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SUNCORP GROUP LIMITED — Annual Report 2017
Aug 2, 2017
65879_rns_2017-08-02_35530b08-0bc1-40ca-a5bd-50657231d3e9.pdf
Annual Report
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Financial Results for the full year ended 30 June 2017 — Create a better today
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Results
—
‒ Group Net Profit After Tax of $1,075m (up 3.6%)
‒ Group top line growth 3.6%
‒ UITR 12% for 2H17 (2016: 10.6%)
‒ Dividend of 73c (up 7.4%) ‒ Cash ROE of 8.4% (2016: 8.2%)
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2
FY17 RESULTS
Highlights
—
‒ Refreshed strategy and ‘One Suncorp’ model in place
‒ Delivering customer growth and a focus on digital ‒ Customers are experiencing the Marketplace deliverables ‒ Creating Shareholder value with Aggregate Reinsurance Program ‒ More resilient Suncorp for a sustainable future
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3
FY17 RESULTS
1. Refreshed strategy and ‘One Suncorp’ model in place
—
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Purpose
Create a better today
Be the destination for the moments that matter Vision
Priorities
Maintain
Elevate the Create the Inspire our
momentum
customer Marketplace people
and grow
One Suncorp Business model
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4
FY17 RESULTS
2. Delivering customer growth through refreshed strategy
—
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Net Customer Flow Increased Digital Usage
0,000
147,000 net inflow
+399,000 AAMI SmartPlates Money Profiles
252,000 SA CTP
0,000 app app
0,000
0,000
0,000
-
-12,000
0,000 -71,000
FY15 FY16 FY17 18,000 users 34,000 users
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5
FY17 RESULTS
- Customers are experiencing the Marketplace Deliverables —
‒ Concept Stores ‒ New branding and logo
- New AAMI and Suncorp Apps
‒ Launched annuities and health solutions
‒ Capturing the opportunity
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6
FY17 RESULTS
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4. Creating Shareholder Value with Aggregate Reinsurance Program
—
$m
800
700 699
600 ‒ Significant NPAT benefit
500
460 ‒
Capital benefit
400
‒
300 Cover extended into FY18
200
100
0
Jul 2016 Oct 2016 Jan 2017 Apr 2017 Jul 2017
Retained Natural Hazard Costs Natural Hazard Aggregate Cover
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7
FY17 RESULTS
-
More Resilient Suncorp for a Sustainable Future —
-
Top line growth and investment for the future
-
Dividend and capital
‒ Re-alignment of investment portfolio
-
Re-insurance
-
Additional expertise
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8
FY17 RESULTS
Create a Better Today
—
Business Improvement Program “Owner’s Mindset”
-
Digitisation of customer experience
-
Sales and Service channel optimisation
-
End-to-end process improvement
-
Claims supply chain re-design
-
Smarter procurement
-
Material benefits in FY19 and FY20
with minor net benefits in FY18
Marketplace Acceleration “Faster and Sooner”
-
Single digital customer experience (app)
-
Roll-out of brand refresh
-
Journeys and Integrated Offers
-
Third Party partnerships
‒ Reward and recognition program Bring forward additional investment with no impact on dividends
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9
FY17 RESULTS
Result overview
—
-
Group top line growth of 3.6%
-
Function NPAT up 4.0%
-
Cash earnings up 5.1%
-
Dividend up 7.4%
-
Amortisation increase due to Autosure divestment
| FY17 ($m) FY16 ($m) Change (%) Insurance (Australia) 723 558 29.6 Banking & Wealth 400 418 (4.3) New Zealand 82 183 (55.2) NPAT from functions 1,205 1,159 4.0 Other (60) (70) (14.3) Cash earnings 1,145 1,089 5.1 Acquisition Amortisation (70) (51) 37.3 Reported NPAT 1,075 1,038 3.6 Full year dividend 73 cps 68 cps 7.4 |
|
|---|---|
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10
FY17 RESULTS
Insurance (Australia)
NPAT
—
-
NPAT up 29.6% to $723 million
-
GWP growth of 3.9%
-
Reported ITR of 12.9%
-
Natural hazards $655 million (FY16: $720 million)
-
Reserve releases of $301 million (FY16: $348 million)
-
Underlying investment yield of 2.5%
| FY17 ($m) FY16 ($m) Change (%) Gross written premium 8,111 7,803 3.9 Net earned premium 7,072 6,893 2.6 Net incurred claims (4,923) (5,099) (3.5) Operating expenses (1,442) (1,411) 2.2 Investment income - insurance funds 205 236 (13.1) Insurance trading result 912 619 47.3 General Insurance profit after tax 689 490 40.6 Life Insurance profit after tax 34 68 (50.0) Insurance (Australia) NPAT 723 558 29.6 |
|
|---|---|
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INSURANCE (AUSTRALIA)
FY17 RESULTS
Gross Written
Premiums
—
-
Home & Motor return to positive unit growth with 3% to 5% price increases
-
Commercial underwriting discipline with some positive pricing momentum
-
CTP growth from SA entry and NSW price increases
| FY17 ($m) FY16 ($m) Change (%) Motor 2,634 2,568 2.6 Home 2,233 2,193 1.8 Commercial 1,543 1,577 (2.2) Compulsory third party 1,404 1,215 15.6 Workers compensation and other 297 250 18.8 Total Gross Written Premium 8,111 7,803 3.9 |
|
|---|---|
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INSURANCE (AUSTRALIA)
FY17 RESULTS
Claims
—
Net incurred claims down 3.5%
Lower natural hazard claims
Operational metrics for Home and Motor working claims have returned to sustainable levels
Strong claims performance across NSW CTP
$423 million of events >$5 million
NHAP renewed
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60
Home active claims
50
volumes (‘000)
40
30
20
10
0
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Working Natural Hazards
250
Motor active claims
200
volumes (‘000)
150
100
50
0
Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Working Natural Hazards
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INSURANCE (AUSTRALIA)
FY17 RESULTS
13
Investments
—
Insurance funds $9.2 billion
Investment income of $205 million (FY16: $236 million)
$120 million MTM loss from an increase in risk-free rates $43 million MTM gain from narrowing credit spreads $52 million MTM gain from outperformance of ILBs 2.5% annualised underlying return
Shareholders’ funds $2.7 billion
Investment income of $98 million (FY16: $80 million)
3.7% annualised return
Returns driven by improving equity markets and narrowing credit spreads, offset by MTM from rising bond yields
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Corporate
ILBs
Semis
Govt
Cash
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Fixed Interest
(Domestic)
Fixed Interest
(Global)
Equities
Infrastructure
Cash
Alternatives
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INSURANCE (AUSTRALIA)
FY17 RESULTS
14
Life Insurance
NPAT
—
-
Stable underlying profits
-
Subdued new business volumes reflecting challenging market conditions
-
Optimisation program to deliver improved profitability
-
Strategic review continuing
| FY17 ($m) |
FY16 ($m) |
Change (%) |
|
|---|---|---|---|
| Planned profit margin release | 19 | 15 | 26.7 |
| Experience | (6) | 19 | n/a |
| Other and investments(1) | 40 | 19 | 110.5 |
| Underlying profit after tax | 53 | 53 | - |
