Slide 1: Financial results for the half year ended 31 December 2016
Financial results for the half year SUNCORP GROUP LIMITED For personal use only ABN 66 145 290 124 ended 31 December 2016 DATA PACK Create a better today RELEASE DATE 9 FEBRUARY 2017
Slide 2: Results
Results For personal use only ̶ Group Net Profit After Tax $537 million ̶ Group top line growth of 4.3% ̶ Expenses remain flat ̶ Dividend of 33 cents per share, up 10% ̶ Cash ROE of 8.5% HY17 2
Slide 3: Highlights
Highlights For personal use only 1. Embedded the Marketplace strategy to deliver greater value to customers 2. Momentum in top line growth of 4.3% reflects discipline in pricing and risk 3. Stabilisation of working claims is driving improved UITR 4. Recalibration of costs providing shareholder benef
Slide 4: Embedded the Marketplace strategy to deliver greater value to customers
Embedded the 1. Marketplace strategy For personal use only to deliver greater value to customers ̶ Parramatta Concept Store ̶ Health Insurance ̶ Annuities ̶ AAMI Smartplates app ̶ Marketplace apps ̶ Brand refresh ̶ Workbench HY17 4
Slide 5: Momentum in top line growth of 4.3%
Momentum in top line Short-Tail GWP ($m) Long-Tail GWP ($m) 2. growth of 4.3% For personal use only reflects discipline in 3.3% 3,585 19% 1,125 pricing and risk 3,472 3,442 3,413 944 945 938 ̶ Premium increases Dec-13 Dec-14 Dec-15 Dec-16 Dec-13 Dec-14 Dec-15 Dec-16 in short-tail ̶ Significant long-
Slide 6: Stabilisation of working claims is driving improved UITR
Home active claim volumes (‘000) Home average claim life (days) 60 Stabilisation of working 125 50 3. claims is driving For personal use only 110 40 improved UITR 95 30 80 20 10 65 0 50 ̶ Lower active claims Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Working Natural Hazard
Slide 7: Recalibration of costs
1600 Chart Title Recalibration of costs 4. providing shareholder 1400 $1,360m $1,347m $1,360m For personal use only benefits and reinvestment capacity 1200 353 Banking and 368 Wealth 1000 ̶ Flat expenses 186 203 ̶ Restructure benefits on 800 New Zealand track ̶ Business improvement 600 program Insur
Slide 8: More resilient Suncorp for a sustainable future
5. More resilient Suncorp For personal use only for a sustainable future David Carter Anthony Day Gary Dransfield Chief Executive Officer Chief Executive Officer Chief Executive Officer Banking and Wealth Insurance Customer Platforms ̶ Dividend and capital ̶ Reinsurance ̶ Realignment of Investment P
Slide 9: Result overview
Result overview HY17 HY16 Change For personal use only ($m) ($m) (%) Insurance (Australia) 369 259 42.5 Banking & Wealth 208 207 0.5 New Zealand 36 78 (53.8) ̶ Business line NPAT up 12.7% Business Line NPAT 613 544 12.7 ̶ Cash earnings up 5.0% Other (29) 12 n.a ̶ Dividend up 10.0% Cash earnings 584
Slide 10: Insurance (Australia)
Insurance (Australia) For personal use only NPAT HY17 HY16 Change ($m) ($m) (%) Gross written premium 4,031 3,796 6.2 ̶ NPAT up 42.5% to $369 million Net earned premium 3,552 3,480 2.1 ̶ GWP growth of 6.2% Net incurred claims (2,374) (2,546) (6.8) ̶ Reported ITR of 13.8% ̶ Natural hazards $319 milli
Slide 11: Gross Written Premiums
Gross Written For personal use only Premiums HY17 HY16 Change ($m) ($m) (%) ̶ Growth in all classes Motor 1,293 1,273 1.6 ̶ Home & Motor low single digit price increases Home 1,123 1,097 2.4 ̶ CTP growth from SA entry and Commercial 787 784 0.4 NSW price increases Compulsory third party 722 567 27.3
Slide 12: Claims expense
Claims expense For personal use only (1) 51 (20) (40) ̶ Home & Motor claims costs down $1 million ̶ Lower natural hazard claims 38 ̶ SA CTP led to increased claims (9) ̶ Lower CTP working claims (17) ̶ Increased prior year releases and reduced risk margins 2,517 2,518 ̶ $232 million of claims >$5 mi
Slide 13: Investments
Investments For personal use only Insurance funds $9.2 billion Corporate ̶ Investment income of $35 million (1H16: $93 million) ILBs ̶ $163 million MTM loss from an increase in risk-free rates Semis ̶ $22 million MTM gain from widening credit spreads Cash ̶ $69 million MTM gain from outperformance o
Slide 14: Life Insurance
