Slide 1: Financial Results for the half year ended 31 December 2017
For personal use only Financial Results for the half year ended 31 December 2017 — Create a better today RELEASE DATE 15 FEBRUARY 2018 SUNCORP GROUP LIMITED ABN 66 145 290 124
Slide 2: Michael Cameron, CEO & Managing Director
For personal use only Michael Cameron CEO & Managing Director ―
Slide 3: Result Overview
Result Overview — For personal use only HY18 HY17 Change ($m) ($m) (%) ‒ Includes the impact of Victorian Insurance (Australia) 264 369 (28.5) hail storm Banking & Wealth 197 208 (5.3) ‒ Impacted by significant business New Zealand 61 36 69.4 investment NPAT from functions 522 613 (14.8) ‒ Reflects
Slide 4: Highlights
Highlights — For personal use only 1. Business growing with strong top line growth 2. Digital transformation to drive improved customer experience and efficiencies is well progressed 3. Investment in the Business Improvement Program to improve processes and deliver a more resilient Suncorp model, on
Slide 5: 1. Business growing with strong top line growth
1. Business growing with strong top line growth For personal use only ‒ Australian Motor & Home GWP up 3.9%¹, unit growth up and market shares stabilised. Focus on Insurance claims processes has driven margin expansion ‒ Commercial has prioritised margin over growth in units ‒ Life business metrics
Slide 6: 2. Digital transformation well progressed
2. Digital transformation well progressed For personal use only ‒ Innovation is improving the customer experience ‒ Pilot of the Reward & Recognition program, 55,000 users ‒ 33% of the Group’s online claims are now ‘zero touch’ ‒ Adoption of digital platform continues to grow: ‒ 67 million digital i
Slide 7: 3. Investment in Business Improvement Program on track to deliver benefits
3. Investment in Business Improvement Program (BIP) on track to deliver benefits For personal use only ‒ Investment in Business Improvement Program $50m YTD, focused on: ‒ Improving customer experience ‒ Driving efficiencies ‒ Embedding a culture of continuous improvement ‒ On track to deliver net b
Slide 8: 4. Dynamic regulatory environment has driven short term costs and longer term growth opportunities
4. Dynamic regulatory environment has driven short term costs and longer term growth opportunities For personal use only ‒ CTP structural change providing opportunities to enter new markets and improve share and returns over the longer term ‒ Banking has benefitted from opportunities created by regu
Slide 9: 5. Outlook is for a significant uplift in performance in FY19 and FY20
5. Outlook is for a significant uplift in performance in FY19 and FY20 For personal use only ‒ In FY19: ‒ Business Improvement Program to drive annualised operating expenses back to $2.7bn ‒ Underlying ITR expected to return to at least 12%, with the Cost to Income ratio around 50%, and Net Interest
Slide 10: Insurance (Australia)
Insurance (Australia) — For personal use only Gross Written Premium – Motor and Home (excluding FSL) ($m) ‒ GWP driven by unit growth and 2,500 premium increases 2,443 ‒ Working claims ratio improved 2,450 reflecting benefits of operating 2,411 efficiencies designed to offset 2,400 inflation 2,351 2
Slide 11: Banking & Wealth
Retail lending portfolio ($m) Banking & Wealth 48,000 47,190 — 47,000 9.00% For personal use only 46,000 44,564 45,098 44,343 7.00% 45,000 44,000 43,391 5.00% ‒ Growth in lending of 8.7% 0.10% 0.08% 0.07% 0.06% 43,000 0.06% 3.00% 42,000 materially above system 41,000 1.00% 40,000 ‒ Simplified origin
Slide 12: New Zealand
New Zealand — For personal use only Gross Written Premium (NZ$m) 800 ‒ Strong result driven by premium 768 increases, unit growth, strong 750 claims management and expense 714 710 control driving an ITR of 12.3% 681 700 ‒ Pricing changes implemented in 658 prior periods have been effective 650 in of
Slide 13: CFO Steve Johnston
For personal use only CFO ― Steve Johnston
Slide 14: Insurance (Australia) NPAT
Insurance (Australia) NPAT For personal use only HY18 HY17 Change — ($m) ($m) (%) Gross written premium 4,004 4,031 (0.7) ‒ NPAT down 28.5% to $264 million Net earned premium 3,643 3,552 2.6 ‒ GWP flat with strong consumer Net incurred claims (2,724) (2,374) 14.7 growth offset by reform headwinds Op
Slide 15: Home and Motor
Home and Motor Motor portfolio 3.4% 2.6% 3.5% } 2.1% 2.0% 2.2% 1.6% portfolio 1.1% -0.5% 1.0% 0.9% 1.2% 4.7% For personal use only — -0.1% -0.1% -0.7% -3.0% -3.0% -5.3% – Positive momentum across Dec 13 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Home and Motor Units AWP growth – Motor p
Slide 16: Gross written premiums
Gross written premiums ($m) — For personal use only 11 15 92 (32) (53) (27) (33) 4,031 4,004 1H17 GWP Home & Commercial Workers' NSW NSW CTP CTP 1H17 1H18 GWP (inc FSL) Motor growth growth comp & Other FSL unearned pricing SA CTP (inc FSL) growth premium novated refund premium HY18 RESULTS INSURANCE
Slide 17: Claims
Claims Home active claims volumes (‘000) — For personal use only 70 60 50 40 Net incurred claims ($m) 20 20 30 30 20 50 10 76 0 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 154 ■ Working claims ■ Natural hazard claims 2,724 Motor active claims volumes (‘000) 200 2,374 160 120 HY17 net Risk free Natural
Slide 18: Investments
