SUNCORP GROUP LIMITED - Annual Report 2014

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ABN 66 145 290 124 Suncorp Group Limited Analyst Pack

Financial results for the full year ended 30 June 2014

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Basis of preparation

Suncorp Group (‘Group’, ‘the Group’ or ‘Suncorp’) is represented by Suncorp Group Limited (SGL) and its subsidiaries, its interests in associates and jointly controlled entities.

Net profit after tax (NPAT) for the Group is measured in accordance with Australian Accounting Standards. All figures have been quoted in Australian dollars rounded to the nearest million unless otherwise denoted. All figures relate to the year ended 30 June 2014 and comparatives are for the year ended 30 June 2013, unless otherwise stated. Where necessary, comparatives have been restated to reflect any changes in table formats or methodology.

In financial summary tables, where there has been a percentage movement greater than 500% or (500%), this has been labelled ’large’. If a line item changes from negative to positive (or vice versa) between periods, this has been labelled ‘n/a’.

This report has not been audited nor reviewed in accordance with Australian Auditing Standards. It should be read in conjunction with the Group’s consolidated annual and interim financial reports which have been either audited or reviewed in accordance with Australian Auditing Standards. In the context of ASIC’s Regulatory Guide 230, this report contains information that is ‘non-IFRS financial information’, such as the General Insurance Underlying Insurance Trading Ratio (UITR) and the Life underlying profit after tax. The calculation of these metrics is outlined in the report and they are shown as they are being used internally to determine operating performance within the various businesses.

This report should be read in conjunction with the definitions in Appendix 4.

Disclaimer

This report contains general information which is current as at 13 August 2014. 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 offered by Suncorp or any of its subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.

This report should be read in conjunction with all other information concerning Suncorp filed with the Australian Securities Exchange (ASX).

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 intent, belief or current expectations with respect to the business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices at the date of this report. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which are beyond Suncorp’s control, which may cause actual results to differ materially from those expressed or implied.

Suncorp undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this report (subject to ASX disclosure requirements).

Registered office

Level 28, 266 George Street, Brisbane Queensland 4000 Telephone: (07) 3835 5769 www.suncorpgroup.com.au

Investor Relations

Mark Ley Head of Investor Relations Telephone: (02) 8121 1221 [email protected]

Financial results for the full year ended 30 June 2014

Basis of preparation .................................................................................................................................................... 2 Result overview ........................................................................................................................................................... 5 Outlook ......................................................................................................................................................................... 6 Contribution to profit by division ................................................................................................................................ 8 Statement of financial position ................................................................................................................................ 10 Ratios and statistics ................................................................................................................................................ 11 Group capital ........................................................................................................................................................... 13 Dividends ................................................................................................................................................................ 16 Income tax .............................................................................................................................................................. 16 General Insurance ..................................................................................................................................................... 17 Result overview ....................................................................................................................................................... 17 Profit contribution .................................................................................................................................................... 18 General Insurance ratios ......................................................................................................................................... 18 Statement of assets and liabilities ........................................................................................................................... 20 Personal Lines Australia ......................................................................................................................................... 28 Commercial Lines Australia .................................................................................................................................... 29 New Zealand ........................................................................................................................................................... 30 Bank ............................................................................................................................................................................ 33 Result overview ....................................................................................................................................................... 33 Profit contribution .................................................................................................................................................... 34 Ratios and key statistics.......................................................................................................................................... 34 Statement of assets and liabilities ........................................................................................................................... 35 Loans, advances and other receivables .................................................................................................................. 36 Outlook .................................................................................................................................................................... 47 Life .............................................................................................................................................................................. 48 Result overview ....................................................................................................................................................... 48 Outlook .................................................................................................................................................................... 49 Profit contribution .................................................................................................................................................... 50 Statement of assets and liabilities ........................................................................................................................... 57 Appendix 1 – Consolidated statement of comprehensive income and financial position .................................. 58 Consolidated statement of comprehensive income ................................................................................................. 58 Consolidated statement of financial position ........................................................................................................... 59 Appendix 2 – Ratio calculations ............................................................................................................................... 61 Appendix 3 – Group capital ...................................................................................................................................... 63 Appendix 4 – Definitions ........................................................................................................................................... 69 Appendix 5 – 2014/15 key dates ............................................................................................................................... 72

Financial results summary

Net profit after tax (NPAT) for the Group of $730 million (FY13: $491 million)
Profit after tax from business lines[*] of $1,330 million
Cash earnings of $1,304 million
Final ordinary dividend of 40 cents per share, fully franked (FY13: 30 cents)
Special dividend of 30 cents per share, fully franked (FY13: 20 cents)
The Common Equity Tier 1 (CET1) Capital ratio for the Bank improved to 8.54%. The General Insurance business holds CET1 of 1.66 times the Prescribed Capital Amount (PCA). After allowance for proposed dividends the Group’s excess to CET1 capital target is $831 million
General Insurance NPAT of $1,010 million (FY13: $883 million)
Reported Insurance Trading Result of $1,195 million representing an Insurance Trading Ratio (ITR) of 15.5% (FY13: 13.1%). Underlying ITR[*] increased to 14.3% (FY13: 13.5%)
Adjusting for the impact of Fire Service Levies (FSL), Gross Written Premium (GWP) increased 5.1% to $8,725 million. Reported GWP is up 3.3% to $8,870 million
Natural hazard claims of $538 million were $27 million below long run allowances
Bank NPAT of $228 million (FY13: loss after tax $343 million)
Bank Net Interest Margin (NIM) of 1.72% (FY13: 1.64%). NIM for the six months to 30 June 2014 increased to 1.78% to be back in the target range six months ahead of schedule
Bank gross non-performing loans reduced by $168 million, or 17.9%, to $772 million
Suncorp Life NPAT of $92 million (FY13: $60 million) with an underlying NPAT of $84 million (FY13: $120 million)
Suncorp Life $496 million write-down of intangible assets and policy adjustments due to material revision of lapse and claims assumptions did not impact on cash earnings
Suncorp Life has increased reinsurance coverage resulting in a reduction in required capital of $207 million and contributing to the $535 million of capital returned to the Group over the past 12 months

Operational summary

Measured growth between 5% and 8% across Suncorp’s business lines in FY14 with a revised growth target of between 4% and 6% for FY15
Simplification projects on track and expected to deliver $225 million in annualised benefits in the 2015 financial year and $265 million in the 2016 financial year
All mass-market General Insurance brands now operating on a single underwriting platform
New Zealand operations continue to make good progress in resolving Canterbury earthquake claims with over 75% now paid
Suncorp employee engagement and enablement scores both improved to at or above global high-performing norms
Across the Group, ‘2[nd] generation’ Risk-Based Capital models have demonstrated the potential for a diversification benefit from the diversified financial services business model
Business Intelligence program launched bringing together an 850-strong team of data analysts, modellers and technology specialists from across the business into a world-class shared services function utilising a single data warehouse
On track to deliver the Return on Equity (RoE) target of at least 10% in 2015 financial year

Refer Appendix 4 for definition of ‘profit after tax from business lines’ and page 18 for underlying ITR.

Financial results for the full year ended 30 June 2014

Group

Result overview

Suncorp has delivered a full year NPAT of $730 million. This result includes a $496 million non-cash write-down of Suncorp Life intangible assets following the material revision of claims and lapse assumptions.

Profit after tax from the business lines was $1,330 million. This strong result has been achieved by prioritising margins ahead of growth, a disciplined approach to risk management and delivering operational efficiencies.

Suncorp has continued to focus on strengthening its balance sheet during the year with a number of initiatives, including increased Life reinsurance arrangements, issuance of preference shares and subordinated debt and good progress on the Group’s Risk-Based Capital (RBC) project. These initiatives support the Group’s commitment to maintain a significantly de-risked balance sheet while continuing to deliver high yield and above system growth.

Suncorp shareholders continue to receive improved returns with a final ordinary dividend of 40 cents, up 10 cents. Total ordinary dividends are 75 cents per share, an increase of 20 cents. A special dividend of 30 cents has also been declared, an increase of 10 cents. Total dividends paid for the 2014 financial year will be $1.05 per share, or over $1.3 billion in total payments, representing a yield of 7.4% based on the SUN closing share price of $14.12 on 12 August 2014.

The Group’s financial performance demonstrates the success of the transformation strategy, under the ‘One Company. Many Brands’ business model. A continued focus on building a simple, low-risk financial services group through operational efficiencies and cost control is evident across all business lines.

Measured growth has been delivered across all business lines with:

General Insurance GWP, excluding the impact of FSL, up 5.1% to $8.7 billion
Suncorp Bank retail and business lending up 5.0% to $49.8 billion; and
Life risk individual in-force premiums up 8.5% to $852 million.

General Insurance profit after tax was $1,010 million. The key drivers were premium growth, favourable natural hazard and investment experience and a continued focus on claims and expense management.

FSL were removed from policies in Victoria during the period. Excluding FSL, GWP increased by 5.1% to $8,725 million with all product lines achieving growth. In Personal Lines, Home (up 6.3%) and Motor (up 2.6%) growth was due to increased average written premiums and the strengthening New Zealand dollar. In Commercial Insurance, GWP increased by 6.8% with growth across all major product lines as a result of an increased breadth of products, as well as improvements in retention.

The Simplification program of work continues, delivering increased efficiency across both claims and support functions. Suncorp is also benefiting from improved claims management following vertical integration initiatives such as SMART and Q-Plus.

The reported ITR was 15.5% and the underlying ITR increased to 14.3%, well above Suncorp’s commitment to ‘meet or beat’ an underlying ITR of 12% through the cycle.

Suncorp Bank delivered an after tax profit of $228 million. The 2014 financial year was one of transition for Suncorp Bank as it consolidates operations and addresses legacy funding and cost positions related to the former ‘Non-core’ portfolio. The Bank’s CET1 position improved to 8.54%.

Home Lending growth of 5.0% reflects the Bank’s conservative approach and a focus on the ‘below 80%’ Loan to Value Ratio (LVR) market.

The NIM has significantly improved over the year to 1.72%. The second half NIM of 1.78% delivers on a commitment to return to the target of 1.75% to 1.85% six months earlier than expected.

Impaired assets reduced by 34.2% and total gross non-performing loans reduced by 17.9%. Credit impairment losses of $124 million, or 25 basis points of gross loans, reflected the continued droughtrelated stress in the Agribusiness portfolio.

Financial results for the full year ended 30 June 2014

Group

Suncorp Life profit after tax was $92 million. Underlying profit after tax of $84 million was down 30% primarily due to the lower planned profit margins following the revision of assumptions and increased reinsurance arrangements. The result also included $50 million of claims and lapse experience losses.

Total Life in-force annual premiums are up 8.5%. Direct new business sales were flat for the year due to the in-house transition for Direct policies. In the second half there was good momentum in Direct life policies sold via General Insurance Brands with growth of 11% half-on-half.

During the year, the financial profile of the Life business was transformed with net assets reducing by circa $900 million. The reduction reflected the capital initiatives announced in the first half, which resulted in $535 million of capital being released to the Group, and the impact of the reset assumptions announced in May.

The Group’s strengthened its balance sheet over the year and the Board has declared a fully franked final ordinary dividend of 40 cents and a special dividend of 30 cents per share.

The Group's CET1 capital position remains strong with $831 million of additional capital held above the Group’s revised operating targets, after accounting for dividend payments and an increase in the Bank’s target of 0.25% to 8.25%.

The Group also has $215 million of franking credits available after the payment of the declared dividends.

Outlook

The transformation of the Suncorp Group is evidenced in the strength of the balance sheet, reduced complexity of operations and the performance of the business lines.

In May 2014, Suncorp revised its growth target for the 2015 financial year to between 4% and 6%. This decision reflects the reduced need to increase insurance premiums following a reduction in reinsurance costs, lower natural hazards and improved investment returns. Suncorp will continue to prioritise stable margins and will be supported by the ongoing benefit of the Group’s Simplification program and supply chain initiatives. Simplification initiatives will continue to deliver benefits and are expected to deliver $225 million in annualised cost savings in the 2015 financial year and $265 million in the 2016 financial year.

Simplification provides the foundation for delivering the Group’s key market commitments of:

Group growth of 4% to 6% in the 2015 financial year
‘meet or beat’ an underlying ITR of 12% through the cycle
Group RoE of at least 10% in the 2015 financial year
an ordinary dividend payout ratio of 60% to 80% of cash earnings; and
continuing to return surplus capital.

These key commitments will position the Group to further capitalise on the ‘One Company. Many Brands’ business model and its strategic assets, known as the 4Cs: Cost, Capital, Customer and Culture.

Across the Group, the 4Cs will drive benefits including:

Cost - lowering the unit cost of procurement by leveraging the Group’s scale, buying power and supplier relationships
Capital - demonstrating a diversification benefit through Risk-Based Capital modelling
Customer - enhancing the value of nine million customer connections by deepening their relationships with the Group brands
Culture - operating as ‘One Company. Many Brands. One Team’ and positioning Suncorp as THE place to work in Australia and New Zealand.

Suncorp General Insurance continues to benefit from the Simplification program of work, with all mass market brands now on a single underwriting platform. Personal Insurance will continue to focus on the balance between price and volume growth. Commercial Insurance’s multi-channel approach will allow the business to attract quality risks and maintain long-term growth of 3% to 4% above system. The Vero New Zealand business continues to exceed system growth and its transformation program means it is well placed to achieve its target NPAT of at least NZ$100 million over the medium term.

Financial results for the full year ended 30 June 2014

Group

With all General Insurance lines performing well, the Group expects to remain well ahead of its long-term commitment to ‘meet or beat’ a 12% underlying ITR. Suncorp will also seek to capitalise on market disruption following the consolidation of a key competitor.

Suncorp Bank will continue to refocus growth efforts in its home state of Queensland. The Bank will continue to target middle Australia by differentiating itself from competitors, offering ‘big bank capability and the customer connection of a small bank’.

Despite the challenges, the Bank is well placed to perform in the current environment. Operating targets over the medium term remain unchanged:

return on CET1 of 12.5% to 15%
NIM of 1.75% to 1.85% underpinned by pricing discipline
disciplined cost management and ongoing investment in strategic programs to drive the cost to income ratio towards 50%
sustainable lending growth of 1 to 1.3 times system through measured expansion in housing and business markets supported by positive conversion of new customers to ‘complete’ customers; and
retail deposit to lending ratio of 60% to 70% supported by the Bank’s ability to leverage its A+/A1 credit rating to raise diverse wholesale funding.

Suncorp Life is executing against its strategic agenda and managing the areas within its control. The Life business model has been comprehensively reorganised around the customer, with a focus on product (design and economics) and optimising distribution (growth in Direct and value driven partnerships in IFA). Whilst there remains a need for industry wide action to address the structural challenges, Suncorp Life is confident in delivering against its committed course of action.

Reflecting the transformation in the financial profile of the business following the capital initiatives and intangible asset write-down, Life’s underlying profit after tax for the 2015 financial year is expected to increase moderately and be in the range of $90 million to $100 million.

The Group’s Risk-Based Capital (RBC) project is further strengthening the link between risk and capital and has the potential to greatly assist the business planning process. RBC preliminary results have been finalised and they confirm that there is a potential diversification benefit inherent in the Group’s structure.

Suncorp targets a full year ordinary dividend payout ratio of 60% to 80% of cash earnings. The Suncorp Board also remains committed to returning to shareholders capital that is surplus to operating targets.

Financial results for the full year ended 30 June 2014

Group

Contribution to profit by division

Contribution to profit by division	Contribution to profit by division
JUN-14 JUN-14 JUN-13 vs JUN-13 $M $M % FULL YEAR ENDED
General Insurance Gross written premium (including Fire Service Levies) 8,870 8,589 Grosswrittenpremium(excludingFire ServiceLevies) 8,725 8,302	3.3 5.1
Net earned premium 7,726 7,298 5.9
Net incurred claims (5,240) (4,919) 6.5 Operating expenses (1,776) (1,753) 1.3
Investmentincome- insurancefunds 485 333 45.6
Insurance tradingresult 1,195 959 24.6
Other income - managed schemes and joint venture 25 35 (28.6)
Investment income - shareholder funds 246 288 (14.6)
Capital funding (32) (33) (3.0)
Profit before tax 1,434 1,249 14.8 Income tax (424) (366) 15.8
General Insuranceprofit after tax 1,010 883 14.4
Bank Net interest income 1,011 986 2.5
Net non-interest income 76 60 26.7 Operating expenses (624) (619) 0.8
Profit before impairment losses on loans and advances 463 427 8.4
Loss on sale of loans and advances (13) (527) (97.5)
Impairmentlosses on loans and advances (124) (375) (66.9)
Bank profit before tax 326 (475) n/a Income tax (98) 132 n/a
Bankprofit(loss) after tax 228 (343) n/a
Life
Underlying profit after tax 84 120 (30.0)
Market adjustments aftertax 8 (60) n/a
Lifeprofit after tax(before Life write-down) (2) 92 60 53.3

Profit after tax from business lines 1,330 600 121.7
Other loss before tax(1) (19) (12) 58.3 Income tax (7) (12) (41.7)
Other loss after tax (26) (24) 8.3

Cash earnings 1,304 576 126.4
Life Insurance write-down (after tax)(2) (496) - n/a Acquisition amortisation (after tax) (78) (85) (8.2)
Netprofit after tax 730 491 48.7

(1) ‘Other’ includes investment income on capital held at the Group level ($28 million), consolidation adjustments (loss $2 million), non-controlling interests (loss $7 million) and external interest expense and transaction costs ($38 million).

(2) The Life Insurance write-down is the non cash write-down of Life Insurance goodwill, intangibles and policy adjustments.

Financial results for the full year ended 30 June 2014

Group

Contribution to profit by division

Contribution to profit by division
		HALF YEAR ENDED			JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
General Insurance
Gross written premium (including Fire Service Levies)	4,490	4,380	4,364	4,225	2.5	2.9
Grosswrittenpremium(excludingFire ServiceLevies)	4,423	4,302	4,265	4,037	2.8	3.7
Net earned premium	3,861	3,865	3,697	3,601	(0.1)	4.4
Net incurred claims	(2,632)	(2,608)	(2,614)	(2,305)	0.9	0.7
Operating expenses	(877)	(899)	(871)	(882)	(2.4)	0.7
Investmentincome- insurancefunds	306	179	78	255	70.9	292.3
Insurance tradingresult	658	537	290	669	22.5	126.9
Other income - managed schemes and joint venture	17	8	38	(3)	112.5	(55.3)
Investment income - shareholder funds	105	141	128	160	(25.5)	(18.0)
Capital funding	(14)	(18)	(9)	(24)	(22.2)	55.6
Profit before tax	766	668	447	802	14.7	71.4
Income tax	(226)	(198)	(128)	(238)	14.1	76.6
General Insuranceprofit after tax	540	470	319	564	14.9	69.3
Bank
Net interest income	519	492	502	484	5.5	3.4
Net non-interest income	56	20	13	47	180.0	330.8
Operating expenses	(319)	(305)	(316)	(303)	4.6	0.9
Profit before impairment losses on loans and advances	256	207	199	228	23.7	28.6
Loss on sale of loans and advances	-	(13)	(506)	(21)	(100.0)	(100.0)
Impairmentlosses on loans and advances	(79)	(45)	(181)	(194)	75.6	(56.4)
Bank profit before tax	177	149	(488)	13	18.8	n/a
Income tax	(54)	(44)	141	(9)	22.7	n/a
Bankprofit(loss) after tax	123	105	(347)	4	17.1	n/a
Life
Underlying profit after tax	43	41	59	61	4.9	(27.1)
Market adjustments aftertax	27	(19)	(50)	(10)	n/a	n/a
Lifeprofit after tax(before Life write-down) (2)	70	22	9	51	218.2	large

Profit (Loss) after tax from business lines	733	597	(19)	619	22.8	large
Other profit (loss) before tax(1)	(10)	(9)	(19)	7	11.1	(47.4)
Income tax	(6)	(1)	(2)	(10)	large	200.0
Other loss after tax	(16)	(10)	(21)	(3)	60.0	(23.8)

Cash earnings	717	587	(40)	616	22.1	large
Life Insurance write-down (after tax)(2)	(496)	-	-	-	n/a	n/a
Acquisition amortisation (after tax)	(39)	(39)	(43)	(42)	-	(9.3)
Netprofit(loss) after tax	182	548	(83)	574	(66.8)	n/a

(1) ‘Other’ includes investment income on capital held at the Group level (Jun-14: $17 million, Dec-13: $11 million), consolidation adjustments (Jun-14 loss $3 million, Dec-13 profit $1 million), non-controlling interests (Jun-14: loss $4 million, Dec-13: loss $3 million) and external interest expense and transaction costs (Jun-14: $20 million, Dec-13: $18 million).

(2) The Life Insurance write-down is the non cash write-down of Life Insurance goodwill, intangibles and policy adjustments.