Life Insurance For personal use only NPAT HY17 HY16 Change ($m) ($m) (%) ̶ Stable underlying profits Planned profit margin release 9 7 28.6 ̶ Lapse and claims assumptions Experience (2) 9 n/a remain appropriate Other and investments 18 10 80.0 ̶ Optimisation program to deliver improved returns Under
Slide 15: Banking & Wealth
Banking & Wealth HY17 HY16 Change ($m) ($m) (%) For personal use only NPAT Net interest income 558 566 (1.4) Net non-interest income 39 49 (20.4) Operating expenses (307) (326) (5.8) ̶ Strong capital & balance sheet Profit before impairment losses 290 289 0.3 ̶ Disciplined cost management Impairment
Slide 16: Credit quality
416 Gross impaired loans by segment 206 262 Credit quality For personal use only ($m) 67 185 176 42 59 182 162 109 96 28 33 25 30 ̶ Continued focus on credit quality and risk management 1H14 1H15 1H16 1H17 ■ Retail ■ Agribusiness ■ Commercial (SME) ̶ Impairment losses <0.01% of GLA ̶ Limited exposur
Slide 17: New Zealand
New Zealand HY17 HY16 Change (NZ$m) (NZ$m) (%) For personal use only NPAT Gross written premium 714 681 4.8 Net earned premium 586 562 4.3 ̶ UITR above group target of 12% Net incurred claims (372) (303) 22.8 ̶ Kaikoura earthquake and Operating expenses (196) (183) 7.1 aftershock impact NZ$23 millio
Slide 18: Capital position
Capital position For personal use only 26 (80) 56 537 (19) (35) (383) ̶ CET1 excess increased to $448 million ̶ NZ Autosure disposal $56 million 448 ̶ Positive Life adjustment 346 ̶ Seasonal GI excess tech provision capital impact ̶ Subdued Bank growth Excess HY17 Autosure Life policy GI excess Bank
Slide 19: Medium term targets
Medium term targets For personal use only ̶ Broadening of customer relationships ̶ Cost base flat in FY17 and FY18 ̶ Improving underlying NPAT ̶ Sustainable ROE of at least 10%, which implies an underlying ITR of at least 12% ̶ Maintaining a dividend payout ratio of 60% to 80% of cash earnings and r
Slide 20: Priorities for next six months
Priorities for next six months For personal use only 1. Stability and momentum ̶ Further UITR improvement ̶ Continued top line growth 2. Elevate the Customer ̶ More Marketplace capabilities ̶ Customer value focus 3. Recalibrate Costs ̶ Flat costs ̶ Focus on reinvestment HY17 20
Slide 21: Suncorp on track to become the first Marketplace
Suncorp is on track to become the first Marketplace that fully meets customers’ financial needs, providing access to all of our brands, products and services, For personal use only through any channel or medium. HY17 21
Slide 22: Highlights
Highlights For personal use only 1. Embedded the Marketplace strategy to deliver greater value to customers 2. Momentum in top line growth of 4.3% reflects discipline in pricing and risk 3. Stabilisation of working claims is driving improved UITR 4. Recalibration of costs providing shareholder benef
Slide 23: HY17 Data Pack
HY17 Data Pack For personal use only Create a better today HY17 23
Slide 24: Suncorp Group
Suncorp Group Top 20 ASX listed company For personal use only Leading financial services brands $17 billion market capitalisation in Australia and New Zealand at 31 December 2016 $97 billion in group assets 13,500 employees in Australia and New Zealand Approximately 9 million customers End-to-end ow
Slide 25: Suncorp's shareholder promise
Suncorp’s For personal use only shareholder promise Yield Growth Simplified, de-risked financial services group ̶ Dividend payout ratio of ̶ ‘Above system’ growth in key markets 60% to 80% ̶ Strategy focused ̶ Multi-brand, multi- exclusively in Australia channel approach and New Zealand providing gr
Slide 26: Strategy
Strategy For personal use only HY17 DATA PACK 26
Slide 27: Operating model
Operating model For personal use only HY17 DATA PACK 27 27
Slide 28: Our strategy to grow Connected Customers
Our strategy to grow Connected Customers For personal use only Customer Marketplace Experience Brands Deep insights Curate solutions Seamless experience Reposition master brand Priority segments Omni-channel Simplified journeys Distinct and complementary New propositions Customer navigation Personal
Slide 29: Elevate the Customer
Elevate the Customer For personal use only Creating a better today by growing customer Customers connections Our strengths: want: 9 million customers To make informed decisions Trusted brands Simple and easy Simplified systems Trust and control Sustainable organic growth HY17 DATA PACK 29