Investments — For personal use only Insurance funds $8.9 billion ̶ Investment income of $120 million (HY17: $35 million) ̶ $24 million MTM loss from an increase in risk-free rates ■ Cash ̶ $30 million MTM gain from narrowing credit spreads ■ ILBs ̶ $8 million MTM gain from outperformance of ILBs ■ C
Slide 19: Life Insurance NPAT
Life Insurance NPAT For personal use only HY18 HY17 Change — ($m) ($m) (%) Planned profit margin release 12 9 33.3 Experience 2 (2) n/a – Improving planned margins from repricing Other and investments 25 18 38.9 – Optimisation program to deliver Underlying profit after tax 39 25 56.0 improved profit
Slide 20: Banking & Wealth NPAT
Banking & Wealth NPAT HY18 HY17 Change For personal use only — ($m) ($m) (%) Net interest income 598 558 7.2 Net non-interest income 34 39 (12.8) – Annualised lending growth of 8.7% Operating expenses (347) (307) 13.0 – NIM of 1.86% (HY17: 1.78%) Profit before impairment losses 285 290 (1.7) – Sound
Slide 21: New Zealand NPAT
New Zealand NPAT For personal use only HY18 HY17 Change — (NZ$m) (NZ$m) (%) Gross written premium 768 714 7.6 Net earned premium 616 586 5.1 – GWP grew 7.6%, driven by all product classes Net incurred claims (348) (372) (6.5) – Lower natural hazard costs Operating expenses (199) (196) 1.5 – New SMAR
Slide 22: Group operating expenses
Group operating expenses ($m) — 11 4 For personal use only 16 17 11 32 1,437 (14) 1,360 1H17 FSL Net BIP Regulatory Commissions Marketing DAC Other 1H18 operating expenses spend spend operating expenses expenses BIP expenses ($m) 1H18 Operating expenses Claims expenses Total Expenses (38) (12) (50)
Slide 23: GI underlying ITR
GI underlying ITR — For personal use only (0.8%) 1.1% (1.2%) (0.4%) (0.5%) (0.8%) 12.0% 10.2% 9.4% 2H17 UITR Natural Operating Investment CTP Reform Margin 1H18 UITR BIP costs 1H18 UITR hazards expenses returns improvement (Ex-BIP) allowance (Ex-BIP)* * Refer to Group operating expense walk HY18 RES
Slide 24: Capital position
Capital position ($m) — For personal use only ̶ CET1 excess of $381 million ̶ Increase in GI PCA driven by both Insurance Risk Charge and Asset 452 (393) Risk Charge (ARC) ̶ Reduction in GI Excess Technical Provisions due to normal seasonality (62) (43) 35 15 (37) 37 ̶ Bank growth in risk weighted 3
Slide 25: Michael Cameron, CEO & Managing Director
For personal use only Michael Cameron CEO & Managing Director ―
Slide 26: Strategy Evolution 2017+
Strategy Evolution 2017+ — Build resilience & For personal use only drive growth 2016 Business Improvement One Suncorp Program “Owner’s mindset” • Digitisation 2011 - 2015 • Organisational • Channel optimisation Simplification re-design • Process improvement • Customer focus • Supply chain re-design
Slide 27: Approach to delivering the strategy
Approach to delivering the strategy Simultaneously improve customer experience and operational excellence For personal use only — • Personalised and empowered experiences ‘Future- ready’ • Customer of the Group IMPROVING CUSTOMER EXPERIENCE OUR PATHWAY • Mobile capability MARKETPLACE • Address pain
Slide 28: Driving shareholder value
Driving shareholder value — For personal use only Drivers of Growth Economic Model Value Creation Deeper relationships for longer Revenue sensitivity FY19 profit growth components² +1 product for 25% of customers1 = ~$97m NPAT pa Value per +5% GI Australia Retention = ~$25m NPAT pa 9% 3x 6x 9x Custo
Slide 29: Engagement with our 9.6m Customers
Engagement with our 9.6m Customers — For personal use only HY18 Increasing Connected Customers¹ Proportion of Customers Holding Multiple Products Across Different Needs 35% Consumer Net Promoter Score (NPS) 7.6 Driving customer engagement via digital channels Number of Digital² Users 1,680,900 Propo
Slide 30: Senior Leadership Team – Deep Industry Experience Across Functions
Senior Leadership Team – Deep Industry Experience Across Functions — For personal use only P&L, Balance Sheet, Claims Enabling Functions Steve Johnston Amanda Revis Gary Dransfield David Carter Finance & Legal People Insurance Banking & Wealth Functions and Accountabilities Paul Smeaton New Zealand
Slide 31: Regulatory Environment
Regulatory Environment — For personal use only ‒ Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry ‒ Banking Executive Accountability Regime (BEAR) ‒ New Industry Codes of Practice ‒ QLD CTP Scheme ‒ ACCC Northern Australia Insurance Inquiry ‒ Productivi
Slide 32: Outlook and FY19 Targets
Outlook and FY19 Targets¹ — For personal use only Key FY19 targets are: ‒ 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 Interest Margin (NIM) of 1.80% to 1.90% ‒ Producing a Cash ROE of 10% ‒ Reserve r
Slide 33: Summary
Summary — For personal use only 1. Business growing with strong top line growth 2. Digital transformation to drive improved customer experience and efficiencies is well progressed 3. Investment in the Business Improvement Program to improve processes and deliver a more resilient Suncorp model, on tr
Slide 34: Important disclaimer
Important disclaimer — For personal use only This presentation contains general information which is current as at 15 February 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 Group or any product or service of
Slide 35: Thank you
Click Thanktoyou edit Master title style ― — For personal use only HY18 RESULTS 35