Slide 1: FY19 Results Presentation
SUNCORP O FY19 Results Presentation Financial Results for the full year ended 30 June 2019 Create a better today for our customers RELEASE DATE 7 AUGUST 2019 SUNCORP GROUP LIMITED ABN 66 145 290 124 SUNCORP |)
Slide 2: Welcome and acknowledgement of country
FY19 RESULTS PRESENTATION Good morning everyone and welcome to the Suncorp FY19 results presentation. Today, I am joined on stage by our Acting CFO, Jeremy Robson, and in the front row by members of our Senior Leadership Team. On behalf of all present I would like to begin by acknowledging the Gadig
Slide 3: Presentation overview
FY19 RESULTS PRESENTATION I will start with an overview of the FY19 result, tell you about the work we are doing to focus the business, and give you a sense of our priorities for FY20. Jeremy will provide a more detailed run through of the numbers, including our year end capital position. I will the
Slide 4: FY19 result overview
FY19 RESULTS PRESENTATION To the result, and we have reported net profit after tax of $175m; a cash profit of $1.115 billion and a final ordinary dividend of 44 cents per share fully franked. As you can see on the left of the slide, a number of factors impacted the result. The most material are the
Slide 5: Result highlights
FY19 RESULTS PRESENTATION The first relates to our key portfolios of home, motor and mortgage lending. While our full year performance is not as strong as we had hoped, we exited FY19 with a solid base to build on into FY20. We achieved a significant improvement in margins across commercial insuranc
Slide 6: Priorities for the business
FY19 RESULTS PRESENTATION I now want to spend a few minutes outlining our priorities for the business from here. When the Chairman asked me to step in as Acting CEO she gave me, and the SLT, a mandate to make the necessary decisions to keep driving the business forward. We have fantastic businesses,
Slide 7: Four priorities for FY20
FY19 RESULTS PRESENTATION We have set ourselves four clear priorities for FY20: – Number 1 is an absolute focus on delivering performance improvement in each of the three businesses. – Two: We are embracing regulatory change. Strengthening trust has become even more important in the post Royal Commi
Slide 8: Priority one: improve core business performance
FY19 RESULTS PRESENTATION Our first priority is to ensure all our people and all our programs of work are aligned to improve the performance of our core businesses. In Insurance this means reinvigorating our multi brand strategy; maintaining a disciplined approach to underwriting; and embedding digi
Slide 9: Priority two: regulatory change and Royal Commission
FY19 RESULTS PRESENTATION To our next priority – our response to the Royal Commission and other regulatory reviews. The Commission identified industry-wide deficiencies and forced us all to review our businesses from top to bottom. This has resulted in large remediation and system investments across
Slide 10: Investing in digital and data
FY19 RESULTS PRESENTATION Turning to slide 10. Investing in digital and data is both essential and uncontroversial. For Suncorp it: – allows us to more effectively meet the needs of existing Insurance and Banking customers – provides a convenient and cost-effective means of reaching new customers –
Slide 11: Digital progress in bank and insurance
FY19 RESULTS PRESENTATION Our progress here is most obvious in the bank where our customers have shown a high propensity to interact with us digitally and where a series of incremental investments in FY20 will provide us with full digital banking capability. Further demonstrating the flexibility of
Slide 12: Priority four: efficiency
FY19 RESULTS PRESENTATION Turning to priority four on Slide 12. Over the past decade we have used a series of programs to improve the operational efficiency of our business. You will be familiar with our building blocks, simplification, optimisation and, most recently, the business improvement progr
Slide 13: Restoring Suncorp as an attractive investment
FY19 RESULTS PRESENTATION The sum of all our efforts under the priorities we have set out for FY20 is to restore and reinforce Suncorp as an attractive investment for those seeking reasonable growth, high yield and maximum franking capacity. What has historically held us back has been our management
Slide 14: Structure changes
FY19 RESULTS PRESENTATION Accordingly, today we are announcing the following structure changes. – A new enabling function bringing together digital, marketing, customer and strategy will be established. Working alongside our technology team, this function will develop innovative digital-first custom
Slide 15: Handover to CFO and Life sale update
FY19 RESULTS PRESENTATION Thanks Steve and good morning everyone. Before I step you through the normal results commentary, I just wanted to provide a brief update on the completion of the Australian Life sale. 15
Slide 16: Life sale completion and capital return