Financial results for the full year ended 30 June 2014

Group

Statement of financial position

Statement of financial position
					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
Assets
Cash and cash equivalents	895	1,064	1,394	595	(15.9)	(35.8)
Receivables due from other banks	927	790	1,460	1,031	17.3	(36.5)
Trading securities	1,593	2,129	3,462	4,077	(25.2)	(54.0)
Derivatives	301	425	627	382	(29.2)	(52.0)
Investment securities	26,915	26,588	26,183	24,046	1.2	2.8
Banking loans, advances and other receivables	49,781	49,074	47,999	48,756	1.4	3.7
General Insurance assets	6,603	6,562	7,158	6,862	0.6	(7.8)
Life assets	862	584	666	624	47.6	29.4
Property, plant and equipment	205	228	212	209	(10.1)	(3.3)
Deferred tax assets	183	-	64	56	n/a	185.9
Other assets	444	476	512	617	(6.7)	(13.3)
Goodwillandintangible assets	5,720	6,138	6,168	6,207	(6.8)	(7.3)
Total assets	94,429	94,058	95,905	93,462	0.4	(1.5)
Liabilities
Payables due to other banks	81	186	213	46	(56.5)	(62.0)
Deposits and short-term borrowings	43,579	44,192	43,547	41,046	(1.4)	0.1
Derivatives	625	554	1,039	1,331	12.8	(39.8)
Payables and other liabilities	2,331	1,605	2,478	1,831	45.2	(5.9)
Current tax liabilities	379	111	2	102	241.4	large
General Insurance liabilities	14,173	14,330	14,496	14,351	(1.1)	(2.2)
Life liabilities	6,374	6,087	5,799	5,622	4.7	9.9
Deferred tax liabilities	58	93	47	43	(37.6)	23.4
Managed funds units on issue	118	30	8	1	293.3	large
Securitisation liabilities	3,581	4,245	4,777	4,305	(15.6)	(25.0)
Debt issues	6,831	6,412	7,291	8,206	6.5	(6.3)
Subordinated notes	1,557	1,671	1,646	978	(6.8)	(5.4)
Preference shares	943	550	579	1,311	71.5	62.9
Total liabilities	80,630	80,066	81,922	79,173	0.7	(1.6)
Net assets	13,799	13,992	13,983	14,289	(1.4)	(1.3)
Equity
Share capital	12,682	12,675	12,682	12,677	0.1	-
Reserves	206	151	40	(38)	36.4	415.0
Retained profits	885	1,154	1,245	1,636	(23.3)	(28.9)
Total equity attributable to owners of the
Company	13,773	13,980	13,967	14,275	(1.5)	(1.4)
Non-controllinginterests	26	12	16	14	116.7	62.5
Total equity	13,799	13,992	13,983	14,289	(1.4)	(1.3)

Financial results for the full year ended 30 June 2014

Group

Ratios and statistics

Ratios and statistics
		FULL YEAR ENDED		JUN-14
		JUN-14	JUN -13	vs JUN -13
				%
Performance ratios
Earnings per share(1)
Basic	(cents)	57.11	38.42	48.6
Diluted	(cents)	57.11	38.42	48.6
Cash earnings per share(1)
Basic	(cents)	102.01	45.08	126.3
Diluted	(cents)	100.76	45.08	123.5
Return on average shareholders' equity(1)	(%)	5.3	3.5
Cash return on average shareholders' equity(1)	(%)	9.4	4.1
Return on average total assets	(%)	0.77	0.51
Insurance trading ratio	(%)	15.5	13.1
Underlying insurance trading ratio	(%)	14.3	13.5
Bank net interest margin (interest-earning assets)	(%)	1.72	1.64
Shareholder summary
Ordinary dividends per ordinary share	(cents)	75.0	55.0	36.4
Special dividends per ordinary share	(cents)	30.0	20.0	50.0
Payout ratio (excluding special dividend)(1)
Net profit after tax	(%)	131.4	143.2
Cash earnings	(%)	73.6	122.0
Payout ratio (including special dividend)(1)
Net profit after tax	(%)	183.9	195.2
Cash earnings	(%)	103.0	166.4
Weighted average number of shares(1)
Basic	(million)	1,278.3	1,277.9	0.0
Diluted	(million)	1,278.3	1,277.9	0.0
Number of shares at end of period	(million)	1,278.9	1,278.2	0.1
Net tangible asset backing per share	($)	6.32	6.11	3.3
Share price at end of period	($)	13.54	11.92	13.6
Productivity
General Insurance expense ratio	(%)	23.0	24.0
Bank cost to income ratio	(%)	57.4	59.2
Financial position
Total assets	($ million)	94,429	95,905	(1.5)
Net tangible assets	($ million)	8,079	7,815	3.4
Net assets	($ million)	13,799	13,983	(1.3)
Average shareholders' equity	($ million)	13,868	14,118	(1.8)
Capital
General Insurance Group PCA coverage	(times)	2.16	1.96
Bank capital adequacy ratio - Total	(%)	13.15	12.61
Bank Common Equity Tier 1 ratio	(%)	8.54	7.68
Suncorp Life total capital	($ million)	555	752	(26.2)
Additionalcapital held by Suncorp GroupLimited	($million)	555	224	147.8

(1) Refer to Appendix 4 for definitions.

Financial results for the full year ended 30 June 2014

Group

Ratios and statistics

Ratios and statistics
			HALF YEAR ENDED			JUN-14	JUN-14
		JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
						%	%
Performance ratios
Earnings per share(1)
Basic	(cents)	14.23	42.88	(6.49)	44.93	(66.8)	n/a
Diluted	(cents)	14.23	42.49	(6.49)	43.37	(66.5)	n/a
Cash earnings per share(1)
Basic	(cents)	56.08	45.93	(3.13)	48.21	22.1	n/a
Diluted	(cents)	55.20	45.44	(3.13)	46.42	21.5	n/a
Return on average shareholders' equity(1)	(%)	2.6	7.9	(1.2)	8.1
Cash return on average shareholders' equity(1)	(%)	10.4	8.4	(0.6)	8.7
Return on average total assets	(%)	0.39	1.14	(0.18)	1.20
Insurance trading ratio	(%)	17.0	13.9	7.8	18.6
Underlying insurance trading ratio	(%)	14.7	14.0	13.6	13.4
Bank net interest margin (interest-earning assets)	(%)	1.78	1.66	1.67	1.60
Shareholder summary
Ordinary dividends per ordinary share	(cents)	40.0	35.0	30.0	25.0	14.3	33.3
Special dividends per ordinary share	(cents)	30.0	-	20.0	-	n/a	50.0
Payout ratio (excluding special dividend)(1)
Net profit after tax	(%)	281.1	81.7	n/a	55.7
Cash earnings	(%)	71.3	76.2	n/a	51.9
Payout ratio (including special dividend)(1)
Net profit after tax	(%)	491.9	81.7	n/a	55.7
Cash earnings	(%)	124.9	76.2	n/a	51.9
Weighted average number of shares(1)
Basic	(million)	1,278.6	1,277.9	1,278.1	1,277.6	0.1	0.0
Diluted	(million)	1,278.6	1,322.7	1,278.1	1,374.2	(3.3)	0.0
Number of shares at end of period	(million)	1,278.9	1,278.4	1,278.2	1,278.0	0.0	0.1
Net tangible asset backing per share	($)	6.32	6.14	6.11	6.32	2.8	3.3
Share price at end of period	($)	13.54	13.10	11.92	10.17	3.4	13.6
Productivity
General Insurance expense ratio	(%)	22.7	23.3	23.6	24.5
Bank cost to income ratio	(%)	55.5	59.6	61.4	57.1
Financial position
Total assets	($ million)	94,429	94,058	95,905	93,462	0.4	(1.5)
Net tangible assets	($ million)	8,079	7,854	7,815	8,082	2.9	3.4
Net assets	($ million)	13,799	13,992	13,983	14,289	(1.4)	(1.3)
Average shareholders' equity	($ million)	13,914	13,822	14,109	14,128	0.7	(1.4)
Capital
General Insurance Group PCA/MCR coverage	(times)	2.16	1.96	1.96	1.70
Bank capital adequacy ratio - Total	(%)	13.15	13.06	12.61	12.60
Bank Common Equity Tier 1 ratio	(%)	8.54	8.25	7.68	7.61
Suncorp Life total capital	($ million)	555	617	752	2,054	(10.0)	(26.2)
Additionalcapital held by Suncorp GroupLimited	($million)	555	512	224	776	8.4	147.8

(1) Refer to Appendix 4 for definitions.

Financial results for the full year ended 30 June 2014

Group

Group Capital

The capital management strategy of the Suncorp Group is to optimise shareholder value by managing the level, mix and use of capital resources. The primary objective is to ensure there are sufficient capital resources to maintain and grow the business, in accordance with risk appetite. The Group’s Internal Capital Adequacy Assessment Process (ICAAP) provides the framework to ensure that the Group as a whole, and each regulated entity, is capitalised to meet internal and external requirements. The NonOperating Holding Company (NOHC), Suncorp Group Limited, also holds capital in respect of the corporate services companies and a portion of the Group’s target capital in respect of the General Insurance and Life Insurance businesses.

A range of instruments and methodologies are used to effectively manage capital including share issues, reinsurance, dividend policies and Tier 1 hybrid and Tier 2 subordinated note issues. Suncorp Group is subject to, and in compliance with, externally imposed capital requirements set and monitored by the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of New Zealand. The ICAAP is reviewed regularly and, where appropriate, adjustments are made to reflect changes in the capital needs, and risk profile of, the Group. Capital targets are structured according to both the business line regulatory framework and to APRA’s draft standards for the supervision of conglomerates.

For regulatory purposes, capital is classified as follows:

CET1 Capital comprising accounting equity with adjustments for intangible assets and regulatory reserves
Tier 1 Capital comprising CET1 Capital plus Additional Tier 1 Capital such as certain hybrid securities with ‘equity-like’ qualities
Tier 2 Capital comprising certain securities recognised as Tier 2 Capital, together with certain Bank reserves eligible as regulatory capital; and
Total Capital, being the sum of Tier 1 Capital and Tier 2 Capital.

CET1 Capital has the greatest capacity to absorb potential losses, followed by Additional Tier 1 Capital and then Tier 2 Capital.

Over the course of the year, the Group continued to execute its capital strategy and improve RoE for shareholders by implementing the following initiatives:

execution of a Life quota share reinsurance arrangement that reduces the risk profile of the Life business and has contributed to the return of $535 million of CET1 Capital from the Life business to the NOHC
deployment of $100 million of Tier 2 subordinated debt from the NOHC to the Life business in August 2013
deployment of $110 million of Tier 1 Convertible Preference Shares from the NOHC to the General Insurance business in February 2014. This is the balance of the $560 million Convertible Preference Shares (SUNPC) issuance from the NOHC in November 2012, of which $450 million was deployed to the Bank
issuance of $400 million of Tier 1 Convertible Preference Shares (SUNPE) from the NOHC in May 2014 and deployment to the General Insurance business in June 2014,
completion of an off-market buy-back of $98 million Unsecured Perpetual Floating Rate Subordinated Notes (58% of the Notes outstanding) issued by the Bank, reducing the Tier 2 Capital that is surplus to the Group’s needs
reviewing the optimal strategic asset allocations for various investment portfolios across the Group, resulting in reduced regulatory capital charges, in the Life and General Insurance businesses, of approximately $65 million
declaring total ordinary dividends of 75 cents per share fully franked, up 20 cents (36%), representing a payout ratio of 73.6% of cash earnings; and
declaring a special dividend of 30 cents per share fully franked.

Financial results for the full year ended 30 June 2014

Group

Risk-Based Capital (RBC)

Across the Group, ‘2nd generation’ RBC models were implemented in 2014, having been introduced in 2013. RBC has the potential to play an increasingly important role in the Group’s ICAAP, and strengthen the link between risk, capital management and business planning. In particular, the models can:

enable enhanced articulation of risk appetite, particularly in relation to capital sufficiency and earnings volatility
be a key influence on the Group’s long-term strategic and risk decisions, such as strategic asset allocation and setting optimal reinsurance programs; and
influence future reviews of capital targets.

Importantly, from a consolidated Group perspective, preliminary outputs from RBC have confirmed there is a potential capital diversification benefit inherent in the conglomerate structure, given the different primary risks affecting each business unit. Discussions are ongoing with regulators and rating agencies regarding the appropriate approach to reflect this in capital management decisions.

Conglomerate Regulation

APRA’s Conglomerate (Level 3) Standards covering risk management, governance and capital requirements are expected to come into effect in 2015. Suncorp Group has been operating under a NOHC structure since 2010, with associated NOHC conditions from APRA having much in common with the proposed Level 3 Standards. The Group is well placed to implement the requirements and does not expect material changes to capital targets as a result.

Capital position at 30 June 2014

The Group has recently reviewed its capital targets, effective 30 June 2014. This has resulted in:

a 0.25% increase in the Bank’s CET1 target operating range, to 8.0%–8.5% of RWA, strengthening the target capital for the Bank
a decrease of $19 million in the Life business target, resulting from revisions to strategic asset allocations and lower insurance risk via the quota share reinsurance arrangement noted earlier.

Financial results for the full year ended 30 June 2014

Group

The table below summarises both the CET1 Capital and Total Capital positions after the payment of declared dividends at 30 June 2014. For the purpose of the table below, the Bank’s CET1 target is taken to be 8.25% of RWA being the mid-point of its revised target operating range.

		AS AT 30 JUNE	2014
				SGL, CORP
	GENERAL			SERVICES &		AS AT
	INSURANCE	BANKING	LIFE	CONSOL	TOTAL	30 JUNE 2013
	$M	$M	$M	$M	$M	TOTAL(1)
CET 1	3,524	2,648	455	555	7,182	6,753
CET1 Target	2,342	2,557	358	193	5,450	5,309
Excess to CET 1 Target (pre div)	1,182	91	97	362	1,732	1,444
Group Dividend					(901)	(643)
Group Excess to CET1 Target (ex div)					831	801
CET 1 Coverage Ratio	1.66	8.54%	1.57
Total Capital	4,606	4,077	555	555	9,793	9,008
Total Capital Target	3,087	3,875	458	179	7,599	7,518
Excess to Target (pre div)	1,519	202	97	376	2,194	1,490
Group Dividend					(901)	(643)
Group Excess to Target (ex div)					1,293	847
Capital Coverage Ratio	2.16	13.15%	1.91

(1) The 30 June 2013 comparative is based on the pro-forma position as disclosed in the 30 June 2013 Financial results. This pro-forma reflected various items, such as the sale of the Non-core portfolio and the reduction in the Life CET1 target due to the deployment of $100m of subordinated debt to the Life business.

In terms of the CET1 capital positions across the Group:

the General Insurance business CET1 Capital position was 1.66 times the PCA, above its target of 1.10 times PCA
the Bank’s Capital Adequacy Ratio (CAR) was 8.54%, slightly above its revised target operating range of 8.0%–8.5%; and
Suncorp Life’s excess CET1 Capital to target was $97 million.

After adjustment for the declared dividend and revised targets, the Group’s excess to CET1 Capital target was $831 million and the excess to Total Capital target was $1,293 million. The Group remains committed to returning excess capital to shareholders in a prudent and measured way that balances the needs of all stakeholders. This will take into account matters such as:

embedding of RBC, which will assist in further understanding the Group’s risk profile, reviewing risk appetite and setting the appropriate capital targets for the Group
the requirements of ratings agencies, such that the Group maintains its target credit ratings
finalisation of APRA’s standards for the supervision of Conglomerates; and
potential economic and natural hazard risks.

Appendix 3 contains further information on the capital position of the Suncorp Group.

Financial results for the full year ended 30 June 2014

Group

Dividends

The final ordinary dividend of 40 cents per share and the special dividend of 30 cents per share will both be fully franked and paid on 1 October 2014. The ex-dividend date is 20 August 2014.

The Group’s franking credit balance has reduced over the past three years as a result of the payment of special dividends and the impact on earnings of the resolution of the Non-core Bank. The Group’s improved earnings profile is expected to increase the franking credit balance over coming years.

		HALF YEAR ENDED
	JUN-14	DEC-13	JUN-13
	$M	$M	$M
Franking credits
Franking credits available for subsequent financial periods based on a
tax rate of 30% afterproposed dividends	215	252	275

Income tax

Income tax
			JUN-14
	JUN-14	JUN-13	vs JUN-13
	$M	$M	%
Profit before income tax expense	1,175	766	53.4
Income tax using the domestic corporation tax rate of 30%	353	230	53.5
Effect of tax rates in foreign jurisdictions	(3)	(4)	(25.0)
Increase in income tax expense due to:
Non-assessable income	-	(3)	(100.0)
Non-deductible expenses	17	21	(19.0)
Imputation gross-up on dividends received	4	4	-
Statutory funds	25	21	19.0
Income tax offsets and credits	(15)	(14)	7.1
Life intangible assets write-down	51	-	n/a
Amortisation of acquisition intangible assets	7	7	-
Other items	2	11	(81.8)
	441	273	61.5
Over-provision inprioryears	(3)	(3)	-
Income tax expense onpre-tax netprofit	438	270	62.2
Effective tax rate	37.3%	35.2%
Income tax expense (benefit) by business unit
General Insurance	424	366	15.8
Banking	98	(132)	n/a
Life	70	50	40.0
Other	(154)	(14)	large
Total income tax expense	438	270	62.2

Income tax expense adjustments have primarily arisen from:

the life insurance statutory funds adjustment resulting in a $25 million income tax expense
non-deductible write-down of life goodwill and intangible assets increased income tax expense by $51 million; and
non-deductible interest paid in respect of convertible preference shares increased income tax expense by $9 million.

General Insurance

Financial results for the full year ended 30 June 2014

General Insurance

Result overview

General Insurance achieved an after tax profit of $1,010 million.

The Insurance Trading Result was $1,195 million, representing an ITR ratio of 15.5%. The result was driven by premium growth, favourable natural hazard and investment experience, and a continued focus on claims and expense management.

On an underlying basis, the ITR ratio increased to 14.3% from 13.5%. This reflects the benefits achieved from improving operational efficiency and the Group’s Simplification projects, enabling the Group to improve margins in an increasingly competitive market.

Excluding FSL, GWP increased 5.1% to $8,725 million. Inclusive of FSL, GWP increased 3.3% to $8,870 million.

Personal lines GWP, excluding FSL, increased across both Home (up 6.3%) and Motor (up 2.6%), primarily driven by increases in average written premiums.

Commercial lines GWP increased 6.8% to $2,329 million. Retention rates have remained strong as intermediaries and customers see value in the broad product offering.

CTP increased 7.4% following further growth in both the Queensland and New South Wales markets and the entry of Suncorp into the Australian Capital Territory CTP market.

Net incurred claims were $5,240 million, with a loss ratio of 67.8% (FY13: 67.4%). Natural hazard claims were $538 million, $27 million below long run allowances. Reserve releases of $109 million were primarily attributable to a benign wage inflation environment and proactive management of long-tail claims, offset by strengthening in the estimation of the February 2011 Canterbury earthquake claims costs.

Total operating expenses remained relatively stable at $1,776 million. The operating expense ratio decreased to 23.0% from 24.0%.

Investment income on Insurance Funds was $485 million. Gains from narrowing credit spreads offset the impact of sustained lower risk-free and credit spread yields. Investment income on Shareholder Funds of $246 million was supported by narrowing credit spreads and improved returns from equity investments.

Capital funding or interest expenses for the General Insurance business remained flat at $32 million.

Financial results for the full year ended 30 June 2014

General Insurance

Profit contribution including discount rate movements and FSL

Profit contribution including discount rate movements and FSL	Profit contribution including discount rate movements and FSL
JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED FULL YEAR ENDED
Gross written premium 8,870 8,589 3.3 4,490 4,380 4,364 4,225 2.5 2.9 Gross unearned premium movement (84) (265) (68.3) (102) 18 (139) (126) large (26.6)
Gross earned premium 8,786 8,324 5.6 4,388 4,398 4,225 4,099 (0.2) 3.9 Outwardsreinsurance expense (1,060) (1,026) 3.3 (527) (533) (528) (498) (1.1) (0.2)
Net earned premium 7,726 7,298 5.9 3,861 3,865 3,697 3,601 (0.1) 4.4
Net incurred claims Claims expense (6,595) (6,264) 5.3 (3,312) (3,283) (3,334) (2,930) 0.9 (0.7) Reinsurance and other recoveries revenue 1,355 1,345 0.7 680 675 720 625 0.7 (5.6)
Net incurred claims (5,240) (4,919) 6.5 (2,632) (2,608) (2,614) (2,305) 0.9 0.7
Total operating expenses Acquisition expenses (1,063) (936) 13.6 (542) (521) (443) (493) 4.0 22.3 Otherunderwriting expenses (713) (817) (12.7) (335) (378) (428) (389) (11.4) (21.7)
(1,776) (1,753) 1.3 (877) (899) (871) (882) (2.4) 0.7
Underwriting result 710 626 13.4 352 358 212 414 (1.7) 66.0 Investmentincome- insurancefunds 485 333 45.6 306 179 78 255 70.9 292.3
Insurance trading result 1,195 959 24.6 658 537 290 669 22.5 126.9
Managed schemes net contribution 20 25 (20.0) 15 5 29 (4) 200.0 (48.3) Jointventure and other income 5 10 (50.0) 2 3 9 1 (33.3) (77.8)
General Insurance operational earnings 1,220 994 22.7 675 545 328 666 23.9 105.8 Investmentincome-shareholder funds 246 288 (14.6) 105 141 128 160 (25.5) (18.0)
General Insurance profit before tax and capital funding 1,466 1,282 14.4 780 686 456 826 13.7 71.1 Capital funding (32) (33) (3.0) (14) (18) (9) (24) (22.2) 55.6
General Insurance profit before tax 1,434 1,249 14.8	766 668 447 802 14.7 71.4
Income tax (424) (366) 15.8	(226) (198) (128) (238) 14.1 76.6
General Insuranceprofit after tax 1,010 883 14.4	540 470 319 564 14.9 69.3

FULL YEAR ENDED HALF YEAR ENDED	FULL YEAR ENDED HALF YEAR ENDED
JUN-14 JUN -13 JUN-14 DEC-13 JUN-13 DEC-12 % % % % % %
Acquisition expenses ratio 13.8 12.8 14.0 13.5 12.0 13.7 Otherunderwriting expensesratio 9.2 11.2 8.7 9.8 11.6 10.8
Totaloperating expensesratio 23.0 24.0 22.7 23.3 23.6 24.5
Loss ratio 67.8 67.4 68.2 67.5 70.7 64.0 Combined operating ratio 90.8 91.4 90.9 90.8 94.3 88.5
Insurance trading ratio 15.5 13.1 17.0 13.9 7.8 18.6
	JUN-14 JUN-13 JUN-12 $M $M $M
Reported ITR Reported reserve releases (above) below long-run expectations (page 24) Natural hazards (below) above long-run allowances (page 24) Investment income mismatch (page 27) Other: Risk margin (page 25) Abnormal (Simplification/restructuring) expenses (page 25) LAT/DAC movement Underlying ITR Underlying ITR ratio	1,195 959 511
	7 4 (64)
	(27) 75 278 (126) (102) 197 (9) (24) (97) 68 94 11 - (21) (14) 1,108 985 822 14.3% 13.5% 12.1%

