SUNCORP GROUP LIMITED — Interim / Quarterly Report 2013

Feb 19, 2013

Suncorp Group Limited and subsidiaries

ABN 66 145 290 124

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Consolidated interim financial report

for the half-year ended 31 December 2012

Contents Page	Contents Page
Directors’ report ............................................................................................................................................. 1
Lead auditor’s independence declaration ...................................................................................................... 6
Consolidated interim statement of comprehensive income ........................................................................... 7
Consolidated interim statement of financial position ..................................................................................... 8
Consolidated interim statement of changes in equity .................................................................................... 9
Consolidated interim statement of cash flows ............................................................................................. 10
1.	Reporting entity .................................................................................................................................... 11
2.	Basis of preparation ............................................................................................................................. 11
3.	Significant accounting policies ............................................................................................................. 11
4.	Use of estimates and judgements ....................................................................................................... 12
5.	Dividends ............................................................................................................................................. 12
6.	Segment reporting ............................................................................................................................... 13
7.	Banking – Specific disclosures ............................................................................................................ 15
7.1.	Banking – Provision for impairment on Banking loans, advances and other receivables ................... 15
7.2.	Banking – Short-term offshore debt securities .................................................................................... 16
7.3.	Banking – Securitisation liabilities........................................................................................................ 16
7.4.	Banking – Debt issues ......................................................................................................................... 17
Suncorp Group and Corporate disclosures ................................................................................................. 17
8.	Income tax expense ............................................................................................................................. 17
9.	Investment property ............................................................................................................................. 17
10.	Subordinated notes .............................................................................................................................. 18
11.	Preference shares................................................................................................................................ 18
12.	Share capital ........................................................................................................................................ 19
13.	Reserves .............................................................................................................................................. 20
14.	Changes in the composition of the Suncorp Group ............................................................................. 20
15.	Related parties ..................................................................................................................................... 20
16.	Contingent assets and liabilities .......................................................................................................... 20
17.	Subsequent events .............................................................................................................................. 21
Directors’ declaration ................................................................................................................................... 22
Independent auditor’s review report to the members of Suncorp Group Limited ........................................ 23

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Directors’ report

The directors present their report together with the consolidated interim financial report of Suncorp Group Limited (the Company) and its subsidiaries for the half-year ended 31 December 2012 and the review report thereon.

Directors

The directors of the Company at any time during or since the end of the half-year are:

Non-executive

Dr Zygmunt E Switkowski (Chairman) Director since 2010 Ilana R Atlas Director since 2011 William J Bartlett Director since 2010 Michael A Cameron Director since 2012 Audette E Exel Director since 2012 Ewoud J Kulk Director since 2010 Dr Douglas F McTaggart Director since 2012 Geoffrey T Ricketts Director since 2010 Executive Patrick J R Snowball Director since 2010 (Managing Director and Group CEO)

Review of operations

Overview of the Suncorp Group

Suncorp Group Limited and its subsidiaries (the Suncorp Group) recorded a consolidated net profit after tax attributable to owners of the Company of $574 million for the half-year ended 31 December 2012. This represents a 48% increase in profit from $389 million in the corresponding prior period. The increase in profit has been achieved as a result of operational efficiencies, favourable investment markets and a relatively benign period for natural hazards.

Financial position and capital structure

Net assets of the Suncorp Group increased to $14,289 million at 31 December 2012 from $14,127 million at 30 June 2012. The increase in net assets of $162 million arises from the profit for the half-year partially offset by the payment of the final and special dividends in respect of 30 June 2012.

The Suncorp Group has continued to strengthen its capital position with in excess of $1.2 billion identified as capital in excess of the Suncorp Group’s targets. Improvements to the Suncorp Group’s capital position were driven by increased retained earnings and capital initiatives during the half-year, which included the issuance of $560 million convertible preference shares. This was partially offset by subordinated notes redemptions of $407 million. The Suncorp Group places a priority on balance sheet management and ensuring the Suncorp Group is well positioned to deal with regulatory and economic uncertainty.

At 31 December 2012, the domestic General Insurance group’s minimum capital ratio multiple is 1.65 times the statutory minimum (June 2012: 1.57 times) and the Bank’s capital adequacy ratio is 12.5% (June 2012: 12.6%). The Suncorp Group is well positioned to meet the new Basel III and Life and General Insurance Capital (LAGIC) framework issued by the Australian Prudential Regulation Authority.

Impact of legislation and other external requirements

There continues to be significant legislative and regulatory reform which impacts the Suncorp Group's operations in Australia and New Zealand.

In Australia, the Australian Prudential Regulation Authority (APRA) has released the first tranche of proposals and draft prudential standards for the supervision of conglomerate groups (Level 3 framework) including the Suncorp Group. APRA expects the proposals will be finalised and come into effect on 1 January 2014.

APRA has finalised the prudential framework for implementing Basel III capital reforms in Australia which will be progressively applied from 1 January 2013 to Australian banks. The Basel III reforms incorporate higher minimum capital requirements and include additional capital buffers.

APRA has implemented new life and general insurance capital frameworks effective from 1 January 2013.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 1

Directors’ report (continued)

Review of operations (continued)

Impact of legislation and other external requirements (continued)

The Federal Government continues to work on establishing a proposed national catastrophic injury and disability insurance scheme. The new national disability insurance scheme will provide insurance cover for all Australians in the event of significant disability except for disabilities covered under the proposed no fault national injury insurance scheme.

The Federal Government has announced that unfair contract terms legislation will be applied to general insurance contracts and it will be consulting on the proposed legislation some time in 2013.

The Federal Senate Economics References Committee released its report on its inquiry into the post global financial crisis banking sector which contains several recommendations. These recommendations include that an independent inquiry into Australia’s banking and financial systems should be established and a voluntary code of conduct for small business should be developed by the Australian Bankers’ Association and implemented. The Federal Government is yet to release its response to the recommendations.

