Slide 1: Financial Results for the full year ended 30 June 2018
Financial Results for the full year ended 30 June 2018 — Create a better today DATA PACK RELEASE DATE 9 AUGUST 2018 SUNCORP GROUP LIMITED ABN 66 145 290 124
Slide 2: Michael Cameron, CEO & Managing Director
Michael Cameron CEO & Managing Director
Slide 3: Result overview
Result overview FY18 FY17 Change ($m) ($m) (%) — Profit from functions up 4.8% year-on-year Insurance (Australia) 739 723 2.2 — 2H18 NPAT $607m (1H18: $452m) Banking & Wealth 389 400 (2.8) New Zealand 135 82 64.6 — Result includes: — Accelerated investment in marketplace component NPAT from function
Slide 4: Result highlights
Result highlights 1. Delivered strong second half performance 2. Business Improvement Program exceeding targets 3. Digitisation beginning to drive benefits 4. Robust balance sheet underpins special dividend 5. Momentum to deliver sustainable uplift in FY19 6. Australian Life business strategic revie
Slide 5: Delivered strong second half performance
1. Delivered strong second half performance — Group top line growth of 2.4% — Australia Motor & Home GWP increased 4.7% (excluding FSL) — Improved performance in the Life business — Bank Home Lending growth 1.2x system, second half moderated in response to market conditions — New Zealand General Ins
Slide 6: Business Improvement Program exceeding targets
2. Business Improvement Program exceeding targets ‒ Investment in Business Improvement Program $104m in FY18: ‒ $144m in gross benefits ($122m in 2H18) ‒ Net benefits of $40m versus target of $10m ‒ Improved the customer experience e.g. Uber at SMART ‒ Increased efficiencies e.g. motor claims pathin
Slide 7: Digitisation beginning to drive benefits
3. Digitisation beginning to drive benefits Customer convenience and retention FY18 FY17 — Scaled Reward and Recognition program Connected customers1 — Over 400,000 users Proportion of customers with multiple — 3% uplift in products per customer needs met (%) 35 35 — 1.7% uplift in retention Consume
Slide 8: Robust balance sheet underpins special dividend
4. Robust balance sheet underpins special dividend ― Suncorp remains committed to returning excess capital to shareholders Payout Ratio* (%) 79.8 81.9 95.2 81 73 8 68 Interim 40 40 Final Dividend (cps) 38 Special 30 33 33 FY16 FY17 FY18 * Cash earnings FY16 FY17 FY18 FY18 RESULTS 8
Slide 9: Momentum to deliver sustainable uplift in FY19
5. Momentum to deliver sustainable uplift in FY19 FY19 Metric 1H18 2H18 FY18 Target¹ Group top line growth² (%) 1.6 3.1 2.4 3-5 Expense base3 1.4 1.3 2.7 2.7 UITR (%) 9.4 11.7 10.6 ≥12 CTI (%) 54.9 54.5 54.7 ~50 NIM (%) 1.86 1.82 1.84 1.80-1.90 Cash ROE (%) 6.8 9.2 8.0 10 Ordinary dividend payout ra
Slide 10: Australian Life business strategic review complete
6. Australian Life business strategic review complete ‒ Assessment of a number of alternatives concluded divestment the best option ‒ Non-binding Heads of Agreement signed ‒ Sale contract expected to be executed in August ‒ Consideration $725m, non-cash write off $880m ‒ Net proceeds will lead to a
Slide 11: Insurance (Australia)
Insurance (Australia) ‒ Positive GWP growth in Consumer and Commercial Gross Written Premium – Motor and Home (excluding FSL) ($bn) ‒ Improved underlying claims performance 2.6 0 2.5 5 2.54 ‒ Natural hazards for Australia $36m below the allowance 2.5 0 2.44 ‒ Operating expenses reflect investment in
Slide 12: Banking & Wealth
Banking & Wealth — Home lending growth of 6.2%, 1.2x system Retail lending portfolio ($bn) 49 .0 47.8 — At-call deposit growth of 7.1% - new product offerings, 9.0 0% 48 .0 47.2 7.0 0% 47 .0 enhanced digital functionality and simplified processes 46 .0 45.1 5.0 0% 45 .0 44.6 44.3 3.0 0% — Stable NIM
Slide 13: New Zealand
New Zealand Gross Written Premium (NZ$m) — Increased NPAT – premium increases, unit growth, claims management and expense control 768 773 — Strong GWP growth – unit growth across the direct and corporate partner channels 714 710 — Improved insurance margins – ITR of 10.8% 658 — Natural hazard costs
Slide 14: Steve Johnston, Chief Financial Officer
Steve Johnston Chief Financial Officer
Slide 15: Life Insurance – Heads of Agreement with TAL Dai-ichi Life Australia
Life Insurance – Heads of Agreement with TAL Dai-ichi Life Australia ‒ Strategic review completed ‒ Proposed sale of Suncorp Life & Superannuation Limited, including Australian Life Risk and Participating business via sale of shares ‒ TAL is part of the Dai-ichi Life Group, one of the world’s larges
Slide 16: Life Insurance – Forecast consideration and capital return
Life Insurance – Forecast consideration and capital return ($m) Life EV $2,050m Less: NZ Life & Other EV ($700m) ‒ Forecast consideration of $725m Australian Life EV $1,350m ‒ Forecast capital return of ~$600m Less: Discount rate adjustment ($250m) ‒ Non-cash write-down of $880m Less: Franking credi
Slide 17: Insurance (Australia) NPAT
Insurance (Australia) NPAT FY18 FY17 Change ‒ NPAT up 2.2% to $739m ($m) ($m) (%) Gross written premium 8,137 8,111 0.3 ‒ Insurance trading result $866m (FY17: $912m) Net earned premium 7,191 7,072 1.7 ‒ Insurance trading ratio 12.3% Net incurred claims (5,057) (4,923) 2.7 (FY17: 12.9%) Operating ex
