Slide 1: Financial results for the year ended 30 June 2013
For personal use only Suncorp Group Limited Financial results for the year ended 30 June 2013 Suncorp Group Limited 21 August 2013
Slide 2: Agenda
Suncorp results presentation Agenda For personal use only Results and operational highlights Patrick Snowball CFO report • Core business lines John Nesbitt • Non-core Bank resolution • Group capital Suncorp’s strategic assets Patrick Snowball Q&A Suncorp Leadership Team 2 Suncorp Group Limited 21 Au
Slide 3: Introduction
For personal use only Introduction Patrick Snowball Chief Executive Officer, Suncorp Group Limited 3 Suncorp Group Limited 21 August 2013
Slide 4: FY13 result overview
FY13 result overview For personal use only FY13 FY12 %∆ General Insurance NPAT 883 493 79.1 Core Bank NPAT 289 289 - Suncorp Life NPAT 60 251 (76.1) Core Business lines NPAT 1,232 1,033 19.3 Non-core Bank (632) (263) n/a Other profit and acquisition amortisation (109) (46) n/a Net Profit After Tax 4
Slide 5: Key commitments
Key commitments One Company. Many Brands For personal use only 1 Group growth of 7% to 9% per annum over the next two years 2 Simplification benefits of $225 million in the 2015 financial year 3 ‘Meet or beat’ an underlying ITR of 12% through the cycle 4 60% to 80% dividend payout ratio 5 Continue t
Slide 6: Top line growth
Top line growth Growth across all three business lines ($m) For personal use only General Insurance GWP Suncorp Life individual 8.0% in-force business 8.7% 8,589 785 7,280 669 FY11 FY12 FY13 FY11 FY12 FY13 Core Bank lending assets Shareholder returns (cps) 9.5% Interim dividend Final dividend Specia
Slide 7: Healthy margins
Healthy margins Above target levels Core Bank Net Interest Margin For personal use only General Insurance Underlying ITR 13.6% 1.97% 13.4% 1.92% 13.1% 1.83% 1.90% 1.89% 1.76% 1.84% 1.83% Meet or beat 12% Target range 1.75% to 1.85% 11.2% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 10.5% 11.1% 10.0% 50 4
Slide 8: Core business profitability
Core business profitability Improved earnings (Profit after tax $m) For personal use only 19% 1,232 General Insurance Core Bank Suncorp Life 60 1,047 1,033 289 222 800 251 268 149 289 259 883 557 493 392 FY10 FY11 FY12 FY13 8 Suncorp Group Limited 21 August 2013
Slide 9: Financial Results
For personal use only Financial Results John Nesbitt Chief Financial Officer, Suncorp Group Limited 9 Suncorp Group Limited 21 August 2013
Slide 10: General Insurance
General Insurance Underlying ITR of 13.5% For personal use only $m FY13 %∆ General Insurance profit after tax 883 79.1 • GWP up 8.0% • GWP up 8.5% after adjusting for FSL • Reported ITR of 13.1% • Delivered on the ‘meet or beat’ 12% underlying ITR target • Natural hazard claims $75 million above all
Slide 11: Gross Written Premium
Gross Written Premium GWP up 8.5% excluding FSL For personal use only Product FY13 %∆ Factors ($m) Motor 2,764 4.7 A combination of unit and premium growth Home 2,498 10.4 Premium increases to recover increased reinsurance Commercial 1,987 8.4 Growth across all major product lines CTP 978 8.5 Strong
Slide 12: Underlying ITR
Underlying ITR Meet or beat 12% underlying ITR FY13 For personal use only 13.5% 13.6% FY12 13.4% 12.1% 13.1% FY11 11.2% 10.8% 10.0% 11.1% FY10 10.5% 9.0% 8.0% 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 12 Suncorp Group Limited 21 August 2013
Slide 13: Core Bank overview
Core Bank overview Sustainable growth For personal use only $m FY13 %∆ Core Bank profit after tax 289 Flat • Home lending up 9.4% and Agribusiness up 11.8% • Second half NIM was 1.89%, above target range of 1.75% to 1.85% • Retail deposit to core lending 66.5% in target range of 60% to 70% • Issued
Slide 14: Core Bank credit quality
Core Bank credit quality Non-performing loans ($m) For personal use only Impaired assets > 90 days past due SME & Agribusiness > 90 days past due retail > 90 days past due due to change in hardship treatment NPLs / total loans (%) Excl change in hardship treatment 1.32 1.25 1.23 1.15 1.19 1.05 1.11
Slide 15: Non-core Bank resolution
Non-core Bank resolution Run-off expected to be less than $100 million by June 14 For personal use only Residual portfolio expected run-off Residual portfolio run-off 735 Residual portfolio • Provision coverage in excess of 50% Performing Impaired • Around $300 million in Dec13 452 407 • Less than $
Slide 16: Consolidated Bank