General Insurance

Financial results for the full year ended 30 June 2014

Profit contribution excluding the discount rate movements and FSL

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14		JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%		%
Gross written premium	8,725	8,302	5.1	4,423	4,302	4,265	4,037	2.8		3.7
Gross unearned premium movement	(133)	(301)	(55.8)	(114)	(19)	(201)	(100)	large		(43.3)
Gross earned premium	8,592	8,001	7.4	4,309	4,283	4,064	3,937	0.6		6.0
Outwardsreinsurance expense	(1,060)	(1,026)	3.3	(527)	(533)	(528)	(498)	(1.1)		(0.2)
Net earnedpremium	7,532	6,975	8.0	3,782	3,750	3,536	3,439	0.9		7.0
Net incurred claims
Claims expense	(6,490)	(6,390)	1.6	(3,171)	(3,319)	(3,389)	(3,001)	(4.5)		(6.4)
Reinsurance and other recoveries
revenue	1,355	1,345	0.7	680	675	720	625	0.7		(5.6)
Net incurred claims	(5,135)	(5,045)	1.8	(2,491)	(2,644)	(2,669)	(2,376)	(5.8)		(6.7)
Total operating expenses
Acquisition expenses	(1,063)	(936)	13.6	(542)	(521)	(443)	(493)	4.0		22.3
Otherunderwriting expenses	(519)	(494)	5.1	(256)	(263)	(267)	(227)	(2.7)		(4.1)
	(1,582)	(1,430)	10.6	(798)	(784)	(710)	(720)	1.8		12.4
Underwriting result	815	500	63.0	493	322	157	343	53.1		214.0
Investmentincome- insurancefunds	380	459	(17.2)	165	215	133	326	(23.3)		24.1
Insurance trading result	1,195	959	24.6	658	537	290	669	22.5		126.9
Managed schemes net contribution	20	25	(20.0)	15	5	29	(4)	200.0		(48.3)
Jointventure and other income	5	10	(50.0)	2	3	9	1	(33.3)		(77.8)
General Insurance operational
earnings	1,220	994	22.7	675	545	328	666	23.9		105.8
Investmentincome-shareholder funds	246	288	(14.6)	105	141	128	160	(25.5)		(18.0)
General Insurance profit before tax
and capital funding	1,466	1,282	14.4	780	686	456	826	13.7		71.1
Capital funding	(32)	(33)	(3.0)	(14)	(18)	(9)	(24)	(22.2)		55.6
General Insurance profit before tax	1,434	1,249	14.8	766	668	447	802	14.7		71.4
Income tax	(424)	(366)	15.8	(226)	(198)	(128)	(238)	14.1		76.6
General Insuranceprofit after tax	1,010	883	14.4	540	470	319	564	14.9		69.3
			FULL YEAR		ENDED		HALF YEAR ENDED
				JUN-14	JUN -13	JUN-14	DEC-13	JUN-13		DEC-12
				%	%	%	%	%		%
Acquisition expenses ratio				14.1	13.4	14.3	13.9	12.5		14.3
Otherunderwriting expensesratio				6.9	7.1	6.8	7.0	7.6		6.6
Totaloperating expensesratio				21.0	20.5	21.1	20.9	20.1		20.9
Loss ratio				68.2	72.3	65.9	70.5	75.5		69.1
Combined operatingratio				89.2	92.8	87.0	91.4	95.6		90.0

Financial results for the full year ended 30 June 2014

General Insurance

Statement of assets and liabilities

Statement of assets and liabilities
					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
Assets
Cash and cash equivalents	281	94	146	94	198.9	92.5
Investment securities	12,963	12,329	12,305	11,825	5.1	5.3
Derivatives	23	31	39	44	(25.8)	(41.0)
Loans, advances and other receivables	2,749	2,508	2,537	2,351	9.6	8.4
Reinsurance and other recoveries	2,399	2,805	3,082	3,252	(14.5)	(22.2)
Deferred insurance assets	1,455	1,249	1,539	1,259	16.5	(5.5)
Investments in associates and joint ventures	57	67	57	56	(14.9)	-
Due from Group entities	-	-	-	28	n/a	n/a
Investment property	-	-	-	75	n/a	n/a
Property, plant and equipment	33	34	34	27	(2.9)	(2.9)
Other assets	115	121	119	121	(5.0)	(3.4)
Goodwillandintangible assets	5,091	5,125	5,145	5,177	(0.7)	(1.0)
Total assets	25,166	24,363	25,003	24,309	3.3	0.7
Liabilities
Payables and other liabilities	1,168	587	1,202	742	99.0	(2.8)
Derivatives	149	91	116	130	63.7	28.4
Due to Group entities	392	364	269	-	7.7	45.7
Deferred tax liabilities	81	128	112	142	(36.7)	(27.7)
Employee benefit obligations	108	102	133	131	5.9	(18.8)
Unearned premium liabilities	4,659	4,553	4,524	4,360	2.3	3.0
Outstanding claims liabilities	9,514	9,777	9,972	9,991	(2.7)	(4.6)
Subordinatednotes	727	743	720	711	(2.2)	1.0
Total liabilities	16,798	16,345	17,048	16,207	2.8	(1.5)
Net assets	8,368	8,018	7,955	8,102	4.4	5.2

Net assets have increased to $8,368 million, a movement of $413 million. This is attributable to current year retained earnings and the allocated proceeds of capital raising.

Suncorp continues to manage its balance sheet with an investment mandate which is primarily focused on matching the risk profile of its insurance liabilities and investment assets to optimise the return in consideration of capital constraints.

General Insurance

Financial results for the full year ended 30 June 2014

Gross Written Premium (GWP)

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Gross written premium by product
Australia
Motor	2,597	2,576	0.8	1,294	1,303	1,314	1,262	(0.7)	(1.5)
Home	2,106	2,049	2.8	1,042	1,064	1,044	1,005	(2.1)	(0.2)
Commercial(1)	1,799	1,716	4.8	953	846	898	818	12.6	6.1
Compulsory Third Party	1,050	978	7.4	545	505	511	467	7.9	6.7
Other(2)	33	39	(15.4)	17	16	18	21	6.3	(5.6)
Australia (ex Fire Service Levies)	7,585	7,358	3.1	3,851	3,734	3,785	3,573	3.1	1.7
New Zealand
Motor	232	180	28.9	123	109	95	85	12.8	29.5
Home	333	246	35.4	174	159	130	116	9.4	33.8
Commercial	530	464	14.2	255	275	227	237	(7.3)	12.3
Other	45	54	(16.7)	20	25	28	26	(20.0)	(28.6)
New Zealand	1,140	944	20.8	572	568	480	464	0.7	19.2
Total
Motor	2,829	2,756	2.6	1,417	1,412	1,409	1,347	0.4	0.6
Home	2,439	2,295	6.3	1,216	1,223	1,174	1,121	(0.6)	3.6
Commercial(1)	2,329	2,180	6.8	1,208	1,121	1,125	1,055	7.8	7.4
Compulsory Third Party	1,050	978	7.4	545	505	511	467	7.9	6.7
Other(2)	78	93	(16.1)	37	41	46	47	(9.8)	(19.6)
Gross Written Premium (ex Fire
Service Levies)	8,725	8,302	5.1	4,423	4,302	4,265	4,037	2.8	3.7
Fire ServiceLevies	145	287	(49.5)	67	78	99	188	(14.1)	(32.3)
Gross Written Premium (inc Fire
Service Levies)	8,870	8,589	3.3	4,490	4,380	4,364	4,225	2.5	2.9

	JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13(3) JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED
Gross written premium by geography New South Wales Queensland Victoria Western Australia South Australia Tasmania Other	2,548 2,462 3.5 1,276 1,272 1,241 1,221 0.3 2.8 2,191 2,178 0.6 1,105 1,086 1,106 1,072 1.7 (0.1) 1,656 1,604 3.2 830 826 832 772 0.5 (0.2) 643 605 6.3 351 292 333 272 20.2 5.4 245 269 (8.9) 125 120 141 128 4.2 (11.3) 129 131 (1.5) 71 58 73 58 22.4 (2.7) 173 109 58.7 93 80 59 50 16.3 57.6
Total Australia	7,585 7,358 3.1 3,851 3,734 3,785 3,573 3.1 1.7
New Zealand	1,140 944 20.8 572 568 480 464 0.7 19.2
Total(ex Fire Service Levies)	8,725 8,302 5.1 4,423 4,302 4,265 4,037 2.8 3.7
Fire ServiceLevies	145 287 (49.5) 67 78 99 188 (14.1) (32.3)
Total(inc Fire Service Levies)	8,870 8,589 3.3 4,490 4,380 4,364 4,225 2.5 2.9

(1) 'Commercial' includes Workers’ Compensation previously reported in “Workers’ Compensation and Other’. Prior periods have been restated accordingly.

(2) 'Other' includes Boat, previously reported in 'Home'. Prior periods have been restated accordingly

(3) Half year ended Dec-13 has been restated to reflect the correct GWP by state.

Financial results for the full year ended 30 June 2014

General Insurance

Gross Written Premium (GWP) (continued)

Motor

Australian Motor GWP increased 0.8% to $2,597 million due to a small increase in average written premiums offset by a marginal reduction in unit growth in an increasingly competitive market.

Fewer new business opportunities were the primary driver of unit losses in the second half. Retention remains strong in Apia, Shannons and Bingle, demonstrating the benefit of Suncorp’s portfolio of brands. Across the portfolio, the business maintained pricing discipline despite aggressive competitor pricing and marketing.

New Zealand Motor GWP increased 28.9% (14.4% in New Zealand dollar terms – NZ$ terms) to $232 million, driven by a combination of strong unit growth, increased average written premium and the impact of the strengthening of the New Zealand dollar against the Australian dollar over the period.

Home

In Australia, Home GWP increased 2.8% to $2,106 million, with average written premiums increasing 6.2%. Increased competition was the primary driver of unit losses and impacted both retention rates and new business opportunities.

Premium increases continued to moderate during the year with average premium increases dropping from 8% in the first half to 4% in the second half of the year.

New Zealand Home GWP increased by 35.4% (20.2% in NZ$ terms) to $333 million. Growth was due to new business, rate increases, retention and the impact of the strengthening of the NZ dollar against the Australian dollar.

Commercial Insurance

Commercial Insurance GWP increased 6.8% to $2,329 million.

Australian Commercial Insurance GWP increased 4.8% to $1,799 million. After adjusting for the exit from crop insurance, growth was 5.6%. While competitive pressure on rates has impacted growth across the industry, Suncorp continues to maintain underwriting discipline and prioritise margin over growth.

Workers’ Compensation GWP increased 10.5% to $315 million, due to a combination of strong retention and new business wins in Western Australia.

Commercial Insurance continues to achieve strong retention rates and high levels of customer satisfaction as a result of on-going customer focus and service improvements. These satisfaction levels have been core to Commercial Insurance’s ability to grow above system.

A multi-channel distribution strategy has delivered growth across all channels, allowing the business to cater for changes in customer preferences. Excellent relationships with brokers and other intermediaries have continued to improve, while direct offerings appeal to a growing number of smaller businesses.

New Zealand Commercial Insurance GWP increased by 14.2% (1.3% in NZ$ terms) to $530 million, largely due to the impact of the strengthening of the NZ dollar against the Australian dollar over the period. The flat NZ dollar growth reflects the impact of increased competition and moderated reinsurance costs following several years of significant premium increases.

Compulsory Third Party (CTP)

CTP GWP increased by 7.4% to $1,050 million.

Suncorp remains the largest CTP provider in Queensland underpinned by a continued focus on customer and risk selection. Suncorp also benefited from the recent exit of a competitor from the Queensland CTP market. Combined with strong retention, GWP growth over the period was 5.7%.

Suncorp is the second largest CTP provider in New South Wales and continues to perform well under a two-brand strategy. The portfolio has benefited from successful cross-selling activities, achieving a growth rate of 6.2% over the period.

General Insurance

Financial results for the full year ended 30 June 2014

The business has also been successful in its entry into the ACT CTP market, with over 35,000 policies written to date. This has further strengthened business scale and demonstrates the success of the national model.

Other

Other GWP, which includes boat insurance, direct travel insurance and other specialist New Zealand products, decreased to $78 million. This decrease was largely due to the exit of the New Zealand travel insurance market.

Reinsurance expense

Outwards reinsurance expense for the year was $1,060 million, an increase of $34 million.

The main factors behind the increase were the purchase of the third and fourth event covers and natural growth across the portfolio offset by a softening in reinsurance rates.

Suncorp has a significant share of the Queensland home insurance market and, to reduce its geographical concentration, the Group has a 30%, multi-year, proportional quota share arrangement covering this portfolio. The quota-share arrangement is in place until at least 30 June 2018.

For the 2015 financial year, as a result of exposure growth, the upper limit on Suncorp’s main catastrophe program, which covers the Group’s Home, Motor and Commercial Property portfolios for major events such as earthquakes, cyclones, storms, floods and bushfires, has increased from $5.8 billion to $6.1 billion.

The maximum event retention is $250 million. Additional cover was purchased to reduce this retention to $200 million for a second Australian event and to $50 million for third and fourth events. Additional multiyear cover has also been purchased to reduce the first event retention for New Zealand risks to NZ$50 million and the second and third event retentions to NZ$25 million.

Reinsurance security has been maintained for the 2015 financial year program, with over 85% of long-tail and short-tail business protected by reinsurers rated ‘A+’ or better. The table below shows risk retention for the Suncorp Group:

for the Suncorp Group:
	MAXIMUM SINGLE RISK	MAXIMUM EVENT RISK
	RETENTION	RETENTION
	JUN-14	JUN-14
	$M	$M
Property(1)	10	250
General liability	10	10
Workers' compensation	10	10
CTP	10	10
Motor(1)	10	250
Professional Indemnity	5	5
Travel & Personal Accident	5	5
Marine	3	3

(1) $250 million is the maximum retention. Additional cover has been purchased to reduce this retention to $200 million for a second Australian event and to $50 million for third and fourth events. Additional multi-year cover has also been purchased to reduce the first event retention for New Zealand risks to NZ$50 million and the second and third event retentions to NZ$25 million.

Financial results for the full year ended 30 June 2014

General Insurance

Net incurred claims

Net incurred claims costs increased 6.5% to $5,240 million.

Natural hazard event costs were $538 million, $27 million below long run allowances. Major natural hazard events are shown in the table below:

NET COSTS DATE EVENT $M	NET COSTS DATE EVENT $M
Sep 2013 NZ Canterbury storms Oct 2013 VIC wind Oct 2013 NSW bushfires Oct 2013 NSW Central Coast hail Nov 2013 NSW QLD storms Nov 2013 Gold Coast hail Feb 2014 VIC bushfires Mar 2014 NSW QLD storms Apr 2014 Cyclone Ita Apr 2014 NZ wind and rain Jun 2014 Southern weather Other natural hazards attritional claims (Australia) Other natural hazards attritional claims(New Zealand)	15 10 63 24 79 37 15 16 7 9 17 224 22
Total Jan-00	538
Less: allowance for natural hazards Natural hazards costs below allowance	(565)
	(27)

Working claims have benefited from lower frequencies due to continued focus on risk selection and higher excesses. Benefits from vertical integration, claims initiatives and savings in procurement continue to keep increases in working claims costs below underlying inflation.

The valuation of outstanding claims resulted in a central estimate release of $109 million, compared to the Group’s long run expectation for reserve releases of $116 million (1.5% of net earned premium).

Long-tail claims reserve releases in Australia of $162 million were primarily attributable to favourable claims experience and claims management initiatives. There was a prior year strengthening in the New Zealand portfolio largely attributable to the deterioration in the net outstanding claims estimates for the February 2011 Canterbury earthquake.

			RISK MARGIN
		NET CENTRAL	(90TH	CHANGE IN NET
		ESTIMATE	PERCENTILE	CENTRAL
	ACTUAL	(DISCOUNTED)	DISCOUNTED)	ESTIMATE(1)
	$M	$M	$M	$M
Short-tail
Australian short-tail and other	1,043	936	107	14
New Zealand	134	120	14	18
Long-tail
Australia long-tail	5,716	4,851	865	(162)
New Zealand	222	192	30	21
Total	7,115	6,099	1,016	(109)

(1) This column is equal to the closing central estimate for outstanding claims (before the impact of a change in interest rates) incurred before the opening balance sheet date, less the opening net central estimate for outstanding claims, plus payments and claims handling expenses, less investment income earned on the net central estimate. A negative sign (–) implies that there has been a release from outstanding reserves.

General Insurance

Financial results for the full year ended 30 June 2014

Outstanding claims provisions over time

The following table shows the gross and net outstanding claims liabilities and their movements over time. The net outstanding claims liabilities are shown split between the net central estimate, the discount on net central estimate (90[th] percentile, discounted) and the risk margin components. The net outstanding claims liabilities are also shown by major class of insurance business.

		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Gross outstanding claims liabilities	9,514	9,777	9,972	9,991	(2.7)	(4.6)
Reinsurance and other recoveries	(2,399)	(2,805)	(3,082)	(3,252)	(14.5)	(22.2)
Net outstanding claims liabilities	7,115	6,972	6,890	6,739	2.1	3.3
Expected future claims payments and claims handling expenses	6,813	6,813	6,651	6,416	-	2.4
Discount to present value	(714)	(825)	(743)	(666)	(13.5)	(3.9)
Risk margin	1,016	984	982	989	3.3	3.5
Net outstanding claims liabilities	7,115	6,972	6,890	6,739	2.1	3.3
Short-tail
Australia short-tail and other	1,043	1,100	1,107	1,038	(5.2)	(5.8)
New Zealand	134	111	101	79	20.7	32.7
Long-tail
Australia long-tail	5,716	5,537	5,503	5,468	3.2	3.9
New Zealand	222	224	179	154	(0.9)	24.0
Total	7,115	6,972	6,890	6,739	2.1	3.3

Risk margins

Risk margins represent approximately 17% of outstanding claims reserves giving an approximate level of confidence of 90%.

Risk margins increased $34 million during the period to $1,016 million from $982 million. The assets notionally backing risk margins had a net return of $43 million, after allowing for movements in the riskfree rate. The net impact was therefore $9 million, which is excluded in the underlying ITR calculation.

Operating expenses

Total operating expenses marginally increased to $1,776 million from $1,753 million. Excluding FSL, the total operating expense ratio increased 0.5% to 21%. Total operating expenses were impacted by exchange rates and deferred acquisition costs.

Acquisition costs were $1,063 million, with the acquisition expense ratio increasing to 13.8% from 12.8% with commission costs increasing in line with GWP growth. Prior year acquisition costs benefited from a $21 million Liability Adequacy Test (LAT) reversal, with no adjustment in the current year.

Other underwriting expenses have reduced to $713 million. This includes $68 million of Simplification project costs such as Legacy System Consolidation and Partnering. The costs relating to the Simplification projects are removed from the underlying ITR calculation.

Managed schemes

Managed schemes income is attributable to Suncorp’s Australian Commercial Insurance business administering various governments’ Workers’ Compensation schemes across Australia. The business generated $20 million net profit before tax. Commercial Insurance will continue to deliver market leading claims to generate improved returns from these schemes.

Financial results for the full year ended 30 June 2014

General Insurance

Joint venture and other income

The Group participates in a joint venture with the motoring club in Tasmania. Joint venture and other income was $5 million.

Investment income

General Insurance investment funds are split into insurance funds and shareholders’ funds. Insurance funds back insurance liabilities and are managed to reduce interest rate and inflation risk emanating from the liabilities. Insurance liabilities comprise provisions for outstanding claims and unearned premiums net of reinsurance. For accounting purposes outstanding claims are discounted using market referenced riskfree discount rates. Shareholders’ funds comprise the balance of investment assets and support the capital position.

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Investment income on insurance funds
Cash and short-term deposits	2	2	-	1	1	1	1	-	-
Interest-bearing securities and other	483	331	45.9	305	178	77	254	71.3	296.1
Total	485	333	45.6	306	179	78	255	70.9	292.3
Investment income on shareholder funds
Cash and short-term deposits	1	2	(50.0)	-	1	1	1	(100.0)	(100.0)
Interest-bearing securities	129	182	(29.1)	68	61	77	105	11.5	(11.7)
Equities	116	127	(8.7)	37	79	49	78	(53.2)	(24.5)
Property	-	(23)	(100.0)	-	-	1	(24)	n/a	(100.0)
Total	246	288	(14.6)	105	141	128	160	(25.5)	(18.0)

Total investment income	731	621	17.7	411	320	206	415	28.4	99.5

Total investment income of $731 million resulted in a total return of 5.7% for the year.

For the year ended 30 June 2014, the Australian cash rate fell 25 basis points to 2.50% and the yield on three-year Government Bonds decreased 11 basis points to 2.68% providing risk-free mark-to-market gains on investment assets (and increased outstanding claims reserves). Narrowing of credit spreads, increases in breakeven inflation and equity markets provided additional gains.

Investment income on Insurance Funds

Total investment income on Insurance Funds was $485 million comprising:

underlying yield income of $263 million or 2.9% of the average funds under management over the year, down from 4.2% reflecting lower shorter duration risk-free rates and narrower credit spreads
mark-to-market gains of $117 million from decreases in risk-free rates
mark-to-market gains of $74 million from a narrowing of credit spreads; and
$31 million outperformance of inflation-linked bonds relative to Commonwealth government nominal bonds.