APRA has released the final prudential standards for superannuation.

The Stronger Super reforms are in the process of being implemented. The reforms will significantly impact superannuation in Australia with key proposals such as the replacement of existing default funds by a new low cost simple superannuation product called MySuper, and SuperStream reforms that are intended to streamline the ‘back office’ operations of superannuation funds.

The Future of Financial Advice reforms (FOFA reforms) continue to be implemented with the financial planning industry having until 1 July 2013 to comply. The key FOFA reforms include a prospective ban on upfront and trailing commissions and like payments for both individual life and group risk cover within superannuation from 1 July 2013 and the imposition of the statutory ‘best interests’ duty which will require financial advisers to act in the best interests of their clients and give priority to their clients’ interests and take reasonable steps to discharge that duty.

In New Zealand, the Insurance (Prudential Supervision) Act 2010 is now in force, which requires with a few limited exceptions, all insurers to be licensed by the Reserve Bank of New Zealand. Insurers are required to be fully compliant with the requirements of the Act by 7 September 2013.

The Financial Markets Conduct Bill is passing through parliament and is intended to implement a new “one stop shop” for securities law. If enacted, it will replace various existing legislation including the New Zealand Securities Act 1978 and Security Markets Act 1988.

The New Zealand Law Commission is reviewing the current joint and several liability law in New Zealand and may recommend changes to New Zealand’s liability laws.

A cross agency group lead by Treasury will review the cover provided under the Earthquake Commission Act 1993. The review will include the types of property the Earthquake Commission insures, including the structure of the insurance and extent of cover, how the Earthquake Commission prices its insurance and the institutional structure. A discussion document is to be released this year which will invite submissions prior to the review’s submission to Government.

There are a number of significant earthquake related matters before the Courts.

On 12 December 2012, the Insurance Council of New Zealand sought a judicial review of whether the seismic strengthening provisions of the Christchurch City Council’s 2010 Policy (Council Policy) are legally enforceable. Council Policy requires existing properties to be repaired to a minimum strength of 67% of the standard required for the construction of new buildings which is significantly higher that the minimum required under the relevant legislation. On 4 February 2013, the High Court confirmed that territorial authorities may not use section 124 notices to advance a policy of increasing building capacity to a level above 34% of the New Building Standard. The parties are required to submit alternate policy wording to the Court for inclusion in final orders.

Several Tower Insurance customers with properties situated within the Government imposed residential Red Zone have filed proceedings seeking the total cost of rebuilding rather than the costs to repair actual earthquake damage. While the decision will be based upon Tower Insurance’s policy wording there are likely to be guiding principles in the judgment which could be applied to claims made on other insurers.

All of these prudential and regulatory changes and other proposals, matters before courts and Government Inquiries in Australia and New Zealand will or could impact the Suncorp Group’s respective operations in banking, general and life insurance and superannuation.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 2

Directors’ report (continued)

Review of operations (continued)

Review of principal businesses

General Insurance profit after tax was $564 million (December 2011: $162 million).

The Insurance Trading Result (ITR) was $669 million (December 2011: $129 million), representing an ITR ratio of 18.6% (December 2011: 3.8%). The result was driven by operational efficiencies, positive investment markets and fewer natural hazard events. The increase in ITR further reflects ongoing benefits from the delivery of the Building Blocks program, the recently implemented Simplification projects and a continued focus on margin improvement.

Gross written premium (GWP) increased 9.6% to $4,225 million. Personal lines experienced growth across both Home (up 14.5%) and Motor (up 5.2%), primarily driven by increases in average written premiums. Commercial lines also experienced strong growth, increasing by 10.1%, with growth across all major product lines as a result of improved pricing and retention. CTP increased 8.1%, largely due to new business growth in New South Wales and Queensland.

General Insurance claims expense decreased 24.3% to $2,930 million. Current year short-tail claims benefited from more benign weather experience, resulting in net natural hazard claims being $113 million lower than the Suncorp Group’s allowance. Reserve releases of $41 million were broadly in line with longterm expectations.

Operating expenses increased 6.3% to $779 million, primarily due to investment in Simplification projects. Investment income on insurance funds decreased 32% to $255 million reflecting the current low yield environment. Investment income on shareholder funds increased 27% to $160 million, primarily driven by a return on equity assets of $78 million.

Banking profit after tax was $4 million (December 2011: $102 million).

The Bank continues to maintain separate core and non-core lending portfolios. The Bank’s core lending portfolio is focused on relationship-based lending and deposit gathering in personal, small to medium enterprises and agribusiness banking. The focus of the non-core lending portfolio remains on responsible run-off of the portfolio to maximise the value of distributable capital that can be returned to the Suncorp Group. The non-core portfolio is now in advanced stages of run-off and represents less than 10% of the Bank’s total loan portfolio.

Total banking loans, advances and other receivables increased to $49,677 million, representing a $467 million increase from 30 June 2012. The Bank’s focus remains on low-risk segments, providing simple products to Australian customers. The Bank’s loan to value ratio for new business remains in line with historic trends and reflects the Bank’s conservative appetite for owner occupiers seeking mortgages from a genuine alternative to the Major Banks.

The Bank’s funding position is underpinned by access to a wide range of wholesale and retail funding markets. This was further demonstrated with the issuance of a second covered bond for $600 million and a $1 billion residential mortgage backed securitisation issue.

The Bank has maintained its strategy of match funding the non-core portfolio, taking a conservative approach to refinancing risk through to portfolio maturity. The Bank currently holds excess liquid assets over prudential requirements which have enabled the comfortable repayment of funding maturities during the half-year. The Bank is also well positioned to meet the impending regulatory changes being imposed on the industry to strengthen liquidity reserves.