Slide 30: Connected Customers
Connected Customers For personal use only increasing frequency of interactions Mobility Home Connected 2 or more needs met Meeting more needs Customers = 96% retention Money Self HY17 DATA PACK 30
Slide 31: Connecting customers creates value
Connecting customers For personal use only creates value Meeting more needs Significant growth opportunity >60% 4x 4x + NPAT/ NPAT/ Customer Customer % of customers >30% <5% <1% 1 2 3 4 Needs met HY17 DATA PACK 31
Slide 32: Progress on Marketplace initiatives
Progress on Marketplace initiatives For personal use only Initiative 1H17 2H17 Connected customers SME: Start a Business | Suncorp Start Company website launched Home: Generation Rent | Shared equity units SME: Grow a Business | 9 Spokes Suncorp Business Toolbox analytics Mobility: Learn to Drive |
Slide 33: Diversification of earnings
Chart Title Profit after tax from For personal use only business lines ($m) 613 Diversification of earnings 544 36 78 208 207 369 259 1H16 1H17 Insurance Banking & Wealth New Zealand HY17 DATA PACK 33
Slide 34: Operating expenses
Chart Title Operating expenses For personal use only ($m) 1,360 1,360 Flat cost base in FY17 and FY18 186 203 368 353 806 804 1H16 1H17 Insurance Banking & Wealth New Zealand HY17 DATA PACK 34
Slide 35: Dividends
Dividends (cps) 105 For personal use only 88 30 75 12 ̶ 33 cent interim dividend, 68 up 10% 20 55 ̶ cash earnings payout 40 38 ratio of 72% 15 38 35 35 30 20 20 20 35 38 33 25 30 15 15 20 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 ■ Interim ■ Final ■ Special HY17 DATA PACK 35
Slide 36: Capital position as at December 2016
As at 31 December 2016 Capital position SGL, Total For personal use only ($m) GI Bank Life Corp Services Total as at 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)
Slide 37: CET1 capital base
CET1 capital base For personal use only ($m) 56 26 (80) 537 (19) (35) (383) ̶ CET1 excess increased to $448 million ̶ NZ Autosure disposal $56 million 448 ̶ Positive Life adjustment 346 ̶ Seasonal GI excess tech provision capital impact ̶ Subdued Bank growth Excess HY17 Autosure Life policy GI exces
Slide 38: Group Risk Based Capital
General Insurance Bank Group Risk Based 3% 3% For personal use only Capital (RBC) 27% 21% Group 65% 8% 73% 11% 3% Life Insurance Corporate 7% 14% 24% 36% 62% 57% 86% ■ Insurance risk ■ Market risk ■ Operational risk ■ Counterparty credit risk HY17 DATA PACK 38
Slide 39: General Insurance capital
General Insurance capital For personal use only Total capital ($m) Prescribed Capital Amount Capital ratios vs peers (PCA) ($m) 1.78x 4,133 1.69x 1.72x 1.78x PCA 775 510 2,324 295 CET1 Target (0.95 – 1.15x 801 PCA) 250 1.23x 1.21x 2,848 568 1.06x 893 (483) SUN Peer 1 Peer 2 ■ Common Equity Tier 1 ■
Slide 40: Bank capital
Bank capital For personal use only Total capital ($m) Risk weighted assets ($m) Capital ratios vs peers 14.14% 14.35% 4,270 13.48% 13.31% 13.11% 31,675 13.48% RWA 12.29% 12.21% 907 3,391 98 450 CET1 Target 9.20% RWA (8.5% – 9.0% RWA) 28,186 2,913 9.20% 9.00% 9.77% 9.61% 9.56% 9.48% 8.09% SUN Regiona
Slide 41: Life Insurance capital
Life Insurance capital For personal use only Total capital ($m) Prescribed Capital Amount (PCA) ($m) 625 2.42x PCA 100 259 525 19 51 37 112 49 1H17 (9) 1H17 ■ Common Equity Tier 1 ■ Insurance risk ■ Combined stress ■ Tier 2 ■ Asset risk scenario adjustment ■ Operational risk ■ Other regulatory ■ Agg
Slide 42: History of major weather events
50 year history of major weather events For personal use only Christchurch earthquakes, 6,000 $m Australia New Zealand Long run average Brisbane floods, Cyclone Yasi, Melbourne hailstorm 5,000 Hunter Valley Cyclone Marcia and NSW storm low storms 4,000 Brisbane flood, Cyclone Tracy Newcastle Kaikour
Slide 43: Reinsurance program
Reinsurance program For personal use only 6.9b 6.1b 2.5b 500m Original cover Reinstatement Reinstatement Reinstatement 250m 200m Dropdown aggregate Dropdown aggregate 50m Retention * Natural hazard protection * Relates to Australian events. Following the Kaikoura earthquake, the Group’s maximum net
Slide 44: Reinsurance program – dropdown aggregate