Investment income on insurance funds is reported as part of the ITR along with changes in the value of outstanding claims. The decrease in risk-free rates increased the value of outstanding claims by $105 million offset by the $117 million of mark-to-market gains on investment assets. The net impact from riskfree rate changes of $12 million is attributable to mark-to-market gains on the assets backing unearned premiums (which are not discounted).

General Insurance

Financial results for the full year ended 30 June 2014

In calculating the underlying ITR, an investment income adjustment of $126 million has been made to materially remove the impact of investment market volatility comprising:

the $74 million gain from the narrowing of credit spreads
the $31 million gain from inflation-linked bond outperformance
the $12 million gain from changes in the risk-free rates referred to above; and
the $9 million gain from the unwind of the prior period risk-free rate charges.

Investment income on shareholder funds

The total investment income on shareholder funds was $246 million, with the following main components:

Interest-bearing securities contributed $129 million. The Australian underlying yield income was $93 million with New Zealand having a net return of $11 million; and,
International and domestic equities recorded a gain of $116 million due to stock market advances ($107 million and $9 million for the Australian and New Zealand portfolios respectively).

Investment assets

		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Allocation of investments held against:
Insurance funds
Cash and short-term deposits	80	79	97	46	1.3	(17.5)
Inflation-linked securities	1,743	1,575	1,580	1,618	10.7	10.3
Interest-bearing securities and other	8,002	7,476	7,420	6,803	7.0	7.8
Total	9,825	9,130	9,097	8,467	7.6	8.0
Shareholder funds
Cash and short-term deposits	51	41	118	97	24.4	(56.8)
Interest-bearing securities	2,617	2,561	2,538	2,669	2.2	3.1
Equities	563	716	689	699	(21.4)	(18.3)
Property	-	-	-	75	n/a	n/a
Total	3,231	3,318	3,345	3,540	(2.6)	(3.4)

The Australian insurance funds are managed against a benchmark that closely matches the interest rate and inflation sensitivity of the claims liability profile.

The Australian shareholder funds portfolio is managed against a benchmark consisting of cash, investment grade credit and 30% growth assets. The portfolio gains exposure to foreign credit and equity markets providing additional diversification and income opportunities. All foreign currency and foreign interest rate risk on international exposures is hedged.

The investment assets reflect an overarching investment strategy that focuses on generating capital efficient risk-adjusted returns.

Credit ratings for General Insurance fixed interest investments

AVERAGE	JUN-14 DEC-13 JUN-13 DEC-12 % % % % HALF YEAR ENDED
AAA AA A BBB	49.6 48.0 46.9 48.1 29.1 30.4 32.5 30.7 18.2 19.1 18.1 19.5 3.1 2.5 2.5 1.7
	100.0 100.0 100.0 100.0

Financial results for the full year ended 30 June 2014

General Insurance

Personal Lines Australia

Personal Lines Australia	Personal Lines Australia
JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED
Gross written premium (including Fire Service Levies) 4,837 4,860 (0.5) 2,400 2,437 2,446 2,414 (1.5) (1.9) Gross written premium (excluding Fire Service Levies) 4,736 4,663 1.6 2,353 2,383 2,375 2,288 (1.3) (0.9)
Net earned premium 4,352 4,225 3.0 2,150 2,202 2,131 2,094 (2.4) 0.9 Net incurred claims (2,913) (2,883) 1.0 (1,394) (1,519) (1,569) (1,314) (8.2) (11.2) Acquisition expenses (497) (466) 6.7 (251) (246) (231) (235) 2.0 8.7 Otherunderwriting expenses (367) (440) (16.6) (170) (197) (228) (212) (13.7) (25.4)
Totaloperating expenses (864) (906) (4.6) (421) (443) (459) (447) (5.0) (8.3)
Underwriting result 575 436 31.9 335 240 103 333 39.6 225.2 Investment income - insurance funds 94 99 (5.1) 37 57 32 67 (35.1) 15.6
Insurance trading result 669 535 25.0	372 297 135 400 25.3 175.6
% %	% % % %
Ratios Acquisition expenses ratio 11.4 11.0 Otherunderwriting expensesratio 8.4 10.4 Totaloperating expensesratio 19.9 21.4 Loss ratio 66.9 68.2 Combined operating ratio 86.8 89.7 Insurance tradingratio 15.4 12.7	11.7 11.2 10.8 11.2 7.9 8.9 10.7 10.1 19.6 20.1 21.5 21.3 64.8 69.0 73.6 62.8 84.4 89.1 95.2 84.1 17.3 13.5 6.3 19.1

Result overview

Australian Personal Insurance delivered a significant increase in the Insurance Trading Result to $669 million representing a headline ITR of 15.4%. Premium increases moderated over the period with unit growth impacted by competitive pressures in the Home and Motor portfolios. Suncorp has continued to maintain its pricing discipline, despite aggressive discounting by challenger brands. Excluding FSL, GWP grew 1.6%.

Benign weather saw the loss ratio fall to 66.9% from 68.2%. Natural hazard claims were favourable to both prior year and allowance. A number of initiatives continue to improve the underlying working claims ratio. Strict risk selection criteria lowered frequencies and many customers opted for higher policy excesses. The benefits of the vertical integration strategy were also evident with 26 SMART facilities now repairing more than 100,000 cars per year at a flat cost.

The total operating expense ratio improved to 19.9%, from 21.4%. Excluding FSL, the expense ratio remained flat, reflecting the continued focus on expense discipline.

Outlook

Personal Insurance has established a position of strength and will continue to deliver superior margins over future periods. Maintaining an appropriate balance between margin improvement and volume growth will underpin the sustainability of the business in a competitive market.

Ongoing competitive pressure and lower reinsurance costs will impact the outlook for premium increases and will impact GWP growth over the coming year. The ongoing roll out of supply chain initiatives together with Simplification benefits will continue to support strong margins and provide the business with the capacity to respond to any future changes in competitive dynamics.

A number of new product initiatives have recently been launched such as Apia Health and AAMI Roadside Assist, with take-up rates exceeding expectations and positive feedback from customers.

General Insurance

Financial results for the full year ended 30 June 2014

Commercial Lines Australia

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Gross written premium (including Fire Service
Levies)	2,893	2,785	3.9	1,518	1,375	1,438	1,347	10.4	5.6
Gross written premium (excluding Fire Service
Levies)	2,848	2,695	5.7	1,497	1,351	1,410	1,285	10.8	6.2
Net earned premium	2,489	2,388	4.2	1,246	1,243	1,204	1,184	0.2	3.5
Net incurred claims	(1,817)	(1,654)	9.9	(983)	(834)	(840)	(814)	17.9	17.0
Acquisition expenses	(358)	(292)	22.6	(184)	(174)	(121)	(171)	5.7	52.1
Otherunderwriting expenses	(258)	(313)	(17.6)	(121)	(137)	(165)	(148)	(11.7)	(26.7)
Totaloperating expenses	(616)	(605)	1.8	(305)	(311)	(286)	(319)	(1.9)	6.6
Underwriting result	56	129	(56.6)	(42)	98	78	51	n/a	n/a
Investment income - insurance funds	381	221	72.4	260	121	40	181	114.9	large
Insurance trading result	437	350	24.9	218	219	118	232	(0.5)	84.7
	%	%		%	%	%	%
Ratios
Acquisition expenses ratio	14.4	12.2		14.8	14.0	10.0	14.4
Otherunderwriting expensesratio	10.4	13.1		9.7	11.0	13.8	12.5
Totaloperating expensesratio	24.7	25.3		24.5	25.0	23.8	26.9
Loss ratio	73.0	69.3		78.9	67.1	69.8	68.8
Combined operating ratio	97.8	94.6		103.4	92.1	93.5	95.7
Insurance tradingratio	17.6	14.7		17.5	17.6	9.8	19.6

Result overview

Australian Commercial Insurance delivered an Insurance Trading Result of $437 million, an increase of 24.9%. The business continues to deliver strong top line growth, while maintaining underwriting and expense discipline.

Excluding FSL, GWP grew 5.7%. After adjusting for the impact of exiting crop insurance, GWP growth was 6.2%. This was driven by improved retention and new business growth.

The reported loss ratio increased to 73%. After adjusting for the impact of changes in discount rates, the loss ratio has improved due to continued focus on superior risk selection and claims management initiatives.

The total operating expense ratio at 24.7% demonstrates ongoing expense discipline. Excluding FSL and the prior period LAT benefit, the expense ratio remained flat.

Outlook

The Australian Commercial Insurance business will continue to focus on superior risk selection, market leading claims management and cost control as it prioritises margin over growth. The Australian Commercial Insurance’s well progressed Simplification journey and solid broker relationships give the business a competitive advantage allowing it to capitalise on changing market dynamics. The breadth of distribution channels, scale in claims and expertise in underwriting, allow the business to target growth of 3% to 4% above system.

The Commercial Insurance strategy enables organic growth, augmented by successful scheme entry, such as ACT CTP, and acquisition of complementary product and channel sets, such as MTA Insurance.

Australian personal injury compensation schemes are currently undergoing significant reform. There are opportunities to engage with regulators and governments on scheme design to drive greater harmonisation across personal injury classes and schemes, while achieving greater certainty in earnings.

The success of Commercial Insurance’s claims initiatives will continue to yield benefits for the business and will contribute to the Group’s guidance to meet or beat an underlying ITR of 12%.

Financial results for the full year ended 30 June 2014

General Insurance

New Zealand

Expressed in A$

JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED FULL YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED FULL YEAR ENDED
Gross writtenpremium 1,140 944 20.8 572 568 480 464 0.7 19.2
Net earned premium 885 685 29.2 465 420 362 323 10.7 28.5 Net incurred claims (510) (382) 33.5 (255) (255) (205) (177) - 24.4 Acquisition expenses (208) (178) 16.9 (107) (101) (91) (87) 5.9 17.6 Otherunderwriting expenses (88) (64) 37.5 (44) (44) (35) (29) - 25.7
Totaloperating expenses (296) (242) 22.3 (151) (145) (126) (116) 4.1 19.8
Underwriting result 79 61 29.5 59 20 31 30 195.0 90.3 Investmentincome- insurancefunds 10 13 (23.1) 9 1 6 7 large 50.0
Insurance trading result 89 74 20.3	68 21 37 37 223.8 83.8
% %	% % % %
Ratios Acquisition expenses ratio 23.5 26.0 Otherunderwriting expensesratio 9.9 9.3 Totaloperating expensesratio 33.4 35.3 Loss ratio 57.6 55.8 Combined operating ratio 91.1 91.1 Insurance tradingratio 10.1 10.8
	23.0 24.0 25.1 26.9 9.5 10.5 9.7 9.0 32.5 34.5 34.8 35.9 54.8 60.7 56.6 54.8 87.3 95.2 91.4 90.7 14.6 5.0 10.2 11.5

Expressed in NZ$

JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 NZ$M NZ$M % NZ$M NZ$M NZ$M NZ$M % % HALF YEAR ENDED FULL YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 NZ$M NZ$M % NZ$M NZ$M NZ$M NZ$M % % HALF YEAR ENDED FULL YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 NZ$M NZ$M % NZ$M NZ$M NZ$M NZ$M % % HALF YEAR ENDED FULL YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 NZ$M NZ$M % NZ$M NZ$M NZ$M NZ$M % % HALF YEAR ENDED FULL YEAR ENDED
Gross writtenpremium 1,262 1,180 6.9 617 645 588 592 (4.3) 4.9
Net earned premium 978 855 14.4 501 477 444 411 5.0 12.8 Net incurred claims (564) (477) 18.2 (274) (290) (251) (226) (5.5) 9.2 Acquisition expenses (231) (223) 3.6 (116) (115) (112) (111) 0.9 3.6 Otherunderwriting expenses (97) (81) 19.8 (47) (50) (43) (38) (6.0) 9.3
Totaloperating expenses (328) (304) 7.9 (163) (165) (155) (149) (1.2) 5.2
Underwriting result 86 Investmentincome- insurancefunds 11	74 16.2 64 22 38 36 190.9 68.4 17 (35.3) 10 1 7 10 large 42.9
Insurance trading result 97	91 6.6	74 23 45 46 221.7 64.4
%	%	% % % %
Ratios Acquisition expenses ratio 23.6 Otherunderwriting expensesratio 9.9	26.1 9.5 35.6 55.8 91.3 10.6	23.2 9.4	24.1 25.2 27.0 10.5 9.7 9.2 34.6 34.9 36.3 60.8 56.5 55.0 95.4 91.4 91.2 4.8 10.1 11.2
Totaloperating expensesratio 33.5		32.5
Loss ratio 57.7 Combined operating ratio 91.2 Insurance tradingratio 9.9		54.7 87.2 14.8

General Insurance

Financial results for the full year ended 30 June 2014

Result overview

New Zealand delivered an Insurance Trading Result of $89 million, an increase of 20.3%. The result includes a $35 million impact from the deterioration in the estimate of ultimate claims costs for the February 2011 earthquake, changes in discounting in relation to outstanding earthquake claims and a change to the recognition of some future earthquake claims handling expenses.

GWP growth of 20.8% (NZ$ 6.9%) was achieved through both direct and intermediated distribution channels. Growth was largely achieved due to rate increases and significant growth in personal line units. Underlying growth was 22.2% (NZ$ 8.2%) after adjusting for Vero’s exit from the travel insurance market, and a change in the treatment of coinsurance in the marine business.

The loss ratio increased to 57.6% from 55.8%, with natural hazard experience $26 million above allowance following a series of floods and other weather events. The final phase of the Christchurch recovery is underway with an increase in claims costs of $35 million (NZ$39 million) impacting the result.

The total operating expenses ratio improved to 33.4% from 35.3%, largely attributable to a reduction in acquisition costs.

Outlook

The New Zealand businesses, Vero and AA Insurance, are well placed to continue to compete and grow at or above system, particularly in the personal lines market.

Vero is well advanced with a series of major projects designed to boost competitiveness through improved risk assessment and pricing, restructured and streamlined operations, and improved claims procurement.

Over 75% of all earthquake claims costs, or NZ$3.6 billion, have been paid, and the business is on track to have resolved almost all claims by the end of 2014 with construction continuing throughout 2015. The degree of uncertainty as to the final earthquake claims cost continues to reduce as claims progress.

Underlying margin has continued to improve and will continue as benefits from Simplification projects and improved operational efficiency are realised. The program is leveraging the systems and processes implemented in the Australian insurance operations.

Financial results for the full year ended 30 June 2014

General Insurance

General Insurance short-tail and long-tail (includes NZ)

General Insurance short-tail and long-tail (includes NZ)	General Insurance short-tail and long-tail (includes NZ)
JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED
Short-tail Gross written premium (including Fire Service Levies) 6,867 6,678 2.8 3,425 3,442 3,332 3,346 (0.5) 2.8 Gross written premium (excluding Fire Service Levies) 6,789 6,391 6.2 3,425 3,364 3,233 3,158 1.8 5.9
Net earned premium 5,885 5,570 5.7 2,933 2,952 2,828 2,742 (0.6) 3.7 Net incurred claims (3,819) (3,675) 3.9 (1,874) (1,945) (2,001) (1,674) (3.7) (6.3) Acquisition expenses (810) (724) 11.9 (415) (395) (360) (364) 5.1 15.3 Otherunderwriting expenses (562) (657) (14.5) (264) (298) (343) (314) (11.4) (23.0)
Totaloperating expenses (1,372) (1,381) (0.7) (679) (693) (703) (678) (2.0) (3.4)
Underwriting result 694 514 35.0 380 314 124 390 21.0 206.5 Investment income - insurance funds 114 118 (3.4) 51 63 42 76 (19.0) 21.4
Insurance trading result 808 632 27.8	431 377 166 466 14.3 159.6
% %	% % % %
Ratios Acquisition expenses ratio 13.8 13.0 Otherunderwriting expensesratio 9.5 11.8 Totaloperating expensesratio 23.3 24.8 Loss ratio 64.9 66.0 Combined operating ratio 88.2 90.8 Insurance tradingratio 13.7 11.3	14.1 13.4 12.7 13.3 9.0 10.1 12.1 11.5 23.2 23.5 24.9 24.7 63.9 65.9 70.8 61.1 87.0 89.4 95.6 85.8 14.7 12.8 5.9 17.0

JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED
Long-tail Gross written premium (including Fire Service Levies) 2,003 1,911 4.8 1,065 938 1,032 879 13.5 3.2 Gross written premium (excluding Fire Service Levies) 2,003 1,911 4.8 1,065 938 1,032 879 13.5 3.2
Net earned premium 1,841 1,728 6.5 928 913 869 859 1.6 6.8 Net incurred claims (1,421) (1,244) 14.2 (758) (663) (613) (631) 14.3 23.7 Acquisition expenses (253) (212) 19.3 (127) (126) (83) (129) 0.8 53.0 Otherunderwriting expenses (151) (160) (5.6) (71) (80) (85) (75) (11.3) (16.5)
Totaloperating expenses (404) (372) 8.6 (198) (206) (168) (204) (3.9) 17.9
Underwriting result 16 112 (85.7) (28) 44 88 24 n/a n/a Investment income - insurance funds 371 215 72.6 255 116 36 179 119.8 large
Insurance trading result 387 327 18.3	227 160 124 203 41.9 83.1
% %	% % % %
Ratios Acquisition expenses ratio 13.7 12.3 Otherunderwriting expensesratio 8.2 9.3 Totaloperating expensesratio 21.9 21.5 Loss ratio 77.2 72.0 Combined operating ratio 99.1 93.5 Insurance tradingratio 21.0 18.9	13.7 13.8 9.6 15.0 7.7 8.8 9.8 8.7 21.3 22.6 19.3 23.7 81.7 72.6 70.5 73.5 103.0 95.2 89.9 97.2 24.5 17.5 14.3 23.6

Bank

Financial results for the full year ended 30 June 2014

Bank

Result overview

The 2014 financial year was one of transition for Suncorp Bank. It consolidated operations and addressed legacy funding and cost positions related to the former ‘Non-core’ portfolio, laying the foundations for sustainable and profitable growth. The Bank delivered net profit after tax of $228 million.

The Bank continued to strengthen its risk management in line with the Basel II Advanced Accreditation agenda. Improving the credit quality and diversification of lending assets remained a key focus, supported by an enhanced risk culture and improved underwriting standards.

Growth across the retail and business lending portfolios of 5.0% was slightly below target. It reflects a considered approach to lending in an intensely competitive mortgage environment and challenging agribusiness trading conditions.

Asset growth is supported by a conservative funding strategy with 65.8% of lending assets funded by retail deposits. Transaction deposit growth of 24% over the year demonstrates the strength of the franchise. An ‘A+/A1’ credit rating and access to a broad range of wholesale funding markets complements the Bank’s funding capability. The CET1 ratio increased 86 basis points to 8.54%.

The Bank’s Net Interest Margin (NIM) for the year improved 8 basis points to 1.72% benefiting from the maturity of legacy ‘Non-core’ funding and moderation of term deposit pricing. NIM of 1.78% for the second half saw the Bank exit the year within the target operating range, six months ahead of schedule.

The cost to income ratio reduced 1.8% to 57.4%, benefiting from positive revenue/expense growth ‘jaws’. Profit before bad debts increased 8.4% to $463 million, underpinned by revenue growth of 11.7%. Operating expenses were broadly flat. In the half to 30 June 2014, the Bank achieved a 23.7% increase in profit before bad debts, contributing to a reduction in the cost to income ratio from 59.6% to 55.5%.

The Bank continued to invest in its transformation program with good progress achieved in the staged delivery of the Bank’s new banking platform, Project Ignite. Further investment occurred in advertising and promotion as the Bank continues its focus on the Queensland market.

Gross impaired assets decreased 34.2% to $333 million. This represents 0.7% of gross loans and advances. Gross non-performing loans have reduced 17.9% to $772 million. Impairment losses on loans and advances reflect heightened stress across the agribusiness segment, ongoing drought conditions and a subdued rural property market. The result includes a prudent approach to provisioning given expectations of continued drought conditions into the 2015 financial year.

The Bank exits the transitional year with a stronger balance sheet, a simplified business and improved financial metrics, leaving it well positioned to deliver on its strategic targets.