Consolidated Bank Stranded funding impact For personal use only Consolidated Core Non-core Residual Non-core Spread over $m maturities [LHS] BBSW [RHS] 2 1.80 1.86 600 5% Target Range 1.75 – 1.85% 500 4% 1.5 1.64 400 1.42 3% 1 300 0.75 2% 200 0.5 1% 0.13 100 0 0 0% FY10 FY11 FY12 FY13 Sep-13 Dec-13
Slide 17: Suncorp Life overview
Suncorp Life overview Strong new business growth For personal use only $m FY13 %∆ Life underlying profit after tax 120 (17.8) Life profit after tax 60 (76.1) • Market adjustments after-tax loss of $60 million due to: • increasing discount rates; and • negative investment income experience • Disabili
Slide 18: Direct distribution
Direct distribution 70,000 Life and Superannuation customers For personal use only Direct Life Sales ($m) Demonstrating growth Sales to General Insurance customers Sales to Bank customers • 3 new Direct Life products sold via AAMI, 33 GIO and APIA 30 23 • Everyday Super for sale through the Bank 16
Slide 19: Capital
For personal use only Capital 19 Suncorp Group Limited 21 August 2013
Slide 20: Capital Management
Capital Management Working through changes = greater clarity For personal use only Regulatory Resolving the Capital Capital Targets change Non-Core Bank Management • CET1 targets for • LAGIC • De-risking the • NOHC all business lines • Basel III Group • Life and GI single • Provides a clear • Sale o
Slide 21: FY13 Capital movements
FY13 Capital movements Dividends funded by core business NPAT For personal use only 322 1,123 643 58 116 45 792 847 Excess Transitional BAU growth and Non-core Bank Core business Interim dividend Final and special Excess 30 June 2012 LAGIC Basel III other Loss and Run-off NPAT dividend 30 June 2013
Slide 22: Pro-forma CET1 at June 2013
Pro-forma CET1 at 30 June 2013 $801 million excess to CET1 targets For personal use only General NOHC and Suncorp A$m Bank Life Insurance other entities Group Total CET1 3,079 2,373 468 190 6,110 CET1 Target 2,335 2,445 352 177 5,309 Excess 744 (72) 116 13 801 CET1 ratios 1.45x 7.76% 1.75x Amount eq
Slide 23: Capital Strategy
Capital Strategy NOHC benefits - Diversification Indicative Diversification potential* For personal use only Risk-based capital Group will allow us to: Surplus Diversification Potential NOHC • Quantify risk and optimise return Life • Enhance decision making Group Group Bank • Understand Total Total
Slide 24: Conclusion
For personal use only Conclusion Patrick Snowball Chief Executive Officer, Suncorp Group Limited 24 Suncorp Group Limited 21 August 2013
Slide 25: General Insurance Supply Chain
General Insurance Supply Chain Better outcomes for customers and shareholders For personal use only Capital S.M.A.R.T. Supply chain optimisation • 23 sites across the country • 120,000 cars repaired per year • $400 average cost saving per car Parts joint venture • Scale benefits Q-Plus • Reduced cos
Slide 26: Suncorp's strategic assets
Suncorp’s strategic assets Our focus For personal use only • Deliver scale cost benefits on third party procured goods / services Cost • Share scale on infrastructure (real estate, enterprise technology) and non-unique business services • Enhancing the value of 9 million customers connections by dee
Slide 27: Cost: Simplification and procurement gains
Cost Simplification and procurement gains $m For personal use only Original net impact Revised net impact 300 Revised • Simplification projects 250 Simplification expected to deliver $225 200 benefits million in FY15 and $265 million in FY16 150 100 • Increased project spend Original Simplification
Slide 28: Customer
Customer Growth from leveraging brands and the customer base For personal use only •• 99 million customers million customers % of personal customers with products from more than one of the Suncorp Group business lines • Nearly 2 million have products from more than one business line • Simple, everyd
Slide 29: Capital
Capital Diversification in Suncorp’s business lines Indicative Diversification potential* For personal use only • NOHC structure Group Surplus Diversification • Common Equity Potential targets set NOHC • Strong excess capital position remains Life intact Group Group Bank • A+/A1 credit ratings Total
Slide 30: Culture
Culture Engagement scores demonstrate the progress For personal use only 90 • Single set of terms and 2012 2013 Aus/NZ Norms 80 conditions 80 77 70 • Reinforcing a Suncorp 70 72 71 culture 60 63 66 66 65 50 • Driving operational excellence 40 • Lifting leadership 30 capability 20 • A proud history a
Slide 31: The Suncorp journey