Net interest income of $484 million was up 3.2%. Solid asset growth combined with pricing discipline has helped to achieve a robust net interest margin against interest earning assets of 1.60% and a net interest margin against lending assets of 1.97%. Operating expenses of $303 million have increased 4% on the corresponding prior period. This reflects the Bank’s investment in system replacement activity, the Basel II accreditation program and Group Simplification initiatives.

Impairment expense on Banking loans, advances and other receivables increased 48% to $194 million. The higher impairment expense reflects continued sector weakness in regional and suburban retail shopping centres and for long-term land development projects. The Bank actively provisioned and wrote down underperforming exposures in these segments where recovery was deemed highly unlikely. Total provision for impairment at 31 December 2012 was $473 million, representing a decrease of 11.9% from 30 June 2012.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 3

Directors’ report (continued)

Review of operations (continued)

Review of principal businesses (continued)

Suncorp Life profit after tax was $51 million (December 2011: $133 million).

The economy has experienced depressed consumer confidence over a prolonged period. This is having a material impact on the Life insurance industry as a whole.

Life Risk profit after tax was $38 million, down 17% on the prior corresponding period. This result includes a stable planned profit margin release of $49 million, but was impacted by negative lapse experience of $17 million as economic conditions reduce life insurance affordability and decrease customer retention. Disability experience was negative $10 million, with more new claims than expected. The financial impact was mitigated by management actions to ensure the early finalisation of claims.

Life Risk new business was $65 million, up 18% on the prior corresponding period reflecting the strong momentum in the Independent Financial Advisor and direct distribution channels. In-force annual premium growth continued with new business growth and in-force increases offsetting policy lapses.

Superannuation new business sales moderated at $131 million. The economic environment and investment market conditions continue to place pressure on discretionary superannuation contributions. Funds under administration were $7.2 billion.

Operating expenses increased 13% to $206 million as the business continues to invest in front-end marketing, new capabilities and implementation of regulatory change.

Investment income has been subdued, with low market yields impacting the results.

The embedded value is $2,430 million (June 2012: $2,604 million), down 7%. The key driver is a material change in lapse assumptions reflecting structural elements of experience. This will also impact planned margins in future years. The Value of One Year’s Sales is forecast to be $46 million for the full year.

Events subsequent to reporting date

Since 31 December 2012, the Suncorp Group has received approximately 23,000 claims associated with Ex-Tropical Cyclone Oswald, which has impacted communities across areas of Queensland and New South Wales. The Suncorp Group’s 30% quota share arrangement on the Queensland home insurance portfolio will limit the net claims costs associated with this event. At the date of this report, the Suncorp Group anticipates the net claims costs associated with these events to be between $200 million and $220 million.

On 14 January 2013, the Suncorp Group repurchased Government guaranteed debt with a carrying value of $250 million for $253 million. On 15 February 2013, the Suncorp Group repurchased Government guaranteed debt with a carrying value of $892 million for $897 million. These repurchases resulted in a loss of $8 million.

Except as noted above, there has not arisen in the interval between 31 December 2012 and the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Suncorp Group, the results of those operations, or the state of affairs of the Suncorp Group.

Dividends

A fully franked 2012 final dividend of $257 million (20 cents per share) and a fully franked 2012 special dividend of $193 million (15 cents per share) were paid on 1 October 2012. A fully franked 2013 interim dividend of $322 million (25 cents per share) has been declared by directors.

Further details of dividends provided for or paid are set out in note 5 to the consolidated interim financial statements.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 4

Directors’ report (continued)

Lead auditor’s independence declaration

The lead auditor’s independence declaration is set out on page 6 and forms part of the directors’ report for the half-year ended 31 December 2012.

Rounding of amounts

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial report and the directors’ report have been rounded off to the nearest million dollars unless otherwise stated.

Signed in accordance with a resolution of the directors.

Dr Zygmunt E Switkowski Chairman

Patrick J R Snowball Managing Director and Group CEO

20 February 2013

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 5

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Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of Suncorp Group Limited

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2012 there have been:

• (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

KPMG

Paul Reid Partner

Brisbane 20 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 6

Consolidated interim statement of comprehensive income for the half-year ended 31 December 2012

CONSOLIDATED	Note	Dec 2012	Dec 2011
Revenue Insurance premium income Reinsurance and other recoveries income Banking interest income Investment revenue Other income		$m $m
		4,499 4,093 725 1,147 1,787 2,088 967 467 245 312
Total revenue Expenses General insurance claims expense Outwards reinsurance premium expense Interest expense Fees and commissions expense Operating expenses 7.1.2 Outside beneficial interests in managed funds Life insurance claims expense and movement in policyowner liabilities Impairment expense on Banking loans, advances and other receivables		8,223 8,107 (2,930) (3,871) (617) 26 (585) (449) (1,324) (1,647) (364) (241) (1,344) (1,280) (194) (131) - (8)
Total expenses Profit before income tax Income tax expense 8		(7,358) (7,601) 865 506 (288) (116)
Profit for the period Net change in fair value of cash flow hedges Exchange differences on translation of foreign operations Income tax Other comprehensive income Items that may be reclassified subsequently to profit or loss Net change in fair value of available-for-sale financial assets		577 390 38 60 (4) (66) 12 (12) (15) 2
Actuarial gains on defined benefit plans Items that will not be reclassified subsequently to profit or loss		31 (16) 4 -
Total other comprehensive income		4 - 35 (16)
Total comprehensive income for theperiod		612 374
Profit for the period attributable to: Owners of the Company Non-controlling interests		574 389 3 1
Profit for theperiod		577 390
Owners of the Company Non-controlling interests Total comprehensive income for the period attributable to:		609 373 3 1
Total comprehensive income for theperiod		612 374
Earnings per share: Basic earnings per share Diluted earningsper share
		Cents Cents
		44.93 30.45 43.37 30.03