Reinsurance program – dropdown aggregate For personal use only 250m 50m xs 200m xs 50m 200m 100m xs 100m xs 150m xs 200m 150m xs 300m 150m 100m xs 100m xs 50m xs 200m 50m xs 300m 50m Natural hazard protection Retention * 300m xs 460m ($232m eroded as at 31 December 2016) * Relates to Australian even
Slide 45: General Insurance underlying and reported ITR
General Insurance 18.6% For personal use only ITR 17.0% Underlying and reported ITR 14.7% 14.8% 14.6% 14.0% 13.4% 13.9% 12.5% 13.6% 12.8% 12% 11.0% 10.1% 11.0% 10.3% 9.9% 9.4% 7.8% 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 Reported ITR Underlying ITR HY17 DATA PACK 45
Slide 46: Shareholder metrics: EPS
EPS (basic) EPS (diluted) Shareholder metrics For personal use only $0.49 $0.48 $0.43 $0.41 $0.42 $0.42 $0.41 $0.41 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 Numerator ($m) Earnings (EPS basic) 548 631 530 537 Interest expense on CPS (net of tax) 14 22 21 20 Earnings (EPS diluted)
Slide 47: Shareholder metrics: Cash EPS
Cash EPS (basic) Cash EPS (diluted) Shareholder metrics For personal use only $0.46 $0.52 $0.46 $0.45 $0.51 $0.45 $0.43 $0.42 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 Numerator ($m) Earnings (EPS basic) 587 660 556 584 Interest expense on CPS (net of tax) 14 22 21 20 Earnings (EPS
Slide 48: Shareholder metrics: Cash ROE
Cash ROE Shareholder metrics For personal use only 9.8% 8.4% 8.3% 8.5% 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 Cash ROE Earnings ($m) 587 660 556 584 Average shareholders’ equity ($m) 13,822 13,361 13,261 13,625 HY17 DATA PACK 48
Slide 49: Shareholder overview
Shareholder overview For personal use only SUN shareholders by type SUN shareholders by geography 1% 1% 2% 4% 25% 6% 40% 11% 75% 35% ■ Domestic Institutions ■ Australia (Institutions & Retail) Source: Orient Capital, 16 December 2016 ■ Retail Investors ■ United States ■ Japan ■ International Institu
Slide 50: Insurance
Insurance For personal use only Create a better today HY17 50
Slide 51: Insurance NPAT
HY17 HY16 Change Insurance NPAT ($m) ($m) (%) For personal use only General Insurance Gross written premium 4,031 3,796 6.2 ̶ NPAT up 42.5% to $369 million Net earned premium 3,552 3,480 2.1 Net incurred claims (2,374) (2,546) (6.8) ̶ GWP growth of 6.2% Operating expenses (722) (724) (0.3) ̶ Reporte
Slide 52: General Insurance Gross Written Premium
General Insurance For personal use only Gross Written Premium Total GWP of $4.0 billion Portfolio by product Portfolio by geography 3% 2% 3% 6% 18% 7% 26% 32% 21% 19% 35% 28% ■ Motor ■ CTP ■ Queensland ■ Western Australia ■ Home ■ Workers ■ New South Wales ■ South Australia ■ Commercial compensation
Slide 53: General Insurance key ratios
Loss ratio Total operating expenses ratio General Insurance For personal use only key ratios 74.8% 73.2% 20.8% 20.3% 20.1% 66.8% 1H16 2H16 1H17 1H16 2H16 1H17 Acquisition expenses ratio Other underwriting expenses ratio 13.0% 13.2% 13.0% 7.8% 6.9% 7.3% 1H16 2H16 1H17 1H16 2H16 1H17 HY17 INSURANCE (A
Slide 54: General Insurance reserve releases
Chart Title General Insurance For personal use only reserve releases $208m 6.1% Conservative assumptions and proactive long-tail $140m $149m claims management 4.0% 4.2% Long-term assumption 1.5% of NEP 1H16 2H16 1H17 HY17 INSURANCE (AUSTRALIA) 54
Slide 55: Natural hazard events
Net costs Date Event Natural hazard ($m) For personal use only events Jul 2016 Southern winds 9 Sep 2016 South Australian and Victorian flooding 7 Sep 2016 Southern wind and rain 13 Oct 2016 Victorian wind storm 17 Oct 2016 Young and Parkes hail 6 Nov 2016 South Australian and Victorian storms 57 No
Slide 56: General Insurance investment asset allocation
General Insurance For personal use only investment asset allocation Insurance funds Fixed income credit quality Shareholders’ funds $9.2 billion 2% $2.8 billion 4% 5% 8% 9% 5% 23% 13% 27% 43% 65% 74% 22% ■ Cash and short-term ■ Semi-Government ■ AAA ■A ■ Cash and short-term ■ Equities deposits bonds
Slide 57: Personal lines market share
Personal lines NT For personal use only market share 17% 13% QLD WA 33% 35% 16% 14% SA 14% 14% NSW 29% 25% VIC Motor Home 34% 30% Source: Roy Morgan, November 2016 TAS 38% 36% HY17 INSURANCE (AUSTRALIA) 57
