Suncorp Group Limited · ASX:SUN
Suncorp — Corporate Update (February 2009)
22 slides from Suncorp's corporate update, Feb 5, 2009
Slide 1: Market update
For personal use only Market update 5 February 2009
Slide 2: Disclaimer
Disclaimer This report contains general information which is current at 5 February 2009. For personal use only It is not a recommendation or advice in relation to Suncorp-Metway Limited, or any product or service offered by the Suncorp Group. Nothing in this release should be construed as either an
Slide 3: Agenda
Agenda • Introduction & overview – John Mulcahy For personal use only • Divisional performance – Chris Skilton • Banking • General Insurance • Wealth Management • Capital • Group outlook – John Mulcahy • Questions 3
Slide 4: Profit overview
Profit overview Unaudited, preliminary financial performance for the six months to 31 December 2008 For personal use only Six months $m to Dec-08 Banking 90 – 100 General Insurance 240 – 260 Wealth Management 100 – 120 LJ Hooker and other 10 – 30 Profit before tax & Promina acquisition items* 470 –
Slide 5: Banking overview
Banking overview For personal use only $m Six months to Dec-08 Net interest income 600 - 620 Fee income 135 -140 Operating expenses (290) - (300) Profit before tax & bad debts 445-455 Bad debts (355) Profit before tax 90-100 • Strong growth in net interest income as asset growth and favourable cash
Slide 6: Margin and expenses
Margin and expenses For personal use only 0.10% 1.84% 1.81% 0.02% 0.04% 0.07% 0.06% 0.02% 1.74% June 2008 Increased Increased Product Pricing Change in Change in Underlying Yield curve Dec-08 Liquid Assets Wholesale Product Mix Free Capital Margin movement funding benefits Net interest margin has be
Slide 7: Lending & funding
Lending & funding Lending growth moderating… Strong momentum in deposit gathering… For personal use only Total retail funding, $bn Loans, advances and other receivables, $bn 55.0 55.2 23.5 22.3 50.2 21.0 45.7 19.2 Jun-07 Dec-07 Jun-08 Dec-08 Jun-07 Dec-07 Jun-08 Dec-08 Strengthened balance sheet pos
Slide 8: Impairment charge
Impairment charge For personal use only Six months to Dec 2008 $m Comment Babcock & Brown specific provision (pre-IFRS) 75 Impairment crystallised post balance date Includes Raptis, SunLeisure and private SEQ Previously identified single name exposures 15 developer as identified in the September qua
Slide 9: Composition of impaired assets
Composition of impaired assets For personal use only Single name exposure represent over 80% of the increase in impaired assets 65 986 133 788 30 92 82 200 384 June 2008 Raptis Sunleisure SE QLD Property Developer Other Sept 2008 Babcock & Brown Other Dec 2008 Development Finance continues to be lar
Slide 10: Provisions coverage
Provisions coverage For personal use only Total provisions at top end of peer range Peer* max 127 111 Peer* min 85 Peer* max 103 86 42 Peer* min 46 36 24 28 Dec-07 Jun-08 Dec-08 Total prov as % Gross Loans, Adv & Other Rec Total prov as % RWA ... and exceed peers including the GRCL 136 Peer* max 127
Slide 11: Factors impacting the impairment charge
Factors impacting the impairment charge For personal use only 355 75 75 19 53 23 110 Reported Impairment Economic overlay Babcock & Brown* Revaluations of impaired IFRS charge Impact on collective Expectation of 35 to charged assets* provision from economic 40bps following 1Q08 deterioration •Exclud
Slide 12: Composition of total loan portfolio
Composition of total loan portfolio For personal use only Lending Segments Geographical Breakdown Real estate mortgage Queensland New South 51% 60% Wales Agribusiness 6% 22% Other Construction & Commerical & Property Development Victoria Industrial investment 12% 12% 11% 13% South Australia & Other
Slide 13: General Insurance overview
General Insurance overview For personal use only A $m Six months to Dec-08 Gross Written Premium 3,250 – 3,350 Net Earned Premium 2,950 -3,000 Net incurred claims (2,150) – (2,200) Operating expenses (830)-(860) Investment income – technical reserves 170 - 200 Insurance Trading Result 150 -160 Inves
Slide 14: Gross Written Premium and operating expenses
Gross Written Premium and operating expenses For personal use only Approximate 1H09 v Product Factors 1H09 GWP 1H08 Strong premium increases offset by higher Motor $1.1 billion 4% excesses and reduced new vehicle sales Commercial $870 million 9% Hardening markets Home $760 million 9% Premium increas
Slide 15: Major weather events
Major weather events Financial Contribution to For personal use only Event impact 2008/09 aggregate (A$ million) cover New Zealand – July 15 5 Ipswich – September 30 20 Gold Coast/Byron – October 10 - South East Queensland – 16-21 Nov 125* 105# Total 180 130^ Suncorp provision for major weather even
Slide 16: Volatile fixed interest markets have impacted 1H09
Volatile fixed interest markets have impacted 1H09 Discount rates have fallen dramatically……increasing the outstanding claims provision and the value of fixed interest For personal use only securities Commonwealth Bond Yield Curve Changes 8.00 7.00 6.00 Yield % Significantly reduced discount rates h
Slide 17: Factors impacting the Insurance Trading Result
Factors impacting the Insurance Trading Result For personal use only 80 11.4% 341 30 Risk margin 200 100 75 New accident 60 5.2%* 157 Reported ITR Major weather events Impact of credit AWE adjustment Reserve releases Strains Normalised ITR above $120m spreads allowance *Based on $3.0 billion NEP 17
Slide 18: Wealth Management overview
Wealth Management overview HY Ended HY Ended HY Ended For personal use only $m Dec-08 Jun-08 Dec-07 Life Risk 40-45 40 38 Funds Management 20-25 22 48 Total wealth management 60-70 61 86 underlying profit after tax Annuities market adjustments (30) – (35) (10) (1) Life risk policy liability discount
Slide 19: Capital position
Capital position For personal use only Based on 20 cents per share dividend and unaudited results as outlined 30 June 2008 31 Dec 2008 Target Bank Capital Adequacy Ratio 10.44% 10.67% 11.5% - 12.0% Tier 1 Capital 8.04% 8.83% 9.0% - 9.5% ACE ratio 4.58% 3.89% 4.5% - 5.0% Bank Capital Adequacy Tier 1
Slide 20: Factors Affecting the ACE Ratio at December 2008
Factors Affecting the ACE Ratio at 31 December 2008 For personal use only 5 0.3 0.5 0.3 3.9 Projected ACE ratio Increased impairment charges Deduction of deferred tax Adverse weather conditions ACE at 31 December 2008 assets and reduced discount rates eliminating anticipated GI dividends 20
Slide 21: Outlook
Outlook For personal use only Bank General Insurance PBT&BD growth in high teens GWP 4% - 6% Conservative provisioning of ITR 10% - 12% for 2H09 impaired assets Wealth Management Capital Underlying profit flat Well above targets and conservatively placed in anticipation of economic deterioration 21
Slide 22: For personal use only
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