Slide 18: Home and Motor portfolio
Home and Motor portfolio Motor portfolio 5.1% } 3.4% 3.5% 2.2% 2.6% 6.9% 2.1% 2.0% 1.6% 1.8% 1.1% 1.0% 1.2% 0.9% – Positive premium growth across the -0.5% -0.1% -0.1% -0.7% consumer portfolio throughout the year -3.0% -3.0% – Motor unit growth accelerated in 2H -5.3% – Home unit growth recovered in
Slide 19: Gross written premiums ($m)
Gross written premiums ($m) 12 32 (97) (31) 224 (32) (80) 7,960 7,988 FY17 GWP Home & Motor Commercial WC & Other NSW CTP NSW CTP 1H17 SA CTP CTP pricing FY18 GWP (ex FSL) lower premiums customer refunds novated premium & volumes (ex FSL) FY18 RESULTS 19
Slide 20: Claims
Claims Home active claims volumes (‘000) 80 60 Net Incurred Claims (ex-discounting) ($m) 40 (33) 20 (18) - 29 108 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 (31) (70) 9 Motor active claims volumes (‘000) 200 5,005 160 4,998 120 80 FY17 net BIP BIP Consumer CTP & Reserve Natural Risk margin FY1
Slide 21: Investments
Investments Insurance funds $9.3 billion ̶ Investment income of $258 million (FY17: $205 million) ̶ $1 million MTM gain from an increase in risk-free rates ■ Cash ■ ILBs ̶ $20 million MTM gain from narrowing credit spreads ■ Corporate ̶ $12 million MTM gain from outperformance of ILBs ■ Semi-Govt ̶
Slide 22: Life Insurance NPAT
Life Insurance NPAT FY18 FY17 Change ($m) ($m) (%) – Repricing and claims benefits flowing through to planned margins Planned profit margin release 25 19 31.6 – Benefits of loss recognition reversal due to Experience 3 (6) n/a repricing of IP and Trauma Other and investments 48 40 20.0 – Underlying
Slide 23: Banking & Wealth NPAT
Banking & Wealth NPAT FY18 FY17 Change ($m) ($m) (%) – Lending growth of 6.1% Net interest income 1,181 1,131 4.4 – At-call deposit growth of 7.1% Net non-interest income 60 76 (21.1) – NIM of 1.84% (FY17: 1.83%) Operating expenses (679) (636) 6.8 – Impairment losses 5bps of GLA Profit before impair
Slide 24: New Zealand NPAT
New Zealand NPAT FY18 FY17 Change – NPAT increased 70.1% driven General (NZ$m) (NZ$m) (%) Insurance premium rate increases Gross written premium 1,541 1,424 8.2 – GI GWP grew 8.2%, driven by rate Net earned premium 1,267 1,163 8.9 increases and unit growth in all channels Net incurred claims (739) (
Slide 25: Group operating expenses (ex-FSL)
Group operating expenses (ex-FSL) ($m) 33 31 (10) 29 1 40 2,700 2,576 FY17 operating BIP * Regulatory spend Technology Commercial Depreciation Other FY18 operating expenses (ex insurance expenses (ex FSL) expenses FSL) Group operating expenses: BIP net cost / (benefits) ($m) 1H18 2H18 FY18 Insurance
Slide 26: GI Underlying ITR – 2H18 vs 1H18
GI Underlying ITR – 2H18 vs 1H18 (0.6%) 0.5% (0.2%) 1.9% 11.7% 0.7% 9.4% 1H18 UITR Loss ratio BIP benefits Operating Investment Other 2H18 UITR expenses income FY18 RESULTS 26
Slide 27: CET1 capital base ($m)
CET1 capital base ($m) Click to edit Master title style ― 1,059 (914) ̶ CET1 excess of $448 million ̶ Strong excess capital has allowed for a special dividend ̶ Excess technical provision benefited from improved loss ratios in motor 36 (25) 90 (31) 552 (104) (40) ̶ Increase in the Life DAC 448 377 d
Slide 28: Michael Cameron, CEO & Managing Director
Michael Cameron CEO & Managing Director 28
Slide 29: Outlook – BIP tracking ahead of targets
Outlook – BIP tracking ahead of targets — Gross benefits for FY19 of $187m Gross FY19 FY20 already locked in Benefits already Net Net Cost Benefit Benefit Cost Benefit Benefit — BIP net benefits in FY19 expected to locked in exceed original target of $195m $m $m $m $m $m $m $m — BIP investment weigh
Slide 30: Outlook – Insurance (Australia)
Outlook – Insurance (Australia) Growth in the Insurance (Australia) underlying trading result will be driven by a number of factors: — Consumer GWP growth between 4% and 6% — Premium rises driven by natural hazards costs and inflation — The Commercial portfolio will continue to focus on returning ma
Slide 31: Outlook – Banking & Wealth
Outlook – Banking & Wealth — Business conditions and the credit environment are stable — Interest rate outlook is for minimal cash rate change — Banking & Wealth will continue to deliver: — Sustainable lending and deposit growth above system — A stable and diverse funding profile with a NSFR above 1
Slide 32: Outlook – New Zealand
Outlook – New Zealand — Positive outlook for New Zealand — GWP growth is expected to remain above system at mid single digit levels driven by intermediated, corporate partner and direct channels. NEP will be supported by recent price increases — A program of efficiency initiatives has been implement
Slide 33: Outlook – Customer
Outlook – Customer — Suncorp’s customer focused strategy means we are well placed to respond to the heightened regulatory and political scrutiny on the sector — Budgeted regulatory spend to increase again in FY19 to >$90m, 36 separate projects, spend incorporated into annual project pool and Group e
Slide 34: Outlook and FY19 Targets
Outlook and FY19 Targets¹ — Key FY19 target is Cash ROE of 10% (excluding the positive impact of the divestment of the Life business) — Driven by: — Group top line growth of 3% to 5% — Expense base of $2.7bn — An underlying ITR of at least 12%, Bank Cost to Income (CTI) of around 50%, and Net Intere