FY19 RESULTS PRESENTATION We successfully completed the sale on 28 February and paid a fully franked 8 cents per share, special dividend to shareholders in May. This represented the first component of the return of excess capital from the sale. I’m pleased to say the completion process has now been
Slide 17: Australian Insurance results
FY19 RESULTS PRESENTATION Turning to the results and starting with the Australian Insurance business where the second half benefited from the reinsurance protection we had in place and improved investment market conditions. While the FY19 result is down on the prior period, this was largely driven b
Slide 18: Insurance GWP growth
FY19 RESULTS PRESENTATION I have shown here a waterfall breaking down our GWP growth for the year. In Consumer, unit growth continues to be impacted by lower new business opportunities as a result of the economic environment, with reduced turnover in dwellings as well as a reduction in new car sales
Slide 19: Insurance claims
FY19 RESULTS PRESENTATION Turning to claims and I have included the usual undiscounted view of net incurred claims in the waterfall. This clearly shows the impact of the significant natural hazard events as well as the ongoing positive effect of BIP which is helping to offset underlying inflation. T
Slide 20: Investment portfolio and funds result
FY19 RESULTS PRESENTATION Moving to the investment portfolio. The headline Insurance funds’ result reflects mark-to-market gains from the significant fall in risk-free rates and narrowing of credit spreads, partially offset by the relative underperformance of inflation-linked bonds. The underlying y
Slide 21: New Zealand result
FY19 RESULTS PRESENTATION Next to New Zealand which delivered a very pleasing result, driven by strong GWP growth across all portfolios and a relatively benign weather environment. Net incurred claims were down 5.7% reflecting favourable natural hazards as well as improved working claims. The increa
Slide 22: Group underlying ITR
FY19 RESULTS PRESENTATION Moving to the Group underlying ITR, which has improved significantly since FY18. As the waterfall shows, the higher natural hazard allowance in FY19 and higher operating expenses, were more than offset by the net claims and expense benefits emerging from BIP. The margin imp
Slide 23: Natural hazards and reinsurance program
FY19 RESULTS PRESENTATION I also wanted to cover off the impacts from natural hazard events and how our Reinsurance program has protected us in the second half of the year. As you can see from the chart, our natural hazard costs for 2H19 was $269 million, despite a number of events including the Tow
Slide 24: Banking and Wealth
FY19 RESULTS PRESENTATION Turning to Banking and Wealth, which delivered a resilient profit after tax of $364 million, broadly in line with the prior period. Total lending grew 1%, principally reflecting moderation in mortgage lending, with a highly competitive and slowing housing market, as well as
Slide 25: Business Improvement Program and costs
FY19 RESULTS PRESENTATION As Steve outlined, the savings from BIP have enabled us to make the necessary investments in core areas of the business. We now expect to deliver at least $380 million in net benefits in FY20, which includes the removal of the life stranded costs. This new target has been u
Slide 26: Regulatory project costs and remediation
FY19 RESULTS PRESENTATION Total regulatory project costs for FY19 came in at $95 million. We have also included a customer remediation provision for $60 million in the results, which is higher than we anticipated at the interim. This relates to the anticipated costs associated with the Royal Commiss
Slide 27: Capital position and dividend
FY19 RESULTS PRESENTATION Finally, to capital and we continue to maintain a very strong capital position. The Board has approved a final fully franked dividend of 44 cents per share, which brings the total ordinary dividends for the year to 70 cents, equivalent to a payout ratio of 81%, in line with
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Slide 29: Outlook and FY20 priorities
FY19 RESULTS PRESENTATION In running through the outlook and the key priorities for FY20, I’ll return to the framework introduced at the start of the presentation. We have four key priorities – become operationally efficient, leverage the investments in digital and data, strengthen trust and improve
Slide 30: Balance sheet priorities
FY19 RESULTS PRESENTATION Our immediate balance sheet priority is to achieve shareholder approval for the Life capital return and get over a billion dollars of capital back to shareholders in the next 10 weeks. We expect to complete the SMART strategic review in the first half and of course we remai
Slide 31: Closing remarks and questions
FY19 RESULTS PRESENTATION In closing, I would like to reiterate that Suncorp has three fantastic businesses, a passionate and capable team and a unique culture. I believe the priorities we have laid out today will drive improved performance across the business. I would like to take this opportunity
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