| Market adjustments | (19) | 15 | n/a |
| Life Insurance NPAT | 34 | 68 | (50.0) |
| In-force annual premium | 806 | 813 | (0.9) |
| Total new business | 62 | 74 | (16.2) |
- (1) Other includes benefits from a group profit share arrangement in prior years and positive experience from previous repricing
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INSURANCE (AUSTRALIA)
FY17 RESULTS
15
Banking & Wealth
NPAT
—
-
Total lending up 1.9%
-
Annualised second half lending growth of 4.2%
-
Improved credit quality
-
Stable funding profile
-
Strong capital & balance sheet
-
– Completion of Super Simplification Program
| FY17 ($m) FY16 ($m) Change (%) Net interest income 1,131 1,129 0.2 Net non-interest income 76 88 (13.6) Operating expenses (636) (639) (0.5) Profit before impairment losses 571 578 (1.2) Impairment losses (7) (16) (56.3) Income tax (168) (169) (0.6) Banking profit after tax 396 393 0.8 Wealth profit after tax 4 25 (84.0) Banking & Wealth NPAT 400 418 (4.3) |
|
|---|---|
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BANKING & WEALTH
FY17 RESULTS
16
New Zealand
NPAT
—
-
GWP grew 6.3%, driven by Home and Motor
-
Kaikoura earthquake and reinsurance reinstatement net NPAT impact of NZ$36 million
-
Motor claims cost inflation across the industry
| FY17 (NZ$m) FY16 (NZ$m) Change (%) Gross written premium 1,424 1,339 6.3 Net earned premium 1,163 1,139 2.1 Net incurred claims (735) (612) 20.1 Operating expenses (387) (369) 4.9 Investment income – insurance funds 14 20 (30.0) Insurance trading result 55 178 (69.1) General Insurance profit after tax 47 147 (68.0) Life Insurance profit after tax 40 53 (24.5) New Zealand NPAT 87 200 (56.5) |
|
|---|---|
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FY17 RESULTS
NEW ZEALAND
17
Capital position
—
CET1 excess of $377 million
GI changes in targets and increased Asset Risk Charges
Bank growth in risk weighted assets offset by RMBS issuance
Capital release from Autosure disposal
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73 40 (148)
1,075
(56)
(17) (35)
(901)
377
346
Excess FY17 GI goodwill Other Increase in Bank Life policy Temporary FY17 Excess
CET1 NPAT & GI Target growth liability increase in Dividends CET1
(Jun-16) intangibles adjustment Group (net of (Jun-17)
and Target Target DRP)
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FY17 RESULTS
18
Operating expenses
—
-
Operating expenses up 2.9%
-
Direct expense base maintained at around $2.7 billion for the past 4 years
-
Business Improvement Program to reduce operating and claims expenses from FY19
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16
21
9
32
2,746
2,701
2,669
FY16 Group bonus Normalised Foreign Fire Services Project FY17
operating expense FY16 Exchange Levy expenses operating
expenses operating expenses
expenses
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FY17 RESULTS
19
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Medium term targets
—
Broadening of customer relationships Improving underlying NPAT Sustainable ROE of at least 10%, which implies an underlying ITR of at least 12%
Maintaining a dividend payout ratio of 60% to 80% of cash earnings and returning surplus capital to shareholders
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20 20
FY17 RESULTS
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Priorities
—
- Elevate the Customer
‒ Create the Marketplace
‒ Maintain momentum and grow
‒ Inspire our people
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21
FY17 RESULTS
—
Highlights
‒ Refreshed strategy and ‘One Suncorp’ model in place
‒ Delivering customer growth and a focus on digital ‒ Customers benefiting from roll out of Marketplace deliverables ‒ Creating Shareholder value with Aggregate Reinsurance Program ‒ More resilient Suncorp for a sustainable future
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22
FY17 RESULTS
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Financial Results for the full year ended 30 June 2017
—
Data Pack
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Data Pack
Suncorp Group
Top 20 ASX listed company
—
Leading financial services brands in Australia and New Zealand
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FY17 RESULTS
$19 billion market capitalisation at 30 June 2017
$97 billion in group assets
13,400 employees in Australia and New Zealand
Approximately 9 million customers
End-to-end ownership of brands
24
DATA PACK
Strategy
—
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25
FY17 RESULTS
DATA PACK
Elevating the Customer
—
-
Making the experience easy for customers
-
Connecting customers to the Suncorp Marketplace
-
Developing integrated solutions and customer journeys
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26
FY17 RESULTS
DATA PACK
Elevating the Customer and Creating the Marketplace
—
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Build the Marketplace
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Design connected solutions and services
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Develop the partner ecosystem
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Differentiate our brands (individually strong and deliver value when connected)
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27
FY17 RESULTS
DATA PACK
Building the Suncorp Marketplace
—
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28
FY17 RESULTS
DATA PACK
Designing end-to-end customer journeys
—
Opportunity
-
3.3 million home owners
-
5.6 million vehicle owners
-
700,000 small business customers
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From
To
-
Seamless connection of solutions and brands
-
Unconnected range of products and brands
-
Winning customers at the end of a purchase
-
Winning customers early within a purchase
-
Competing only where we manufacture
-
Engaging partners to compete in new areas
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29 29
FY17 RESULTS
DATA PACK
Marketplace priorities
—
– Build intuitive digital experience for our customers and partners
-
Execute loyalty and differentiated service levels
-
Enhance sales and service productivity
-
Connect Intermediaries to the Marketplace to deepen relationships
-
Continue to deliver integrated customer journeys
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30
FY17 RESULTS
DATA PACK
Key metrics
—
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31
FY17 RESULTS
DATA PACK
Profit after tax from functions ($m)
—
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32
FY17 RESULTS
DATA PACK
Profit and operating
expenses
—
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1,205
1,159
Profit after tax 82
183
from functions
400
418
723
558
FY16 FY17
Insurance Banking & Wealth New Zealand
2,746
2,669
Operating expenses
372 400
721 730
1,576 1,616
FY16 FY17
Insurance Banking & Wealth New Zealand
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33
FY17 RESULTS
DATA PACK
Dividends (cps)
—
73 cent total ordinary dividend, up 7.4% Cash earnings payout ratio of 81.9%
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105
88
30
75 12
73
68
20
55
38
40
40
38
15
35 35 30
20
20 20
38
35 33
30
25
20
15 15
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