Slide 35: Critical actions to achieve FY19 Group targets
Critical actions to achieve FY19 Group targets 1. Business Improvement Program — Gross Benefits – Opex Savings $152m – Claims cost reduction $122m 2. Revenue growth – GWP and NII 3. Digital Transformation 4. Project Initiatives (weightings) — Regulatory ~50% — System Upgrades ~25% — Discretionary ~2
Slide 36: Focus for FY19
Focus for FY19 Strategic FY18 Achievements FY19 Areas of Focus Priorities Elevate the Delivered strategic investment in the marketplace Increase digital communications and digital self-service Customer component of the strategy: functionality App launched Enhance technology platforms for fro
Slide 37: Summary
Summary 1. Delivered strong second half performance 2. Business Improvement Program exceeding targets 3. Digitisation beginning to drive benefits 4. Robust balance sheet underpins special dividend 5. Momentum to deliver sustainable uplift in FY19 6. Australian Life business strategic review complete
Slide 38: Group
Group — Financial Results for the full year ended 30 June 2018
Slide 39: Suncorp Group
Suncorp Group Click to edit Master title style ― Top 20 ASX listed company ASX: SUN | ADR: SNMCY $19 billion market capitalisation at 30 June 20181 $99 billion in group assets 13,300 employees in Australia and New Zealand 2 Approximately 9.6 million customers Credit ratings A+ / A1 / A+ 3 1 Based on
Slide 40: Strategy
Strategy Click to edit Master title style ― FY18 RESULTS GROUP 40
Slide 41: Group result snapshot
Group result Click to editsnapshot Master title style ― Contribution to top-line growth Contribution to profit by function Total capital invested 3% 2% 8% 25% 46% 46% 31% 54% 10% 65% 4% 6% General Insurance GWP General Insurance AU Life Insurance AU General Insurance Life in-force premium Life Banki
Slide 42: Driving shareholder value
Driving shareholder value Click to edit Master title style ― Investment thesis Shareholder value – Leading financial services Suncorp’s key FY19 targets1 are: brands in Australia and – Cash ROE of 10% (excluding the positive impact of the New Zealand divestment of the Life business) – Strategy focus
Slide 43: Senior Leadership Team – deep industry experience across functions
Senior Leadership Team – deep industry experience across functions Click to edit Master title style ― P&L, Balance Sheet, Claims Enabling Functions Steve Johnston Amanda Revis Gary Dransfield David Carter Finance & Legal People Insurance Banking & Wealth Paul Smeaton New Zealand Michael Cameron Sara
Slide 44: FY19 Executive remuneration structure
FY19 Executive remuneration structure Click to edit Master title style Full details are provided in the Remuneration Report ― Remuneration mix The CEO & Managing Director’s remuneration mix is heavily focused on longer term performance and two-thirds of total remuneration for Senior Executives is ‘a
Slide 45: Key financial highlights
Key financial highlights Click to edit Master title style FY18 FY17 Change ― (%) Net profit after tax $m 1,059 1,075 (1.5) Cash earnings $m 1,098 1,145 (4.1) Profit after tax from functions $m 1,263 1,205 4.8 Insurance trading ratio % 12.1 11.8 Underlying insurance trading ratio % 10.6 11.5 Bank net
Slide 46: Group profit and operating expenses
Group profit and Click to edit Master title styleProfit after tax 1,205 1,263 operating expenses ($m) 1,159 135 ― 82 from functions 183 400 389 418 723 739 558 F Y1 6 F Y1 7 F Y1 8 Insurance (Australia) Banking & Wealth New Zealand 2,700 Operating expenses 2,520 2,576 405 (excluding FSL) 372 400 730
Slide 47: Shareholder returns
Shareholder returns Click to edit Master title style ― Dividends (cps) Cash ROE 81 13.0% 13.1% 73 8 12.4% 68 40 40 8.2% 8.4% 8.0% 38 30 33 33 FY16 FY17 FY18 FY16 FY17 FY18 ■ Interim ■ Final ■ Special Cash ROE Cash ROE pre-goodwill FY18 RESULTS GROUP 47
Slide 48: Shareholder metrics
Shareholder Click to editmetrics Master title style EPS (basic) EPS (diluted) ― $0.84 $0.82 $0.80 $0.83 $0.81 $0.81 FY16 FY17 FY18 FY16 FY17 FY18 Cash EPS (basic) Cash EPS (diluted) $0.85 $0.89 $0.85 $0.88 $0.83 $0.83 FY16 FY17 FY18 FY16 FY17 FY18 FY18 RESULTS GROUP 48
Slide 49: General Insurance ITR
General Insurance ITR Click to edit Master title style ($m) Insurance ITR General ― (194) 28 41 (4) 1,012 883 ̶ Successful delivery of BIP will assist in delivering >12% UITR in Reported ITR Reserve Natural hazards Investment Other Underlying ITR releases above below allowance income FY19 expectatio
Slide 50: History of major weather events
50 year Click tohistory of major edit Master weather title style events ($m) ― Christchurch earthquakes, 7,000 Australia New Zealand Long run average Brisbane floods, Cyclone Yasi, Melbourne hailstorm 6,000 Kaikoura 5,000 earthquake Brisbane flood, 4,000 Cyclone Tracy Newcastle Cyclone earthquake Me
Slide 51: Reinsurance program – natural hazards
Reinsurance program – natural hazards Click to edit Master title style ― $7.2bn $500m Original cover Reinstatement Reinstatement Reinstatement $250m $200m Dropdown aggregate Dropdown aggregate $50m Retention * Natural hazards protection Event 1 2 3 4 5 * Relates to Australian events FY18 RESULTS GRO