Financial results for the full year ended 30 June 2014

Bank

Profit contribution

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	JUN-13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Net interest income	1,011	986	2.5	519	492	502	484	5.5	3.4
Net non-interest income
Net banking fee income	67	77	(13.0)	30	37	38	39	(18.9)	(21.1)
MTM on financial instruments	4	(6)	n/a	23	(19)	(14)	8	n/a	n/a
Other income (loss)	5	(11)	n/a	3	2	(11)	-	50.0	n/a
Total netnon-interestincome	76	60	26.7	56	20	13	47	180.0	330.8
Total income from Banking activities	1,087	1,046	3.9	575	512	515	531	12.3	11.7
Operating expenses
Staff expenses	(354)	(360)	(1.7)	(176)	(178)	(180)	(180)	(1.1)	(2.2)
Equipment and occupancy expenses	(109)	(112)	(2.7)	(56)	(53)	(56)	(56)	5.7	-
Hardware, software and dataline
expenses	(42)	(36)	16.7	(21)	(21)	(19)	(17)	-	10.5
Advertising and promotion	(30)	(30)	-	(17)	(13)	(16)	(14)	30.8	6.3
Office supplies, postage and printing	(31)	(28)	10.7	(16)	(15)	(13)	(15)	6.7	23.1
Other	(58)	(53)	9.4	(33)	(25)	(32)	(21)	32.0	3.1
Totaloperating expenses	(624)	(619)	0.8	(319)	(305)	(316)	(303)	4.6	0.9
Bank profit before losses on loans and
advances	463	427	8.4	256	207	199	228	23.7	28.6
Loss on sale of loans and advances	(13)	(527)	(97.5)	-	(13)	(506)	(21)	(100.0)	(100.0)
Impairment losses on loans and
advances	(124)	(375)	(66.9)	(79)	(45)	(181)	(194)	75.6	(56.4)
Bank profit (loss) before tax	326	(475)	n/a	177	149	(488)	13	18.8	n/a
Income tax	(98)	132	n/a	(54)	(44)	141	(9)	22.7	n/a
Bankprofit (loss) after tax	228	(343)	n/a	123	105	(347)	4	17.1	n/a

Bank ratios and key statistics

Bank ratios and key statistics
	FULL YEAR ENDED			HALF YEAR ENDED
	JUN-14	JUN-13	JUN-14	DEC-13	JUN-13	DEC-12
	%	%	%	%	%	%
Lending growth (annualised)	3.65	0.77	3.17	4.06	(4.05)	5.62
Net interest margin (interest-earning assets)	1.72	1.64	1.78	1.66	1.67	1.60
Cost to income ratio	57.4	59.2	55.5	59.6	61.4	57.1
Impairment losses to gross loans and advances	0.25	0.78	0.32	0.18	0.76	0.78
Return on Common Equity Tier 1	8.19	(14.70)	8.78	7.59	(28.98)	0.33
Deposit to loan ratio	65.8	65.5	65.8	65.7	65.5	61.3

Bank

Financial results for the full year ended 30 June 2014

Statement of assets and liabilities

					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
Assets
Cash and cash equivalents	463	810	905	341	(42.8)	(48.8)
Receivables due from other banks	927	790	1,460	1,031	17.3	(36.5)
Trading securities	1,593	2,129	3,462	4,077	(25.2)	(54.0)
Derivatives	334	451	667	427	(25.9)	(49.9)
Investment securities	6,500	6,652	6,640	5,114	(2.3)	(2.1)
Loans, advances and other receivables	49,781	49,074	47,999	48,770	1.4	3.7
Due from Group entities	147	290	251	190	(49.3)	(41.4)
Deferred tax assets	98	88	141	185	11.4	(30.5)
Other assets	192	213	272	319	(9.9)	(29.4)
Goodwillandintangible assets	262	262	262	262	-	-
Totalassets	60,297	60,759	62,059	60,716	(0.8)	(2.8)
Liabilities
Deposits and short-term borrowings	44,154	44,597	43,861	41,828	(1.0)	0.7
Derivatives	525	494	984	1,287	6.3	(46.6)
Payables due to other banks	81	186	213	46	(56.5)	(62.0)
Payables and other liabilities	457	403	640	502	13.4	(28.6)
Due to group entities	160	-	-	-	n/a	n/a
Securitisation liabilities	3,598	4,267	4,802	4,326	(15.7)	(25.1)
Debt issues	6,839	6,433	7,313	8,250	6.3	(6.5)
Subordinated notes	742	840	840	267	(11.7)	(11.7)
Preference shares	-	-	30	764	n/a	(100.0)
Total liabilities	56,556	57,220	58,683	57,270	(1.2)	(3.6)
Net assets	3,741	3,539	3,376	3,446	5.7	10.8
Reconciliation of net equity to Common Equity Tier 1 Capital
Net equity - Banking line of business	3,741	3,539	3,376	3,446
Additional tier 1 capital	(450)	(450)	(450)	(450)
Goodwill allocated to Banking Business	(235)	(235)	(235)	(235)
Regulatory capital equity adjustments	27	37	58	90
Regulatory capital deductions	(287)	(259)	(286)	(277)
Other reserves excludedfromCET1 ratio	(151)	(125)	(131)	(133)
Common Equity Tier 1 Capital	2,645	2,507	2,332	2,441

Financial results for the full year ended 30 June 2014

Bank

Loans, advances and other receivables

					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Housing loans	32,540	31,329	29,399	28,614	3.9	10.7
Securitisedhousingloans and covered bonds	6,461	6,955	7,759	7,349	(7.1)	(16.7)
Total housing loans	39,001	38,284	37,158	35,963	1.9	5.0
Consumer loans	431	452	463	464	(4.6)	(6.9)
Retail loans	39,432	38,736	37,621	36,427	1.8	4.8
Commercial (SME)	5,772	5,666	5,531	5,297	1.9	4.4
Agribusiness	4,624	4,484	4,311	4,039	3.1	7.3
Total Retail and Business lending	49,828	48,886	47,463	45,763	1.9	5.0
Corporate and property	128	298	735	3,422	(57.0)	(82.6)
Total lending	49,956	49,184	48,198	49,185	1.6	3.6
Other receivables	51	100	101	58	(49.0)	(49.5)
Gross banking loans, advances and other receivables	50,007	49,284	48,299	49,243	1.5	3.5
Provision for impairment	(226)	(210)	(300)	(473)	7.6	(24.7)
Loans, advances and other receivables	49,781	49,074	47,999	48,770	1.4	3.7
Credit-risk weighted assets	25,903	25,407	25,364	27,423	2.0	2.1
Geographical breakdown - Total lending
Queensland	28,748	28,448	28,254	28,889	1.1	1.7
New South Wales	12,095	11,777	11,212	11,431	2.7	7.9
Victoria	4,436	4,372	4,273	4,487	1.5	3.8
Western Australia	3,139	3,119	3,066	3,059	0.6	2.4
South Australia and other	1,538	1,468	1,393	1,319	4.8	10.4
Outside ofQueenslandloans	21,208	20,736	19,944	20,296	2.3	6.3
Total lending	49,956	49,184	48,198	49,185	1.6	3.6

Total Lending

Total lending receivables, including securitised assets, grew 3.6%. The result includes $607 million runoff from the legacy ‘Non-Core’ Corporate and Property portfolio. Excluding the legacy corporate and property run-off, lending growth was 5.0%.

Retail Loans

The home lending portfolio grew 5.0% to $39 billion in a low credit growth environment characterised by intense price competition, customer deleveraging and increased refinancing activity. Growth at 0.9 times system reflects the Bank’s focus of targeting the sub-80% LVR segment in Queensland and interstate markets.

The intermediated channel is integral to the Bank’s customer acquisition and portfolio diversification strategy, particularly outside Queensland. As at 30 June 2014, 42% of the home lending portfolio was originated outside of Queensland.

Building complete customer relationships remains a key focus across direct and intermediated channels. Currently 80% of new home loan customers have a transaction account relationship with the Bank.

Commercial (SME)

The commercial (SME) portfolio grew to $5.8 billion in an Australian economy shaped by low business confidence and a high Australian dollar. Construction and property development has responded to

Bank

Financial results for the full year ended 30 June 2014

accommodative interest rates and demand for apartments, while manufacturing, mining and hospitality sectors face challenges from the high dollar.

Commercial (SME) portfolio breakdown

	QLD	NSW	Other	Total	Total
	%	%	%	%	$M
Commercial (SME) breakdown
Property Investment	30	4	5	39	2,277
Hospitality & Accomm.	16	2	1	19	1,113
Retail	5	2	1	8	444
Construction & Dev.	7	1	1	9	493
Manufacturing & Mining	3	2	2	7	364
Services (Inc. prof services)	6	2	1	9	496
Other	7	1	1	9	585
Total %	74	14	12	100
Total$M	4,252	806	714		5,772

The Bank’s commercial property investment assets have an average loan size of around $2 million. The portfolio is heavily weighted towards less than $5 million lending, with 98% of customer groups with loans in this range. By value, more than half of the commercial (SME) portfolio consists of customer groups with an average exposure of less than $5 million.

Commercial (SME) portfolio by average group exposure size

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----- Start of picture text -----

5% [3% ]
9% <1%
< $5 million
1%
$5-$10 million
$10-$25 million
Number of
$25-$50 million
16% Commercial
52%
(SME) groups $50-$100 million
$100+ million
98%
15%
1 exposure, exited August 2014
----- End of picture text -----

Agribusiness

The Agribusiness portfolio grew 7.3% to $4.6 billion. The Bank is taking a measured approach to risk selection in an environment affected by ongoing drought and intense price competition.

Financial results for the full year ended 30 June 2014

Bank

The Bank has a long heritage in agribusiness and remains committed to this segment. The target market remains family-operated farms with an average loan size of around $1.8 million.

Agribusiness portfolio breakdown

	QLD	NSW	Other	Total	Total
	%	%	%	%	$M
Agribusiness breakdown
Beef	31	2	-	33	1,495
Grain & Mixed Farming	10	15	2	27	1,245
Sheep & Mixed Livestock	5	4	1	10	457
Cotton	4	4	-	8	383
Sugar	5	-	-	5	222
Fruit	3	-	-	3	159
Other	7	3	4	14	663
Total %	65	28	7	100
Total$M	2,974	1,309	341		4,624

The portfolio is heavily weighted towards less than $5 million lending, with 91% of customer groups with loans in this range. By value, half of the Agribusiness portfolio consists of customer groups with an average exposure of less than $5 million.

Agribusiness portfolio by average group exposure size

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----- Start of picture text -----

9%
3%
0%
5%
< $5 million
21%
$5-$10 million
Number of
50%
Agribusiness $10-$25 million
groups
$25+ million
91%
20%
----- End of picture text -----

Corporate and Property

The corporate and property portfolio represents the residual ‘Non-core’ portfolio of loans. The portfolio reduced by 83% ($607 million). At 30 June 2014, net receivables total $128 million, with $48 million or 37% impaired. Provisioning allocated against these loans remains appropriate with specific provision coverage in excess of 42%.

Bank

Financial results for the full year ended 30 June 2014

Bank funding composition

JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %	JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %
Retail funding Retail Deposits(1) Transaction 5,333 5,113 4,301 4,010 4.3 24.0 Investment 8,085 7,711 6,673 6,588 4.9 21.2 Termdeposits 15,305 15,812 16,599 15,486 (3.2) (7.8)
Retaildeposits 28,723 28,636 27,573 26,084 0.3 4.2
Retailtreasury deposits 4,169 3,673 3,981 4,061 13.5 4.7
Total retail funding 32,892 32,309 31,554 30,145 1.8 4.2
Wholesale funding
Domestic funding sources Short-term wholesale 8,551 8,602 8,308 8,231 (0.6) 2.9 Long-term wholesale 2,750 2,650 2,866 3,975 3.8 (4.0) Covered bonds 2,197 2,196 2,196 2,195 0.0 0.0 Subordinated notes 742 840 840 170 (11.7) (11.7) Reset preference shares - - 30 30 n/a (100.0)
Convertible preference shares - - - 734 n/a n/a
14,240 14,288 14,240 15,335 (0.3) -
Overseas funding sources(2) Short-term wholesale 2,711 3,686 3,999 3,452 (26.5) (32.2) Long-term wholesale 1,892 1,587 2,251 2,080 19.2 (15.9) Subordinatednotes - - - 97 n/a n/a
4,603 5,273 6,250 5,629 (12.7) (26.4)
Total wholesalefunding 18,843 19,561 20,490 20,964 (3.7) (8.0)
Total funding (excluding securitisation) 51,735 51,870 52,044 51,109 (0.3) (0.6) Securitised funding
APS 120 qualifying 3,140 3,711 3,733 3,552 (15.4) (15.9) APS120non-qualifying 458 556 1,069 774 (17.6) (57.2)
Totalsecuritisedfunding 3,598 4,267 4,802 4,326 (15.7) (25.1)
Total funding (including securitisation) 55,333 56,137 56,846 55,435 (1.4) (2.7)
Total funding is represented on the balance sheet by: Deposits 32,892 32,309 31,554 30,145 1.8 4.2 Short-term borrowings 11,262 12,288 12,307 11,683 (8.3) (8.5) Securitisation liabilities 3,598 4,267 4,802 4,326 (15.7) (25.1) Bonds, notes and long-term borrowings 6,839 6,433 7,313 8,250 6.3 (6.5) Subordinated notes 742 840 840 267 (11.7) (11.7) Preference shares - - 30 764 n/a (100.0)
Total 55,333 56,137 56,846 55,435 (1.4) (2.7)
Deposit to loan ratio 65.8% 65.7% 65.5% 61.3%

(1) Comparative information has been restated to conform to current year presentation

(2) Foreign currency borrowings are hedged back into Australian dollars.

Financial results for the full year ended 30 June 2014

Bank

Retail funding

The Bank manages the retail deposits portfolio to support lending, margin and customer acquisition objectives. The retail deposit to lending ratio of 65.8% is within target range.

A focus on the acquisition of stable and diversified retail deposits underpinned 24% growth in transaction deposits in the year to 30 June 2014.

Components of balance sheet (% of total lending assets)

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Assets Liabilities Assets Liabilities Assets Liabilities
+ Equity + Equity + Equity
0% 4%
28% 24% 24% 25% 19% 1% 22% Other Assets
Treasury Assets
36% 30% 24%
Lending
7% 8%
6% Short-Term Wholesale
100% 100% 100%
Long-Term Wholesale
62% 66% 66% Equity
Retail Deposits
June 2012 June 2013 June 2014
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Wholesale funding

The Bank’s funding position is strengthened by an ‘A+/A1’ credit rating, access to a wide range of wholesale funding markets and a proven ability to successfully execute covered bonds, senior domestic and offshore debt transactions. This provides the Bank with substantial funding diversification and flexibility, supporting capacity for future growth.

The Bank successfully completed a US$850 million senior unsecured 144a debt issuance in March 2014 followed by a five-year $750 million senior domestic debt deal in April 2014. The US 144a offered investors both floating and fixed bonds and was Suncorp’s first long-term debt issue in the US capital markets since 2009, when the Bank issued with the benefit of the Australian Government Guarantee.

The Bank operates a conservative wholesale funding instrument duration profile given its solid retail deposit to lending ratio. The Bank has lengthened the average tenure of the short-term wholesale book. Securitisation represents a large proportion of wholesale funding with a maturity of greater than 12 months. While this funding reduces over time, duration decline is aligned to the loan amortisation profile, supporting the management of refinancing risk.

Wholesale funding instruments maturity profile[(1)]

	Short	Long					JUN-14	JUN-14
	term	term	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	$M	$M	%	%
Maturity
0 to 3 months	9,121	342	9,463	11,019	10,648	9,696	(14.1)	(11.1)
3 to 6 months	1,726	1,635	3,361	3,545	3,322	3,815	(5.2)	1.2
6 to 12 months	415	1,399	1,814	2,129	2,695	2,055	(14.8)	(32.7)
1 to 3 years	-	4,783	4,783	4,591	5,882	7,161	4.2	(18.7)
3+years	-	3,020	3,020	2,544	2,745	2,563	18.7	10.0
Total wholesale fundinginstruments	11,262	11,179	22,441	23,828	25,292	25,290	(5.8)	(11.3)

(1) Includes wholesale debt, securitisation, subordinated notes and preference shares.

Bank

Financial results for the full year ended 30 June 2014

Net interest income

Net interest income increased to $1,011 million. The Bank is displaying momentum in net interest income, with growth of 5.5% over the second half contributing to 2.5% growth for the full year. Net interest margin (NIM) for the second half improved 12 basis points to 1.78% within the target range of 1.75% to 1.85%, six months earlier than expected.

The full-year NIM at 1.72% has improved by 8 basis points. This was shaped by the following drivers:

expansion in retail product margins with the impact of price competition in lending more than offset by benefits from funding mix and reduction in term deposit pricing
margin compression on low cost deposits and invested capital in the first half due to the reduction in the RBA cash rate in May and August 2013
unwind of legacy funding relating to the former ’Non-core‘ portfolio and term debt issuances completed during the second half extending duration at a reduced cost; and
benefits realised in the second half from a focus on efficiency in liquidity management and funding requirements which optimised the performance of the balance sheet.

NIM movements

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0.04% [0.01% ]
0.06% 0.03%
0.13%
0.03%
0.03%
(0.02%)
(0.02%)
(0.04%) (0.02%)
(0.12%)
1.78%
1.67%
1.66%
Balance sheet management Capital Balance sheet management Capital
Mix/Spreads
H2 2013 Bank NIM Legacy NonCore Funding Lending Mix / Spreads Funding Mix / Spreads LCD margin compression Earnings on Invested H1 2014 Bank NIM Legacy NonCore Funding Lending Mix / Spreads Funding Mix / Spreads Wholesale Funding Earnings on Invested H2 2014 Bank NIM
----- End of picture text -----

Financial results for the full year ended 30 June 2014

Bank

Average banking balance sheets

Average banking balance sheets
AVERAGE INTEREST AVERAGE BALANCE RATE $M $M % FULL YEAR ENDED JUN-14	AVERAGE INTEREST AVERAGE BALANCE RATE $M $M % HALF YEAR ENDED JUN-14
Assets Interest-earning assets Trading and investment securities 9,693 339 3.50 Gross loans, advances and other receivables 49,008 2,634 5.37 Total interest-earning assets 58,701 2,973 5.06	9,245 160 3.49 49,558 1,298 5.28
	58,803 1,458 5.00
Non-interest earning assets Otherassets (inc. loanprovisions) 1,035 Total non-interest earning assets 1,035 TOTAL ASSETS 59,736 Liabilities Interest-bearing liabilities	800 800 59,603
Retail deposits 32,274 1,056 3.27 Wholesale liabilities 22,174 863 3.89 Debt capital 843 43 5.10 Total interest-bearingliabilities 55,291 1,962 3.55	32,585 506 3.13 21,722 412 3.82 834 21 5.08
	55,141 939 3.43
Non-interest bearing liabilities Other liabilities 874 Total non-interest bearingliabilities 874 TOTAL LIABILITIES 56,165 AVERAGE SHAREHOLDERS' EQUITY 3,571 Non-Shareholder Accounting Equity 31 ConvertiblePreference Shares (450) Average Shareholders' Equity 3,152 Goodwillallocated toBankingBusiness (235) Average Shareholders' Equity (ex Goodwill) 2,917 Analysis of interest margin and spread	820 820 55,961 3,642 28 (450) 3,220 (235) 2,985
Interest-earning assets 58,701 2,973 5.06 Interest-bearing liabilities 55,291 1,962 3.55 Net interest spread 1.51 Net interest margin (interest-earning assets) 58,701 1,011 1.72 Net interest margin(lending assets) 49,008 1,011 2.06	58,803 1,458 5.00 55,141 939 3.43 1.57 58,803 519 1.78 49,558 519 2.11

Bank

Financial results for the full year ended 30 June 2014

Net non-interest income

JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % FULL YEAR ENDED HALF YEAR ENDED
Net banking fee income 67 77 (13.0) 30 37 38 39 MTM on financial instruments 4 (6) n/a 23 (19) (14) 8	(18.9) (21.1) n/a n/a
Other income (loss) 5 (11) n/a 3 2 (11) -	50.0 n/a
Total net non-interest income 76 60 26.7 56 20 13 47	180.0 330.8

Non-interest income of $76 million for the year represents a 26.7% increase on the prior year. This is attributed to a $20 million gain from the off-market buy-back of unsecured floating rate notes.

Fee generation from the Bank’s retail products is comparable with retail banking peers. Retail fees are reducing due to ongoing customer preference for low fee and/or fee-free banking. The result also includes higher commissions paid to intermediaries consistent with lending volumes delivered by this channel.

The mark-to-market (MTM) result included unrealised losses on short-term derivative positions offset by realised gains on the sale of treasury bank book assets. The Bank purchases liquid assets and uses hedging instruments for balance sheet risk management purposes. The Bank places some of its liquid assets into a trading portfolio which it uses to manage liquidity and is accounted for on a fair value basis. This trading position is hedged using short-dated instruments which do not qualify for hedge accounting and are valued on a MTM basis. These instruments are often held to maturity and as such any unrealised MTM will unwind through net interest income until maturity.

Operating expenses

Operating expenses have been held broadly flat year on year, resulting in a 1.8% improvement in the cost to income ratio to 57.4%. The Bank maintains a strategic approach to cost management and is committed to investment into brand, capability and capacity. Recent investment into risk management capability, distribution alignment and marketing contributed to an increase in expenses on a half-on-half basis.

Delivering productivity improvements via the Bank’s distribution network remains an ongoing focus. Benefits are being realised from branch footprint redesign and development of electronic channels. The Bank continues to leverage the Group’s capability and scale in the management of occupancy, technology and procurement. The adoptions of ‘smart’ working environments are delivering ongoing benefits in the cost of real estate.

Delivery of the Bank’s two key transformational programs, Project Ignite and Basel II Advanced Accreditation, remain a key focus.

Financial results for the full year ended 30 June 2014

Bank

Impairment losses on loans and advances

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN-13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Collective provision for impairment	18	(43)	n/a	23	(5)	(39)	(4)	n/a	n/a
Specific provision for impairment	104	399	(73.9)	56	48	203	196	16.7	(72.4)
Actual netwrite-offs	2	19	(89.5)	-	2	17	2	(100.0)	(100.0)
	124	375	(66.9)	79	45	181	194	75.6	(56.4)
Impairment losses to gross loans and
advances(annualised)	0.25%	0.78%		0.32%	0.18%	0.76%	0.78%

Impairment losses were $124 million. The result reflects appropriate provisioning for stress across the agribusiness segment caused by ongoing drought conditions and a subdued rural property market. Credit impairment losses are 25 basis points of gross loans and advances. Impairment losses across the retail and commercial portfolios are consistent with recent experience.

Loss on sale of loans and advances

Losses on the sale of loans were limited to the $13 million charge incurred in the first half from the residual Non-core portfolio. The result was attributable to the Bank’s ongoing balance sheet de-risking process through the execution of individual sales of performing corporate and property loans at a discount to book value.

Impaired assets

Impaired assets	Impaired assets
JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %
Retail lending 26 28 33 32 (7.1) (21.2) Agribusiness lending 208 182 139 99 14.3 49.6 Commercial/SME lending 51 57 51 85 (10.5) - Corporate and property 48 149 283 1,644 (67.8) (83.0)
Gross impaired assets 333 416 506 1,860 (20.0) (34.2) Specificprovision for impairment (106) (113) (198) (332) (6.2) (46.5)
Net impaired assets 227 303 308 1,528 (25.1) (26.3)
Gross impaired assets togross loans and advances 0.67% 0.84% 1.05% 3.78%

Gross impaired assets decreased 34.2% on the prior year to $333 million. This represents 0.67% of gross loans and advances.