Slide 58: Personal lines market share
Total market Personal lines $17.6 billion For personal use only market share 27% 27% 4% Home 2% 4% Motor $8.3 billion 7% 29% $9.3 billion 25% 25% 28% 31% 4% 3% 2% 2% 7% 2% 7% 26% 6% 32% Source: Roy Morgan, November 2016 ■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Peer 5 ■ Others HY17 INSURANCE (
Slide 59: Commercial lines market share
Commercial lines For personal use only market share Total market $12.9 billion 12% 30% 18% 7% 20% 13% ■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Others Source: Latest Suncorp estimates HY17 INSURANCE (AUSTRALIA) 59
Slide 60: Personal Injury market share
Personal Injury For personal use only market share CTP * Workers compensation $3.9 billion $1.0 billion 1% 5% 13% 24% 20% 33% 23% 5% 23% 17% 18% 18% Source: Latest Suncorp estimates * CTP includes QLD, NSW & ACT schemes only ■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Others HY17 INSURANCE (AUST
Slide 61: CTP market share
QLD* 2% NSW** CTP market share $1.2 billion 8% $2.7 billion For personal use only 18% 25% 16% 49% 27% 32% 23% ACT* SA*** $170 million $458 million 30% 42% 58% Source: State scheme regulators 70% * as at December 2016 ** as at September 2016 *** as at June 2016 ■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■
Slide 62: Life Insurance NPAT
Life Insurance For personal use only NPAT HY17 HY16 Change ($m) ($m) (%) Planned profit margin release 9 7 28.6 Experience (2) 9 n/a Other and investments 18 10 80.0 ̶ Stable underlying profits Underlying profit after tax 25 26 (3.8) ̶ Lapse and claims assumptions remain appropriate Market adjustmen
Slide 63: Life Insurance in-force premium
Life Insurance For personal use only in-force premium Total in-force premium of $801 million Premium by product Premium by geography Premium by channel 7% 9% w 10% 8% 12% 35% 27% 47% 18% 19% 82% 26% ■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia ■ Direct via General Insurance bran
Slide 64: Life Insurance new business
Life Insurance For personal use only new business Total new business of $33 million New business by product New business by geography New business by channel 8% 7% 5% w 12% 23% 29% 23% 55% 25% 14% 72% 27% ■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia ■ Direct via General Insuranc
Slide 65: Life Insurance key metrics
Planned margins Claims and lapse experience Life Insurance For personal use only key metrics ($m) 8 9 9 10 7 (2) 1H16 2H16 1H17 1H16 2H16 1H17 In-force premium Operating expenses 813 83 801 82 82 798 1H16 2H16 1H17 1H16 2H16 1H17 HY17 INSURANCE (AUSTRALIA) 65
Slide 66: Life Insurance (Australia)
Life Insurance (Australia) For personal use only Life Insurance meets a core customer need Key Initiatives Outcomes Optimise efficiencies in claims Improved customer experience Health Travel and expense management Insurance Life Insurance Insurance Commercial Professional Super Indemnity Streamline
Slide 67: Life Insurance market share
Life Insurance 14% 14% 13% 14% For personal use only market share 11% 11% 9% In-force 8% $9.5 billion 6% Individual risk Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 SUN Peer 7 Others 19% 14% 14% 13% New business 11% 10% $1.0 billion 7% 7% 5% Source: NMG Consulting, September 2016 In-force portfolio in
Slide 68: Life Insurance market share by channel
35% 34% Life Insurance For personal use only market share Direct $1.0 billion Share by distribution 8% 6% channel 4% 4% 3% 3% 3% Peer 1 Peer 2 SUN Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Others 33% Bank $2.4 billion 19% 18% 18% 4% 2% 2% 3% 1% Source: NMG Consulting, September 2016 Peer 1 Peer 2 Peer 3 Pe
Slide 69: Life Insurance market share by channel
IFA 21% Life Insurance $6.1 billion For personal use only market share 14% 13% 11% 10% 10% 8% 7% Share by distribution 6% channel Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer 5 Peer 6 Peer 7 Others Group 26% 24% $6.5 billion 13% 9% 8% 8% 7% 4% Source: NMG Consulting, September 2016 1% Peer 1 Peer 2 Peer 3 P
Slide 70: Banking & Wealth
For personal use only Banking & Wealth Create a better today HY17 70
Slide 71: Banking & Wealth NPAT
HY17 HY16 Change Banking & Wealth ($m) ($m) (%) For personal use only 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
