Suncorp Group Limited · ASX:SUN
Suncorp — UBS Investment Conference 2006
26 slides from Suncorp's conference presentation, May 16, 2006
Slide 1: Suncorp-Metway Ltd ASX covering letter
Suncorp-Metway Ltd ABN 66 010 831 722 Corporate Secretary's Office Suncorp Centre 36 Wickham Terrace BRISBANE QLD 4000 GPO Box 1453, Brisbane QLD 4001 Direct Line: (07) 3835 5214 Direct Fax: (07) 3836 1190 16 May 2006 Company Announcements Office Australian Stock Exchange Level 4, Exchange Centre 20
Slide 2: Presentation introduction by the Chief Financial Officer
sncial Officer ina if = < oS & + S a = S o and to have the opportunity to speak to you about Suncorp. I’m delighted to be here, Good afternoon. k overview of who we are, briefly re-cap our first half results which were presented in February, ive you a quic Today, I'd like to g into the second half,
Slide 3: Unparalleled diversification
Unparalleled diversification a ae Contribution fo profit before tax 8 months to December 2005: $627m ue H SLIDE ore ; Suncorp is a top 25 Australian company, capitalised at approximately $11 billion with operations in every state. We employ more than 8,700 people, and service more than 4.3 million c
Slide 4: What differentiates Suncorp
SLIDE This is different from our competitors in that they consist of mono-line General Insurers, or Banks, which have fairly substantial Wealth Management expertise, but only minor General Insurance capability. What differentiates us is our full ownership position throughout the manufacturing and di
Slide 5: Strong economic environment, well structured industries
Strong economic environment Weil structured industries ‘Banking So Well stractuced and stable PEG, fig 8 ~~ Real of Australia 46% Queenstenc eres neve sae 0: Popatetion growth, Annusl, % Source: ABS SLIDE We also operate within a robust and stable macro environment. The Australian economy continues
Slide 6: Well structured industries
Weil structured industries ‘Banking 3 “Real of Ausiratin 46% Queenstenc eres neve sae 0: Popatetion growth, Annusl, % Source: ABS SLIDE In General Insurance, the fundamentals of the industry have improved dramatically over the past few years. Industry consolidation, the fact that there are no longer
Slide 7: Underlying profit: Key performance measures
Underlying* profit : Key performance measures Halt-year, $m A7.2% Bec OS Osc 04 + Group Efficiency : 25.5% + Return on Equity : 21.4% + EPS up 3.0% to 82.9 cents + DPS up 11.9% to 47.0 cents Dec-04 SIFRS Dec-05 ~ ARS Sun-05 SLIDE So, having set that context, let me re-cap our half-year results which
Slide 8: Profit before tax, half-year
Profit before tax”, half-year, $n Bank General insurance = !Wealth Management +16.4% - 4.4% 42.4% Dec vs Debt 330 SLIDE This slide provides a high level summary of the performance of each of our three key divisions. The Banking division reported a 16.4% uplift in profit before tax to $255 million fo
Slide 9: Asset & Liability growth, Net interest margin
Asset & Liability growth i : Net interest margin Halbyear, % Like a Otike Total lending up 11.8% + Home +11.2% * Business +12.2% Core Retail deposits up 12.6% {Dec 05 vs Dec 04} Encludting imasury 04" Di AIRS ® Wa NIV IFRS} tc Nil GAGAAP equiv: 8 Let me now provide a little more detail around each o
Slide 10: Asset & Liability growth, Net interest margin
Asset & Liability growth i i Net interest margin tale * al-year, % ine a Re 2x “th 204 Total lending up 11.8% * Home +11.2% * Business +12.2% Core Retail deposits up 12.6% {Dec 05 vs Dec 04} Encludting imasury Di AIRS ® BNE IFRS] ct Nid (GARY equiv: Oeune* If you look at our retail operations. In th
Slide 11: Asset & Liability growth
__Asset & Liability growth SuSERSS BANKING SeGuent PARTICIPATION Total asses Total lending up 11.9% 100% + Home +11.2% ww * Business +12.2% Core Retail deposits up 12.6% {Dec 0S vs Dee 04} 20 Encludting imasury cits SLIDE In the Business portfolio, lending increased by 11.2% to $16.1 billion at the
Slide 12: Asset & Liability growth
__.... Asset & Liability growth SuSERSS BANKING SeGuent PARTICIPATION Total asses Total lending up 11.9% 100% + Home +11.2% ww * Business +12.2% Core Retail deposits up 12.6% {Dec 0S vs Dee 04} 20 Encludting imasury segment W SLIDE In aggregate, growth across the business portfolio continues to be s
Slide 13: Bank costs and revenue growth
Half-year, % * Increased focus on costs + Dec 05 operating expenses: vs Dec 04 +14% vs dun 05 (2.2%) Revenue growth | > Cost growtts mAACoal to Mea ARS» 42 We also continue to manage cost growth in the Bank. At the half year we reported operating expenses increasing by just 1.4% over the prior corre