The consolidated interim statement of comprehensive income is to be read in conjunction with the accompanying notes.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 7

Consolidated interim statement of financial position as at 31 December 2012

Consolidated interim statement of financial position
CONSOLIDATED Note 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 Property, plant and equipment Deferred tax assets Other assets Goodwill and intangible assets	Dec 2012 Jun 2012 Dec 2011 $m $m $m
	595 866 1,231 124 154 159 4,077 4,787 3,641 382 393 291 24,046 24,881 24,775 49,663 49,180 47,739 6,862 7,688 7,247 624 721 586 209 216 230 69 181 94 617 731 717 6,207 6,264 6,295
Total assets Liabilities Deposits and short-term borrowings Derivatives Payables due to other banks Payables and other liabilities Current tax liabilities General insurance liabilities Life liabilities Managed funds units on issue Securitisation liabilities 7.3 Debt issues 7.4 Subordinated notes 10 Preference shares 11	93,475 96,062 93,005 41,060 40,708 38,774 1,331 2,406 2,105 32 41 26 1,832 2,602 1,752 102 51 7 14,351 14,835 14,956 5,678 5,786 5,770 - 1 365 4,305 3,800 4,313 8,206 9,569 8,676 978 1,374 1,368 1,311 762 760
Total liabilities	79,186 81,935 78,872
Net assets	14,289 14,127 14,133
Equity Share capital 12 Reserves 13 Retained profits	12,677 12,672 12,665 (38) (55) 36 1,636 1,493 1,420
Non-controlling interests Total equity attributable to owners of the Company	14,275 14,110 14 17	14,121 12
Total equity	14,289 14,127	14,133

The consolidated interim statement of financial position is to be read in conjunction with the accompanying notes.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 8

Consolidated interim statement of changes in equity for the half-year ended 31 December 2012

CONSOLIDATED Note Balance as at 1 July 2012 Profit after tax for the period Total other comprehensive income	Share capital Reserves Retained profits Total $m $m $m $m $m $m Equity attributable to owners of the Company Non- controlling interests Total Equity
	12,672 (55) 1,493 14,110 17 14,127
	- - 574 574 3 577
	- 31 4 35 - 35
Total comprehensive income Transactions with owners, recorded directly in equity Dividends paid 5 Share-based payments Treasury shares movements Transfers	- 31 578 609 3 612
	- - (449) (449) (6) (455)
	(7) - - (7) - (7)
	12 - - 12 - 12
	- (14) 14 - - -
Balance as at 31 December 2012	12,677 (38) 1,636 14,275 14 14,289
Balance as at 1 July 2011 Profit after tax for the period Total other comprehensive income	12,662 33 1,306 14,001 17 14,018 - - 389 389 1 390 - (16) - (16) - (16)
Total comprehensive income Transactions with owners, recorded directly in equity Dividends paid 5 Share-based payments Treasury shares movements Transfers	- (16) 389 373 1 374 - - (256) (256) (6) (262) 5 - - 5 - 5 (2) - - (2) - (2) - 19 (19) - - -
Balance as at 31 December 2011	12,665 36 1,420 14,121 12 14,133

The consolidated interim statement of changes in equity is to be read in conjunction with the accompanying notes.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 9

Consolidated interim statement of cash flows for the half-year ended 31 December 2012

CONSOLIDATED	Dec 2012	Dec 2011
Cash flows from operating activities Premiums received Claims paid Interest received Interest paid Reinsurance and other recoveries received Outwards reinsurance premiums paid Other operating income received Dividends received Operating expenses paid Income tax paid Net increase (decrease) in operating assets Trading securities Banking loans, advances and other receivables Net increase (decrease) in operating liabilities Deposits and short-term borrowings	$m $m
	4,653 4,552 (3,837) (4,512) 2,135 2,533 (1,324) (1,647) 1,161 1,700 (590) (486) 964 194 57 82 (2,510) (2,052) (144) (195) 736 1,329 (679) 1,085 352 (84)
Net cash from operating activities Cash flows from (used in) investing activities Proceeds from sale of investment securities Payments for purchase of investment securities Proceeds from disposal of property plant and equipment and intangible software Proceeds from other investing activities Payments from other investing activities	974 2,499 17,204 17,669 (16,255) (18,256) 2 103 31 - (55) (93)
Net cash from (used in) investing activities Cash flows (used in) financing activities Net (decrease) in borrowings Payment on call of subordinated notes Dividends paid on ordinary shares Proceeds from (payments for) preference shares issued (redeemed) Payments for other financing activities	927 (577) (1,877) (1,505) (407) (173) (449) (256) 560 (72) (19) (14)
Net cash (used in) financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of exchange rate fluctuations on cash held	(2,192) (2,020) (291) (98) 979 1,466 (1) (4)
Cash and cash equivalents at end of theperiod	687 1,364
Cash and cash equivalents at end of the period comprises: Cash and cash equivalents Receivables due from other banks Payables due to other banks	595 1,231 124 159 (32) (26)
	687 1,364

The consolidated interim statement of cash flows is to be read in conjunction with the accompanying notes.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 10

Notes to the consolidated interim financial statements

1. Reporting entity

Suncorp Group Limited (the Company ) is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the half-year ended 31 December 2012 comprises the Company and its subsidiaries (the Suncorp Group ).

The Suncorp Group is a for-profit entity and its consolidated annual financial report for the financial year ended 30 June 2012 is available upon request from the Company’s registered office at Level 18, 36 Wickham Terrace, Brisbane, QLD 4000 or at www.suncorpgroup.com.au.

