Suncorp Group Limited · ASX:SUN
Suncorp — JP Morgan Australasian Conference 2007
33 slides from Suncorp's conference presentation, Sep 28, 2007
Slide 1: Suncorp-Metway Ltd – JP Morgan Australasian Conference, Edinburgh
Suncorp-Metway Ltd For personal use only John Mulcahy Chief Executive Officer 28 September 2007 JP Morgan Australasian Conference, Edinburgh Good morning. I’m delighted to be here in Edinburgh and to have the opportunity to speak to you about Suncorp. Today, I’d like to give you a quick overview of
Slide 2: Suncorp at a glance
Suncorp at a glance • Group total assets in excess of $84bn • Approximately 8 million customers • Australia’s second largest general insurance group with gross written premium of over $6bn • Australia’s sixth largest bank with banking assets of over $61bn For personal use only • Strong wealth manage
Slide 3: Suncorp – the history
Suncorp – the history 2 1 Promina 3 For personal use only 2 Value 1 GIO 1 Integration 3 2 Organic growth 3 Corporate Development Suncorp 2 1 Metway QIDC 1996 2001 2006/07 3 This slide provides you with a snapshot of the major milestones in the Suncorp history. In December 1996 the Group was formed t
Slide 4: Overview of the 2007 full year result
Overview of the 2007 full year result • Strong operating performance of each of our businesses For personal use only • No distraction from transaction or integration • Confirms opportunity for the new Suncorp 4 SLIDE There were three key themes to come out of the result Firstly – that each of our bu
Slide 5: Group profit
Group profit Full year, $m NPAT PBT* 1,652 1,346 1,064 For personal use only 916 FY06 FY07 FY06 FY07 FY07 is the consolidated result of Suncorp for the12 months to 30/06/07 and Promina for the period of 20/03/07 to 30/06/07 *PBT : profit before tax and Promina acquisition items 5 SLIDE To the high l
Slide 6: Dividend
Dividend Dividend (cents/share) 10.3% 107 97 FY07 87 vs FY06 For personal use only 55 70 50 45 Total 56 June 40 half 30 75 52 47 42 Dec 30 half 26 FY03 FY04 FY05 Special FY06 FY07 6 SLIDE To dividend and the Board’s continuing confidence in the performance of our business has allowed us to declare a
Slide 7: Banking profit
Banking profit Full year, $m Jun 06 Jun 07 Ì% Net Interest Income 848 910 7.3 Non Interest Income 149 163 9.4 For personal use only Total Income 997 1,073 7.6 Operating Expenses (460) (479) 4.1 Profit before Tax and Bad Debts 537 594 10.6 Bad Debts (31) (25) (19.4) Contribution before Tax 506 569 12
Slide 8: Lending performance
Lending performance Bank lending assets (half-year, $b) 45.7 41.8 38.8 36.5 34.8 32.6 20.8 Total 30.3 For personal use only 18.5 Other 17.2 16.1 15.3 14.4 Business 12.2 Housing 22.4 23.8 19.6 20.8 (incl sec) 17.2 17.6 18.9 8 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 SLIDE If we look at lendin
Slide 9: Net interest margin
Net interest margin Net interest margin, % 2.09 - 0.04 - 0.10 0.09 1.97 For personal use only - 0.07 June 2006 Asset Funding Pricing Free June 2007 mix mix capital 9 Another key driver of the P&L performance in the Bank is net interest margin. And you will see that it has reduced 12 basis points dur