Agribusiness impaired asset volumes increased to $208 million which represents 4.5% of the total Agribusiness portfolio. The portfolio continues to be impacted by prolonged drought conditions and the ongoing impact of previous flooding events. Current procedures for identifying stressed accounts remain robust and effective. The Bank continues to closely monitor emerging issues on a per exposure basis and remains well positioned to withstand the cyclical nature and challenges of the industry.

Bank

Financial results for the full year ended 30 June 2014

Non-performing loans

Non-performing loans	Non-performing loans
JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %
Individually impaired loans Gross impaired assets 333 416 506 1,860 (20.0) (34.2) Specific provision for impairment (106) (113) (198) (332) (6.2) (46.5)
Net impaired assets 227 303 308 1,528 (25.1) (26.3)
Size of gross individually impaired assets Less than one million 22 34 32 35 (35.3) (31.3) Greater than one million but less than ten million 183 204 245 265 (10.3) (25.3) Greaterthanten million 128 178 229 1,560 (28.1) (44.1)
333 416 506 1,860 (20.0) (34.2)
Past due loans not shownas impaired assets 439 445 434 324 (1.3) 1.2
Gross non-performing loans 772 861 940 2,184 (10.3) (17.9)
Analysis of movements in gross individually impaired assets Balance at the beginning of the half year 416 506 1,860 2,090 (17.8) (77.6) Recognition of new impaired assets 193 113 201 227 70.8 (4.0) Increases in previously recognised impaired assets 4 1 15 27 300.0 (73.3) Impaired assets written off/sold during the half year (55) (124) (1,436) (191) (55.6) (96.2) Impaired assets which have been reclassed as performing assets or repaid (225) (80) (134) (293) 181.3 67.9
Balance at the end of the halfyear 333 416 506 1,860	(20.0) (34.2)

Gross non-performing loans reduced 17.9% to $772 million.

Retail past due loan experience has improved against the prior half following changes to hardship seasoning timeframes. The Bank continues to refine management of hardship, with ongoing monitoring of hardship loan delinquency regularly undertaken.

Financial results for the full year ended 30 June 2014

Bank

Provision for impairment

p JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %	p JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % %
Collective provision Balance at the beginning of the period 97 102 141 145 (4.9) (31.2) Charge against contributionto profit 23 (5) (39) (4) n/a n/a
Balance at the end of theperiod 120 97 102 141 23.7 17.6
Specific provision Balance at the beginning of the period 113 198 332 392 (42.9) (66.0) Charge against impairment losses 56 48 203 196 16.7 (72.4) Write-off of impaired assets (55) (124) (294) (191) (55.6) (81.3) Unwind of interest (8) (9) (43) (65) (11.1) (81.4)
Balance at the end ofthe period 106 113 198 332 (6.2) (46.5)
Total provision for impairment - Banking activities 226 210 300 473 7.6 (24.7)
Equity reserve for credit loss (ERCL) Balance at the beginning of the period 125 131 133 147 (4.6) (6.0) Transfertoretained earnings 26 (6) (2) (14) n/a n/a
Balance at the end ofthe period 151 125 131	133 20.8 15.3
Pre-taxequivalent coverage 216 179 187	190 20.7 15.5
Total provision for impairment and ERCL - Banking activities 442 389 487	663 13.6 (9.2)
% % %	% 7.6 17.8 25.4 10.2 35.6 30.4
Provision for impairment expressed as a percentage of gross impaired assets are as follows: Collective provision 36.0 23.3 20.2 Specific provision 31.8 27.2 39.1 Total provision 67.9 50.5 59.3 ERCL coverage 64.9 43.0 37.0 TotalprovisionandERCLcoverage 132.7 93.5 96.3
Total provision and ERCL coverage expressed as apercentage ofgross non-performing loans 57.3 45.2 51.8

Total provision coverage increased to 132.7% of gross impaired assets, demonstrating adequate provisioning levels across all portfolios.

Gross non-performing loans coverage by portfolio

						Total provision
		Impaired	Specific	Collective	ERCL (pre-tax	and ERCL
	Past due loans	assets	provision	provision	equivalent)	coverage
	$M	$M	$M	$M	$M	%
Retail lending	366	26	5	35	63	26.3
Agribusiness lending	18	208	60	44	74	78.8
Commercial/SME lending	55	51	21	37	72	122.6
Corporate and property	-	48	20	4	7	64.6
Total	439	333	106	120	216	57.3

Bank

Financial results for the full year ended 30 June 2014

Outlook

Suncorp Bank’s goal is to be the best bank for Queenslanders and the best challenger in target markets outside Queensland. To achieve this, the Bank will differentiate itself from competitors by offering ‘big bank capability and customer connection of a small bank’. It will leverage the competitive advantages of the Suncorp Group across capital, funding, customer as well as utilising the Bank’s unique brand forged over a 110-year heritage.

The Bank possesses a simple and conservatively managed balance sheet as demonstrated by the strength of its capital and funding ratios. The Bank is well positioned to meet Basel III liquidity requirements and is committed to holding appropriate levels of physical and contingent liquidity.

Delivery of the Bank’s new banking platform, Project Ignite, and Basel II Advanced Accreditation remain key priorities. Both programs will significantly improve the way the Bank conducts business. They will enhance the Bank’s ability to meet the changing needs of customers within a robust risk management framework. Project Ignite will deliver material efficiency benefits through simplification and automation, enabling the Bank to achieve a sub-50% cost to income ratio over the medium term. In short, successful delivery of these programs will ensure the long-term future of the Bank.

In addition to the transformation programs, the Bank is investing in ways to better engage and service customers via digital channels. Leveraging insights from the Group’s Business Intelligence initiative will provide further support to these endeavours.

In the near term, market conditions will challenge the ability of the Bank to achieve its target. Competition is expected to remain intense as industry participants strive to maintain and improve their market share. The short term outlook for agribusiness remains uncertain as drought conditions persist. The Bank has responded appropriately and the adoption of a prudent drought provision in addition to revised risk selection processes are expected to drive moderation of the impairment ratio in future periods.

Despite the challenges, the Bank is well placed to perform in the current environment. Operating targets over the medium term remain unchanged:

NIM of 1.75% to 1.85% underpinned by pricing discipline;
disciplined cost management and ongoing investment in strategic programs to drive the cost to income ratio towards sub-50%;
sustainable lending growth of 1 to 1.3 times system through measured expansion in housing and business markets supported by positive conversion of new customers to ‘complete’ customers;
retail deposit to lending ratio of 60% to 70% supported by the Bank’s ability to leverage its A+/A1 credit rating to raise diverse wholesale funding; and
return on CET1 of 12.5% to 15%.

Financial results for the full year ended 30 June 2014

Life

Result overview

Suncorp Life’s profit after tax for the full year was $92 million. Underlying profit was $84 million. As announced in May, Suncorp Life has materially revised its key valuation assumptions, resulting in a $496 million non-cash write-down of intangible assets.

During the year, Life delivered a number of key priorities:

capital efficiency initiatives with $535 million of capital released to the Group, representing over a quarter of the starting capital base of $2.1 billion (CET1 plus Deferred Acquisition Costs (DAC))
bringing the Direct Life business in-house, with all new policies now sold and serviced by Suncorp employees on Suncorp systems, rather than through an external partner
improved sustainability in the advice channel through an increased proportion of IFA new business written electronically and on hybrid commission
strong momentum in Suncorp Everyday Super (EDS), with approximately 80% of EDS customers holding a Suncorp Bank account.

The net assets of Suncorp Life decreased by circa $900 million. This reflected the capital initiatives during the first half of the year and the impact of the assumption changes discussed below.

Annual in-force premium increased by 8.5% to $911 million with strong growth in New Zealand. Individual new business volumes fell by 5%, with the Australian IFA channel sales down 10.3% driven by constrained market growth and a prioritisation of value over volume.

Direct sales via General Insurance brands were up 11% over the second half reflecting the emphasis of putting the customer at the forefront and providing our wider Suncorp Group customers with propositions aligned to their needs. This resulted in improved conversion rates in the Direct Life business.

EDS continues to gather momentum with funds under administration increasing to $150 million supported by strong new business flows.

Assumption changes

On 27 May 2014, Suncorp announced a non-cash write-down of intangible assets of $496 million following a detailed review of key assumptions.

Suncorp Life has changed from the industry’s traditional practice of setting assumptions using ‘historical averages’ to a more forward-looking basis. The revised approach explicitly reflects the time Suncorp Life believes it will take to work through the industry structural challenges (product design, premium structures and IFA remuneration) and recognises the potential for dislocation as the industry transitions and then recovers in the medium term.

The reset assumptions have impacted the Group’s financial result for the year ended 30 June 2014 as follows:

a Suncorp Group non-cash write-down of $496 million, comprising:
a write-down of goodwill and other intangible assets of $320 million after tax
a loss recognition on some products and other reserving adjustments to policy liabilities of $176 million after tax.
Embedded Value reduced to $1.7 billion as at 30 June 2014.

Life has four key lines of business – IFA, Direct Life (Direct), Superannuation and New Zealand. The impact of the assumption changes is largely in the IFA business, with only nominal adjustments across the other business lines, including New Zealand.

Life

Financial results for the full year ended 30 June 2014

Outlook

Life is focused on executing its strategic agenda and managing the areas within its control. The business model has been comprehensively realigned around the customer with a priority on addressing product design and optimising distribution.

Whilst there remains a need for industry wide action to address the challenges, Suncorp Life is confident in delivering against its strategic agenda.

The financial profile of the business has been impacted by the capital initiatives and the reset of key assumptions during the 2014 financial year. For the 2015 financial year, the planned profit margin release is expected to be $25 million to $35 million lower. The Suncorp Life underlying profit after tax is expected to increase moderately and be in the range of $90 million to $100 million.

Market adjustments will remain volatile. An increase in interest rates will result in adverse market adjustments, a decrease will result in positive market adjustments.

Financial results for the full year ended 30 June 2014

Life

Profit contribution

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Life Risk
Planned profit margin release(1)	69	99	(30.3)	34	35	50	49	(2.9)	(32.0)
Claims experience	(24)	(21)	14.3	(14)	(10)	(9)	(12)	40.0	55.6
Lapse experience	(26)	(26)	-	(9)	(17)	(9)	(17)	(47.1)	-
Other experience	(7)	(6)	16.7	(4)	(3)	(2)	(4)	33.3	100.0
Underlyinginvestmentincome	35	43	(18.6)	17	18	21	22	(5.6)	(19.0)
Life Risk	47	89	(47.2)	24	23	51	38	4.3	(52.9)
Superannuation	37	31	19.4	19	18	8	23	5.6	137.5
Total Life underlying profit after tax	84	120	(30.0)	43	41	59	61	4.9	(27.1)
Market adjustments (2)	8	(60)	n/a	27	(19)	(50)	(10)	n/a	n/a
Net profit after tax (before Life write-
down)	92	60	53.3	70	22	9	51	218.2	large

(1) Planned profit margin release includes the unwind of policy liabilities which refers to the profit impact of changes in the value of policy liabilities due to the passing of time.

(2) Market adjustments consist of Annuities Market Adjustments, Life Risk Policy Discount Rate changes and Investment Income Experience.

Life Risk in-force annual premium

		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Term and TPD	419	404	388	361	3.7	8.0
Trauma	167	161	154	150	3.7	8.4
Disability income	235	226	217	209	4.0	8.3
Other	31	30	26	26	3.3	19.2
Total Individual	852	821	785	746	3.8	8.5
Group(1)	59	60	55	49	(1.7)	7.3
Total	911	881	840	795	3.4	8.5
Total Australia	729	709	691	662	2.8	5.5
Total New Zealand(2)	182	172	149	133	5.8	22.1

(1) The methodology used to calculate Group in-force premium has been revised to reflect the recent Superannuation reforms. The impact has been to reduce prior period Group in-force numbers by $5 million.

(2) In-force growth for NZ includes exchange rate movements. The NZD in-force figures are June-14 $200 million, Dec-13 $188 million, Jun-13 $177 million

Life Risk new business by product

JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED FULL YEAR ENDED	JUN-14 JUN-14 JUN-14 JUN-14 JUN -13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED FULL YEAR ENDED
Term and TPD 75 76 (1.3) 37 38 38 38 Trauma 9 8 12.5 4 5 4 4 Disability income 26 29 (10.3) 12 14 15 14 Other 10 8 25.0 5 5 4 4	(2.6) (2.6) (20.0) - (14.3) (20.0) - 25.0
Total Individual 120 121 (0.8) 58 62 61 60 Group (1) 4 8 (50.0) 1 3 3 5	(6.5) (4.9) (66.7) (66.7)
Total 124 129 (3.9) 59 65 64 65	(9.2) (7.8)

(1) Group New Business excludes NZ.

Life

Financial results

for the full year ended 30 June 2014

Life Risk new business by channel

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
IFA	61	68	(10.3)	29	32	33	35	(9.4)	(12.1)
Direct	34	33	3.0	17	17	17	16	-	-
New Zealand	25	20	25.0	12	13	11	9	(7.7)	9.1
Total Individual	120	121	(0.8)	58	62	61	60	(6.5)	(4.9)
Group (1)	4	8	(50.0)	1	3	3	5	(66.7)	(66.7)
Total	124	129	(3.9)	59	65	64	65	(9.2)	(7.8)

(1) Group New Business excludes NZ channel sales.

Superannuation new business

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Superannuation	292	192	52.1	157	135	113	79	16.3	38.9
Pensions	107	80	33.8	59	48	32	48	22.9	84.4
Investment	3	8	(62.5)	1	2	4	4	(50.0)	(75.0)
Total	402	280	43.6	217	185	149	131	17.3	45.6

Funds under administration

Funds under administration
	JUN-14 JUN-14 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M $M $M % % HALF YEAR ENDED
Opening balance at start of period Net inflows (outflows)(1) Investmentincome and other	7,691 7,339 7,230 7,111 4.8 6.4 (73) (84) (169) (127) (13.1) (56.8) 105 436 278 246 (75.9) (62.2)
Balance at end ofperiod	7,723 7,691 7,339 7,230 0.4 5.2

(1) Net outflows for 1H14 included an estimate for a legacy product. The estimate has been updated following receipt of actual figures for the full year.

Operating expenses

Operating expenses
	FULL YEAR ENDED		JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Total operating expenses (1)	303	291	4.1	153	150	144	147	2.0	6.3

(1) Consistent with prior disclosures, sales commissions have been excluded from total operating expenses.

Financial results for the full year ended 30 June 2014

Life

Shareholder investment income

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Shareholder investment income on
invested assets	46	36	27.8	31	15	4	32	106.7	large
Less underlying investment income:
Life Risk	(35)	(43)	(18.6)	(17)	(18)	(21)	(22)	(5.6)	(19.0)
Superannuation	(14)	(14)	-	(7)	(7)	(6)	(8)	-	16.7
Investment income experience	(3)	(21)	(85.7)	7	(10)	(23)	2	n/a	n/a

Invested shareholder assets

		HALF YEAR ENDED	HALF YEAR ENDED		JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Cash	371	401	652	548	(7.5)	(43.1)
Fixed interest securities	867	841	743	801	3.1	16.7
Equities	30	50	45	66	(40.0)	(33.3)
Property	5	4	4	4	25.0	25.0
Total	1,273	1,296	1,444	1,419	(1.8)	(11.8)

New business

IFA Australia

New business sales fell by 10% to $61 million driven by constrained market growth and a prioritisation of value over volume.

Addressing the structural challenges facing the IFA business will take time, but Life is confident in delivering on the areas within its control. Life’s emphasis on putting the customer at the forefront and uplifting service was reflected in improved adviser satisfaction, up 14%, as well as continued better than industry lapse rates.

Direct Australia

New business volumes through the Direct channel were up 3% to $34 million, with growth impacted by the in-house transition of manufacturing and administrative activities during the first half of the year.

The Direct Life business started to gain momentum in the second half with Direct sold via General Insurance Brands up 11% half-on-half. The benefit of being closer to Suncorp Group customers and a better understanding of their holistic insurance needs is reflected in improved conversion rates. The online business is now number 1 in market share.

Superannuation Australia

Superannuation new business flows increased by 43.6% to $402 million. A key driver behind the significant increase was the performance of EDS which continues to gain traction, having now reached $150 million of funds under administration. Approximately 80% of EDS customers hold a Suncorp Bank account. EDS was also recognised during the year as the Best New Product by Super Ratings.

New Zealand

New Zealand Life Risk sales increased 25.0% to $25 million demonstrating the strong foundations which the team has built over recent years. Adviser engagement continues to be positive and the business has taken a leading role in shifting the market to a more sustainable model by simplifying products and remuneration structures.

Life

Financial results for the full year ended 30 June 2014

Underlying profit after tax

Planned profit margin release

Planned margins of $69 million were down 30.3% for the year. This reflects the increase in reinsurance coverage as announced in the first half of the year and the impact of strengthening claims and lapse assumptions in the prior year.

The planned profit margin release for FY15 is expected to be $25–$35 million lower than FY14 to reflect the strengthening of key assumptions.

Experience

Adverse lapse and claims experience remains a key challenge across the industry and was the key driver behind the review of Suncorp Life’s assumptions announced in May.

Lapse experience in IFA Australia continued to deteriorate and assumptions have been reset.

Customer lapses were driven by affordability concerns, coupled with adviser remuneration and historical product and pricing structures. These structures result in significant price increases at the older ages, leading to a potential misalignment between customers’ needs and affordability.

Life’s key initiatives to address structural challenges are focusing the business on the customer, reviewing product design and rolling out the Adviser Value Proposition.

Suncorp is responding to its lapse experience through enhanced customer contact practices based on customer segmentation, peak period staffing of the Customer Care Team, and rolling out an Adviser Value Proposition that facilitates greater focus on value over volume. The activities which have been implemented to date continue to support Suncorp Life’s better than industry average lapse rates.

As in the first half, IFA disability claims and group claims were the main drivers of the adverse claims experience, with higher than expected incidence and size of new claims. Efforts to improve experience include aligning Life and General Insurance claims management, tightening the rules around automatic acceptance and removal of rate guarantees at renewal for several group schemes, and early intervention and improved return to work programs with rehabilitation providers.

Expense management

Overall expenses increased 4.1% reflecting a strong focus on expense management, while investing for growth (in-housing the Direct business operations), and delivering significant regulatory projects.

Investment income

Underlying investment income of $49 million decreased by 14.0%. The reduction reflects lower average shareholder assets following the capital initiatives and a decrease in Suncorp Life’s overall long-term investment assumptions. A further reduction is expected in FY15 driven by the above dynamics.

The long-term investment assumption is based on the average of the Government 10-year bond rate (7-year historical and 3-year market expected) with risk margins added to various asset classes.

Financial results for the full year ended 30 June 2014

Life

Market adjustments

Market adjustments are mainly comprised of balance sheet revaluations of policy liabilities and shareholder investment assets, which we expect to neutralise through the cycle.

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN -13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Life Risk policy liability impact (DAC)	9	(37)	n/a	21	(12)	(25)	(12)	n/a	n/a
Investment Income Experience	(3)	(21)	(85.7)	7	(10)	(23)	2	n/a	n/a
Annuitiesmarket adjustments	2	(2)	n/a	(1)	3	(2)	-	n/a	(50.0)
Total market adjustments	8	(60)	n/a	27	(19)	(50)	(10)	n/a	n/a

Life Risk policy liability impact (DAC)

Risk-free rates are used to discount Life Risk policy liabilities. Due to DAC there are net negative policy liabilities (an asset). An increase in discount rates leads to a loss while a decrease leads to a gain. This volatility represents the impact of an accounting revaluation adjustment to reflect the movements of interest rates and the impact on the DAC. This impact was $9 million.

During the year ended 30 June 2013 Suncorp Life experienced significant losses as yields on government bonds increased. During 2014 there has been considerable volatility in yields, with increases in the first half reversing during the second half. Positive and negative revaluation adjustments are expected to neutralise over time.

Life Embedded Value

The Embedded Value is the sum of the net present value of all future cash flows distributable to shareholders that are expected to arise from in-force business, the value of franking credits at 70% of face value and the net assets in excess of target capital requirements (adjusted net worth). The Embedded Value differs from what is known as an Appraisal Value, as it does not consider the value of future new business that the Life company is expected to write.

The components of value are shown in the table below:

Embedded Value and Value of One Year’s new Sales (VOYS)

					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13 vs JUN-13
	$M	$M	$M	$M	%	%
Adjusted net worth	97	113	300	104	(14.2)	(67.7)
Value of distributable profits	1,440	1,643	1,980	2,008	(12.4)	(27.3)
Value of imputationcredits	222	250	289	318	(11.2)	(23.2)
Value of in-force	1,662	1,893	2,269	2,326	(12.2)	(26.8)
Traditional Embedded Value	1,759	2,006	2,569	2,430	(12.3)	(31.5)
Value of oneyear’s new sales(VOYS)	11	35	43	46	(68.6)	(74.4)

Change in Embedded Value and VOYS

The reduction in the embedded value reflects:

the impact of the various capital management initiatives in the first half of the year; and
the impact of the changes to claims and lapse assumptions announced in the first half of the year and the rebasing of assumptions announced in May 2014.

The rebasing of assumptions as expected has also reduced VOYS.

Life

Financial results

for the full year ended 30 June 2014

	JUN-13 TO JUN-14 $M
Opening Embedded Value	2,569
Expected return	171
Experience over FY14 Economic Claims,lapse and other	45 (57)
Future assumption changes Discount rate / Economic Lapses assumptions Dec-13 Rebased assumptions May-14 Other(1) ValueAddedfrom newbusiness	6 (122) (334) 32 11
Closing Embedded Value prior to Dividends/transfers(2) Release of franking credits	2,321 (535) (27)
Closing Embedded Value	1,759

(1) Other assumptions includes $51 million NZD appreciation

(2) Dividends/transfers includes all dividends recommended or paid up to the parent company over the period

Assumptions

The assumptions used for valuing in-force business and the VOYS are based on long-term best estimate assumptions.