2. Basis of preparation

The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The consolidated interim financial report does not include all of the information required for a full consolidated annual financial report, and should be read in conjunction with the consolidated financial report of the Suncorp Group for the financial year ended 30 June 2012 and any public announcements made in the period by the Suncorp Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

The consolidated interim financial report was approved by the Board of Directors on 20 February 2013.

The consolidated interim financial statements have been prepared on the historical cost basis unless the application of fair value or other measurements are required by relevant accounting standards. An exception exists regarding the measurement of defined benefit scheme surplus (deficit) which is described in note 34.1.19 to the Suncorp Group consolidated financial report for the financial year ended 30 June 2012.

These consolidated interim financial statements are presented in Australian dollars which is the Company’s functional currency and the functional currency of the majority of the subsidiaries.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with the Class Order, amounts in the financial report have been rounded off to the nearest million dollars, unless otherwise stated.

Where necessary, comparative information has been restated to conform with changes in presentation in the current year.

3. Significant accounting policies

Except as described below, the accounting policies applied by the Suncorp Group in this consolidated interim financial report are the same as those applied by the Suncorp Group in its consolidated annual financial report for the year ended 30 June 2012. The following changes are also expected to be reflected in the Suncorp Group’s consolidated financial statements as at and for the financial year ending 30 June 2013.

Since 1 July 2012, the Suncorp Group has adopted AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income. Consequently, the format of the consolidated interim statement of comprehensive income has been revised to present items of other comprehensive income that may be reclassified to profit or loss in the future separately from items that would never be reclassified to profit or loss. This is a change in presentation only and has no impact on earnings per share or net income. These changes have been applied retrospectively.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 11

Notes to the consolidated interim financial statements (continued)

4. Use of estimates and judgements

The preparation of the consolidated interim financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the amounts reported in the financial statements. The estimates and associated accounting assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Estimates and underlying assumptions are reviewed on an ongoing basis. Where revisions are made to accounting estimates, any financial impact is recognised in the period in which the estimate is revised.

In preparing this consolidated interim financial report, the significant judgements made by management in applying the Suncorp Group’s accounting policies and the key sources of estimation uncertainty are the same as those that applied to the consolidated annual financial report as at and for the year ended 30 June 2012.

The liability adequacy test (LAT) is used to assess the sufficiency of the unearned premium liability to cover all expected future cash flows relating to future claims against in-force insurance contracts. It is based on prospective information and is heavily dependent on assumptions and judgements. At 31 December 2012, the LAT resulted in a deficiency of $24 million for the Australian Commercial Insurance portfolio and a surplus for the Australian Personal Insurance and New Zealand General Insurance portfolios (December 2011: surplus for each portfolio). Consequently, a $24 million (December 2011: $nil) write-down of deferred acquisition costs has been recognised in the half-year.

5. Dividends

CONSOLIDATED	Dec 2012	Dec 2011
Dividends on ordinary shares 2012 final dividend (Dec 2011: 2011 final dividend) 2012 special dividend	¢ per share $m ¢ per share $m
	20 257 20 256
	15 192 - -
Total dividends recognised in equity	35 449 20 256
Dividends declared since balance date and not recognised in the consolidated interim statement of financial position Dividend on ordinary shares 2013 interim dividend(Dec 2011: 2012 interim dividend)1	25 320 20 256

Notes

• 1 The total 2013 interim dividend on ordinary shares declared but not recognised in the consolidated interim statement of financial position is estimated based on the total number of ordinary shares on issue net of treasury shares as at 31 December 2012. Actual amount to be recognised in the consolidated financial statements for the financial year ending 30 June 2013 will be based on the actual number of ordinary shares on issue net of treasury shares on the record date.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 12

Notes to the consolidated interim financial statements (continued)

6. Segment reporting

Operating segments are identified based on separate financial information which is regularly reviewed by the Group Chief Executive Officer and his immediate executive team, representing the Suncorp Group’s Chief Operating Decision Maker (CODM), in assessing performance and determining the allocation of resources. The Suncorp Group’s operating segments are determined based on their business activities.

Segment	Business area	Business activities
Personal Insurance (Personal)	General Insurance	Provision of personal insurance products to customers in Australia including home and contents insurance, motor insurance and travel insurance.
Commercial Insurance (Commercial)	General Insurance	Provision of commercial insurance products to customers in Australia including commercial motor insurance, commercial property insurance, marine insurance, industrial special risks insurance, public liability and professional indemnity insurance, workers’ compensation insurance and compulsory third party insurance.
General Insurance – New Zealand (GI NZ)	General Insurance	Provision of general insurance products to customers in New Zealand including home and contents insurance, marine insurance, business insurance, rural insurance, construction and engineering insurance, travel insurance, public liability andprofessional indemnity, and directors’ and officers’ liability.
Banking	Banking	Provision of personal and commercial banking, agribusiness, property and equipment finance, home, personal and small business loans, savings and transaction accounts and foreign exchange and treasury products and services in Australia.
Life	Life	Provision of life insurance products, superannuation administration services, financial planning and funds administration services in Australia and New Zealand.
Corporate	Corporate	Investment of the Suncorp Group’s capital, Suncorp Group business strategy activities (including business combinations and divestments) and Suncorp Group shared services.

While profit or loss information is reviewed by the CODM at an operating segment level, assets and liabilities information are reviewed by the CODM at a business area level. Business areas are equivalent to operating segments except for the Personal Insurance, Commercial Insurance and General Insurance New Zealand operating segments which are aggregated as the General Insurance business area.

Segment results presented below are measured on a consistent basis to how they are reported to the CODM:

• Revenues and expenses occurring between segments are subject to contractual agreements between the legal entities comprising each segment.

• Inter-segment transactions which are eliminated on consolidation are reported on a gross basis except for operating expenses incurred by one segment on behalf of another which are recharged on a cost-recovery basis that are presented on a net basis (post allocation basis).