Slide 10: Banking expenses
Banking expenses Bank efficiency ratios, full year, % Cost to average total banking assets ratio 1.07% 0.94% • Key increases in expenditure For personal use only involve people investment in the Business Bank, increased compliance expenditure and occupancy costs. 46.1% 44.6% • Compliance expenditure
Slide 11: Credit quality
Credit quality Half-year, $m Gross non-performing 1.70% 1.48% loans, % of gross loans 1.12% 1.17% 1.00% 1.01% 0.73% 0.60% 0.64% 0.69% 0.48% 0.42% 0.50% 0.51% 318 0.37% 317 286 For personal use only Past 90 269 253 days 242 149 230 232 160 228 156 91 96 187 185 145 104 174 94 133 71 71 133 129 121 10
Slide 12: Group position in current environment
Group position in current environment • No direct exposure to US sub-prime market • No direct exposure to CDO’s exposed to US sub- For personal use only prime mortgages • Approximately 3.7% of the total lending book is low doc loans (max LVR 80%). • High quality home loan portfolio • Average LVR of
Slide 13: Funding strategy
Funding strategy Funding Strategy Bank Liabilities Dom Group OS MTN's ECP Dom FRNCD's 5% TCD's 7% 1% For personal use only 11% Domestic NCD's & ST W/Sale • Diversification 24% • Funding flexibility through new initiatives Sub & Cap 3% • Proactive debt investor Retail deposits programme 49% Outstandi
Slide 14: Global diversification of funding
Global diversification of funding EUROPE ECP Senior Debt - Benchmark Issuance UNITED STATES Sub-debt – Bank & Insurer Securitisation Commercial Paper For personal use only ASIA ECP Senior Debt Sub-debt Securitisation AUSTRALIA Deposits NCD’s Bank Bills Senior Debt Sub-debt Capital Securitisation 14
Slide 15: Banking summary
Banking summary • Strong receivables growth • Improvement in total revenue For personal use only • Some margin contraction • Robust funding strategy • Disciplined approach to credit 15 SLIDE So to quickly sum up the bank result We’ve seen strong lending growth across the portfolio, Pleasing growth i
Slide 16: General Insurance profit: consolidated
General Insurance profit: consolidated Full year, $m Including discount rate adjustment and fire services levy Jun 06 Jun 07 Ì% Gross Written Premium 2,691 3,790 40.8 Net Earned Premium 2,526 3,475 37.6 For personal use only Net Incurred Claims (1,633) (2,159) 32.2 Operating Expenses (653) (967) 48.
Slide 17: Premium revenue by product
Premium revenue by product Gross written premium (full year, $m) Including fire services levy Suncorp Promina 3,560 3,413 For personal use only 2,691 2,686 1363 Motor 1268 755 748 596 674 Home 591 628 Workers’ Comp 988 970 Commercial 595 582 246 239 CTP 530 519 269 270 Other Jun-06 Jun-07 Jun-06 Jun
Slide 18: Claims expense
Claims expense Net incurred claims (full year, $m) Including discount rate adjustment Suncorp Loss ratio Promina 65.7% 65.6% For personal use only 64.6% 2,079 61.5% 1,965 1,633 1,570 Jun-06 Jun-07 Jun-06 Jun-07 18 SLIDE Turning now to claims, Net incurred claims for the year for Suncorp were down 3.