Slide 52: Reinsurance program – dropdown aggregate
Reinsurance program – dropdown aggregate Click to edit Master title style ― $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 $50m Natural hazards protection Retention * 300m xs 504m Event 1 2 3 4 5 * Relates to Australian events F
Slide 53: General Insurance reserve releases ($m)
General Insurance Click to edit Master title style reserve releases ($m) ― 5.0% 4.5% $348m 4.0% 4.4% $319m $301m 3.5% 3.7% 3.8% 3.0% 2.5% 2.0% Long-term 1.5% assumption 1.0% 1.5% of Group NEP 0.5% 0.0% FY16 FY17 FY18 FY18 RESULTS GROUP 53
Slide 54: Insurance investment assets
Insurance investment assets Click to edit Master title style ― FY18 2% 2% ($m) 3% Insurance (Australia) investments 9% General Insurance - insurance funds 9,341 General Insurance - shareholders’ funds 2,971 Life shareholder assets 1,366 20% Insurance (Australia) total 13,678 64% New Zealand investme
Slide 55: Australian Investment Yield
Australian Investment Yield Click to edit Master title style ― Chart Title ̶ The Australian yield curve 4.5% flattened in FY18, resulting in directionally different mark-to- 4.0% market impacts on assets & liabilities depending on their 3.5% exposure to the curve 3.0% 2.5% 2.0% 1.5% 1.0% 0 5 10 15 2
Slide 56: Group capital position
Group capital position Click to edit Master title style As at 30 June 2018 ($m) ― SGL, Corp Total as at 30 GI2 Bank2 Life Total Services June & Consol 2017 CET1 3,280 2,952 478 171 6,881 6,625 CET1 target 2,633 2,849 326 2 5,810 5,772 Excess to CET1 target (pre div) 647 103 152 169 1,071 853 Group d
Slide 57: Group Risk Based Capital
Group Risk Click to editBased Capital Master title styleGeneral Insurance Bank 3% ― 7% 14% 10% 23% 67% Group 76% 10% 6% Life Insurance 1% Corporate 10% 100% 31% 24% 60% 58% ■ Insurance risk ■ Market risk ■ Operational risk ■ Counterparty credit risk FY18 RESULTS GROUP 57
Slide 58: Group General Insurance capital
Group General Click to Insurance edit Master titlecapital style ― Total capital ($m) Prescribed Capital Amount Capital ratios vs peers (PCA) ($m) 1.84x 1.81x 4,400 1.64x 1.84x PCA 555 565 2,394 299 Axis Title CET1 Target (1.0 – 1.2x PCA) 895 3,280 250 1.37x 1.19x 1.10x 554 920 (524) SUN Peer 1 Peer
Slide 59: Group Life Insurance capital
Group Click toLife Insurance edit Master title style capital ― Total capital ($m) Prescribed Capital Amount (PCA) ($m) 300 613 240 250 2.55x PCA 18 100 35 200 67 150 31 478 100 97 50 27 0 2H18 2H18 ■ Common Equity Tier 1 ■ Insurance risk ■ Combined stress ■ Additional Tier 1 ■ Asset risk scenario ad
Slide 60: Bank capital
Bank Clickcapital to edit Master title style ― Total capital ($m) Risk-weighted assets ($m) Capital ratios vs peers 15.05% 14.83% 14.95% 14.43% 4,401 32,563 13.52% 12.78% 12.98% 13.52% RWA 3,473 899 88 550 9.07% RWA CET1 Target (8.5% – 9.0% 29,002 RWA) 10.50% 11.04% 10.21% 9.42% 10.15% 2,952 9.07% 8
Slide 61: Credit ratings
Credit ratings Click to edit Master title style ― S&P Moody’s Fitch Ratings Global Ratings Investors Service A+ A1 A+ Suncorp Group Limited Stable Stable Stable AA- Aa3 AA- Major banks1 Negative Stable Stable2 BBB+ A3 A- Regional banks3 Stable Stable Stable 1 Major banks include Australia and New Ze
Slide 62: Home and Car Master Ecosystems
Home and Click to CarMaster edit Ecosystems title style ― 7 Ecosystem Solutions Delivered 34,783 unique site visits (and counting) FY18 RESULTS GROUP 62
Slide 63: Home and Car Master FY19
Home and Click to CarMaster edit Ecosystems FY19 title style ― One place for mobility and home needs Timely and contextual advice, tools and services Trusted and credible source of solutions to better support the financial wellbeing of customers FY18 RESULTS 63
Slide 64: Suncorp Insurance Ventures (SIV)
Suncorp Click to Insurance Ventures edit Master (SIV) title style ‒ SIV is an investment vehicle used to scope, execute and manage Suncorp’s strategic insurance investments. The portfolio is regularly ― reviewed and valued ‒ The SIV model is based on partnerships with innovative industry participant
Slide 65: Corporate Responsibility Framework
Corporate Responsibility Framework Click to edit Master title style ― FY18 RESULTS GROUP 65
Slide 66: Corporate Responsibility roadmap
Corporate Responsibility roadmap Click to edit Master title style ― Performance highlights Focus for FY19 ✓ Refreshed assessment of material environmental, ‒ Implement a stakeholder survey and establish a social licence or trust social and governance topics metric ✓ Expanded measurement and reportin
Slide 67: Shareholder overview
Shareholder overview Click to edit Master title style ― SUN shareholders by type SUN shareholders by geography 1% 1% 2% 4% 24% 6% 41% 11% 75% 35% ■ Domestic Institutions ■ Australia (Institutions & Retail) ■ Retail Investors ■ United States ■ Japan ■ International Institutions ■ United Kingdom ■ Res
Slide 68: Insurance (Australia)
Insurance (Australia) — Financial Results for the full year ended 30 June 2018
Slide 69: Insurance (Australia) NPAT