Slide 72: Total lending portfolio
Total lending portfolio For personal use only Lending assets by portfolio Portfolio by geography Total assets of $54.2 billion <1% 8% 4% 7% 10% 10% 53% 26% 81% ■ Housing ■ Agribusiness ■ Queensland ■ Western Australia ■ Commercial (SME) ■ Consumer ■ New South Wales ■ South Australia ■ Victoria and o
Slide 73: Bank key ratios
Bank For personal use only 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% 52.2% 53.0% 51.4% (0.34%) 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 1H14 1H15 1H16 1H17 Impairment losses to gross loans
Slide 74: Home lending portfolio
Home lending portfolio For personal use only 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 Austral
Slide 75: Commercial (SME) portfolio
Commercial (SME) portfolio For personal use only Total assets of $5.5 billion Portfolio by industry Portfolio by geography Portfolio by exposure size 4% 10% 12% 13% 7% 35% 14% 18% 54% 19% 74% 15% 9% 16% ■ Property investment ■ Retail ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million ■ Hospitali
Slide 76: Agribusiness portfolio
Agribusiness portfolio For personal use only Total assets of $4.4 billion Portfolio by industry Portfolio by geography Portfolio by exposure size 10% 6% 15% 3% 3% 29% 25% 49% 8% 29% 61% 11% 20% 31% ■ Beef ■ Sugar ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million ■ Grain & mixed farming ■ Fruit
Slide 77: Credit quality
416 Gross impaired loans by segment 206 262 Credit quality For personal use only ($m) 67 185 176 42 59 182 162 109 96 28 33 25 30 ̶ Continued focus on credit quality and risk management 1H14 1H15 1H16 1H17 ■ Retail ■ Agribusiness ■ Commercial (SME) ̶ Impairment losses <0.01% of GLA ̶ Limited exposur
Slide 78: Home lending loan to value ratio
9% 5% 17% 12% Home lending 22% 22% Loan to value ratio assets by LVR 22% 24% For personal use only (LVR) 69% 73% Total home lending assets of 61% 64% $44.1 billion 1H14 1H15 1H16 1H17 ■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+ 5% 2% 3% Home lending new 12% 10% 18% 26% business by LVR 8% 83% 88% 79%
Slide 79: Credit quality relativity to peers
Impairment losses 0.35% Credit quality to gross loans For personal use only 0.20% 0.16% 0.14% 0.16% Relativity to peers 0.11% <0.01% SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 Net impaired 0.39% loans to gross 0.35% 0.32% loans 0.28% 0.26% 0.27% 0.16% Source: Latest peer financial rep
Slide 80: Collective provision
Chart Title Collective provision For personal use only 129 ($m) 119 12 102 97 27 28 117 97 92 74 1H14 1H15 1H16 1H17 ■ Modelled collective provision ■ Management overlays HY17 BANKING & WEALTH 80
Slide 81: Portfolio credit quality
Portfolio credit quality For personal use only Commercial (SME) portfolio Agribusiness portfolio 5,964 6,000 5,593 5,462 15.00% 5,203 4,484 4,534 12.00% 4,383 5,000 5,000 13.00% 4,258 10.00% 11.00% 4,000 4.06% 4,000 3.58% 3.45% 9.00% 8.00% 3,000 2.56% 2.19% 3,000 7.00% 1.20% 1.08% 6.00% 0.81% 5.00%
Slide 82: Long-term funding profile
For personal use only profile ($m) Long-term funding HY17 1,000 0 100 200 300 400 500 600 700 800 900 Feb 17 Jul 17 Dec 17 May 18 BANKING & WEALTH Oct 18 Covered bond Mar 19 Aug 19 Jan 20 Jun 20 Nov 20 Apr 21 Sep 21 Feb 22 Jul 22 Domestic senior unsecured Dec 22 May 23 Oct 23 Mar 24 Aug 24 Jan 25 Ju
Slide 83: Liquid assets and Liquidity Coverage Ratio
Liquid assets and Liquidity Coverage Ratio For personal use only Components of liquid assets ($b) Components of LCR* ($b) 13.0 12.3 LCR 130% 11.5 LCR 130% 2.03 4.0 1.90 4.3 4.20 LCR 100% 4.4 4.20 LCR 100% 5.4 3.4 3.6 6.35 6.76 4.05 4.59 3.6 3.5 4.6 1H15 1H16 1H17 2H16 1H17 ■ Cash, Government, Semi-G
Slide 84: Bank market share
Bank For personal use only market share NT 0.0% Retail banking market share and Suncorp footprint 14 QLD 8.8% 106 11 516 WA 0.5% 2 1 123 SA 0.3% 1 1 125 NSW & ACT 0.8% 36 2 330 VIC 0.4% 8 1 440 Source: Roy Morgan, December 2016 Branch Business centre ATM TAS 0.4% 1 39 HY17 BANKING & WEALTH 84
Slide 85: Bank market share: mortgage and business lending
26% Mortgage lending 25% Bank For personal use only market share 16% 15% 11% 3% 2% 2% ANZ CBA NAB WBC SUN BEN BOQ Others Business lending 22% 22% 20% 17% 15% 1% 2% 1% Source: APRA, December 2016 ANZ CBA NAB WBC SUN BEN BOQ Others HY17 BANKING & WEALTH 85