Slide 14: Impaired assets and impairment losses
Impaired assets impairment losses Hatt-year, $m Halt-year, $n 4281 4s ao fhe AFRS 43 Benea! Collective O Specific This slide highlights the strength of credit quality across our book. While reporting an uplift in gross non performing loans at the half year it is important to note that absolute level
Slide 15: Gross written premium, profit before tax
Gross written premium Profit before tax & funding costs | Haif-year, $m Half-year, $m, before disc rate adjustnents flat CTF Commercial. Home: Motor BJun-04 ODec-O4 mJun-05 mDecS nguraios Trading eau 44 SLIDE Moving now to General Insurance. At the half year we achieved strong premium growth, with t
Slide 16: Key contributors
Key contributors + Strong growth in home and motor... + Flat growth in commercial insurance ~ markets 200000 wo Trading Ratio: - +. Concentrated hail storms -. 5.9% (1H06) drive higher motor repair ~~.” costs - «One-off costs from Claims . Cost Reduction project. - 45 lf we look at short tail first.
Slide 17: Claims cost reduction project summary
Project summary Set up +- Driving down costs to meet costs industry competition incurred . “Start to finish” claims THOG handling + Building strong supplier - relationships... +. Accessing volume discounts c vol sess where available Benefits to + Creating systems for improved progressively customer
Slide 18: CTP market share, insurance trading result
CTP Market Share Insurance Trading Result Halkyear, Sin avd "] Rid fo Song tween range: 11-44% 7 SLIDE In jong tail classes we continue to maintain our dominant position in Queensland with approximately 52% of the CTP market as well as growing our CTP market share in NSW. The nature of reserving and
Slide 19: Cyclone Larry impact
f Cy ry curre stimated to be in, $80-$85 millio: tax) inge after reinsurance recoveries, f year to June 30 expected to, © vith long term, 14-14% range. Which brings me to Cyclone Larry. Many of you will be aware that Cyclone Larry impacted a number of communities in north and far-north Queensland on
Slide 20: New business sales, funds under administration
New business sales Funds under administration Haif-year, $m Halt-year, $n Dec OF sae HO ATR ec 4 Invest Descs Income Dacte Dest — Jun Inftows Dens Super kineslment — Group Lila & CCl Personal isk External 19 SLIDE Moving now to Wealth Management which, although the smallest of our three businesses,
Slide 21: Capital position of Suncorp
Having looked at the profitability of the business, | would now like to turn to the capital position of Suncorp and our outlook on that front. The first column in this slide shows the banking group's actual capital position as at 31st December 2005. APRA has been active in reviewing its capital requ
Slide 22: Regulatory capital and ACE ratio
As you can see, our regulatory capital remains above our target after making these adjustments, however the ACE ratio is below our previously stated target of 5%. We have been in discussion with S&P who have confirmed they do not expect changes to the ACE ratio as a result of any accounting changes
Slide 23: Capacity across all capital categories provides flexibility
100.7 334.6 Capacity across all capital categories provides flexibility for future initiatives 22 We therefore have adjusted our ACE target minimum to 4.5%. This is important as it is ACE rather than regulatory capital that, at present, is the defining variable in our capital strategy. This is highl
Slide 24: Outlook
Bank — Continue fo aplimise revenue growth — Balancing price / volume mix — Margin contraction — Loan jagses unlikely to remain at historical 5, fows, bul no material increase anticipated 2328" — Revenue growth relatively flat 2H to 1H — Some expense growth 2H to 14 General Insurance Ordinary divide
Slide 25: Outlook
Bank — Continue fo aplimise revenue growth — Balancing price / volume mix — Margin contraction — Loan lagses unlikely to remaiss at historical tows, bul no material increase anticipated — Revenue growth relatively flat 2H to 4K — Some expense growth 2H to 14 General Insurance Ordinary dividend growt
Slide 26: Summary
SLIDE So to summarise: Suncorp has three very strong businesses. Together, they form a unique portfolio, providing an extensive national distribution footprint as a platform for growth and a complete product set to offer our customer base. While the markets we operate in have become decidedly more c