Insurance (Australia) Click to edit Master title style NPAT ― FY18 FY17 Change ($m) ($m) (%) ‒ NPAT up 2.2% to $739m Gross written premium 8,137 8,111 0.3 ‒ Insurance trading result $866m Net earned premium 7,191 7,072 1.7 (FY17: $912m) Net incurred claims (5,057) (4,923) 2.7 ‒ Insurance trading rat
Slide 70: General Insurance gross written premium
General Insurance Click to edit Master title style gross written premium ― FY18 FY17 Change ‒ Motor premium increases of 4.3% ($m) ($m) (%) with unit growth of 1.5% Motor 2,779 2,626 5.8 ‒ Improved retention in the Home Home 2,206 2,135 3.3 portfolio drove unit growth of 0.7% in the second half, off
Slide 71: General Insurance gross written premium by product and geography
General Insurance Click to edit Master title style grossInsurance General written Gross premium Portfolio by product Portfolio by geography ― excluding Written PremiumFSL 4% 2% 4% 5% 14% 8% 26% Total GWP of $8.0bn 35% 19% 23% 32% 28% ■ Motor ■ CTP ■ Queensland ■ Western Australia ■ Home ■ Workers’ c
Slide 72: General Insurance gross written premium – compulsory third party
General Insurance Click to edit Master title style gross written premium FY18 FY17 Change ― ($m) ($m) (%) compulsory third party CTP GWP by geography Queensland 435 477 (8.8) New South Wales 549 721 (23.9) ACT 66 66 - South Australia 114 140 (18.6) Total CTP GWP 1,164 1,404 (17.1) CTP GWP one-off mo
Slide 73: General Insurance key ratios
General Insurance Click to edit Master title style key ratios ― Loss ratio Total operating expenses ratio 74.0% 70.3% 20.4% 20.4% 20.9% 69.6% FY16 FY17 FY18 FY16 FY17 FY18 Combined operating ratio Reported ITR 94.4% 12.9% 12.3% 91.2% 9.0% 90.0% FY16 FY17 FY18 FY16 FY17 FY18 FY18 RESULTS INSURANCE (A
Slide 74: Natural hazard events
Natural hazard Click to edit Master title style events ― ‒ Australian natural hazard costs Net costs Date Event were $625m for the full year, $36m ($m) below the allowance of $661m Oct 2017 Toowoomba Newcastle Hail 35 ‒ Group natural hazard costs were Nov 2017 Lismore Bundaberg Hail 22 $688m for the
Slide 75: General Insurance investment asset allocation
General Insurance Click to edit Master title style investment asset allocation ― Insurance funds Fixed income credit quality Shareholders’ funds $9.3bn $3.0bn 1% 3% 2% 6% 8% 16% 11% 25% 45% 13% 44% 21% 64% 23% 18% ■ Cash & short-term ■ Semi-Government ■ AAA ■A ■ Cash & short-term ■ Equities deposits
Slide 76: Personal lines market share
Personal lines Click to edit Master title style market share ― NT 23% 19% QLD WA 33% 33% 15% 15% SA 16% 15% NSW 28% 24% VIC 33% 28% Motor Home TAS 32% 29% Source: Roy Morgan, May 2018 FY18 RESULTS INSURANCE (AUSTRALIA) 76
Slide 77: Insurance (Australia) market share
Insurance (Australia) Click to edit Master title stylePersonal lines* Commercial lines** market share $20.7bn ― $12.7bn 12% 27% 27% 30% 20% 4% 6% 2% 4% 7% 13% 29% 19% CTP*** Workers’ compensation**** $3.2bn $1.0bn 7% 21% 18% 21% 34% * Source: Roy Morgan, May 2018 4% ** Source: Latest Suncorp estimat
Slide 78: CTP market share
CTP Clickmarket to editshare Master title style QLD * NSW ** $1.0bn 8% ― $1.7bn 19% 26% 17% 47% 31% 28% 24% ACT * SA * $157m $349m 30% 43% 57% 70% Source: State scheme regulators * as at May 2018 ** as at March 2018 ■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Rest of market FY18 RESULTS INSURANC
Slide 79: Life Insurance NPAT
Life Insurance Click to edit Master title style NPAT ― FY18 ($m) FY17 ($m) Change (%) – Repricing and claims benefits Planned profit margin release 25 19 31.6 flowing through to planned margins Experience 3 (6) n/a – Benefits of loss recognition reversal due to repricing of IP and Trauma Other and i
Slide 80: Life Insurance in-force premium
Life ClickInsurance to edit Master title style in-force premium ― Total in-force premium of $816m Premium by product Premium by geography Premium by channel 5% 8% 8% 9% 12% 34% 28% 48% 19% 19% 83% 27% ■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia ■ Direct via General Insurance br
Slide 81: Life Insurance new business
Life Insurance Click to edit Master title style new business ― Total new business of $59m New business by product New business by geography New business by channel 3% 1% 6% 19% 12% 29% 26% 55% 25% 16% 80% 28% ■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia ■ Direct via General Insu
Slide 82: Life Insurance key metrics ($m)
Life ClickInsurance to edit Master title style key metrics ($m) Planned margins Experience ― 25 – Favourable experience 19 15 19 compared to the prior year is due to the benefits of the Life Optimisation Program 3 FY16 FY17 FY18 (6) FY16 FY17 FY18 In-force premium Operating expenses 816 813 174 165
Slide 83: Life Insurance market share
Life ClickInsurance to edit Master title style market Life share Insurance market In-force ― share $10.1bn 13% 15% 13% 13% 12% Individual risk 10% 9% 8% 7% Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 SUN Peer 7 Others 21% New business 16% $0.9bn 13% 13% 10% 9% 8% 6% 4% Source: NMG Consulting, March 20
Slide 84: Banking & Wealth
Banking & Wealth — Financial Results for the full year ended 30 June 2018
Slide 85: Banking & Wealth NPAT