Lapses and claims (death and disability) assumptions are best estimate assumptions based on Life company experience and are consistent with those used for profit reporting.

VOYS calculations are based on new business and acquisition costs for FY14. New business includes new policies as well as voluntary increases to existing policies, whereas the Embedded Value includes contractual increases (age and CPI) on retail business, but excludes voluntary increases.

	JUN-14	JUN-14	JUN-13	JUN-13
	AUSTRALIA	NEW ZEALAND	AUSTRALIA	NEW ZEALAND
	% PER ANNUM	% PER ANNUM	% PER ANNUM	% PER ANNUM
Investment return for underlying asset classes (gross of tax)
Risk-free rate (at 10 years)	3.6	5.0	3.9	4.2
Cash	3.7	5.0	3.9	4.6
Fixed interest	4.2	4.8	4.4	4.7
Australian equities (inc. allowance for franking credits)(1)	8.7	9.0	8.9	8.8
International equities	7.7	8.0	7.9	7.8
Property	6.2	7.0	6.4	6.8
Investment returns (net of tax)	3.3	3.5	3.5	3.4
Inflation
Benefit indexation	2.0	2.5	2.5	2.5
Risk discount rate	7.6	8.5	7.9	8.2
Risk discount rate	-	-	-	0.0

(1) New Zealand assumption covers Australasian equities.

Financial results for the full year ended 30 June 2014

Life

	AS AT
	JUN-14	JUN-13
	$M	$M
Base Embedded Value	1,759	2,569
Embedded Value assuming
Discount rate and returns 1% higher	1,722	2,553
Discount rate and returns 1% lower	1,800	2,601
Discontinuance rates 10% lower	1,925	2,804
Renewal expenses 10% lower	1,806	2,623
Claims10%lower(1)	1,929	2,787
Base value of oneyear’s new business	11	43
Value of one year’s new business assuming
Discount rate and returns 1% higher	6	31
Discount rate and returns 1% lower	17	57
Discontinuance rates 10% lower	25	72
Acquisition expenses 10% lower	21	55
Claims 10% lower(1)	32	73

(1) Claims decrements include mortality, lump sum morbidity, disability income incidence and disability income recovery rates.

Life

Financial results for the full year ended 30 June 2014

Statement of assets and liabilities

Statement of assets and liabilities
					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
Total assets
Assets
Invested assets	5,159	4,813	4,787	4,661	7.2	7.8
Assets backing annuity policies	135	129	135	142	4.7	-
Assets backing participating policies	2,139	2,595	2,549	2,524	(17.6)	(16.1)
Deferred tax assets	22	-	-	-	n/a	n/a
Reinsurance ceded	512	293	445	409	74.7	15.1
Other assets	394	333	247	254	18.3	59.5
Goodw ill and intangible assets	229	628	640	657	(63.5)	(64.2)
	8,590	8,791	8,803	8,647	(2.3)	(2.4)
Liabilities
Payables	275	210	157	181	31.0	75.2
Subordinated Debt	100	100	-	-	-	n/a
Outstanding claims liabilities	260	228	206	190	14.0	26.2
Deferred tax liabilities	42	169	132	142	(75.1)	(68.2)
Policy liabilities	5,781	5,418	5,204	5,002	6.7	11.1
Unvested policyholder benefits(1)	326	429	380	421	(24.0)	(14.2)
	6,784	6,554	6,079	5,936	3.5	11.6
Total net assets	1,806	2,237	2,724	2,711	(19.3)	(33.7)
Policyholder assets
Invested assets	3,886	3,517	3,343	3,242	10.5	16.2
Assets backing annuity policies	135	129	135	142	4.7	-
Assets backing participating policies	2,139	2,595	2,549	2,524	(17.6)	(16.1)
Deferred tax assets	-	-	-	-	n/a	n/a
Other assets	135	57	33	10	136.8	309.1
	6,295	6,298	6,060	5,918	(0.0)	3.9
Liabilities
Payables	-	-	-	-	n/a	n/a
Deferred tax liabilities	-	-	-	-	n/a	n/a
Policy liabilities	5,969	5,869	5,680	5,497	1.7	5.1
Unvested policyholder benefits(1)	326	429	380	421	(24.0)	(14.2)
	6,295	6,298	6,060	5,918	(0.0)	3.9
Policyholder net assets	-	-	-	-	n/a	n/a
Shareholder assets
Assets
Invested assets	1,273	1,296	1,444	1,419	(1.8)	(11.8)
Deferred tax assets	22	-	-	-	n/a	n/a
Reinsurance ceded	512	293	445	409	74.7	15.1
Other assets	259	276	214	244	(6.2)	21.0
Goodw ill and intangible assets	229	628	640	657	(63.5)	(64.2)
	2,295	2,493	2,743	2,729	(7.9)	(16.3)
Liabilities
Payables	275	210	157	181	31.0	75.2
Subordinated Debt	100	100	-	-	-	n/a
Outstanding claims liabilities	260	228	206	190	14.0	26.2
Deferred tax liabilities	42	169	132	142	(75.1)	(68.2)
Policy liabilities	(188)	(451)	(476)	(495)	(58.3)	(60.5)
	489	256	19	18	91.0	large
Shareholder net assets	1,806	2,237	2,724	2,711	(19.3)	(33.7)

(1) Includes participating business policyholder retained profits.

The reduction of $918 million in net assets during the year reflects the impact of the capital initiatives of $535 million and the rebasing of assumptions, along with the resulting write-down of $496 million. Offsetting these items were current year profit and foreign currency translation movements.

Financial results for the full year ended 30 June 2014

Appendices

Appendix 1 – Consolidated statement of comprehensive income and financial position

Consolidated statement of comprehensive income

This consolidated income statement presents revenue and expense categories that are reported for statutory purposes

FULL YEAR ENDED JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED	FULL YEAR ENDED JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED	FULL YEAR ENDED JUN-14 JUN-14 JUN-14 JUN-14 JUN-13 vs JUN-13 JUN-14 DEC-13 JUN-13 DEC-12 vs DEC-13 vs JUN-13 $M $M % $M $M $M $M % % HALF YEAR ENDED
		vs JUN-13
		%
Revenue Insurance premium income 9,707 9,134 6.3 4,849 4,858 4,635 4,499 (0.2) 4.6 Reinsurance and other recoveries income 1,577 1,538 2.5 790 787 813 725 0.4 (2.8) Banking interest income 2,972 3,420 (13.1) 1,459 1,513 1,633 1,787 (3.6) (10.7) Investment revenue 1,569 1,523 3.0 742 827 556 967 (10.3) 33.5 Other income 545 571 (4.6) 276 269 305 266 2.6 (9.5)
Total revenue 16,370 16,186 1.1 8,116 8,254 7,942 8,244 (1.7) 2.2
Expenses General Insurance claims expense (6,595) (6,264) 5.3 (3,312) (3,283) (3,334) (2,930) 0.9 (0.7) Life insurance claims expense and movement in policy owners liabilities (1,450) (1,142) 27.0 (581) (869) (525) (617) (33.1) 10.7 Outwards reinsurance premium expense (1,124) (1,203) (6.6) (676) (448) (618) (585) 50.9 9.4 Interest expense (2,029) (2,477) (18.1) (973) (1,056) (1,153) (1,324) (7.9) (15.6) Fees and commissions expense (756) (700) 8.0 (383) (373) (336) (364) 2.7 14.0 Operating expenses (2,757) (2,732) 0.9 (1,409) (1,348) (1,388) (1,344) 4.5 1.5 Losses on Banking loans, advances and other receivables (137) (902) (84.8) (79) (58) (687) (215) 36.2 (88.5) Impairmentloss ongoodwillandintangible assets (347) - n/a (347) - - - n/a n/a
Total expenses (15,195) (15,420) (1.5) (7,760) (7,435) (8,041) (7,379) 4.4 (3.5)
Profit (Loss) before income tax 1,175 766 53.4 356 819 (99) 865 (56.5) n/a Income taxexpense (438) (270) 62.2 (170) (268) 18 (288) (36.6) n/a
Profit (Loss) for the period 737 496 48.6 186 551 (81) 577 (66.2) n/a Other comprehensive income *Items that may be reclassified subsequently to profit* *or loss* Net change in fair value of cash flow hedges 47 61 (23.0) 15 32 23 38 (53.1) (34.8) Net change in fair value of available-for-sale financial assets 23 - n/a 11 12 4 (4) (8.3) 175.0 Exchange differences on translation of foreign operations 98 68 44.1 10 88 56 12 (88.6) (82.1) Income taxexpense (22) (18) 22.2 (7) (15) (3) (15) (53.3) 133.3
146 111 31.5 29 117 80 31 *Items that will not be reclassified subsequently to* *profit or loss* Actuarial gains (losses) on defined benefit plans 31 20 55.0 31 - 16 4 Income taxexpense (9) (6) 50.0 (9) - (6) -	(75.2) (63.8) n/a 93.8 n/a 50.0
22 14 57.1 22 - 10 4 Total Other comprehensive income 168 125 34.4 51 117 90 35	n/a 120.0 (56.4) (43.3)
Total comprehensive income for theperiod 905 621 45.7 237 668 9 612	(64.5) large
Profit (Loss) for the period attributable to: Owners of the Company 730 491 48.7 182 548 (83) 574 Non-controllinginterests 7 5 40.0 4 3 2 3	(66.8) n/a 33.3 100.0
Profit(Loss) for theperiod 737 496 48.6 186 551 (81) 577	(66.2) n/a
Total comprehensive income for the period attributable to: Owners of the Company 898 616 45.8 233 665 7 609 Non-controllinginterests 7 5 40.0 4 3 2 3	(65.0) large 33.3 100.0
Total comprehensive income for theperiod 905 621 45.7 237 668 9 612	(64.5) large

Appendices

Financial results for the full year ended 30 June 2014

Appendix 1 – Consolidated statement of comprehensive income and financial position (continued)

Consolidated statement of financial position

	GENERAL INSURANCE BANKING LIFE CORPORATE ELIMINATIONS CONSOLIDATION JUN-14 JUN-14 JUN-14 JUN-14 JUN-14 JUN-14 $M $M $M $M $M $M	GENERAL INSURANCE BANKING LIFE CORPORATE ELIMINATIONS CONSOLIDATION JUN-14 JUN-14 JUN-14 JUN-14 JUN-14 JUN-14 $M $M $M $M $M $M
Assets Cash and cash equivalents Receivables due from other banks Trading securities Derivatives Investment securities Banking loans, advances and other receivables General Insurance assets Life assets Due from Group entities Property, plant and equipment Deferred tax assets Other assets Goodwillandintangible assets	281 463 707 17 (573) 895 - 927 - - - 927 - 1,593 - - - 1,593 23 334 5 - (61) 301 12,963 6,500 9,040 14,665 (16,253) 26,915 - 49,781 - - - 49,781 6,603 - - - - 6,603 - - 862 - - 862 - 147 7 1,240 (1,394) - 33 - 4 168 - 205 - 98 22 128 (65) 183 172 192 49 54 (23) 444 5,091 262 229 138 - 5,720
Total assets	25,166 60,297 10,925 16,410 (18,369) 94,429
Liabilities Payables due to other banks Deposits and short-term borrowings Derivatives Payables and other liabilities Current tax liabilities Due to Group entities General Insurance liabilities Life liabilities Deferred tax liabilities Managed funds units on issue Securitisation liabilities Debt issues Subordinated notes Preference shares	- 81 - - - 81 - 44,154 - - (575) 43,579 149 525 12 - (61) 625 1,253 457 177 448 (4) 2,331 23 - 1 370 (15) 379 392 160 56 13 (621) - 14,173 - - - - 14,173 - - 6,374 - - 6,374 81 - 42 - (65) 58 - - 2,357 - (2,239) 118 - 3,598 - - (17) 3,581 - 6,839 - - (8) 6,831 727 742 100 758 (770) 1,557 - - - 943 - 943
Total liabilities	16,798 56,556 9,119 2,532 (4,375) 80,630
Net assets	8,368 3,741 1,806 13,878 (13,994) 13,799
Equity Share capital Reserves Retained profits Non-controlling interests Total equity Total equity attributable to owne	rs of the Company	12,682 206 885
		13,773 26
		13,799

Financial results for the full year ended 30 June 2014

Appendices

Appendix 1 – Consolidated statement of comprehensive income and financial position (continued)

SGL Statement of financial position

					JUN-14	JUN-14
	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	$M	$M	%	%
Current assets
Cash and cash equivalents	2	3	18	186	(33.3)	(88.9)
Investment securities	687	636	441	435	8.0	55.8
Due from Group entities	432	410	275	194	5.4	57.1
Otherassets	20	8	13	3	150.0	53.8
Total current assets	1,141	1,057	747	818	7.9	52.7
Non-current assets
Investment in subsidiaries	14,056	14,099	14,629	14,362	(0.3)	(3.9)
Due from Group entities	770	770	670	-	-	14.9
Deferred tax assets	5	4	9	13	25.0	(44.4)
Otherassets	67	70	90	93	(4.3)	(25.6)
Total non-current assets	14,898	14,943	15,398	14,468	(0.3)	(3.2)
Total assets	16,039	16,000	16,145	15,286	0.2	(0.7)
Current liabilities
Payables and other liabilities	8	6	6	2	33.3	33.3
Current tax liabilities	370	108	-	99	242.6	n/a
Due to Group entities	13	248	256	220	(94.8)	(94.9)
Total current liabilities	391	362	262	321	8.0	49.2
Non-current liabilities
Subordinated notes	758	758	756	-	-	0.3
Preference shares	943	550	549	547	71.5	71.8
Total non-current liabilities	1,701	1,308	1,305	547	30.0	30.3
Total liabilities	2,092	1,670	1,567	868	25.3	33.5
Net assets	13,947	14,330	14,578	14,418	(2.7)	(4.3)

Equity
Share capital	12,766	12,764	12,786	12,784	0.0	(0.2)
Reserves	987	987	987	987	-	-
Retained profits	194	579	805	647	(66.5)	(75.9)
Total equity	13,947	14,330	14,578	14,418	(2.7)	(4.3)

SGL Profit contribution

	FULL YEAR ENDED	FULL YEAR ENDED	JUN-14		HALF YEAR	ENDED		JUN-14	JUN-14
	JUN-14	JUN-13	vs JUN-13	JUN-14	DEC-13	JUN-13	DEC-12	vs DEC-13	vs JUN-13
	$M	$M	%	$M	$M	$M	$M	%	%
Revenue
Dividend and interest income from
subsidiaries	858	1,036	(17.2)	413	445	495	541	(7.2)	(16.6)
Other investment revenue	29	29	-	18	11	11	18	63.6	63.6
Other income	3	3	-	1	2	1	2	(50.0)	-
Total revenue	890	1,068	(16.7)	432	458	507	561	(5.7)	(14.8)
Expenses
Impairment loss on investment in
subsidiaries	(319)	-	n/a	(319)	-	-	-	n/a	n/a
Interest expense	(79)	(26)	203.8	(40)	(39)	(21)	(5)	2.6	90.5
Operating expenses	(4)	(5)	(20.0)	(2)	(2)	(2)	(3)	-	-
Total expenses	(402)	(31)	large	(361)	(41)	(23)	(8)	large	large
Profit before income tax	488	1,037	(52.9)	71	417	484	553	(83.0)	(85.3)
Income taxbenefit (expense)	(5)	(12)	(58.3)	(6)	1	(4)	(8)	large	50.0
Profit for theperiod	483	1,025	(52.9)	65	418	480	545	(84.4)	(86.5)

Appendices

Financial results for the full year ended 30 June 2014

Appendix 2 – Ratio calculations

Earnings per share

Earnings per share
Numerator	FULL YEAR ENDED			HALF YEAR ENDED
	JUN-14	JUN-13	JUN-14	DEC-13	JUN-13	DEC-12
	$M	$M	$M	$M	$M	$M
Earnings:
Earnings used in calculating basic earnings per share	730	491	182	548	(83)	574
Interest expense on convertible preference shares (net of
tax)	-	-	-	14	-	22
Earnings used in calculatingdiluted earningsper share	730	491	182	562	(83)	596
Denominator	FULL YEAR ENDED			HALF YEAR ENDED
	JUN-14	JUN-13	JUN-14	DEC-13	JUN-13	DEC-12
	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES
Weighted average number of shares:
Weighted average number of ordinary shares used as the
denominator in calculating basic earnings per share	1,278,270,243	1,277,858,329	1,278,612,315	1,277,933,749	1,278,106,483	1,277,614,221
Effect ofconversionofconvertible preference shares	-	-	-	44,748,091	-	96,605,771
Weighted average number of ordinary shares used as the
denominator in calculatingdiluted earningsper share	1,278,270,243	1,277,858,329	1,278,612,315	1,322,681,840	1,278,106,483	1,374,219,992

Cash earnings per share

Cash earnings per share
Numerator	FULL YEAR ENDED			HALF YEAR ENDED
	JUN-14	JUN-13	JUN-14	DEC-13	JUN-13	DEC-12
	$M	$M	$M	$M	$M	$M
Earnings:
Earnings used in calculating basic cash earnings per share	1,304	576	717	587	(40)	616
Interest expense on convertible preference shares (net of
tax)	31	-	17	14	-	22
Earnings used in calculatingdiluted cash earningsper share	1,335	576	734	601	(40)	638
Denominator	FULL YEAR ENDED			HALF YEAR ENDED
	JUN-14	JUN-13	JUN-14	DEC-13	JUN-13	DEC-12
	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES	NO. OF SHARES
Weighted average number of shares:
Weighted average number of ordinary shares used as the
denominator in calculating basic cash earnings per share	1,278,270,243	1,277,858,329	1,278,612,315	1,277,933,749	1,278,106,483	1,277,614,221
Effect ofconversionofconvertible preference shares	46,607,172	-	51,135,494	44,748,091	-	96,605,771
Weighted average number of ordinary shares used as the
denominator in calculatingdiluted cash earningsper share	1,324,877,415	1,277,858,329	1,329,747,809	1,322,681,840	1,278,106,483	1,374,219,992

Financial results for the full year ended 30 June 2014

Appendices

ASX-listed securities

ASX-listed securities

JUN-14
DEC-13
JUN-13
DEC-12
HALF YEAR ENDED

Ordinary shares (SUN) each fully paid
Number at the end of the period
Dividend declared for the period (cents per share)
Convertible preference shares (SUNPC) each fully paid
Number at the end of the period
Dividend declared for the period ($ per share)(1)
Convertible preference shares (SUNPE) each fully paid
Number at the end of the period
Dividend declared for the period ($ per share)(1)
Subordinated Notes (SUNPD)
Number at the end of the period
Interest per note ($ per note)(1)
Floating Rate Capital Notes (SBKHB)
Number at the end of the period
Interest per note ($ per note)(1)
Reset preference shares (SBKPA) each fully paid
Number at the end of the period
Dividend declared for the period ($ per share)(1)
Convertible preference shares (SBKPB) each fully paid
Number at the end of the period
Dividend declared for theperiod($per share) (1)

1,286,600,980
1,286,600,980
1,286,600,980
1,286,600,980
70
35
50
25
5,600,000
5,600,000
5,600,000
5,600,000
2.54
2.57
2.70
0.61
4,000,000
-
-
-
0.47
-
-
-
7,700,000
7,700,000
7,700,000
-
2.71
2.77
1.43
-
715,383
1,698,008
1,698,008
1,698,008
1.66
1.75
1.91
2.25
-
-
304,063
304,063
-
2.15
2.09
2.12
-
-
-
7,350,000
-
-
2.20
2.38

(1) Classified as interest expense.

Appendices

Financial results for the full year ended 30 June 2014

Appendix 3 – Group capital

Group capital position

		AS AT	30 JUNE 2014	30 JUNE 2014
				SGL, CORP		AS AT 30
	GENERAL			SERVICES &		JUNE 2013
	INSURANCE	BANKING	LIFE	CONSOL	TOTAL	TOTAL
	$M	$M	$M	$M	$M	$M
Common Equity Tier 1 Capital
Ordinary share capital	-	-	-	12,717	12,717	12,717
Subsidiary share capital (eliminated upon
consolidation)	7,575	3,787	1,970	(13,332)	-	-
Reserves	13	(975)	311	786	135	40
Retained profits and non-controlling interests	266	359	(475)	761	911	1,261
Insurance liabilities in excess of liability valuation	710	-	-	-	710	650
Goodwill and other intangible assets	(5,035)	(412)	(231)	(166)	(5,844)	(6,198)
Net deferred tax liabilities/(assets)(1)	-	(85)	44	(127)	(168)	(194)
Policy liability adjustment(2)	-	-	(1,163)	-	(1,163)	(1,420)
Other Tier 1deductions	(5)	(26)	(1)	(84)	(116)	(116)
Common Equity Tier 1Capital	3,524	2,648	455	555	7,182	6,740
Additional Tier 1 Capital
Eligible hybrid capital	510	450	-	-	960	560
Transitional hybrid capital	-	-	-	-	-	30
Additional Tier 1Capital	510	450	-	-	960	590
Tier 1Capital	4,034	3,098	455	555	8,142	7,330
Tier 2 Capital
General reserve for credit losses	-	237	-	-	237	195
Eligible subordinated notes	-	670	100	-	770	670
Transitionalsubordinatednotes	572	72	-	-	644	813
Tier 2Capital	572	979	100	-	1,651	1,678

Total Capital	4,606	4,077	555	555	9,793	9,008
Represented by:
Capital in Australian regulated entities	4,007	4,074	375	-	8,456	8,054
Capital in New Zealand regulated entities	463	-	95	-	558	554
Capital inunregulated entities (3)	136	3	85	555	779	400

(1) Deferred tax assets in excess of deferred tax liabilities are deducted in arriving at CET1. Under the Reserve Bank of New Zealand’s regulations, a net deferred tax liability is added back in determining Common Equity Tier 1 Capital.