■ Interim ■ Final ■ Special
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FY17 RESULTS
DATA PACK
34
Capital position ($m)
—
Total Total as at 30 Jun 2016 6,625 6,338 5,772 5,552 853 786 (476) (440) 377 346 9,512 8,860 7,880 7,743 1,632 1,117 (476) (440) 1,156 677 |
Total Total as at 30 Jun 2016 6,625 6,338 5,772 5,552 853 786 (476) (440) 377 346 9,512 8,860 7,880 7,743 1,632 1,117 (476) (440) 1,156 677 |
Total Total as at 30 Jun 2016 6,625 6,338 5,772 5,552 853 786 (476) (440) 377 346 9,512 8,860 7,880 7,743 1,632 1,117 (476) (440) 1,156 677 |
||||||
|---|---|---|---|---|---|---|---|---|
| As at 30 June 2017 | ||||||||
| GI | Bank | Life | SGL, Corp Services & Consol |
Total | Total as at 30 Jun 2016 |
|||
| CET1 CET1 Target |
3,115 2,593 |
2,963 2,809 |
461 335 |
86 35 |
6,625 | 6,338 5,552 |
||
| 5,772 | ||||||||
| Excess to CET1 Target (pre div) | 522 | 154 | 126 | 51 | 853 | 786 | ||
| Group Dividend | (476) | (440) | ||||||
| Group Excess to CET1 Target (ex div) | 377 | 346 | ||||||
| Common Equity Tier 1 Ratio | 1.32x | 9.23% | 2.00x | |||||
| Total Capital Total Capital Target |
4,180 3,535 |
4,685 3,933 |
561 397 |
86 15 |
9,512 | 8,860 7,743 |
||
| 7,880 | ||||||||
| Excess to Target (pre div) | 645 | 752 | 164 | 71 | 1,632 | 1,117 | ||
| Group Dividend Group Excess to Target (ex div) |
(476) | (440) 677 |
||||||
| 1,156 | ||||||||
| Total Capital Ratio | 1.77x | 14.59% | 2.44x | |||||
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FY17 RESULTS
DATA PACK
35
CET1 capital base ($m)
—
CET1 excess of $377 million
GI changes in targets and increased Asset Risk Charges
Bank growth in risk weighted assets offset by RMBS issuance
Capital release from Autosure disposal
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73 40 (148)
1,075
(56)
(17) (35)
(901)
377
346
Excess FY17 GI goodwill Other Increase in Bank Life policy Temporary FY17 Excess
CET1 NPAT & GI Target growth liability increase in Dividends CET1
(Jun-16) intangibles adjustment Group (net of (Jun-17)
and Target Target DRP)
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FY17 RESULTS
DATA PACK
36
Group Risk Based Capital (RBC)
—
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Group
8%
6%
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28%
58%
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General Insurance Bank
7% [3%]
38%
24%
54%
66%
8%
Life Insurance Corporate
100%
9%
23%
17%
51%
■ Insurance risk ■ Market risk ■ Operational risk ■ Counterparty credit risk
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FY17 RESULTS
DATA PACK
37
General Insurance capital
—
Total capital ($m)
Prescribed Capital Amount (PCA) ($m)
Capital ratios vs peers
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4,180 1.77x 1.81x 1.79x
1.77x PCA
555
510
2,358
CET1 Target
294
(1.0 – 1.2x
PCA) 848
250 1.32x 1.27x
3,115 1.09x
569
900
(503) SUN Peer 1 Peer 2
Common Equity Tier 1 ■ Tier 2 ■ Outstanding claims risk ■ Asset risk ■ Common Equity Tier 1 ■ Tier 2
Additional Tier 1 ■ Premium liabilities risk ■ Operational risk ■ Additional Tier 1
■ Insurance concentration risk ■ Aggregation benefit
Source: Latest published company reports
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■ Common Equity Tier 1 ■ Tier 2 ■ Additional Tier 1
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FY17 RESULTS
DATA PACK
38
Bank capital
—
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Total capital ($m) Risk weighted assets ($m) Capital ratios vs peers
14.59% 14.71% 14.54%
4,685 13.80% 14.00%
32,107
12.57%
14.59% RWA 12.26%
897 3,424
62
825
CET1 Target
(8.5% – 9.0% 9.23% RWA
RWA) 28,621
2,963 9.23% 9.29% 8.05% 10.11% 9.60% 10.13% 9.97%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
Standardised Advanced
■ Common Equity Tier 1 ■ Tier 2 ■ Credit risk ■ Operational risk ■ Common Equity Tier 1 ■ Tier 2
■ Additional Tier 1 ■ Market risk
■ Additional Tier 1
Source: Latest published company reports
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FY17 RESULTS
DATA PACK
39
Life Insurance capital
—
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Total capital ($m) Prescribed Capital Amount
(PCA) ($m)
561
2.44x PCA
100
230
461
17
57
31
97
32
2H17 (4)
■ Insurance risk 2H17■ Combined stress
■ Common Equity Tier 1
■ Asset risk scenario adjustment
■ Tier 2
■ Operational risk ■ Other regulatory
■ Aggregation benefit requirements
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FY17 RESULTS
DATA PACK
40
Investment assets
—
| 65% 19% 10% 2%2% 2% Insurance (Australia) ■ GI - insurance funds ■ GI - shareholders’ funds ■ Life shareholder assets New Zealand ■ GI - insurance funds ■ GI - shareholders’ funds ■ Life shareholder assets |
FY17 ($m) |
|
|---|---|---|
| Insurance (Australia) investments | ||
| General Insurance - insurance funds | 9,198 | |
| General Insurance - shareholders’ funds | 2,737 | |
| Life shareholder assets | 1,445 | |
| Insurance (Australia) total | 13,380 | |
| New Zealand investments | ||
| General Insurance - insurance funds | 321 | |
| General Insurance - shareholders’ funds | 275 | |
| Life shareholder assets | 209 | |
| New Zealand total | 805 | |
| Total investments | 14,185 |
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FY17 RESULTS
DATA PACK
41
50 year history of major weather events
—
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Christchurch earthquakes,
6,000 $m Australia New Zealand Long Run Average Brisbane floods, Cyclone Yasi,
Melbourne hailstorm
5,000
4,000
Brisbane flood,
Cyclone Tracy Newcastle Kaikoura
3,000 earthquake Melbourne & earthquake
Perth hailstorms,
Christchurch
Sydney
earthquakes
Brisbane hailstorm
2,000 hailstorm
Cyclone
Debbie
1,000
-
1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017
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Adjusted for inflation, population growth and market share
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FY17 RESULTS
DATA PACK
42
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Reinsurance program – natural hazards
—
6.9b
6.1b
2.5b
500m
Original cover Reinstatement Reinstatement Reinstatement
250m
200m Dropdown aggregate
Dropdown aggregate
50m
Retention * Natural hazards protection
Event 1 2 3 4 5
Relates to Australian events.
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FY17 RESULTS
DATA PACK
43
Reinsurance program – dropdown aggregate
—
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250m
50m xs
200m xs 50m
200m 100m xs 100m xs
150m xs 200m 150m xs 300m
150m
100m xs 100m xs
50m xs 200m 50m xs 300m
50m
` Natural hazards protection
300m xs 475m
Event 1 2 3 4 5
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- Relates to Australian events.
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FY17 RESULTS
DATA PACK
44
Underlying and General Insurance ITR reported ITR
—
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18.6%
17.0%
14.8%
14.6%
13.9%
13.4%
13.6% 14.7%
12.8%
12.5%
14.0% 12.0%
12%
11.0%
11.2%
10.1% 11.0%
9.9% 10.3%
9.4%
7.8%
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1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17
Reported ITR Underlying ITR
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FY17 RESULTS
DATA PACK