Slide 86: Funds under management and administration
Funds under management and For personal use only administration ($m) 135 ( 97 ) 7,452 7,490 7,355 7,355 Balance Net flows Investment income Balance Jun-16 and other Dec-16 HY17 BANKING & WEALTH 86
Slide 87: New Zealand
For personal use only New Zealand Create a better today HY17 87
Slide 88: New Zealand NPAT
HY17 HY16 Change New Zealand (NZ$m) (NZ$m) (%) For personal use only NPAT General Insurance Gross written premium 714 681 4.8 Net earned premium 586 562 4.3 Net incurred claims (372) (303) 22.8 ̶ UITR above group target of 12% Operating expenses (196) (183) 7.1 Investment income - insurance funds 4
Slide 89: General Insurance Gross Written Premium
General Insurance For personal use only Gross Written Premium Portfolio by product Portfolio by channel Total GWP of NZ$714 million 3% 19% 23% 32% 42% 32% 49% ■ Motor ■ Commercial ■ Direct ■ Strategic partners & ■ Home ■ Other ■ Brokers financial intermediaries HY17 NEW ZEALAND 89 89
Slide 90: General Insurance key ratios
Loss ratio Total operating expenses ratio General Insurance For personal use only key ratios 63.5% 53.9% 53.6% 33.4% 32.6% 32.3% 1H16 2H16 1H17 1H16 2H16 1H17 Acquisition expenses ratio Other underwriting expenses ratio 23.3% 23.7% 22.9% 9.3% 9.4% 9.7% 1H16 2H16 1H17 1H16 2H16 1H17 HY17 NEW ZEALAND
Slide 91: Natural hazard events
Natural hazard For personal use only events Net costs Date Event (NZ$m) Kaikoura earthquake Nov 16 20 (net of internal reinsurance) Nov 16 North Island rain 1 Nov 16 South Island earthquake aftershock 3 Other natural hazards attritional claims 9 Total natural hazards 33 Less: allowance for natural h
Slide 92: General Insurance investment asset allocation
General Insurance For personal use only investment asset allocation Insurance funds Fixed income credit quality Shareholders’ funds NZ$490 million NZ$320 million 1% 3% 7% 11% 15% 30% 24% 28% 58% 66% 57% ■ Cash and short-term ■ Local government ■ AAA ■A ■ Cash and short-term deposits deposits bonds ■
Slide 93: General Insurance market share
General Insurance For personal use only market share Total NZ$5.2 billion 17% 20% 5% 5% 7% 46% Source: Insurance Council New Zealand, September 2016 ■ Vero ■ AAI ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Others (Suncorp NZ) (Suncorp NZ) HY17 NEW ZEALAND 93
Slide 94: Life Insurance NPAT
Life Insurance For personal use only NPAT HY17 HY16 Change (NZ$m) (NZ$m) (%) Planned profit margin 15 16 (6.3) Experience 5 (4) n/a ̶ Underlying profit up 41.2% ̶ Favourable experience Other and investments 4 5 (20.0) ̶ Strong in-force growth with new Underlying profit after tax 24 17 41.2 business
Slide 95: Life Insurance in-force premium
Life Insurance For personal use only in-force premium Premium by product Premium by channel Total in-force premium 3% 3% of NZ$240 million 16% 16% 47% 18% 81% 16% ■ Term & TPD ■ Other ■ Direct ■ Group & other ■ Trauma ■ Group ■ Advised ■ Income protection HY17 NEW ZEALAND 95 95
Slide 96: Life Insurance new business
Life Insurance For personal use only new business New business by product New business by channel Total new business of NZ$15 million 8% 8% 17% 17% 57% 18% 75% ■ Term & TPD ■ Income protection ■ Direct ■ Group & other ■ Trauma ■ Group ■ Advised HY17 NEW ZEALAND 96 96
Slide 97: Life Insurance key metrics
Planned margins Claims and lapse experience Life Insurance For personal use only key metrics (NZ$m) 16 16 15 5 3 (4) 1H16 2H16 1H17 1H16 2H16 1H17 In-force premium Operating expenses 240 229 20 18 18 222 1H16 2H16 1H17 1H16 2H16 1H17 HY17 NEW ZEALAND 97
Slide 98: Life Insurance market share
28% In-force Life Insurance NZ$2.1 billion 20% For personal use only market share 14% 11% 10% 10% Individual risk 7% Peer 1 Peer 2 SUN Peer 3 Peer 4 Peer 5 Others 27% New business 21% NZ$60 million 14% 12% 12% 10% 4% Source: Melville Jessup Weaver, September 2016 Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer
Slide 99: Economy
For personal use only Economy HY17 99
Slide 100: Economic fundamentals