Banking & Wealth Click to edit Master title style NPAT ― FY18 FY17 Change ($m) ($m) (%) – Lending growth of 6.1% Net interest income 1,181 1,131 4.4 – At-call deposit growth of 7.1% Net non-interest income 60 76 (21.1) – NIM of 1.84% (FY17: 1.83%) Operating expenses (679) (636) 6.8 – Impairment loss
Slide 86: Total lending portfolio
Total lending portfolio Click to edit Master title style ― Lending assets by portfolio Lending assets by geography Total assets of $58.7bn <1% 8% 4% 6% 11% 10% 53% 27% 81% ■ Housing ■ Agribusiness ■ Queensland ■ Western Australia ■ Commercial (SME) ■ Consumer ■ New South Wales ■ South Australia & ■
Slide 87: Banking key ratios
Banking Click to key editratios Master title style ― Lending growth (annualised) Net interest margin Cost to income ratio (interest-earning assets) 6.13% 54.7% 4.55% 1.85% 1.86% 1.83% 1.84% 53.4% 52.7% 3.93% 52.5% 1.92% FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 Impairment losses to
Slide 88: Home lending portfolio
Home lending portfolio Click to edit Master title style ― Total home lending assets of $47.6bn Portfolio by borrower type Portfolio by geography Portfolio by channel 5% 7% 28% 33% 11% 49% 67% 72% 28% ■ Owner occupied ■ Investor ■ Queensland ■ Western Australia ■ Direct ■ Intermediaries ■ New South W
Slide 89: Home lending origination by repayment type
Home lending Click to origination edit Master title style by repayment type New business ― origination by 35% 22% 28% 22% repayment type – Continued focus on high quality 78% 72% 78% lending including serviceability, 65% credit quality and loan-to-value ratios FY15 FY16 FY17 FY18 – Investor year-on-
Slide 90: Commercial (SME) portfolio
Commercial Click to edit(SME) portfolio Master title style ― Total assets of $6.4bn Portfolio by industry Portfolio by geography Portfolio by exposure size 3% 10% 13% 10% 4% 7% 35% 16% 49% 22% 21% 71% 14% 16% 9% ■ Property investment ■ Retail ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million ■
Slide 91: Agribusiness portfolio
Agribusiness portfolio Click to edit Master title style ― Total assets of $4.5bn Portfolio by industry Portfolio by geography Portfolio by exposure size 5% 9% 14% 4% 3% 35% 25% 28% 48% 8% 7% 63% 22% 29% ■ Beef ■ Sugar ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million ■ Grain & mixed farming ■ F
Slide 92: NIM movements
NIM movements Click to edit Master title style ― 0.05% (0.01%) (0.09%) 0.06% 1.83% 1.84% 1.84% FY17 NIM Lending mix / Funding mix / Balance sheet Earning on FY18 NIM spreads spreads and liquidity invested capital management FY18 RESULTS BANKING & WEALTH 92
Slide 93: Credit quality – impaired loans
Credit quality Click to edit Master title style impaired loans ($m) Gross impaired ― loans by segment 218 206 173 62 – Gross impaired assets decreased 62 144 17% to $144m, representing 25bps 60 56 of gross loans and advances, 125 117 79 51 primarily driven by a reduction in impaired agribusiness loa
Slide 94: Credit quality – impairment losses
Credit quality Click to edit Master title style Impairment losses ― to gross loans 0.15% 0.15% 0.13% 0.14% 0.11% 0.10% Relativity to peers 0.05% – Continued focus on credit quality and prudent risk management SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4 – Impairment losses 0.05% of gros
Slide 95: Credit quality – home lending
Credit quality Click to edit Master title style home lending ― % gross home loans – Past due loans increased during the year predominately driven by retail past due from changes to 1.01% hardship and recoveries 0.85% 0.78% 0.79% processes, implemented to better support customers genuinely experienci
Slide 96: Loan-to-value ratio (LVR)
Loan-to-value Click to edit Master title style 7% 5% 4% 12% ratio (LVR) Home lending ― 22% 19% 22% assets by LVR 22% Total home lending assets of 77% $47.6bn 66% 71% 73% – Increase in home lending new business with >90% LVR F Y1 5 F Y1 6 F Y1 7 F Y1 8 ■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+ 4% 2
Slide 97: Credit quality – business lending
Credit quality Click to edit Master title styleCommercial (SME) portfolio business lending ― 6, 000 5.35 5.36 5.73 6.40 15 .00% 13 .00% 5, 000 11 .00% 9.0 0% 4, 000 1.16% 1.05% 1.16% 0.87% 7.0 0% 3, 000 5.0 0% 2, 000 3.0 0% 1, 000 1.0 0% - -1 .00 % F Y1 5 F Y1 6 F Y1 7 F Y1 8 Commercial portfolio ($
Slide 98: Collective provision ($m)
Collective provision ($m) Click to edit Master title style ― 126 – Collective provision reduced over 15 108 the year primarily driven by the quality of new business loans and 96 25 91 improvements in several long- standing business exposures 25 23 – Suncorp continuously reviews its management and op
Slide 99: Funding mix
Funding Click to mix edit Master title style ― Overall funding mix Net stable funding ratio1 Stable funding composition $42.1bn Wholesale $37.7bn funding & Liquids & Government other other 13% 12% 2 18% 16% 16% 17% 15% & non- liabilities assets financial 3 23% 22% 21% 22% 24% 25% corporate Other loa
Slide 100: Long-term funding profile ($m)
Long-term funding Click to edit Master title style profile ($m) ― 1,750 1,500 – Exercised ability to fund in a range of 1,250 long-term wholesale markets during the financial year 1,000 – Executed $5.5bn in term wholesale 750 issuance over the financial year at a weighted average term of 3.5 years.