45
Shareholder metrics
EPS (basic)
EPS (diluted)
—
- Convertible securities include SUNPC, SUNPE, SUNPF
| $0.57 $0.89 $0.81 $0.84 FY14 FY15 FY16 FY17 |
$0.57 $0.89 $0.81 $0.84 FY14 FY15 FY16 FY17 |
$0.57 $0.87 $0.80 $0.83 FY14 FY15 FY16 FY17 |
$0.57 $0.87 $0.80 $0.83 FY14 FY15 FY16 FY17 |
$0.57 $0.87 $0.80 $0.83 FY14 FY15 FY16 FY17 |
$0.57 $0.87 $0.80 $0.83 FY14 FY15 FY16 FY17 |
|---|---|---|---|---|---|
| FY14 | FY15 | FY16 | FY17 | ||
| Numerator ($m) | |||||
| Earnings (EPS basic) | 730 | 1,133 | 1,038 | 1,075 | |
| Interest expense on convertible securities(net of tax) | - | 45 | 43 | 42 | |
| Earnings(EPS diluted) | 730 | 1,178 | 1,081 | 1,117 | |
| Denominator (m) | |||||
| Weighted average ordinary shares (EPS basic) | 1,278 | 1,279 | 1,279 | 1,282 | |
| Effect of conversion of convertible securities | - | 72 | 80 | 71 | |
| Weighted average ordinaryshares(EPS diluted) | 1,278 | 1,351 | 1,358 | 1,353 |
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FY17 RESULTS
DATA PACK
46
Shareholder metrics
Cash EPS (basic)
Cash EPS (diluted)
—
- Convertible securities include SUNPC, SUNPE, SUNPF
| $1.02 $0.93 $0.85 $0.89 FY14 FY15 FY16 FY17 |
$1.02 $0.93 $0.85 $0.89 FY14 FY15 FY16 FY17 |
$1.01 $0.92 $0.83 $0.88 FY14 FY15 FY16 FY17 |
$1.01 $0.92 $0.83 $0.88 FY14 FY15 FY16 FY17 |
$1.01 $0.92 $0.83 $0.88 FY14 FY15 FY16 FY17 |
$1.01 $0.92 $0.83 $0.88 FY14 FY15 FY16 FY17 |
|---|---|---|---|---|---|
| FY14 | FY15 | FY16 | FY17 | ||
| Numerator ($m) | |||||
| Earnings (EPS basic) | 1,304 | 1,191 | 1,089 | 1,145 | |
| Interest expense on convertible securities(net of tax) | 31 | 45 | 43 | 42 | |
| Earnings(EPS diluted) | 1,335 | 1,236 | 1,132 | 1,187 | |
| Denominator (m) | |||||
| Weighted average ordinary shares (EPS basic) | 1,278 | 1,279 | 1,279 | 1,282 | |
| Effect of conversion of convertible securities | 47 | 72 | 80 | 71 | |
| Weighted average ordinaryshares(EPS diluted) | 1,325 | 1,351 | 1,358 | 1,353 |
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DATA PACK
47
Shareholder metrics
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Cash ROE
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—
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9.4%
8.9%
8.2% 8.4%
FY14 FY15 FY16 FY17
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| FY14 | FY15 | FY16 | FY17 | |
|---|---|---|---|---|
| Cash ROE | ||||
| Earnings ($m) | 1,304 | 1,191 | 1,089 | 1,145 |
| Average shareholders’ equity ($m) | 13,868 | 13,345 | 13,282 | 13,631 |
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FY17 RESULTS
DATA PACK
48
Shareholder overview
—
Source: Orient Capital, 23 June 2017
SUN shareholders by type
SUN shareholders by geography
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1%
2% [1%]
4%
6%
25%
11%
41%
75%
34%
■ Domestic Institutions ■ Australia (Institutions & Retail)
■ Retail Investors ■ United States ■ Japan
■ International Institutions ■ United Kingdom ■ Rest of Europe
■ Hong Kong ■ Rest of World
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FY17 RESULTS
DATA PACK
49
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Financial Results for the full year ended 30 June 2017 —
Insurance (Australia)
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Insurance (Australia)
Insurance (Australia) NPAT
—
– NPAT up 29.6% to $723 million – GWP growth of 3.9% – Reported ITR of 12.9% – Natural hazards $655 million – Reserve releases of $301 million – Underlying investment yield of 2.5%
| FY17 ($m) FY16 ($m) Change (%) General Insurance Gross written premium 8,111 7,803 3.9 Net earned premium 7,072 6,893 2.6 Net incurred claims (4,923) (5,099) (3.5) Operating expenses (1,442) (1,411) 2.2 Investment income - insurance funds 205 236 (13.1) Insurance trading result 912 619 47.3 Other income 65 71 (8.5) Income tax (288) (200) 44.0 General Insurance profit after tax 689 490 40.6 Life Insurance profit after tax 34 68 (50.0) Insurance NPAT 723 558 29.6 |
|
|---|---|
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FY17 RESULTS
INSURANCE (AUSTRALIA)
51
General Insurance General Insurance Gross Gross Written Premium
—
Total GWP of $8.1 billion
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Portfolio by product Portfolio by geography
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4% 2% [4%]
5%
17% 8% 26%
32%
21%
19%
34%
28%
■ Motor ■ CTP ■ Queensland ■ Western Australia
■ Home ■ Workers ■ New South Wales ■ South Australia
■ Commercial compensation & other ■ Victoria ■ Tasmania
■ Other
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FY17 RESULTS
INSURANCE (AUSTRALIA)
52
General Insurance key ratios
—
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Loss ratio Total operating expenses ratio
74.8%
73.2%
72.4%
20.8%
66.8% 20.1% 20.3% 20.5%
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
Combined operating ratio Reported ITR
13.8%
94.9% 12.0%
94.0%
92.9%
9.3%
8.7%
87.1%
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
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FY17 RESULTS
INSURANCE (AUSTRALIA)
53
General Insurance General Insurance reserve releases
—
- Conservative assumptions and proactive long-tail claims management
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$348m
4.4% $301m
3.7%
Long-term
assumption
1.5% of Group NEP
FY16 FY17
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FY17 RESULTS
INSURANCE (AUSTRALIA)
54
Natural hazard
events
—
(1) Events with a gross cost over $5 million, shown net of recoveries from reinsurance.016
| Date Event Net costs ($m) Jul 2016 Southern winds 9 Sep 2016 South Australian and Victorian flooding 8 Sep 2016 Southern wind and rain 14 Oct 2016 Victorian wind storm 18 Oct 2016 Young and Parkes hail 7 Nov 2016 South Australian and Victorian storms 104 Nov 2016 Maryborough storms 6 Nov 2016 Kaikoura earthquake (NZ) 28 Nov 2016 Gympie hail 10 Dec 2016 Ipswich hail 9 Dec 2016 South Australian and Victorian storms 74 Feb 2017 Western Australian rain 6 Feb 2017 Northern Sydney hail 110 Mar 2017 New South Wales, Queensland and Victorian rain 20 Mar 2017 Tropical Cyclone Debbie - Apr 2017 Ocean Grove rain - Apr 2017 Geelongrain - Total events over$5 million(1) 423 Other natural hazards attritional claims 232 Total natural hazards 655 Less: allowance for natural hazards (600) Natural hazards costs above allowance 55 |
|
|---|---|
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FY17 RESULTS
INSURANCE (AUSTRALIA)
55
General Insurance
investment asset allocation
—
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Insurance funds Fixed income credit quality Shareholders’ funds
$9.2 billion $2.7 billion
4%
3%
6% 5% 5%
16% 9%
26%
12%
44%
23%
47%
23%
60%
17%
■ Cash and short-term ■ Semi-Government ■ AAA ■ A ■ Cash and short-term ■ Equities
deposits bonds ■ AA ■ BBB deposits ■ Infrastructure
■ Inflation-linked bonds ■ Commonwealth ■ Australia interest- and property
■ Corporate bonds Government bonds bearing securities ■ Alternative
■ Global interest- investments
bearing securities
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- The total notional exposure to inflation-linked securities, after accounting for both physical bonds and derivatives, in the insurance funds is $2.4 billion.