• Intra-group dividends are presented net of eliminations.

• Consolidated gain or loss on sale of subsidiaries and joint ventures and any amortisation of business combination acquired intangible assets are allocated to the Corporate segment regardless of whether the related assets and liabilities are included in the Corporate segment assets and liabilities.

• Depreciation and amortisation expense relating to the Corporate segment’s property, plant and equipment and non-business combination acquired intangible assets are allocated to other segments based on their utilisation.

• Goodwill is allocated to each operating segment on a consistent basis to goodwill impairment testing.

The above basis of segmentation and basis of measurement of segment results are the same as those applied by the Suncorp Group in its consolidated annual financial report for the year ended 30 June 2012.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 13

Notes to the consolidated interim financial statements (continued)

6.1. Segment results

BUSINESS AREAS Operating segments Half-year ended 31 December 2012 Revenue from external customers Inter-segment revenue	BANKING LIFE CORPORATE Personal Commercial GI NZ Total Banking Life Corporate Total $m $m $m $m $m $m $m $m GENERAL INSURANCE
	2,849 1,828 571 5,248 1,859 1,175 18 8,300
	- - - - 6 4 - 10
Total segment revenue	2,849 1,828 571 5,248 1,865 1,179 18 8,310
Segment profit (loss) before income tax Segment income tax expense
	461 295 46 802 13 96 (44) 867
	(139) (86) (13) (238) (9) (45) 4 (288)
Segmentprofit(loss) after income tax	322 209 33 564 4 51 (40) 579
Half-year ended 31 December 2011 Revenue from external customers Inter-segment revenue
	2,628 1,856 879 5,363 2,208 480 55 8,106
	- - - - 17 3 - 20
Total segment revenue	2,628 1,856 879 5,363 2,225 483 55 8,126
Segment profit (loss) before income tax Segment income tax (expense) benefit
	43 108 75 226 138 161 (25) 500
	(12) (31) (21) (64) (36) (28) 12 (116)
Segmentprofit(loss) after income tax	31 77 54 162 102 133 (13) 384

6.2. Reconciliation of segment profit before tax

CONSOLIDATED	Dec 2012	Dec 2011
Segment profit before income tax Elimination of intra-group investments revenue Other consolidation eliminations	$m $m
	867 500
	(11) (11)
	9 17
Consolidatedprofit before income tax	865 506

6.3. Results by business area

A summary of revenue and expenses by business area and a summary of assets and liabilities by business area are presented in notes 6.3.1 and 6.3.2. These disclosures are an extension to the operating segment results presented above and are prepared on the same basis as described in note 6. Inclusion of results by business area in addition to the operating segment information presented above is beneficial in understanding the nature and financial effects of the business activities of the Suncorp Group, which consists of a General Insurance group, a Banking group, a Life group and a Corporate group.

6.3.1. Summary of revenue and expenses by business area

CONSOLIDATED	Note	Half-year ended 31 December 2012	Half-year ended 31 December 2011
		General Insurance Banking Life Corporate General Insurance Banking Life Corporate
		$m $m $m $m $m $m $m $m
Revenue
Insurance premium income Reinsurance and other recoveries income Banking interest income Investment revenue Other income		4,099 - 400 - 3,727 - 366 - 625 - 100 - 1,051 - 96 - - 1,787 - - - 2,088 - - 426 8 599 18 505 14 (60) 19 98 70 80 - 80 123 81 36
Total revenue		5,248 1,865 1,179 18 5,363 2,225 483 55
Expenses
General Insurance claims expense Life insurance claims expense and movement in policyowner liabilities Outwards reinsurance premium expense Interest expense		(2,930) - - - (3,871) - - - - - (617) - - - 26 - (498) - (87) - (368) - (81) - (24) (1,303) - (5) (37) (1,619) - (6)
Fees and commissions expense Operating expenses Impairment expense on Banking loans, advances and other receivables 7.1.2		(215) (52) (100) (1) (128) (46) (78) - (779) (303) (206) (56) (733) (291) (183) (74) - (194) - - - (131) - -
Outside beneficial interests in managed funds		- - (73) - - - (6) -
Total expenses		(4,446) (1,852) (1,083) (62) (5,137) (2,087) (322) (80)
Profit (loss) before income tax 6.1 Income tax expense 6.1		802 13 96 (44) 226 138 161 (25) (238) (9) (45) 4 (64) (36) (28) 12
Profit(loss) for theperiod 6.1		564 4 51 (40) 162 102 133 (13)

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 14

Notes to the consolidated interim financial statements (continued)