Economic Australia Queensland Data For personal use only Fundamentals Population growth 1.4% 1.4% Jun-16, annual AUS: Sep-16 annual, trend Economic growth 2.2% 2.0% QLD: 2015-16 annual Unemployment rate 5.6% 5.9% Nov-16, trend ̶ Supportive fundamentals for Inflation 1.3% 1.5% Sep-16, annual both Aus
Slide 101: Growth Outlook
Growth Outlook For personal use only GDP outlook State prospects 4.0 Annual % Change 3.5 3.0 ̶ Australia is forecast to record 2.5 3.1% continued moderate economic 2.0 3.9% 1.9% growth, with domestic income 1.5 2.0% and demand recovering 1.0 2.6% ACT: 2.2% ̶ Queensland is projected to 0.5 2.8% lead
Slide 102: Monetary policy remains highly supportive
8 Monetary policy Inflation and interest rates 7 % Source: ABS, RBA, Bloomberg remains highly For personal use only 6 supportive 5 4 Inflation 3 Target Range 2 1 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 ̶ Cash rate reached a record Std Var Mortgage Rate RBA Cash Rate Headline Inflation Rate low in
Slide 103: Housing market buoyant yet risks contained
Housing market House prices 900 Median house price ($ '000) buoyant yet risks 800 For personal use only contained 700 600 500 400 Source: Bloomberg, ABS, RP Data 300 ̶ Housing being supported by Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16 demographics, low rates and a Sydney Melbourne Brisbane sound e
Slide 104: Labour market making gradual progress
Labour market Labour market 75 Monthly change ('000) 6.4 making gradual For personal use only 50 6.1 progress 25 5.8 0 5.5 -25 5.2 Source: Bloomberg -50 4.9 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 ̶ Despite faltering job growth, Employment Unemployment Rate (%) unemployment has eased ̶ Encouraging
Slide 105: Favourable export outlook
170 Commodity prices $US price Favourable export 150 For personal use only Iron Ore outlook 130 110 Thermal Coal 90 WTI Oil 70 50 Source: Bloomberg 30 ̶ Commodity prices have lifted, Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 assisted by improved Chinese industrial activity Service exports 4.1 ̶ Tour
Slide 106: Glossary
For personal use only Glossary Create a better today HY17
Slide 107: Glossary
Acquisition expense Acquisition expenses expressed as a percentage of net earned premium ratio Glossary For personal use only ADI Authorised Deposit-taking Institution The value of annuity obligations are determined by discounting future obligations into today’s dollars using risk-free rates. The va
Slide 108: Glossary
Common Equity Common Equity Tier 1 Capital comprises accounting equity plus adjustments for Tier 1 (CET1) intangible assets and regulatory reserves Glossary For personal use only Common Equity Common Equity Tier 1 divided by the Prescribed Capital Amount for Life and General Tier 1 Ratio Insurance,
Slide 109: Glossary
The equity reserve for credit losses represents the difference between the collective Equity reserve for provision for impairment and the estimate of credit losses across the credit cycle Glossary credit losses For personal use only based on guidance provided by APRA The expense levied on premiums f
Slide 110: Glossary
Life risk in-force Total annualised statistical premium for all business in-force at the date annual premiums (including new business written during the reporting period) Glossary For personal use only Life risk new business annual Total annualised statistical premium for policies issued during the
Slide 111: Glossary
Payout ratio – net Ordinary shares (net of treasury shares) at the end of the period multiplied by the profit after tax ordinary dividend per share for the period divided by profit after tax Glossary For personal use only Profit after tax from The net profit after tax for the Insurance, Banking & We
Slide 112: Disclaimer
Disclaimer For personal use only This report contains general information which is current as at 9 February 2017. It is information given in summary 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 Suncorp or
Slide 113: Registered office and investor relations contacts
For personal use only TO SEE MORE, GO ONLINE suncorpgroup.com.au REGISTERED OFFICE Level 28, 266 George Street Brisbane, Qld Australia 4000 +61 7 3362 1222 INVESTOR RELATIONS CONTACTS Mark Ley Ph: 02 8121 1221 Andrew Dempster Ph: 02 8121 9206 Susan Troy Ph: 07 3135 3729 Carly Jefferson Ph: 02 8121 1