The Suncorp journey 4Cs drive the Group’s competitive advantage For personal use only FY13 - FY16 Optimise and differentiate FY12 - FY16 • ‘Meet or beat’ 12% Simplification underlying ITR FY10 - FY12 program • 10%+ ROE by FY15 NOHC & • Licence Building Blocks • Additional consolidation FY10 • One pr
Slide 32: Q&A session
For personal use only Q&A session 32 Suncorp Group Limited 21 August 2013
Slide 33: Suncorp's shareholder focus
Suncorp’s shareholder focus For personal use only Yield Growth • Dividend payout ratio of 60% to • 7% to 9% per annum growth 80% across the business lines • Return surplus capital • Leverage the Group’s 9 million • Organic strategy customers • Focus exclusively in Australia • Multi-brand, multi-chan
Slide 34: Supplementary slides
For personal use only Supplementary slides 34 Suncorp Group Limited 21 August 2013
Slide 35: Additional Simplification benefits
Additional Simplification benefits Delivering more, sooner - $225 million in FY15 $m use only 300 Original net impact 250 Revised net impact Revised Simplification 200 benefits 150 For personal 100 Original Simplification 50 benefits 0 Original one-off (50) project costs FY16 FY15 (100) Revised FY14
Slide 36: Suncorp's historical dividends
Suncorp’s historical dividends The Non-core Bank impact For personal use only Interim Final 70% payout of cash earnings (ex non-core) 66 59 55 44 30 20 20 20 20 25 15 15 FY10 FY11 FY12 FY13 36 Suncorp Group Limited 21 August 2013
Slide 37: FY14 Reinsurance program
FY14 Reinsurance program 5.8bn For personal use only Key Points • Purchase more side-ways cover 2.5bn • $250 million ICRC • Top end increasing to $5.8 billion 500m Original cover Third cover Original cover Third cover 250m reinstatement reinstatement 200m 150m 50m NZ Dropdown NZ Dropdown Drop-down a
Slide 38: FY14 Reinsurance program
FY14 Reinsurance program Drop-down aggregate program For personal use only 250m 50m xs 200m xs 50m 100m xs 100m xs 150m xs 200m 150m xs 300m 200m 150m Erosion contributes to 100m xs 100m xs aggregate dropdown 50m xs 200m 50m xs 300m 50m Retention 38 Suncorp Group Limited 21 August 2013
Slide 39: Natural hazards since 1967
Natural hazards since 1967 Suncorp long-term catastrophic loss experience Events greater than $100m, gross of all reinsurance For personal use only 4,500 Christchurch NZ AUS Long run average earthquakes, Brisbane 4,000 floods, Cyclone Yasi, Melbourne hailstorm 3,500 Brisbane flood, Cyclone Tracy New
Slide 40: Core Bank - credit quality
Core Bank - credit quality Past due loans impacted by methodology change For personal use only QLD home lending past due - 90 days (% of QLD loans) Total home lending past due - 90 days (% of Total loans) 0.96% Excluding change in hardship treatment 0.81% 0.82% Excluding change in hardship treatment
Slide 41: Core Bank
Core Bank Strong growth across all key segments For personal use only Core lending assets ($47.5bn) Geographic Split up 9.5% SA & Agri Other WA +11.8% 3% VIC 6% Commercial 9% (SME) +9.2% QLD Consumer NSW -3.9% 59% 23% Mortgage +9.4% 41 Suncorp Group Limited 21 August 2013
Slide 42: Residual Non-Core
Residual Non-Core Residual loans $735 million as at 30 June 2013 For personal use only … by segment … by geography Performing Impaired Performing Impaired 23 36 39 63 193 124 88 292 5 101 29 68 36 117 95 6 27 26 37 40 7 18 Retail Office Land Other Dev. Other Prop. Other Corp. Gold Coast QLD (ex. GC)
Slide 43: Residual Portfolio
Residual Portfolio Well provisioned with continued run-off expected For personal use only … Well provisioned Residual expected run-off ($m) Additional coverage Residual Portfolio Provision coverage 735 10% Performing Impaired - - 1% 10% 15% 18% 452 407 301 69% 60% 58% 56% 51% 283 129 44% 42% <$100 R
Slide 44: Suncorp transformation
Suncorp transformation Life & Vero NZ For personal use only Bank Commercial Insurance Core Businesses Personal Insurance Simplification Building Blocks in place Stabilise 2009 2010 2011 2012 2013 2014 2015 Suncorp Group Limited 21 August 2013
Slide 45: Important disclaimer
Important disclaimer This report contains general information which is current as at 21 August 2013. It is information given in summary form For personal use only 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 S
Slide 46: Contacts
For personal use only Contacts Mark Ley mark.ley@suncorp.com.au (+61) 07 3135 3991 Nicole McGinn nicole.mcginn@suncorp.com.au (+61) 07 3135 3993 Sam Miller samantha.miller@suncorp.com.au (+61) 07 3135 2415 Nick Perchey nick.perchey@suncorp.com.au (+61) 02 8121 9206 Andrew Dempster andrew.dempster@su