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FY17 RESULTS
INSURANCE (AUSTRALIA)
56
Personal lines market share
—
Source: Roy Morgan, June 2017 November 2016
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NT
27% 29%
QLD
WA
32% 33%
15% 15%
SA
15% 15% NSW
30% 26%
VIC
33%
29%
Motor Home
TAS
39% 35%
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FY17 RESULTS
INSURANCE (AUSTRALIA)
57
Personal lines market share
—
Source: Roy Morgan, June 2017
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Total market
$19.2 billion
25%
28%
4%
2%
4%
Home Motor
$9.3 billion 7% $9.9 billion
30%
25%
27% 26% 29%
4%
4%
2%
2%
2%
7% 7%
28%
6% 31%
■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Peer 5 ■ Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
58
Commercial lines market share
—
Source: Latest Suncorp estimates
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Total market
$12.9 billion
12%
30%
18%
7%
20%
13%
■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
59
Personal Injury market share
—
- CTP source: Latest Suncorp estimates Includes QLD, NSW, ACT & SA schemes
** Workers compensation source: Workcover WA, November 2016 Includes WA only
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CTP * Workers compensation
$4.3 billion $1.0 billion
7%
13%
24%
20% 35%
23%
5%
20% 17%
18% 18%
■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
60
CTP market share
—
-
Source: State scheme regulators * as at May 2017
-
** as at March 2017
-
*** as at June 2017
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QLD
NSW
$1.0 billion 8%
$2.6 billion
22%
28%
17%
48%
27% 31% 19%
ACT SA*
$171 million $364 million
30%
44%
56%
70%
■ Suncorp ■ Peer 1 ■ Peer 2 ■ Peer 3 ■ Peer 4 ■ Rest of market
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FY17 RESULTS
INSURANCE (AUSTRALIA)
61
Life Insurance
NPAT
—
-
Stable underlying profits
-
Subdued new business volumes reflecting challenging market conditions
-
Optimisation program to deliver improved profitability
-
Strategic review continuing
| FY17 ($m) |
FY16 ($m) |
Change (%) |
|
|---|---|---|---|
| Planned profit margin release | 19 | 15 | 26.7 |
| Experience Other and investments (1) |
(6) 40 |
19 19 |
n/a 110.5 |
| Underlying profit after tax | 53 | 53 | - |
| Market adjustments | (19) | 15 | n/a |
| Life Insurance NPAT | 34 | 68 | (50.0) |
| In-force annual premium Total new business |
806 62 |
813 74 |
(0.9) (16.2) |
- (1) Other includes benefits from a group profit share arrangement in prior years and positive experience from previous repricing
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INSURANCE (AUSTRALIA)
62
Life Insurance in-force premium
—
Total in-force premium of $806 million
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Premium by product Premium by geography Premium by channel
7% 8% 10% 8%
12%
34%
27%
48%
19%
82%
18%
27%
■ Direct via General Insurance brands
■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia
■ Trauma ■ Group ■ New South Wales ■ Other ■ Advised ■ Group & other
■ Victoria & Tasmania
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FY17 RESULTS
INSURANCE (AUSTRALIA)
63
Life Insurance new business
—
Total new business of $62 million
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New business by product New business by geography New business by channel
5%
7%
8%
22%
12%
29%
24%
54%
25%
14% 73%
27%
■ Direct via General Insurance brands
■ Term & TPD ■ Income protection ■ Queensland ■ Western Australia
■ Trauma ■ Other ■ New South Wales ■ Other ■ Advised ■ Group & other
■ Victoria & Tasmania
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FY17 RESULTS
INSURANCE (AUSTRALIA)
64
Life Insurance key metrics ($m) —
– Higher planned profit margins and reduced experience profits reflect assumption changes in June 2016
- 2H17 uplift due to allocated costs associated with the optimisation program.
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Planned margins Experience
10
9
10
9
8
7
(2) (4)
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
In-force premium Operating expenses
813
806
92
801
798
82 83 82
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
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FY17 RESULTS
INSURANCE (AUSTRALIA)
65
Click to edit Master title styleLife Insurance
—
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Life Insurance meets a core customer need
Health Travel
Life
Insurance Insurance
Insurance
Commercial Professional
Super Indemnity
Life Insurance is a core component of the Suncorp financial services
Marketplace, however, currently delivers sub-optimal ROE.
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Key Initiatives Outcomes
Optimise efficiencies in claims
Improved customer experience
and expense management
Streamline processes under
Enhanced competitiveness
new operating model
Improve customer connectivity Improved shareholder returns
Product and claims innovation Reduced earnings volatility
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FY17 RESULTS
INSURANCE (AUSTRALIA)
66
Life Insurance Life Insurance market market share share
—
Individual risk
Source: NMG Consulting, March 2017
In-force portfolio includes IFA, Bank and Direct business
In-force
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14%
$9.7 billion 14% 13% 13%
11%
11%
9%
8%
7%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 SUN Peer 7 Others
21%
New business
15%
13%
$1.0 billion 12%
11%
10%
7%
7%
4%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 SUN Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
67
Life Insurance Life Insurance market share market share —
Share by distribution channel
Source: NMG Consulting, March 2017
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33%
29%
Direct
$1.1 billion
7% 8%
6% 6%
4% 4%
3%
Peer 1 Peer 2 SUN Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Others
31%
Bank
$2.3 billion
19%
18% 18%
4% 4% 2% 3%
1%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 SUN Peer 6 Peer 7 Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
68
Life Insurance
Life Insurance market share market share —
Share by distribution channel
Source: NMG Consulting, March 2017
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IFA
20%
$6.3 billion
14%
13%
11%
10% 9%
8%
7% 8%
Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer 5 Peer 6 Peer 7 Others
24%
22%
Group
$7.0 billion
11%
10%
9% 9% 8%
6%
1%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 SUN Others
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FY17 RESULTS
INSURANCE (AUSTRALIA)
69
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Financial Results for the full year ended 30 June 2017 —
Banking & Wealth
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Banking & Wealth
Banking & Wealth NPAT
—
– Total lending up 1.9% – Annualised second half lending growth of 4.2% – Improved credit quality – Stable funding profile – Strong capital & balance sheet – Completion of Super Simplification Program
| FY17 ($m) FY16 ($m) Change (%) Banking Net interest income 1,131 1,129 0.2 Net non-interest income 76 88 (13.6) Operating expenses (636) (639) (0.5) Profit before impairment losses on loans and advances 571 578 (1.2) Impairment losses on loans and advances (7) (16) (56.3) Income tax (168) (169) (0.6) Banking profit after tax 396 393 0.8 Wealth profit after tax 4 25 (84.0) Banking & Wealth NPAT 400 418 (4.3) |
|
|---|---|
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FY17 RESULTS
BANKING & WEALTH
71
Total lending portfolio
—
Lending assets by portfolio Lending assets by geography
Total assets of $55.3 billion
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<1%
4%
8%
7%
10%
10%
53%
26%
81%
■ Housing ■ Agribusiness ■ Queensland ■ Western Australia
■ Commercial (SME) ■ Consumer ■ New South Wales ■ South Australia
■ Victoria and other
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FY17 RESULTS
BANKING & WEALTH
72
Banking key ratios
—
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Lending growth (annualised) Net interest margin Cost to income ratio
(interest-earning assets)
57.4%
4.55% 1.85% 1.86% 1.83%
3.93%
3.65%
1.72%
53.4%
1.92% 52.5% 52.7%
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
Impairment losses to gross loans Return on Common Equity Tier 1 Deposit to loan ratio
and advances (annualised)
66.7% 66.6%
13.2% 13.0%
12.2% 65.8% 65.8%
0.25%
8.2%
0.11%
0.03%
0.01%
FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17
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FY17 RESULTS
BANKING & WEALTH
73
Home lending portfolio
—
Total assets of $44.8 billion
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Portfolio by borrower type Portfolio by geography Portfolio by channel
4%
8%
30%
34%
11%
49%
66%
70%
28%
■ Owner occupied ■ Investor ■ Queensland ■ Western Australia ■ Direct ■ Intermediaries
■ New South Wales ■ South Australia
■ Victoria and other
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FY17 RESULTS