6.3.2. Summary of assets and liabilities by business area

CONSOLIDATED	Note	As at 31 December 2012	As at 30 June 2012
		General Insurance Banking Life Corporate General Insurance Banking Life Corporate
		$m $m $m $m $m $m $m $m
Assets
Cash and cash equivalents Receivables due from other banks Trading securities Derivatives Investment securities General Insurance assets Banking loans, advances and other receivables		94 341 577 365 113 549 828 212 - 124 - - - 154 - - - 4,077 - - - 4,787 - - 44 427 - - 50 424 10 - 11,825 5,114 8,280 14,714 11,477 6,308 8,191 14,132 - 49,677 - - - 49,210 - - 6,862 - - - 7,688 - - -
Life assets Due from Group entities Property, plant and equipment Deferred tax assets Other assets Goodwill and intangible assets		- - 624 - - - 721 - 28 190 12 - 128 144 - - 27 - 4 178 24 - 4 188 - 185 - 110 - 241 - 120 252 319 31 22 323 350 19 62 5,177 262 657 111 5,216 262 672 114
Total assets Liabilities Deposits and short-term borrowings Derivatives Payables due to other banks		24,309 60,716 10,185 15,500 25,019 62,429 10,445 14,828 - 41,842 - - - 41,544 - - 130 1,287 3 - 124 2,369 4 - - 32 - - - 41 - -
Payables and other liabilities		871 502 173 300 1,457 634 225 325
Current tax liabilities Due to Group entities General Insurance liabilities Life liabilities Deferred tax liabilities Managed funds units on issue Securitisation liabilities 7.3 Debt issues 7.4 Subordinated notes 10 Preference shares 11		2 - - 100 - - - 51 - - - 226 - - 52 220 14,351 - - - 14,835 - - - - - 5,678 - - - 5,786 - 142 - 86 - 132 - 48 - - - 1,534 - 15 - 1,608 - - 4,326 - - - 3,839 - - - 8,250 - - - 9,598 - - 711 267 - - 708 666 - - - 764 - 547 - 762 - -
Total liabilities		16,207 57,270 7,474 1,173 17,271 59,453 7,723 596
Net assets		8,102 3,446 2,711 14,327 7,748 2,976 2,722 14,232

7. Banking – Specific disclosures

7.1. Banking – Provision for impairment on Banking loans, advances and other receivables

7.1.1. Reconciliation of provision for impairment on Banking loans, advances and other receivables

CONSOLIDATED	Dec 2012	Dec 2011
Collective provision Balance at the beginning of the period (Credit) against impairment losses	$m $m
	145 177 (4) (11)
Balance at the end of the period Specific provision Balance at the beginning of the period Charge against impairment losses Impaired assets written off Unwind of discount	141 166 392 387 196 128 (191) (50) (65) (78)
Balance at the end of the period	332 387
Totalprovisions	473 553

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 15

Notes to the consolidated interim financial statements (continued)

7.1.2. Impairment expense on Banking loans, advances and other receivables

CONSOLIDATED	Dec 2012	Dec 2011
	$m $m
Decrease in collective provision for impairment Increase in specific provision for impairment Bad debts written off Bad debts recovered	(4) (11) 196 128 10 17 (8) (3)
Total impairment expense	194 131

7.2. Banking – Short-term offshore debt securities

BANKING	Dec 2012	Dec 2011
Balance at the beginning of the period Proceeds from issues Repayments Foreign exchange translation and fair value movements	$m $m
	3,715 3,840
	3,458 9,419
	(3,668) (11,522)
	(53) 130
Balance at the end of theperiod	3,452 1,867

Short-term offshore debt securities are disclosed within the consolidated interim statement of financial position category of ‘Deposits and short-term borrowings’. They are translated to Australian dollars at spot currency rates, with gains and losses recognised in profit or loss. These movements are largely offset by movements in derivative hedging positions relating to foreign currency foreign exchange contracts.

7.3. Banking – Securitisation liabilities

CONSOLIDATED	Dec 2012	Dec 2011
Banking Balance at the beginning of the period Proceeds from issues Transaction costs (incurred) amortised	$m $m
	3,839 3,634
	1,000 1,250
	(2) (2)
Net proceeds Repayments Foreign exchange translation movements	998 1,248
	(538) (518)
	27 (8)
Balance at the end of the period	4,326 4,356
Consolidated Adjustments for intra-group investments in Banking's securitisation liabilities Balance at the beginning of the period Repayments
	(39) (102)
	18 59
Balance at the end of the period	(21) (43)
Total securitisation liabilities	4,305 4,313

Securitisation liabilities have associated securitised home loans which are secured by residential mortgages. Securitisation liabilities issued in a foreign currency are translated to Australian dollars at spot currency rates, with gains and losses recognised in profit or loss. These movements are largely offset by movements in derivative hedging positions relating to cross currency swaps.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 16

Notes to the consolidated interim financial statements (continued)

7.4. Banking – Debt issues

CONSOLIDATED	Dec 2012	Dec 2011
Banking Balance at the beginning of the period Proceeds from issues Transaction costs amortised (incurred)	$m $m
	9,598 10,151
	987 -
	(1) 6
Net proceeds Repayments Foreign exchange translation and fair value movements	986 6
	(2,281) (1,629)
	(53) 178
Balance at the end of the period	8,250 8,706
Consolidated Adjustments for intra-group investments in Banking's debt issues Balance at the beginning of the period Proceeds from issues Repayments
	(29) (120)
	(15) (8)
	- 98
Balance at the end of the period	(44) (30)
Total debt issues	8,206 8,676

Foreign currency debt issues are translated to Australian dollars at spot currency rates, with gains and losses recognised in profit or loss. These movements are largely offset by movements in derivative hedging positions relating to cross currency swaps.

Suncorp Group and Corporate disclosures

8. Income tax expense

The Suncorp Group’s consolidated effective tax rate for the half-year ended 31 December 2012 was 33.3% (for the year ended 30 June 2012: 24.4%; for the half-year ended 31 December 2011: 22.9%).

Income tax expense adjustments have primarily arisen from:

• The life insurance statutory funds adjustment resulting in a $19 million income tax expense (December 2011: $8 million income tax credit). Accounting standards require that the tax expense from an increase in net market values of policyowner assets be recognised as part of the Suncorp Group’s income tax expense, whereas the net profit before tax of the Suncorp Group includes a partially offsetting transfer to policyowner liabilities. Consequently, the tax expense is disproportionate relative to the net profit before tax. The reverse (a tax credit) is required in periods where the market values of policyowner assets decrease.

• Non-deductible interest paid in respect of preference shares increased income tax expense by $7 million (December 2011: $7 million).

• For the half-year ended 31 December 2011, income tax credits arising from non-taxable profits on disposal of Suncorp Centre of $9 million and deferred tax credit adjustment of $12 million for the disposal of the Polaris Data Centre joint venture asset.

