Suncorp Group Limited · ASX:SUN
Suncorp — NY Conference (March 2008)
25 slides from Suncorp's conference presentation, March 2008
Slide 1: Welcome and overview of Suncorp
Good morning. I’m delighted to be here in New York and to have the opportunity to speak to you about Suncorp Suncorp. Today Today, I’ll I ll give you a quick overview of who we are and where we have come from. I’ll briefly rundown the highlights of our half year results which were announced to the m
Slide 2: Suncorp is a major Australian company
Suncorp is a major Australian company, with operations in every state and a significant presence in New Zealand. We employ more than 16,000 people, and service more than 7 million customers. Suncorp has grown to be Australia’s sixth largest bank with more than $91.8 billion in assets, and with over
Slide 3: Major milestones in Suncorp history
This slide provides you with a snapshot of the major milestones in the Suncorp history. In December 1996 the Group was formed through a 3 way merger involving Suncorp, a government owned insurance company; QIDC, a government owned industry development corporation; and the publicly listed regional ba
Slide 4: High level half year numbers
So first to the high level numbers. And net profit after tax for the half year to December 2007 is $382 million. Profit before tax and with the Promina acquisition items removed is $616 million. While this is a reduction off 20% % on the December 2006 halff year it does reflect f a number of externa
Slide 5: Bank profit contribution
To the Bank first. And here the numbers are very satisfying with profit contribution before tax increasing by 6.2% to $307 million for the half year.
Slide 6: Bank profit before tax and bad debts
Profit before tax and bad debts increased by 9.9% to $323 million which includes the impacts of increased funding costs flowing from the global credit crunch which we estimate has had a negative $8 million impact on the half year. The Bank has a very positive trajectory. It has built a strong lendin
Slide 7: Bank fundamentals remain sound
It has new and effective sourcing arrangements with globally recognised partners which is assisting in driving down costs and improving productivity and capability. But most importantly, in volatile times, the Bank’s fundamentals remain very sound. C t as a percentage Costs t off income i are on par
Slide 8: Bank fundamentals remain sound (continued)
It has new and effective sourcing arrangements with globally recognised partners which is assisting in driving down costs and improving productivity and capability. But most importantly, in volatile times, the Bank’s fundamentals remain very sound. C t as a percentage Costs t off income i are on par
Slide 9: General insurance result and weather impact
To general insurance and here the effects of weather and investment markets have significantly impacted the result with profit contribution of $172 million down 75% on the prior corresponding period. But driving below this to the underlying performance and it’s clear that despite the multiple challe
Slide 10: Credit spread impact on fixed interest portfolio
The other item that we have specifically identified is the impact of credit spread movements in our General Insurance fixed interest portfolio. This resulted in a negative ‘mark to market’ impact of $85 million. I’ll reiterate that we have no direct exposure to sub-prime markets in this portfolio an
Slide 11: Interim dividend maintained and partly underwritten
So, wrapping it all up… the Board’s continued confidence in the underlying strength of the business has allowed us to maintain a fully franked, interim ordinary dividend of 52 cents per share despite the impact of the events on first half earnings. In order to provide us with additional capital flex
Slide 12: Suncorp and Promina integration synergies
Turning now to the high level Suncorp and Promina integration numbers. And as we announced last month in Australia Australia, the economics that underpinned the merger have improved significantly, with annualised synergies now $325 million at a one-off implementation cost of $375 million. The origin
Slide 13: Timing of synergy benefits and implementation costs
This slide illustrates the timing profile of synergy benefits and one-off implementation costs and presents a P&L view of the portfolio. We have also provided the market with a detailed breakdown of how we anticipate the benefits will flow through to the P&L by line item. We believe this level of di
Slide 14: Major synergy themes
Briefly, to the major synergy themes. And we’ve we ve taken a targeted approach to this Integration focusing on the areas of greatest opportunity. Broadly, there are three categories of benefit: • Home and Motor claims (short tail) • Operational expenditure reductions, and • Reinsurance Within each
Slide 15: Other opportunities beyond synergy benefits
There are other opportunities which we haven’t included in the synergy benefits. Firstly, the intellectual property held within the brands can be utilised to grow either risks in force or margins as market conditions dictate. In long tail claims, initiatives will be focussed primarily on claims cost
Slide 16: What the integration will deliver
Therefore, in our view, this Integration will deliver: • A robust business model that reflects our customer-led strategy. • Enhanced capabilities to lift performance, expressed through: - first of all brands and customer propositions - then people - simplified, efficient and agile business technolog
Slide 17: Outlook for the full year to June 2008
Briefly to our outlook for the full year to 30 June and you’ll find more information in our analyst pack and half year results presentation but, in summary, we are confident that the full year impact of the credit crunch on our banking operations will be no greater than $10 million to $15 million pr
Slide 18: Wealth Management and Group outlook
In Wealth Management we remain on track to achieve our full-year forecast of underlying profit growth of greater than 10% . And finally at the Group level, we continue to target absolute growth in dividends for the full-year. However given all the factors we have outlined today and the fact that syn
Slide 19: Impaired assets and subprime exposure
Finally, before I conclude I’d like to cover off on some issues that have been topical in the market over recent months months. Firstly, impaired assets have been a focus both here and in Australia and I can emphatically restate that we don’t have any exposure to the United States subprime markets.
Slide 20: Past due assets and loan book security
Past 90 day due assets have increased slightly and represent 0.32% of gross loans, advances and receivables. receivables Recent rate rise pressure on home mortgages has been the primary reason for this increase, although I should stress that they are still at relatively low levels compared with hist
Slide 21: Capital ratios versus targets
Another issue of interest has been capital and this table sets out Suncorp’s Capital ratios compared to their targets targets. As you can see we are comfortably ahead of our target bank capital adequacy and Group MCR coverage is slightly ahead of target, which should come as no surprise given we ups
Slide 22: Funding approach and mix
Finally, y, with the continued dislocation in credit markets likelyy throughout g 2008 I thought it would be important to outline the approach Suncorp has taken to funding over recent years. Total funding (excluding securitisation) grew by 27% to $48bn at Dec 07 up from $37.85bn in Dec 06. As a prop
Slide 23: Global investor base and debt issuance
In addition to a wide variety of domestic funding options available to Suncorp, we have also developed strong alliances with a diverse group of investors located in the major financial centres of Europe, Asia and the United States. This provides the capacity to issue a wide range of short-term and l
Slide 24: Wrap up and thank you
So, let me wrap up by saying: This has been one of the most challenging periods I have experienced in 25 years in the finance sector. We have almost had a perfect storm (pardon the pun) with the combination of: 1. The credit crunch 2. The incidence of major weather events 3. Volatile investment mark
Slide 25: General information notice
* This report contains general information which is current as at 10 March 2008. + It is not a recommendation or advice in relation to Suncorp-Metway Limited or any product or service offered by the Suncorp Group. + This report should be read in conjunction with all other information concerning Sunc