Suncorp Group Ltd. is a financial services company, which engages in the provision of banking, wealth, and insurance products and services. It operates through the following segments: Insurance; Banking and Wealth; Suncorp New Zealand.
This morning, SUN shares were upbeat as Suncorp Group announced a strong FY21 result with cash earnings of $1,064 million, up 42.1%. The result demonstrates the program of simplifying and refocusing Suncorp is gaining traction. Group net profit after tax increased by 13.1% to $1,033 million. The Board has declared a fully franked final ordinary dividend of 40 cents per share. This brings the total fully franked ordinary dividends for FY21 to 66 cents per share. In addition, the Board has declared a fully franked 8 cent special dividend and has announced an on-market share buyback of up to $250 million.
Suncorp Group CEO Steve Johnston said the result had been delivered against a challenging external backdrop of COVID-19 and the La Niña weather pattern. “During this time our focus has been on supporting our insurance and banking customers and executing our strategic priorities.” Mr Johnston said over the course of the year, the Group had provided COVID-19 support to more than 85,000 customers and contributed $9 million to a range of community programs.
In the results, Suncorp’s Insurance (Australia) delivered its strongest top-line growth since 2013, with GWP up 5.5%. As part of the business’ focus on revitalising growth, it’s customer value propositions have been refined, new product features have been introduced and an additional investment has been made in marketing. In the Bank, driving improved performance in home lending is the key priority. Home lending grew by 0.8% in the second half of the year, reflecting improvements in broker lodgements and settlements, and improved approval turnaround times. A net impairment release of $49 million reflected a $60 million reduction in the Collective Provision, due to the improvement in economic conditions since the outbreak of COVID-19.New Zealand GWP grew 9.2%, driven by performance in the AA Insurance channel and growth in the intermediated commercial portfolios. This top-line growth was partly offset by higher natural hazard costs, lower investment returns and a normalisation in working claims.The La Niña weather pattern resulted in a higher number of events during FY21, with Group natural hazard costs of $1,010 million. This was $60 million above the Group’s FY21 allowance of $950 million. Group operating expenses were $2.80 billion, up from $2.75 billion, due to the temporary increase in spending on strategic initiatives, technology upgrades and increased spending on marketing.
As a result, SUN shares were trending today and the SUN stock price surged over 7% and closed at $12.79 a share – setting a new 52-week high for the SUN share price. The performance was also not just a one off. SUN shares have returned 44% in the past year and 31% in 2021 alone. With operating conditions still remaining favourable, SUN shares may have further wind in its sails.
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