.79% 0.81% 99 0.74% 0.65% 67 0.51% 0.62% 182 208
Slide 20: Suncorp Bank
Suncorp Bank Contributing sustainable earnings to the Group For personal use only Australia’s leading Key targets regional bank • NIM 1.75% to 1.85% • Basel II Advanced Accreditation • Retail deposit to loan ratio 60% to 70% • New banking platform – Project Ignite • Drive the cost to income ratio •
Slide 21: Suncorp Life
Suncorp Life For personal use only $m HY15 %Δ Underlying profit after tax 52 27 Market adjustment after tax 34 n/a Life profit after tax 86 291 Claims experience $6 million favourable Risk in-force annual premiums up 8.6% Lapse experience $1 million favourable Super up 51.9% driven by WealthSmart St
Slide 22: Suncorp Life
Suncorp Life Growth in Life risk and superannuation ($m) For personal use only Life Risk in-force Individual in-force New business annual premium by channel IFA Direct NZ 69 178 191 957 168 65 145 149 138 911 59 515 529 552 881 1H14 2H14 1H15 1H14 2H14 1H15 1H14 2H14 1H15 22 Suncorp Group Limited 11
Slide 23: HY15 CET1 movements ($m)
HY15 CET1 movements ($m) Reduction due to increased Bank CET1 target and GI timing issue For personal use only 156 631 80 40 70 489 831 627 Excess CET1 NPAT Bank GI Life Growth and other Interim Excess CET1 (ex div) (Change in CET1 (Seasonal timing (Lower yields BAU impacts dividend (ex div) 30-Jun-
Slide 24: Suncorp Capital Ratios
Suncorp Capital Ratios Strong General Insurance and Bank capital ratios For personal use only Bank CET1 ratios General Insurance CET1 ratios* 8.97% 8.82% 8.80% 8.60% 8.63% 1.44x 8.50% 7.83% 1.19x 1.14x SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 SUN Insurer 1 Insurer 2 *Ratios listed r
Slide 25: Group Risk Based Capital
Group Risk Based Capital Capital volatility by key risk type For personal use only Insurance Risk Suncorp Group GI Bank Counterparty 3% 9% Credit Risk 3% 20% 26% Market Risk 73% 65% Operational Risk 23% 4% Life Corporate 9% 13% 65% 18% 29% 53% 87% 25 Suncorp Group Limited 11 February 2015
Slide 26: Conclusion
For personal use only Conclusion Patrick Snowball Suncorp Group CEO 26 Suncorp Group Limited 11 February 2015
Slide 27: Suncorp Group Key commitments
Suncorp Group Key commitments For personal use only 1 Group growth of ‘low single digits’ in the 2015 financial year 4 Continue to return surplus capital 2 ‘Meet or beat’ an underlying ITR of 12% through the cycle 5 Simplification benefits of $225 million in the 2015 financial year 3 60% to 80% divi
Slide 28: Suncorp's waves of growth
Suncorp’s waves of growth Life Bank For personal use only Top line growth Vero NZ Commercial Insurance Personal Insurance Building blocks Plan for growth Building Blocks in place Balance Sheet strength Business simplified Stabilise the business Cost Customer Capital Culture 28 Suncorp Group Limited
Slide 29: Suncorp's Strategic Assets
Suncorp’s Strategic Assets Our focus For personal use only • Deliver scale cost benefits on third party procured goods / services Cost • Share scale on infrastructure (real estate, enterprise technology) and non-unique business services • Enhancing the value of 9 million customers connections by dee
Slide 30: Culture
Culture Suncorp is now THE place to work For personal use only 93% of Suncorp people participated in 2012 2013 2014 the latest survey 73 72 72 • Engagement and Enablement are at or above Global High Performance Norms 70 • Our Leader Index at 82 is 12 points above 66 the Global High Performance Norm
Slide 31: Customer
Customer Strong and growing customer advocacy For personal use only SUN brands HY14 SUN brands HY15 Industry average Very strong metrics across the Group 17 17 • 3 of the top 4 most advocated national 16 insurance brands 14 • Improving customer retention 11 • Brisbane Hailstorm claims satisfaction 9
Slide 32: Q&A
For personal use only Q&A Financial results for the half-year ended 31 December 2014 32 Suncorp Group Limited 11 February 2015
Slide 33: Supplementary Slides
For personal use only Supplementary Slides Financial results for the half-year ended 31 December 2014 33 Suncorp Group Limited 11 February 2015
Slide 34: FY15 Reinsurance program
FY15 Reinsurance program 6.1b For personal use only 5.8b 2.5b 500m 250m Original cover Reinstatement Reinstatement Reinstatement 200m Attributable to the Dropdown aggregate Dropdown aggregate 50m Brisbane Hailstorm Retention 34 Suncorp Group Limited 11 February 2015
Slide 35: FY15 Reinsurance program
FY15 Reinsurance program Drop-down aggregate program For personal use only 250m 50m xs 200m xs 50m 100m xs 100m xs 150m xs 200m 150m xs 300m 200m Attributable to the 150m Brisbane Hailstorm 100m xs 100m xs 50m xs 200m 50m xs 300m 50m Retention 35 Suncorp Group Limited 11 February 2015
Slide 36: Natural hazards since 1967
Natural hazards since 1967 Christchurch earthquakes, Brisbane floods, Suncorp long-term catastrophic loss experience Cyclone Yasi, Events greater than $100m, gross of all reinsurance Melbourne Hailstorm For personal use only 5,000 NZ AUS Long run average 4,500 4,000 Hunter Valley storm 3,500 Brisban
Slide 37: Simplification benefits
Simplification benefits $225 million in FY15, $265 million in FY16 use only 300 Original net impact Revised Revised net impact Simplification 250 Benefits 200 150 For personal $m 100 Original Simplification 50 benefits 0 Original one-off (50) project costs FY16 FY15 (100) Revised FY14 (150) Project
Slide 38: Housing loans
Housing loans Improved LVR mix For personal use only Conservative approach to mortgage lending Mortgage disbursements by LVR • Steady improvement in home <80% 80% - 90% 90% + lending portfolio quality 4% 13% 7% 25% 21% 11% • LVR mix has shifted notably toward 15% 13% 10% sub-80% lending 8% • 84% of
Slide 39: Project Ignite & Basel II Advanced Accreditation
Project Ignite & Basel II Advanced Accreditation Optimising Suncorp Bank For personal use only Project Ignite Basel II Advanced Accreditation Replacement of Bank legacy systems with a Credit risk models validated and in use simplified, integrated and modern platform will: Significant resources inves
Slide 40: Suncorp capital at December 2014
Suncorp capital at 31 December 2014 Excess capital position remains very strong For personal use only General NOHC and Suncorp $m Bank Life Insurance other entities Group total CET1 3,040 2,754 412 488 6,694 CET1 target 2,323 2,732 334 189 5,578 Excess (pre-div) 717 22 78 299 1,116 Dividend (489) Ex
Slide 41: Important disclaimer
Important disclaimer This report contains general information which is current as at 11 February 2015. It is information given in summary For personal use only form and does not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service offered by
Slide 42: Investor Relations App
For personal use only Investor Relations App In 2014, Suncorp launched an Investor Relations application for tablets to enable easy access to a suite of investor materials. For all the latest news, updates and share price movements download the Suncorp Group investor relations app now. Search “Sunco