Slide 19: Short tail ITR
Short tail ITR Full year, $m Suncorp Promina 7.1% For personal use only 5.8% 3.9% 4.1% FY06 FY07 FY06 FY07 19 SLIDE To short tail first and looking at the claims expense for both companies. The above slide highlights the different geographic profiles and how the impact of storm events in different s
Slide 20: Long tail claims expense
Long tail claims expense • Favourable trends in claims frequency and underlying experience For personal use only • Little evidence of superimposed inflation • Prior year releases offset current year profit strains 20 SLIDE In long tail classes, which include Compulsory Third Party, Workers Compensat
Slide 21: General Insurance summary
General Insurance summary • Strong, diversified and profitable • business Long tail classes benefit from For personal use only favourable claims experience • Strong performance in short tail ITR • Continued benefits from claims cost reduction projects and improved risk selection 21 SLIDE So, in summ
Slide 22: Wealth Management profit: consolidated
Wealth Management profit: consolidated Full year, $m Jun 06 Jun 07 Ì% Life Risk Planned profit margins 5 22 340.0 For personal use only Experience profits 8 18 125.0 Recapture of losses - 1 Life Risk 13 41 215.4 Funds Management 40 55 37.5 Total Wealth Mgmt underlying profit 53 96 81.1 Net investmen
Slide 23: Wealth Management NPAT
Wealth Management NPAT Full year, $m Suncorp Promina 160 150 140 126 Investment income 120 For personal use only 72 91 52 100 19 80 71 15 Funds Management 18 21 60 63 50 53 40 40 Life Risk 20 22 13 0 Jun-06 Jun-07 Jun-06 Jun-07 23 SLIDE Both businesses continued to focus on the delivery of superior
Slide 24: Funds and annual premium growth: Suncorp
Funds and annual premium growth: Suncorp Half-year, $m Funds Under Funds Under Life Risk annual Administration Management premium 6,353 14,406 151 For personal use only 5,803 13,698 139 121 5,163 12,995 Jun-06 Dec-06 Jun-07 Jun-06 Dec-06 Jun-07 Jun-06 Dec-06 Jun-07 24 SLIDE The Suncorp result was dr
Slide 25: Funds and annual premium growth: Promina
Funds and annual premium growth: Promina Half-year, $m Funds Under Funds Under Life Risk annual Administration Management premium 10,139 12,620 For personal use only 462 9,825 12,484 446 425 9,178 11,177 Jun-06 Dec-06 Jun-07 Jun-06 Dec-06 Jun-07 Jun-06 Dec-06 Jun-07 25 SLIDE In Promina Funds under a
Slide 26: Capital position
Capital position 30 Jun 1 July 06 31 Dec 30 Jun Target 2006 Adjusted 2006 2007 Suncorp MCR For personal use only 1.79x 1.79x 1.83x 1.66x 1.60x coverage VIL MCR 2.72x coverage Bank Capital 12.31% 11.90% 11.34% 9.86% 10%-10.5% Adequacy ratio Bank ACE 6.07% 5.59% 6.09% 5.05% 4.5%-5.0% 26 SLIDE To Capit
Slide 27: A measured and methodical approach to Integration
We have planned a measured and methodical approach to Integration PHASE 1 PHASE 2 PHASE 3 For personal use only Understanding Each Designing and Agreeing Implementing Other Initiatives Agreed Initiatives May – July 2007 July – November 2007 December Onward • Develop a deep understanding • Joint Inte
Slide 28: Integration timeline so far
Integration timeline so far • Executive team agreed the • Phase 2 kicks off with the Purpose, Vision, Business design of integration For personal use only Model and Synergy Principles initiatives for the Group • Appointment and • All requirements in place • Integration deliverables agreed training o
Slide 29: Inroads made to deliver synergy benefits
Inroads have already been made to deliver synergy benefits Suncorp still expects to incur a total of approximately $355 million of one-off For personal use only integration costs in order to achieve annualised synergy benefits of $225 million At 30 June $55 million of annualised synergy benefit ‘Qui
Slide 30: Group outlook
Group outlook Bank – Continue balancing price / volume mix – No trigger for material loan losses – Grow banking profit before tax and bad debts by approx. 10% Group – Higher expense growth offset by increased For personal use only revenue growth • Maintain growth momentum General Insurance • Strong
Slide 31: Summary
Summary • Strong operating performance of each or our businesses For personal use only • No distraction from transaction or integration • Capital position remains strong • Integration on track • Confirms opportunity for the new Suncorp 31 SLIDE So to summarise…. Suncorp is a diversified financial se
Slide 32: Suncorp-Metway Ltd 2007 Full-Year Results
Suncorp-Metway Ltd For personal use only 2007 Full-Year Results 27 August 2007 32
Slide 33: Disclaimer
Disclaimer • The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp’s current views at the date of this report (28 September 2007) and is subject to known and unknown risks and For
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