Slide 101: Banking market share
Banking Click to edit Master title style market share ― Retail banking market share and Suncorp footprint NT 0.6% 23 QLD 9.3% – Banking increased its ATM 91 11 845 footprint across Australia with its WA 0.5% partnership with rediATM 1 1 245 SA 0.4% 1 1 325 NSW & ACT 0.9% 35 6 913 VIC 0.4% 10 2 593 M
Slide 102: Housing lending growth vs system
Housing Click to lending edit Master title style growth vs system Housing lending 25% 25% ― market share 15% 16% – Above system growth in the home 12% lending portfolio was underpinned by simplified origination processes, an increased focus on customer 3% retention and headroom within 2% 2% macro-pr
Slide 103: Business lending growth vs system
Business lending Click to edit Master title style growth vs system Business lending ― 23% 22% market share 19% 18% – Growth in Commercial (SME) driven 14% by deliberate management action to achieve targeted growth within selected well-known market 2% segments to balance total lending 1% 1% portfolio
Slide 104: Funds under management and administration ($m)
Funds under Click to edit Master title style management and ― administration ($m) – Flows impacted by the migration to 627 (854) the new platform and advice channel realignment 249 – Focused on continuing to stabilise the operating model, implementing regulatory changes, and improving operational ef
Slide 105: New Zealand
New Zealand — Financial Results for the full year ended 30 June 2018
Slide 106: New Zealand NPAT
New Zealand Click to edit Master title style NPAT ― FY18 FY17 Change – NPAT increased 70.1% driven by (NZ$m) (NZ$m) (%) General Insurance premium rate Gross written premium 1,541 1,424 8.2 increases Net earned premium 1,267 1,163 8.9 – GI GWP grew 8.2%, driven by rate increases and unit growth in al
Slide 107: General Insurance Gross Written Premium
General Insurance Click to edit Master title style Gross Written Premium ― Total GWP of NZ$1.5bn Portfolio by product Portfolio by channel 2% 24% 25% 29% 41% 33% 46% ■ Motor ■ Commercial ■ Direct ■ Strategic partners & ■ Home ■ Other ■ Brokers financial intermediaries FY18 RESULTS NEW ZEALAND 107
Slide 108: General Insurance key ratios
General Click to Insurance edit Master title style key ratios Loss ratio Total operating expenses ratio ― – Improved ratios due to price driven 63.2% premium growth and removal of 58.3% 53.7% 33.3% prior year earthquake impacts 32.4% 31.9% FY16 FY17 FY18 FY16 FY17 FY18 Combined operating ratio Repor
Slide 109: Natural hazard events
Natural hazard Click to edit Master title style Net costs events Date Event ― (NZ$m) Jul 17 Winter Storm 2 ‒ New Zealand natural hazard costs Jul 17 Major Storm 5 were NZ$68m for the full year, NZ$35m above the allowance of Jan 18 North Island heavy rain 7 NZ$33m Feb 18 NZ Storm including Cyclone Fe
Slide 110: Natural hazard events over time
Natural hazard $60 10 Click to edit Master title style events over time 9 ― $50 48 8 ‒ FY18 worst year on record for $40 7 natural hazard costs 6 ‒ Anomalous year with 8 events $30 5 27 over NZ$2m 24 22 4 21 ‒ The only other years with more $20 20 20 20 3 than 4 events were FY05 and 12 FY14 11 12 2
Slide 111: General Insurance investment asset allocation
General Insurance Click to edit Master title style investment asset allocation ― Insurance funds Fixed income credit quality Shareholders’ funds NZ$506m NZ$349m 2% 3% 8% 14% 16% 21% 27% 32% 50% 68% 59% ■ Cash & short-term ■ Local government ■ AAA ■A ■ Cash & short-term deposits deposits bonds ■ AA ■
Slide 112: General Insurance market share
General Insurance Click to edit Master title style market share ― 20% 19% Total market NZ$6.0bn 4% 6% 7% 44% ■Vero ■AAI ■Peer 1 ■Peer 2 ■Peer 3 ■Others (Suncorp NZ) (Suncorp NZ joint venture with NZ Automobile Association) Source: Insurance Council New Zealand, March 2018 FY18 RESULTS NEW ZEALAND 11
Slide 113: Life Insurance NPAT
Life Insurance Click to edit Master title style NPAT ― FY18 FY17 Change – Planned margins driven by in-force (NZ$m) (NZ$m) (%) premium growth Planned profit margin 33 31 6.5 – Experience volatility driven by mortality claims and cover Experience (5) 6 n.a reductions where business has Other 7 5 40.0
Slide 114: Life Insurance in-force premium
Life Insurance Click to edit Master title style in-force premium ― Total in-force premium of Premium by product Premium by channel NZ$257m 4% 3% 6% 16% 18% 52% 20% 81% ■ Term & TPD ■ Other ■ Direct ■ Group & other ■ Trauma ■ Group ■ Advised ■ Income protection FY18 RESULTS NEW ZEALAND 114
Slide 115: Life Insurance key metrics (NZ$m)
Life Insurance Click to edit Master title style key metrics (NZ$m) Planned margins Experience ― 33 32 31 6 1 FY16 FY17 FY18 (5) FY16 FY17 FY18 In-force premium Operating expenses* 257 245 229 40 40 39 * Includes investment expenses FY16 FY17 FY18 FY16 FY17 FY18 FY18 RESULTS NEW ZEALAND 115 115
Slide 116: Life Insurance market share
Life Insurance Click to edit Master title style 26% market share In-force ― NZ$2.3bn 21% Individual risk 13% 11% 11% 9% 9% Peer 1 Peer 2 Peer 3 SUN Peer 4 Peer 5 Others New business 23% 24% NZ$234m* 17% 17% 9% 7% 3% Source: Melville Jessup Weaver, March 2018 Note: excludes Group policies * New Busin
Slide 117: Economy
Economy — Financial Results for the full year ended 30 June 2018
Slide 118: Economic fundamentals