BANKING & WEALTH
74
Home lending origination by repayment type
—
-
Continued focus on a high quality lending portfolio including serviceability, credit quality and loan to value ratios
-
Investor year-on-year lending growth of 4% well within the supervisory measure of 10%
-
New business interest-only loan repayment type of 28% within supervisory measure of 30%
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18%
29% 30% 28%
40%
43%
82%
71% 70% 72%
60%
57%
1H15 2H15 1H16 2H16 1H17 2H17
Principal & Interest Interest Only
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FY17 RESULTS
BANKING & WEALTH
75
Commercial (SME) portfolio
—
Total assets of $5.7 billion
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Portfolio by industry Portfolio by geography Portfolio by exposure size
2%
12% 12% 9%
5%
32%
7% 15% 21%
51%
20%
73%
15% 17%
9%
■ Property investment ■ Retail ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million
■ Hospitality & accommodation ■ Other ■ New South Wales ■ $5 - $10 million ■ $25 - $50 million
■ Construction & development ■ >$50 million
■ Services (including professional services)
■ Manufacturing & mining
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FY17 RESULTS
BANKING & WEALTH
76
Agribusiness portfolio
—
Total assets of $4.5 billion
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Portfolio by industry
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Portfolio by geography
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Portfolio by exposure size
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5%
10%
15%
3%
3% 34% 25%
49%
29%
9%
61%
7%
21%
29%
■ Beef ■ Sugar ■ Queensland ■ Other ■ <$5 million ■ $10 - $25 million
■ Grain & mixed farming ■ Fruit ■ New South Wales ■ $5 - $10 million ■ $25 - $50 million
■ Sheep & mixed livestock ■ Other
■ Cotton
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FY17 RESULTS
BANKING & WEALTH
77
Credit quality
—
-
Continued focus on credit quality and risk management
-
Impairment losses 0.01% of gross loans and advances
-
Low loan balances in resources and inner-city apartment development sectors
-
Favourable agricultural conditions and improved commodity prices over the period
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333
Gross impaired 99
loans by segment 218 206
($m) 173
62
62
60
208
125
117
79
26 31 27 34
FY14 FY15 FY16 FY17
■ Retail ■ Agribusiness ■ Commercial (SME)
0.93%
0.85%
0.79% 0.78% 0.79%
Home lending
credit quality
(% gross home loans)
0.08%
0.02%
FY13 FY14 FY15 FY16 FY17
Past due loans Impaired assets Loss rate
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FY17 RESULTS
BANKING & WEALTH
78
Loan to value ratio
(LVR)
—
Total home lending assets of $44.8 billion
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5% 5%
17% 15% 12% 12% 9% 7%
Home lending 22% 21%
22% 22%
24% 22%
assets by LVR 22% 23%
61% 62% 64% 66% 69% 71% 73% 74%
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17
■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+
5% 3% 2% 1% 3% 3%
17% 10% 10% 13%
Home lending new 26% 12% 18% 17%
12%
business by LVR 8%
83% 87% 88% 86% 79% 80%
71%
66%
1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17
■ 0.00 – 80.00% ■ 80.01% - 90.00% ■ 90.01%+
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FY17 RESULTS
BANKING & WEALTH
79
Credit quality
—
Relativity to peers
Source: Latest peer financial reports
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Impairment losses
to gross loans 0.26%
0.17%
0.16%
0.13% 0.15%
0.10%
0.01%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
Net impaired
0.34%
0.32%
loans to gross 0.30%
loans
0.24%
0.23%
0.22%
0.19%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
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FY17 RESULTS
BANKING & WEALTH
80
Collective provision
($m)
—
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126
120
15
108
12
96
25
25
111
108
83
71
FY14 FY15 FY16 FY17
■ Modelled collective provision ■ Management overlays
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FY17 RESULTS
BANKING & WEALTH
81
Portfolio credit quality
—
Commercial (SME) portfolio
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6,000 5,772 5,729 15.00%
5,531
5,353 5,356
13.00%
5,000
11.00%
4,000
9.00%
3,000 7.00%
5.00%
2,000
3.00%
1,000
1.00%
- -1.00%
FY13 FY14 FY15 FY16 FY17
Commercial portfolio ($m)
Gross impaired assets/Total portfolio (%)
0.92% 0.88% 1.16% 1.16% 1.05%
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Agribusiness portfolio
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5,000 12.00%
4,624
4,311 4,400 4,360 4,497
10.00%
4,000
8.00%
3,000
6.00%
2,000
4.00%
1,000
2.00%
- 0.00%
FY13 FY14 FY15 FY16 FY17
Agribusiness portfolio ($m)
Gross impaired assets/Total portfolio (%)
4.50%
3.22%
2.83% 2.68%
1.76%
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FY17 RESULTS
BANKING & WEALTH
82
Long-term funding profile ($m)
—
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1,000
900
800
700
600
500
400
300
200
100
0
Covered bond Domestic senior unsecured Offshore senior unsecured
Aug 17 Dec 17 Apr 18 Aug 18 Dec 18 Apr 19 Aug 19 Dec 19 Apr 20 Aug 20 Dec 20 Apr 21 Aug 21 Dec 21 Apr 22 Aug 22 Dec 22 Apr 23 Aug 23 Dec 23 Apr 24 Aug 24 Dec 24 Apr 25 Aug 25 Dec 25 Apr 26 Aug 26
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FY17 RESULTS
BANKING & WEALTH
83
Liquid assets and Liquidity Coverage Ratio
—
Components of liquid assets ($b)
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12.1 12.2
11.4
4.3 4.3
4.4
3.8 2.5
5.0
4.1 4.5
2.8
FY15 FY16 FY17
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■ Cash, Government, Semi-Government ■ Bank, NCD, Bills, RMBS, Supra, Covered Bonds ■ Internal RMBS
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FY17 RESULTS
Components of LCR* ($b)
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LCR 130% LCR 123%
1.53
1.90
3.80
4.20
6.80
6.35
4.53
4.05
FY16 FY17
■ HQLA assets ■ Required LCR qualifying assets
■ CLF ■ Buffer
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- based off AUD LCR
BANKING & WEALTH
84
Banking market share
—
Retail banking market share and Suncorp footprint
Market share source: Roy Morgan, June 2017 Footprint as at June 2017
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NT 1.6%
6 QLD 8.1%
107 11 482
WA 0.6%
1 1 94
SA 0.4%
1 1 85
NSW & ACT 1.0%
35 6 205
VIC 0.5%
7 2 395
Store Business centre ATM TAS 0.9%
1 26
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FY17 RESULTS
BANKING & WEALTH
85
Banking market share
—
Source: APRA, May 2017
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26%
24%
Mortgage lending
16% 15%
12%
3% 2%
2%
ANZ CBA NAB WBC SUN BEN BOQ Others
Business lending 22% 22%
19%
18%
15%
1% 2% 1%
ANZ CBA NAB WBC SUN BEN BOQ Others
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FY17 RESULTS
BANKING & WEALTH
86
Funds under
management and administration ($m)
—
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397
(582)
206
7,490 7,511
Balance Inflows Outflows Investment Balance
Jun-16 income and Jun-17
other
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FY17 RESULTS
BANKING & WEALTH
87
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Financial Results for the full year ended 30 June 2017 —
New Zealand
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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New Zealand
New Zealand
NPAT
—
-
GWP grew 6.3%, driven by Home and Motor
-
Kaikoura earthquake and reinsurance reinstatement net NPAT impact of NZ$36 million
-
Motor claims cost inflation across the industry
| FY17 (NZ$m) FY16 (NZ$m) Change (%) General Insurance Gross written premium 1,424 1,339 6.3 Net earned premium 1,163 1,139 2.1 Net incurred claims (735) (612) 20.1 Operating expenses (387) (369) 4.9 Investment income - insurance funds 14 20 (30.0) Insurance trading result 55 178 (69.1) Other income 10 24 (58.3) Income tax (18) (55) (67.3) General Insurance profit after tax 47 147 (68.0) Life Insurance profit after tax 40 53 (24.5) New Zealand NPAT 87 200 (56.5) |
|
|---|---|
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FY17 RESULTS
NEW ZEALAND
89
General Insurance Gross Written Premium
—
Total GWP of NZ$1.4 billion
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Portfolio by product Portfolio by channel
3%
24% 24%
28%
40%
33%
48%
■ Motor ■ Commercial ■ Direct ■ Strategic partners &
■ Home ■ Other ■ Brokers financial intermediaries
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FY17 RESULTS
NEW ZEALAND
90
General Insurance key ratios
—
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Loss ratio Total operating expenses ratio
63.5% 62.9%
53.9% 53.6% 33.4%
33.1%
32.6%
32.3%
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
Combined operating ratio Reported ITR
96.9% 96.0%
16.5%
14.8%
86.5% 85.9%
3.8% 5.7%
1H16 2H16 1H17 2H17
1H16 2H16 1H17 2H17
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FY17 RESULTS