(2) Policy liability adjustments equate to the difference between adjusted policy liabilities and the sum of policy liabilities and policy owner retained profits. This mainly represents the implicit Deferred Acquisition Costs (DAC) for the life risk business.

(3) Capital in unregulated entities includes capital in authorised NOHCs such as Suncorp Group Limited (SGL), consolidated adjustments within a business unit and other diversification adjustments.

Financial results for the full year ended 30 June 2014

Appendices

Appendix 3 – Group capital (continued)

Group capital position

Group capital position
		AS AT	30 JUNE 2014			AS AT
				SGL, CORP		30 JUNE
	GENERAL			SERVICES &		2013
	INSURANCE	BANKING	LIFE	CONSOL	TOTAL	TOTAL
	$M	$M	$M	$M	$M	$M
Reconciliation of Total Capital to Net Assets
Net Assets	8,368	3,741	1,806	(116)	13,799	13,983
Equity items not eligible for inclusion in capital
for APRA purposes
Reserves	(5)	30	-	5	30	62
Additional items allowable for capital for APRA
Eligible hybrid capital	-	-	-	960	960	560
Eligible subordinated notes	-	670	100	-	770	670
Transitional hybrid capital	-	-	-	-	-	30
Transitional subordinated notes	572	72	-	-	644	813
Insurance liabilities in excess of liability valuation	710	-	-	-	710	650
Eligible collective provision	-	86	-	-	86	64
Net deferred tax liabilities (NZ)	-	-	44	-	44	66
Other items, adjustments	1	1	-	(1)	1	(1)
Deductions from capital for APRA purposes
Goodwill, brands	(5,029)	(261)	(231)	-	(5,521)	(5,922)
Software assets	(3)	-	-	(138)	(141)	(125)
Deductible capitalised expenses	(3)	(151)	-	(28)	(182)	(151)
Net deferred tax assets	-	(85)	-	(127)	(212)	(260)
Policy liability adjustment	-	-	(1,163)	-	(1,163)	(1,420)
Other assets excluded from regulatory capital	(5)	(26)	(1)	-	(32)	(11)
Total Capital	4,606	4,077	555	555	9,793	9,008

Appendices

Financial results for the full year ended 30 June 2014

Appendix 3 – Group capital (continued)

General Insurance Prescribed Capital Amount

General Insurance Prescribed Capital Amount
	GI GROUP(1)	GI GROUP(1)
	JUN-14	JUN-13
	$M	$M
Common Equity Tier 1 Capital
Ordinary share capital	7,575	7,977
Reserves	13	(50)
Retained profits and non-controlling interests	266	22
Insurance liabilities in excess of liability valuation	710	650
Goodwill and other intangible assets	(5,035)	(5,074)
Net deferred tax assets	-	-
Other Tier 1deductions	(5)	(11)
Common Equity Tier 1Capital	3,524	3,514
Additional Tier 1Capital	510	-
Tier 1Capital	4,034	3,514
Tier 2 Capital
Transitionalsubordinatednotes	572	643
Tier 2Capital	572	643

Total Capital	4,606	4,157
Prescribed Capital Amount
Outstanding claims risk charge	864	835
Premium liabilitiesriskcharge	490	475
Total insurance risk charge	1,354	1,310
Insurance concentration risk charge	250	250
Asset risk charge	675	751
Asset concentration risk charge	-	-
Operational risk charge	269	261
Aggregationbenefit	(419)	(449)
Total Prescribed Capital Amount(PCA)	2,129	2,123
Common Equity Tier 1 Coverage Ratio	1.66	1.66
Capital Coverage Ratio	2.16	1.96

(1) GI Group – Suncorp Insurance Holdings Ltd and its subsidiaries (includes New Zealand subsidiaries).

Financial results for the full year ended 30 June 2014

Appendices

Appendix 3 – Group capital (continued)

Banking capital adequacy

	REGULATORY BANKING GROUP OTHER ENTITIES STATUTORY BANKING GROUP STATUTORY BANKING GROUP JUN-14 JUN-14 JUN-14 JUN-13 $M $M $M $M
Common Equity Tier 1 Capital Ordinary share capital Reserves Retained profits Goodwill and other intangible assets Net deferred tax assets Other Tier 1deductions	2,565 1,222 3,787 3,675 12 (987) (975) (991) 356 3 359 173 (177) (235) (412) (384) (85) - (85) (113) (26) - (26) -
Common Equity Tier 1Capital	2,645 3 2,648 2,360
Additional Tier 1 Capital Eligible hybrid capital Transitional hybrid capital	450 - 450 450 - - - 30
Additional Tier 1Capital	450 - 450 480
Tier 1Capital	3,095 3 3,098 2,840
Tier 2 Capital General reserve for credit losses Eligible subordinated notes Transitionalsubordinatednotes	237 - 237 195 670 - 670 670 72 - 72 170
Tier 2Capital	979 - 979 1,035

Total Capital	4,074 3 4,077 3,875
Risk-Weighted Assets Credit risk Market risk Operational risk	27,399 - 27,399 27,029 333 - 333 385 3,265 - 3,265 3,308
Total Risk-Weighted Assets	30,997 - 30,997 30,722
Common Equity Tier 1 Ratio	8.53% 8.54% 7.68%
Total Capital Ratio	13.14% 13.15% 12.61%

Appendices

Financial results for the full year ended 30 June 2014

Appendix 3 – Group capital (continued)

Life Prescribed Capital Amount

	LIFE CO	LIFE CO NEW	OTHER	TOTAL LIFE	TOTAL LIFE
	AUSTRALIA	ZEALAND(1)	ENTITIES(2)	GROUP	GROUP
	JUN-14	JUN-14	JUN-14	JUN-14	JUN-13
	$M	$M	$M	$M	$M
Common Equity Tier 1 Capital
Ordinary share capital	664	202	1,104	1,970	2,435
Reserves	-	29	282	311	274
Retained profits and non-controlling interests	434	134	(1,043)	(475)	14
Goodwill and other intangible assets	-	-	(231)	(231)	(593)
Net deferred tax liabilities(3)	-	44	-	44	42
Policy liability adjustment(4)	(850)	(313)	-	(1,163)	(1,420)
Other Tier 1deductions	-	(1)	-	(1)	-
Common Equity Tier 1Capital	248	95	112	455	752
Additional Tier 1Capital	-	-	-	-	-
Tier 1Capital	248	95	112	455	752
Tier 2 Capital
Eligible subordinatednotes	100	-	-	100	-
Tier 2Capital	100	-	-	100	-

Total Capital	348	95	112	555	752
Prescribed Capital Amount
Insurance risk charge	55	29	-	84	67
Asset risk charge	75	34	-	109	110
Asset concentration risk charge	-	-	-	-	-
Operational risk charge	36	1	-	37	35
Aggregation benefit	(28)	-	-	(28)	(25)
Combined stress scenario adjustment	61	-	-	61	62
Other regulatoryrequirements	-	-	27	27	19
Total Prescribed Capital Amount(PCA) (5)	199	64	27	290	268
Common Equity Tier 1 Coverage Ratio	1.25	1.48	4.15	1.57	2.81
Capital Coverage Ratio	1.75	1.48	4.15	1.91	2.81

(1) Asteron Life Limited New Zealand regulatory capital is as prescribed in the Life Solvency Standard, issued by the Reserve Bank of New Zealand, set out in a consistent format with the LAGIC presentation for the Australian Life company.

(2) Other entities represent all other corporate, regulated and non-regulated entities in the Suncorp Life Group.

(3) Includes Deferred Tax Liabilities relating to the policy liability adjustment for the New Zealand business.

(4) Policy liability adjustments equate to the difference between adjusted policy liabilities and the sum of policy liabilities and policy owner retained profits. This mainly represents the implicit Deferred Acquisition costs (DAC) for the life risk business. The policy liability adjustment for the New Zealand business is shown gross of Deferred Tax Liabilities.

(5) PCA in other entities is reflective of Australian Financial Services Licence requirements being the greater of Net Tangible Assets (NTA), Surplus Liquid Fund (SLF), Cash Needs Requirement (CNR) and Operational Risk Financial Requirement (ORFR).

Financial results for the full year ended 30 June 2014

Appendices

Appendix 3 – Group capital (continued)

Capital Instruments

	Coupon rate /			JUN-14			Total	Regulatory
	margin above	Optional Call /	GI	Bank	Life	SGL	Balance	Capital
	90 day BBSW (1)	Exchange Date	$M	$M	$M	$M	$M	$M
AAIL Subordinated Debt	6.75%	Sept 2014	131	-	-	-	131	110
	100bps	Sept 2014	52	-	-	-	52	41
AAIL Subordinated Debt(1)	6.15%	Sept 2015	121	-	-	-	121	97
	70 bps	Sept 2015	77	-	-	-	77	62
AAIL Subordinated Debt	6.75%	Oct 2016	105	-	-	-	105	86
AAIL Subordinated Debt(2)	-	June 2017	244	-	-	-	244	176
SGL Subordinated Debt(1) (3)	285 bps	Nov 2018	-	670	100	-	770	770
SML FRCN	75 bps	Perpetual	-	72	-	-	72	72
Total subordinated debt			730	742	100	-	1,572	1,414
SGL CPS2(1) (3)	465 bps	Dec 2017	110	450	-	-	560	560
SGLCPS3 (1) (3)	340 bps	June2020	400	-	-	-	400	400
Total Additional Tier 1Capital			510	450	-	-	960	960
Total			1,240	1,192	100	-	2,532	2,374

Total			1,240	1,192	100	-	2,532	2,374
	Coupon rate /			DEC-13			Total	Regulatory
	margin above	Optional Call /	GI	Bank	Life	SGL	Balance	Capital
	90 day BBSW (1)	Exchange Date	$M	$M	$M	$M	$M	$M
AAIL Subordinated Debt	6.75%	Sept 2014	131	-	-	-	131	123
	100bps	Sept 2014	52	-	-	-	52	46
AAIL Subordinated Debt(1)	6.15%	Sept 2015	121	-	-	-	121	110
	70 bps	Sept 2015	77	-	-	-	77	69
AAIL Subordinated Debt	6.75%	Oct 2016	111	-	-	-	111	97
AAIL Subordinated Debt(2)	-	June 2017	254	-	-	-	254	198
SGL Subordinated Debt(1) (3)	285 bps	Nov 2018	-	670	100	-	770	770
SML FRCN	75 bps	Perpetual	-	170	-	-	170	170
Total subordinated debt			746	840	100	-	1,686	1,583
SGLCPS2(1) (3)	465 bps	Dec2017	-	450	-	110	560	560
Total Additional Tier 1Capital			-	450	-	110	560	560
Total			746	1,290	100	110	2,246	2,143

(1) Unamortised transaction costs related to external issuance are deducted from the "Total Balance" outlined above when recorded in the issuing

(2) Current GBP amount issued is £121m with a 6.25% coupon rate. Foreign currency borrowings are hedged back into Australian dollars

(3) These instruments were issued by SGL and deployed to regulated entities within the Group. The amounts held by SGL which have been deployed are eliminated on consolidation for accounting and regulatory purposes

Appendices

Financial results for the full year ended 30 June 2014

Appendix 4 – Definitions

ADI	Authorised Deposit-taking Institution
Acquisition expense ratio	Acquisition expenses expressed as a percentage of net earned
	premium
Annuities market	The value of annuity obligations are determined by discounting future
adjustments	obligations into today’s dollars using risk-free rates. The value of such
	obligations fluctuates as market referenced discount rates change.
	The value of assets backing annuity obligations also fluctuates with
	investment markets. The net impact of both of these market-driven
	valuation changes are removed from Suncorp Life’s Underlying Profit
	and recorded as annuity market adjustments
APRA	Australian Prudential Regulation Authority
Basis points (BPS)	A ’basis point’ is 1/100th of a percentage point
Cash earnings	Net profit after tax adjusted for the amortisation of acquisition
	intangible assets, the write-down of Life intangible assets, the profit or
	loss on divestments and their tax effect
Cash earnings per share	Basic: cash earnings divided by the weighted average number of
	ordinary shares (net of treasury shares) outstanding during the period
	Diluted: cash earnings adjusted for consequential changes in income
	or expenses associated with the dilutive potential ordinary shares
	divided by the weighted average number of diluted shares (net of
	treasury shares) outstanding during the period
Cash return on average	Cash earnings divided by average equity attributable to owners of the
shareholders' equity	Company. Averages are based monthly balances over the period. The
	ratio is annualised for half years
Capital adequacy ratio	Capital base divided by total risk-weighted assets, as defined by
	APRA
Combined operating ratio	The percentage of net earned premium that is used to meet the costs
	of all claims incurred plus pay the costs of acquiring (including
	commission), writing and servicing the General Insurance business
Common Equity Tier 1	Common Equity Tier 1 Capital (“CET1”) comprises accounting equity
	plus adjustments for intangible assets and regulatory reserves
Common Equity Tier 1 ratio	Common Equity Tier 1 Capital divided by total risk-weighted assets
	(Bank) or Prescribed Capital Amount (General Insurance & Life)
Complete Customer	A Suncorp Bank customer that holds three or more Suncorp branded
	products
Cost to income ratio	Operating expenses of the Banking business divided by total income
	from Banking activities
Credit risk-weighted assets	Total of the carrying value of each asset class multiplied by their
	assigned risk weighting, as defined by APRA
Deferred acquisition costs	The portion of acquisition costs not yet expensed on the basis that it
(DAC)	can be reliably measured and it is probable that it will give rise to
	premium revenue that will be brought to account in subsequent
	financial periods
Deposit to loan ratio	Total retail deposits divided by total loans and advances, excluding
	other receivables

Financial results for the full year ended 30 June 2014

Appendices

Appendix 4 – Definitions (continued)

Diluted shares	Diluted shares is based on the weighted average number of ordinary
	shares outstanding during the period adjusted for potential ordinary
	shares that are dilutive in accordance with AASB 133 Earnings per
	Share
Effective tax rate	Income tax expense divided by profit before tax
Embedded Value	Embedded Value is equivalent to the sum of the adjusted net worth
	and the net present value of all future cash flows distributable to the
	shareholder that are expected to arise from in-force business,
	together with the value of frankingcredits
Equity reserve for	The equity reserve for credit losses represents the difference between
credit losses	the collective provision for impairment and the estimate of credit
	losses across the credit cycle based onguidanceprovided byAPRA
Fire Service Levies (FSL)	The expense relating to the amount levied on policyholders by
	insurance companies as part of premiums payable on policies with a
	fire risk component, which is established to cover the corresponding
	fire brigade charge which the Groupwill eventuallyhave topay
Funds under administration	Funds where the Australian superannuation and investments business
(FUA)	receives a fee for the administration of an assetportfolio
General Insurance –	Commercial products consist of commercial motor insurance,
Commercial	commercial property insurance, marine insurance, industrial special
	risk insurance, public liability and professional indemnity insurance,
	workers’ compensation insurance and compulsory third party
	insurance
General Insurance –	Personal products consist of home and contents insurance, motor
Personal	insurance, boat insurance, and travel insurance
Gross non-performing	Gross impaired assets plus past due loans
loans
Impairment losses to gross	Impairment losses on loans and advances divided by gross loans and
loans and advances	advances. The ratio is annualised for halfyears
Insurance Trading Ratio	The insurance trading result expressed as a percentage of net earned
(ITR)	premium
Insurance Trading Result	Underwriting result plus investment income on assets backing
	technical reserves
Life insurance	Amounts due to an entity or person who owns a life insurance policy.
policyholders' interests	This need not be the insured. This is distinct from shareholders’
	interests
Life risk in-force annual	Total annualised statistical premium for all business in-force at the
premiums	date(includingnew business written duringtheperiod)
Life risk new business	Total annualised statistical premium for policies issued during the
annualpremiums	reporting period
Life underlying profit	Life underlying profit refers to net profit after tax less market
after tax	adjustments. Market adjustments represents the impact of movements
	in discount rates on the value of policy liabilities, investment income
	experience on invested shareholder assets and annuities mismatches

Appendices

Financial results for the full year ended 30 June 2014

Appendix 4 – Definitions (continued)

Loss ratio	Net claims incurred expressed as a percentage of net earned
	premium. Net claims incurred consist of claims paid during the period
	increased (or decreased) by the increase (decrease) in outstanding
	claims liabilities
Net interest spread	The difference between the average interest rate on average interest
	earning assets and the average interest rate on average interest
	bearingliabilities
Net tangible asset backing	Total equity less intangible assets divided by ordinary shares at the
per share	end of theperiod adjusted for treasuryshares
Net profit after tax	Net profit after tax attributable to owners of the Company derived in
	accordance with Australian AccountingStandards
Other underwriting	Other underwriting expenses expressed as a percentage of net
expenses ratio	earnedpremium
Past due loans	Loans outstandingfor more than 90 days
Payout ratio –	Ordinary shares (net of treasury shares) at the end of the period
cash earnings	multiplied by ordinary dividend per share for the period divided by
	cash earnings
Payout ratio –	Ordinary shares (net of treasury shares) at the end of the period
net profit after tax	multiplied by the ordinary dividend per share for the period divided by
	profit after tax
Profit after tax from	The net profit after tax for the General Insurance, Bank and Life
business lines	business lines
Return on average	Net profit after tax divided by average total assets. Averages are
total assets	based on beginning and end of period balances. The ratio is
	annualised for halfyears
Return on Common Equity	Net profit after tax adjusted for dividends paid on capital notes divided
Tier 1	by average Common Equity Tier 1 Capital. Average Common Equity
	Tier 1 Capital is based on the monthly balance of Common Equity Tier
	1 1 Capital over theperiod. The ratio is annualised for halfyears
Return on average	Net profit after tax divided by average equity attributable to owners of
shareholders’ equity	the Company. Averages are based monthly balances over the period.
	The ratio is annualised for halfyears
Total risk-weighted assets	Bank credit risk-weighted assets, off-balance sheet positions and
	market risk capital charge and operational risk charge, as defined by
	APRA
Total operating	Total operating expenses (acquisition and other underwriting
expense ratio	expenses)expressed as apercentage of net earnedpremium
Treasury shares	Ordinary shares of Suncorp Group Limited that are acquired by
	subsidiaries

Financial results for the full year ended 30 June 2014

Appendices

Appendix 5 – 2014/15 key dates[(1)]

Ordinary shares (SUN)

Full year results and final dividend announcement Ex-dividend date Dividend payment

Annual General Meeting

13 August 2014 20 August 2014 1 October 2014

23 October 2014

Half year results announcement Ex-dividend date Dividend payment

11 February 2015 18 February 2015 1 April 2015

Convertible Preference Shares 2 (SUNPC)

Ex-dividend date 8 September 2014 Dividend payment 17 September 2014 Ex-dividend date 8 December 2014 Dividend payment 17 December 2014 Ex-dividend date 5 March 2015 Dividend payment 17 March 2015 Ex-dividend date 5 June 2015 Dividend payment 17 June 2015

Convertible Preference Shares 3(SUNPE)

1 September 2014 17 September 2014

Ex-dividend date Dividend payment

4 December 2014 17 December 2014

Ex-dividend date Dividend payment

26 February 2015 17 March 2015

Ex-dividend date Dividend payment

29 May 2015 17 June 2015

Subordinated Notes (SUNPD)

Floating Rate Capital Notes (SBKHB)

Ex interest date 12 August 2014 Ex interest date Interest payment 22 August 2014 Interest payment Ex interest date 12 November 2014 Ex interest date Interest payment 24 November 2014 Interest payment Ex interest date 11 February 2015 Ex interest date Interest payment 23 February 2015 Interest payment Ex interest date 12 May 2015 Ex interest date Interest payment 22 May 2015 Interest payment

13 August 2014 1 September 2014

11 November 2014 2 December 2014

12 February 2015 3 March 2015

13 May 2015 1 June 2015

(1) All dates are subject to change. Dividend dates will be confirmed upon their declaration.

AI assistant

SUNCORP GROUP LIMITED — Annual Report 2014

65879_rns_2014-08-12_242b4953-ebdd-4518-840b-ea380f629f88.pdf

Basis of preparation

Disclaimer

Registered office

Investor Relations

Table of contents

Financial results summary

Operational summary

Result overview

Group

Outlook

Group

Contribution to profit by division

Contribution to profit by division

Group

Statement of financial position

Ratios and statistics

Group

Ratios and statistics

Group Capital

Group

Risk-Based Capital (RBC)

Conglomerate Regulation

Capital position at 30 June 2014

Group

Dividends

Income tax

General Insurance

Result overview

Profit contribution including discount rate movements and FSL

Profit contribution excluding the discount rate movements and FSL

Statement of assets and liabilities

Gross Written Premium (GWP)

Gross Written Premium (GWP) (continued)

Motor

Home

Commercial Insurance

Compulsory Third Party (CTP)

Other

Reinsurance expense

Net incurred claims

Outstanding claims provisions over time

Risk margins

Operating expenses

Managed schemes

Joint venture and other income

Investment income

Investment income on Insurance Funds

Investment income on shareholder funds

Investment assets

Credit ratings for General Insurance fixed interest investments

Personal Lines Australia

Result overview

Outlook

Commercial Lines Australia

Result overview

Outlook

New Zealand

Result overview

Outlook

General Insurance short-tail and long-tail (includes NZ)

Bank

Result overview

Profit contribution

Bank ratios and key statistics

Statement of assets and liabilities

Bank

Loans, advances and other receivables

Total Lending

Retail Loans

Commercial (SME)

Commercial (SME) portfolio breakdown

Commercial (SME) portfolio by average group exposure size

Agribusiness

Bank

Agribusiness portfolio breakdown

Agribusiness portfolio by average group exposure size

Corporate and Property

SUNCORP GROUP LIMITED Annual Report 2014