Economic fundamentals Click to edit Master title style ― Australia Queensland Data Population growth 1.6% 1.7% Dec-17, annual – Supportive fundamentals for both Australia and Queensland Economic growth 3.1% 3.1% Mar-18, annual (GDP & State Final Demand) – Australian economic growth has accelerated a
Slide 119: Growth outlook
Growth outlook Click to edit Master title style ― National GDP outlook State prospects 6 Annual % change Forecasts – Australia’s economy continues 5 to successfully adapt 4 – GDP growth has lifted and solid 3.1% real and nominal GDP is 3 3.4% 2.8% projected for the coming 3 years 2 2.2% – Queensland
Slide 120: Business investment and domestic expenditure
Business investment and Click to edit Master title styleSources of GDP domestic expenditure Net Exports ― growth Dwelling Investment Government Investment Inventories & Other – As homebuilding slows, business Business Investment investment and government Government Consumption spending are supportin
Slide 121: Monetary policy and inflation and labour market
Monetary policy and Click to edit Master title styleInflation and 6 % Source: ABS, RBA, Bloomberg labour market ― interest rates 5 4 RBA ‘Neutral’ Cash Rate Estimate – Monetary policy remains 3 expansionary and, despite Inflation selected repricing, the average Target Range 2 mortgage interest rate
Slide 122: Housing experiencing orderly slowdown
Housing Click to experiencing edit Master title styleHouse prices 1,100 Median house price ($ '000) orderly slowdown ― 1,000 900 800 – The housing sector has softened. 700 In part, this reflects policy 600 measures designed to strengthen 500 lending and prudential standards 400 Source: Bloomberg, AB
Slide 123: Opportunities and risks
Opportunities and risks Click to edit Master title styleCommodity 150 $US price ― prices 130 Thermal Coal 110 – Stronger global activity, firm 90 WTI commodity prices and a Oil 70 competitive AUD are boosting Australia’s export outlook, 50 Iron Ore including for LNG Source: Bloomberg 30 – However, i
Slide 124: Glossary
Glossary — Financial Results for the full year ended 30 June 2018
Slide 125: Glossary
Glossary Click to edit Master title style ― Acquisition expense ratio – Acquisition expenses expressed as a percentage of net earned premium general insurance Acquisition expense ratio – Acquisition expenses, including upfront commissions, as a percentage of new business life insurance ADI Authorise
Slide 126: Glossary
Glossary Click to edit Master title style ― Cash return on average Cash earnings divided by average equity attributable to owners of the Company. Averages are based on monthly balances over th e period. The shareholders' equity ratio is annualised for half years Cash return on average Cash earnings
Slide 127: Glossary
Glossary Click to edit Master title style ― Deferred acquisition costs (DAC) The portion of acquisition costs not yet expensed on the basis that it can be reliably measured and it is probable that it will give rise to premium revenue that will be brought to account in subsequent financial periods De
Slide 128: Glossary
Glossary Click to edit Master title style ― Gross earned premium The total premium on insurance earned by an insurer during a specified period on premiums underwritten in the current and pre vious underwriting years Gross non-performing loans Gross impaired assets plus past due loans Gross written p
Slide 129: Glossary
Glossary Click to edit Master title style ― Life planned profit margin It includes the unwind of policy liabilities which refers to the profit impact of changes in the value of policy liabilities due to the passing of time release Life risk in-force annual Total annualised statistical premium for al
Slide 130: Glossary
Glossary Click to edit Master title style ― Marketplace Suncorp's Marketplace is a connected network of brands, solutions, partners, and channels to empower customers to improve the ir financial wellbeing and deliver outstanding customer experiences and deepen Suncorp’s relationships with its custom
Slide 131: Glossary
Glossary Click to edit Master title style ― Net tangible asset backing per Total equity less intangible assets divided by ordinary shares at the end of the period adjusted for treasury shares share New Zealand function Suncorp's New Zealand business distributes consumer, commercial and life insuranc
Slide 132: Glossary
Glossary Click to edit Master title style ― Reinsurance A form of insurance for insurance companies where, in exchange for an agreed premium, the reinsurer agrees to pay all or a sh are of certain claims incurred by the insurance company. Suncorp's reinsurance arrangements currently include a main c
Slide 133: Glossary
Glossary Click to edit Master title style ― Total capital ratio Total capital divided by the Prescribed Capital Amount for Life and General Insurance, or total risk-weighted assets for the Bank, as defined by APRA Total operating expense ratio – Total operating expenses (acquisition and other underw
Slide 134: Important disclaimer
Important disclaimer Click to edit Master title style ― This report contains general information on the Group and its operations which is current as at 9 August 2018. 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
Slide 135: To see more, go online suncorpgroup.com.au
To see more, go online suncorpgroup.com.au — Registered office Level 28, 266 George Street Brisbane, Qld Australia 4000 Investor relations contacts Kelly Hibbins Ph: 02 8121 9208 Andrew Dempster Ph: 02 8121 9206 Sophie Bastin-Byrne Ph: 07 3135 4700 Alexia Brockhall Ph: 07 3836 1421 Isabella Sinclair