NEW ZEALAND
9191
Natural hazard
events
—
(1) Events with a gross cost over $5 million, shown net of recoveries from reinsurance excluding the natural hazards aggregate cover.2016
| Date Event Net costs (NZ$m) Nov 16 Kaikoura earthquake 20 Mar 17 Widespread North Island flooding 17 Apr 17 NZ Cyclone Debbie 8 Total events over $5 million(1) 45 Other natural hazards attritional claims 27 Suncorp Group Natural Hazard Aggregate Protection (16) Total natural hazards 56 Less: allowance for natural hazards (21) Natural hazards costs above allowance 35 |
|
|---|---|
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FY17 RESULTS
NEW ZEALAND
92
General Insurance
investment asset allocation
—
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Insurance funds Fixed income credit quality Shareholders’ funds
NZ$436 million NZ$374 million
2% 3%
5% 12%
10%
29%
26% 35%
66% 53%
59%
■ Cash and short-term ■ Local government ■ AAA ■ A ■ Cash and short-term deposits
deposits bonds ■ AA ■ BBB ■ Interest-bearing securities
■ Corporate bonds ■ Government bonds ■ Equities
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FY17 RESULTS
NEW ZEALAND
93
General Insurance
market share
—
Total market NZ$5.5 billion
Source: Insurance Council New Zealand, March 2017
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19% 20%
4%
6%
7%
44%
■Vero [■][AAI ] [■][Peer 1] ■Peer 2 ■Peer 3 ■Others
(Suncorp NZ) (Suncorp NZ)
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FY17 RESULTS
NEW ZEALAND
94
Life Insurance
NPAT
—
-
Strong in-force premium growth of 7.0%
-
Positive experience driven by strong policy retention
-
Underlying profit flat, with growth in margins offset by claims assumption strengthening
-
Market adjustments in FY16 reflected downward yield curve movements
| FY17 (NZ$m) FY16 (NZ$m) Change (%) Planned profit margin 31 32 (3.1) Experience 6 (1) n/a Other 5 11 (54.5) Underlying profit after tax 42 42 - Market adjustments (2) 11 n/a Life Insurance NPAT 40 53 (24.5) In-force annual premium 245 229 7.0 |
|
|---|---|
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FY17 RESULTS
NEW ZEALAND
95
Life Insurance in-force premium
—
Total in-force premium of NZ$245 million
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Premium by product Premium by channel
3% 3%
6%
16%
19%
52%
20%
81%
■ Term & TPD ■ Other ■ Direct ■ Group & other
■ Trauma ■ Group ■ Advised
■ Income protection
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FY17 RESULTS
NEW ZEALAND
96
Life Insurance new business
—
Total new business of NZ$26 million
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New business by product
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New business by channel
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7% 7%
17%
17%
58%
18%
76%
■ Term & TPD ■ Income protection ■ Direct ■ Group & other
■ Trauma ■ Group ■ Advised
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FY17 RESULTS
NEW ZEALAND
97
Life Insurance key metrics (NZ$m) —
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Planned margins Experience
16 16 15 16
5
3
1
(4)
1H16 2H16 1H17 2H17
1H16 2H16 1H17 2H17
In-force premium Operating expenses
245
240
229
18 16 17 17
222
1H16 2H16 1H17 2H17 1H16 2H16 1H17 2H17
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FY17 RESULTS
NEW ZEALAND
9898
Life Insurance market share
—
Individual risk
Source: Melville Jessup Weaver, March 2017 Excludes Group policies
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27%
In-force
NZ$2.2 billion 19%
14%
11% 11%
10%
8%
Peer 1 Peer 2 Peer 3 SUN Peer 4 Peer 5 Others
25%
24%
New business
NZ$49 million
15% 15%
9%
9%
3%
Peer 1 Peer 2 Peer 3 Peer 4 SUN Peer 5 Others
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FY17 RESULTS
NEW ZEALAND
99
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Financial Results for the full year ended 30 June 2017
—
Economy
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Economy
Economic
Fundamentals
—
-
Supportive fundamentals for both Australia and Queensland
-
Australian economy registering broad based, moderate growth
-
Queensland benefiting from a lift in population growth while Moody’s has lifted the state’s rating outlook
| Australia | Queensland | Data | |
|---|---|---|---|
| Population growth | 1.5% | 1.5% | Dec-16, annual |
| Economic growth | 1.7% | 2.0% | AUS: Mar-17 annual QLD: 2015-16 annual |
| Unemployment rate | 5.6% | 6.3% | Jun-17, trend |
| Inflation | 2.1% | 1.8% | Mar-17, annual |
| Budget position | $29bn deficit (1.6% of GDP) |
$0.1bn surplus (budget balance) |
2017-18 estimate |
| Credit rating (S&P / Moody’s) |
(AAA neg outlook / Aaa stable) |
(AA+ stable / Aa1 stable) |
Jul-17 |
“The past year has been characterised by impressive profit growth for companies in Australia, particularly miners. This has added to a number of existing positives including supportive interest rates, near decade high capacity utilisation, and improving business confidence”
Deloitte Access Economics, Business Outlook, June 2017
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FY17 RESULTS
ECONOMY
101
Growth Outlook
—
-
Recent quarters have seen domestic demand and income accelerate
-
Economic growth is forecast to return to the long run trend of 3%
-
Queensland is projected to lead growth among the states
“Queensland has a lovely portfolio of sectors – and as some lose steam, others are taking up the slack”
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State prospects
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GDP outlook
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4.0
Annual % Change
3.5
3.0
2.5 3.2%
3.3%
2.0
2.1%
1.5 2.1%
2.9%
1.0
ACT: 2.7%
0.5
3.0%
0.0
2012 2013 2014 2015 2016 2017f 2018f 2019f 2020f
2.2%
Gross State Product annual average forecast FY18-FY20
Source: ABS, Suncorp, Deloitte Access Economics Source: Deloitte Access Economics, June 2017
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Gross State Product annual average forecast FY18-FY20 Source: Deloitte Access Economics, June 2017
Deloitte Access Economics, September 2016
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FY17 RESULTS
ECONOMY
102
Monetary policy remains highly supportive
—
-
With the cash rate well below ‘neutral’, the RBA is expected to begin gradually lifting rates in 2018
-
Meanwhile, low rates continue to support lending and building activity
-
A ‘soft landing’ for homebuilding is anticipated
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8
Inflation and %
Source: ABS, RBA, Bloomberg
interest rates 7
6
5
4
RBA ‘Neutral’ Cash Rate Estimate
3
Inflation
Target Range 2
1
Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17
Std Var Mortgage Rate RBA Cash Rate Headline Inflation Rate
125 40
$bn per annum $bn per month
Mortgage and 115 35
building New Mortgage Loan Approvals (RHS)
approvals 105 30
95 Building Approvals 25
Residential and Non-Residential (LHS)
85 20
Source: Bloomberg, ABS
75 15
May-12 May-13 May-14 May-15 May-16 May-17
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FY17 RESULTS
ECONOMY
103
Housing and household
risks contained
—
-
Elevated debt, areas of strong price growth and pockets of oversupply represent risks
-
Macro-prudential measures are addressing these risks while the RBA observes that household financial stress remains contained and low rates are assisting debt servicing
-
We anticipate a cooling of house price growth nationally while Queensland will continue to benefit from an affordability advantage
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House prices 1,100
Median house price ($ '000)
1,000
900
800
700
600
500
400
Source: Bloomberg, ABS, RP Data
300
Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17
Sydney Melbourne Brisbane
195 14
% %
190 13
Household
debt and debt 185 Interest payments to disposable income (RHS) 12
servicing
180 11
175 10
170 9
165 8
Debt to disposable income (LHS) Source: RBA
160 7
Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17
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FY17 RESULTS
ECONOMY
104
Labour market has clearly strengthened
—
-
Recent months have seen a clear improvement in job creation, accompanied by lower unemployment
-
Business sentiment is also relatively upbeat
Labour market
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80 6.4
Change Per Month ('000)
6.2
60
6.0
40
5.8
20
5.6
0
5.4
-20
5.2
Source: Bloomberg
-40 5.0
Jun-2012 Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2017
Employment Unemployment Rate
15
Index
Business
Business Survey
sentiment 10
5
0
-5
Source: NAB, Bloomberg
Average of current conditions and future confidence series
-10
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17
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FY17 RESULTS
ECONOMY
105
Favourable external
sector
—
-
Commodity prices have lifted, assisted by improved Chinese industrial activity
-
Australia now consistently posting a trade surplus
-
Strong export growth evident in tourism and education services
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Commodity prices 170 $US price
150
130 Iron Ore
110
Thermal Coal
90
70
50
WTI Oil
Source: Bloomberg
30
Jul-12 Jul-13 Jul-14 Jul-15 Jul-16 Jul-17
34 6
$bn $bn
4
International trade 32
2
30
0
28
-2
26
-4
Source: Bloomberg
24 -6
May-12 May-13 May-14 May-15 May-16 May-17
Trade Balance (RHS) Imports (LHS) Exports (LHS)
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FY17 RESULTS
ECONOMY
106
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Financial Results for the full year ended 30 June 2017
—
Glossary
DATA PACK RELEASE DATE 3 AUGUST 2017 SUNCORP GROUP LIMITED ABN 66 145 290 124
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Glossary
Glossary
—
| Acquisition expense ratio |
Acquisition expenses expressed as a percentage of net earned premium |
| ADI | Authorised Deposit-taking Institution |
| The value of annuity obligations are determined by discounting future obligations into | |
| today’s dollars using risk-free rates. The value of such obligations fluctuates as | |
| Annuities market | market referenced discount rates change. The value of assets backing annuity |
| adjustments | obligations also fluctuates with investment markets. The net impact of both of these |
| market-driven valuation changes are removed from the Life Insurance 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 profit or loss on divestments and their tax effect |
| Basic: cash earnings divided by the weighted average number of ordinary shares | |
| Cash earnings per share |
(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 | Cash earnings divided by average equity attributable to owners of the Company. |
| average | Averages are based on monthly balances over the period. The ratio is annualised for |
| shareholders' equity | half years |
| 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 |
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FY17 RESULTS
108
Glossary
—
| Common Equity | Common Equity Tier 1 Capital comprises accounting equity plus adjustments for |
| Tier 1 (CET1) | intangible assets and regulatory reserves |
| Common Equity | Common Equity Tier 1 divided by the Prescribed Capital Amount for Life and General |
| Tier 1 Ratio | Insurance, or total risk-weighted assets for the Bank |
| Cost to income ratio | Operating expenses of the Banking business divided by total income from Banking activities |
| Credit risk-weighted | Total of the carrying value of each asset class multiplied by their assigned risk |
| assets | weighting, as defined by APRA |
| Deferred acquisition costs |
The portion of acquisition costs not yet expensed on the basis that it 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 |
| Diluted shares is based on the weighted average number of ordinary shares | |
| Diluted 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 is equivalent to the sum of the adjusted net worth and the net | |
| Embedded Value | present value of all future cashflows distributable to the shareholder that are |
| expected to arise from in-force business, together with the value of franking credits | |
| Equity reserve for credit losses |
The equity reserve for credit losses represents the difference between the collective provision for impairment and the estimate of credit losses across the credit cycle based on guidance provided by APRA |
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FY17 RESULTS
109
Glossary
—
| Fire service levies (FSL) |
The expense levied on premiums for insurance policies with a fire risk component, which is recoverable from insurance companies by the applicable State Government. Fire service levies were established to cover corresponding fire brigade charges |
| Funds under management and administration |
Funds where the Wealth Australia business receives a fee for the administration and management of an asset portfolio |
| General Insurance – Commercial |
Commercial products consist of commercial motor insurance, commercial property insurance, marine insurance, industrial special risk insurance, and public liability and professional indemnity insurance |
| General Insurance – | Consumer insurance products consist of home and contents insurance, motor |
| Consumer | insurance, boat insurance, and travel insurance |
| Gross non- performing loans |
Gross impaired assets plus past due loans |
| Impairment losses to gross loans and advances |
Impairment losses on loans and advances divided by gross loans and advances. The ratio is annualised for half years |
| Insurance Trading Result |
Underwriting result plus investment income on assets backing technical reserves |
| Insurance Trading Ratio (ITR) |
The insurance trading result expressed as a percentage of net earned premium |
| Life insurance policyholders' interests |
Amounts due to an entity or person who owns a life insurance policy. This need not be the insured. This is distinct from shareholders’ interests |
| Life risk in-force | Total annualised statistical premium for all business in-force at the date |
| annual premiums | (including new business written during the reporting period) |
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FY17 RESULTS
110
Glossary
—
| Life risk new | |
| business annual | Total annualised statistical premium for policies issued during the reporting period |
| premiums | |
| Life underlying profit after tax |
Net profit after tax less market 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 |
| Net claims incurred expressed as a percentage of net earned premium. Net claims | |
| Loss ratio | 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 bearing liabilities |
| Net profit after tax | Net profit after tax attributable to owners of the Company derived in accordance with Australian Accounting Standards |
| Net tangible asset | Total equity less intangible assets divided by ordinary shares at the end of the period |
| backing per share | adjusted for treasury shares |
| Other underwriting expenses ratio |
Other underwriting expenses expressed as a percentage of net earned premium |
| Past due loans | Loans outstanding for more than 90 days |
| Payout ratio – cash | Ordinary shares (net of treasury shares) at the end of the period multiplied by the |
| earnings | ordinary dividend per share for the period divided by cash earnings |
| Payout ratio – net | Ordinary shares (net of treasury shares) at the end of the period multiplied by the |
| profit after tax | ordinary dividend per share for the period divided by profit after tax |
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FY17 RESULTS
111
Glossary
—
| Profit after tax from | The net profit after tax for the Insurance, Banking & Wealth and New Zealand |
| functions | business lines |
| Return on average | Net profit after tax divided by average equity attributable to owners of the Company. |
| shareholders' equity | Averages are based on monthly balances over the period. The ratio is annualised for |
| half years | |
| Return on average | Net profit after tax divided by average total assets. Averages are based on beginning |
| total assets | and end of period balances. The ratio is annualised for half years |
| Return on Common | Net profit after tax adjusted for dividends paid on capital notes divided by average |
| Equity Tier 1 | Common Equity Tier 1 Capital. Average Common Equity Tier 1 Capital is based on |
| the monthly balance of Common Equity Tier 1 Capital over the period. The ratio is | |
| annualised for half years | |
| Total capital ratio | Total capital divided by the Prescribed Capital Amount for Life and General |
| Insurance, or total risk-weighted assets for the Bank, as defined by APRA | |
| Total operating | Total operating expenses (acquisition and other underwriting expenses) expressed |
| expense ratio | as a percentage of net earned premium |
| Total risk-weighted | Bank credit risk-weighted assets, off-balance sheet positions and market risk capital |
| assets | charge and operational risk charge, as defined by APRA |
| Treasury shares | Ordinary shares of Suncorp Group Limited that are acquired by subsidiaries |
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FY17 RESULTS
112
Disclaimer
—
This report contains general information which is current as at 3 August 2017. 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).
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FY17 RESULTS
113
To see more, go online suncorpgroup.com.au
—
Registered office
Level 28, 266 George Street Brisbane, Qld Australia 4000 +61 7 3362 1222
Investor relations contacts
Andrew Dempster Ph: 02 8121 9206 Susan Troy Ph: 07 3135 3729 Sophie Bastin-Byrne Ph: 07 3135 4700 Gabrielle Gulliver Ph: 02 8121 1225 Leo Ling Ph: 02 8121 0305
Connect
[suncorpgroup.com.au]
- [@SuncorpGroup]
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