9. Investment property

Investment property comprises a number of commercial properties held for short-term rentals and longterm leases to third parties and premises held for capital appreciation. It is presented in the consolidated interim statement of financial position within other assets, and are included in the General Insurance business area.

At 30 June 2012, investment property was carried at a fair value of $127 million. Included in this balance was a property carried at $31 million, which was classified as held for sale. This property was sold during the half-year ended 31 December 2012 and resulted in nil gain or loss on disposal for the half-year.

At 31 December 2012, the remaining investment properties are classified as held for sale. As a result of market movement in property prices, a $21 million fair value loss was recorded for the half-year ended 31 December 2012 (December 2011: $10 million).

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 17

Notes to the consolidated interim financial statements (continued)

10. Subordinated notes

CONSOLIDATED	Dec 2012		Dec 2011
	General Insurance Banking Total General Insurance		Banking Total
Balance at the beginning of the period Repayment on call of subordinated notes Foreign exchange translation and fair value movements	$m $m $m $m		$m $m
	708 666 1,374 678		846 1,524
	- (407) (407) -		(173) (173)
	3 8 11 20		(3) 17
Balance at the end of theperiod	711 267 978 698		670 1,368

Subordinated notes issued in a foreign currency are translated to Australian dollars at spot currency rates, with gains and losses recognised in profit or loss. These movements are largely offset by movements in derivative hedging positions relating to cross currency swaps.

11. Preference shares

CONSOLIDATED	Dec 2012	Dec 2011	Dec 2011
	Banking Corporate Total Banking Corporate Total
Balance at the beginning of the period Proceeds from issue Repayments on redemption Transaction costs incurred Transaction costs amortised	$m $m $m $m $m $m
	762 - 762 830 - 830
	- 560 560 - - -
	- - - (72) - (72)
	- (13) (13) -		- -
	2 - 2 2		- 2
Balance at the end of theperiod	764 547 1,311 760		- 760

Banking

Banking preference shares consist of Reset Preference Shares (SBKPA) and Convertible Preference Shares (SBKPB). These are issued by Suncorp-Metway Limited.

SBKPA are perpetual, paying fixed non-cumulative dividends with certain terms periodically reset. They last reset on 14 September 2011 and the Suncorp Group received exchange requests for 718,519 securities from SBKPA holders. Exchange consideration of $72 million was settled in cash and the exchanged securities were cancelled on this date. The number of SBKPA on issue as at 31 December 2012, 30 June 2012 and 31 December 2011 was 304,063. The next reset date is 14 September 2016.

The SBKPB are fully paid preference shares which will mandatorily convert into a variable number of the Company’s ordinary shares on 14 June 2013 (subject to certain requirements being met). The number of SBKPB on issue as at 31 December 2012, 30 June 2012 and 31 December 2011 was 7,350,000.

Corporate

On 6 November 2012, the Company issued 5,600,000 Convertible Preference Shares (SUNPC) at an issue price of $100 per share. SUNPC are fully paid, convertible preference shares and are unsecured and perpetual in nature. They will pay, subject to the terms outlined in the Prospectus and at the Company’s discretion, floating rate, quarterly, non-cumulative, and preferred dividends which are expected to be fully franked. SUNPC will mandatorily convert into a variable number of the Company’s ordinary shares on or after 17 December 2019 (subject to satisfaction of the Mandatory Conversion Conditions), unless they are exchanged earlier. The Company may elect to exchange SUNPC following the occurrence of certain events, subject to APRA approval; or on the optional exchange date of 17 December 2017. In a NonViability Trigger Event, SUNPC are converted or written off. A Non-Viability Trigger Event occurs where APRA determines that without the conversion or write off; or without a public sector injection of capital or equivalent, the Company would become non-viable.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 18

Notes to the consolidated interim financial statements (continued)

11.1. Preference share dividends recognised as interest expense

CONSOLIDATED	Dec 2012	Dec 2011
	¢ per share $m ¢ per share $m
Reset Preference Shares (SBKPA) Period from March to September	212 1 255 3
Convertible Preference Shares (SBKPB) September quarter December quarter	119 9 145 11 119 9 141 10
	238 18 286 21
Convertible Preference Shares (SUNPC) Decemberquarter	61 3 - -

12. Share capital

CONSOLIDATED

12. Share capital CONSOLIDATED
Balance as at 1 July 2012 Share-based payments Treasury shares movements	Issued capital Share- based payments Treasury shares Total
	$m $m $m $m
	12,717 75 (120) 12,672
	- (7) - (7)
	- - 12 12
Balance as at 31 December 2012	12,717 68 (108) 12,677
Balance as at 1 July 2011 Share-based payments Treasury shares movements
	12,717 64 (119) 12,662 - 5 - 5 - - (2) (2)
Balance as at 31 December 2011	12,717 69 (121) 12,665

12.1. Number of ordinary shares on issue

At 31 December 2012, 1,286,600,980 of ordinary shares were on issue. There have been no movements to this balance since 30 June 2011.

On 1 October 2012, 7,376,305 ordinary shares were allotted at the issue price of $9.17 per share under the Dividend Reinvestment Plan in respect of the 2012 final and special dividends. On 3 October 2011, 5,594,173 ordinary shares were allotted at the issue price of $7.98 per share under the Dividend Reinvestment Plan in respect of the 2011 final dividend. Shares for both allotments were acquired on market for delivery to shareholders and resulted in no issue of new shares.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 19

Notes to the consolidated interim financial statements (continued)

13. Reserves

CONSOLIDATED
Balance as at 1 July 2012 Transfer to retained profits Amount recognised in equity Amount transferred from equity to profit or loss Income tax Exchange differences on translation of foreign operations	Equity reserve for credit losses Hedging reserve Assets available- for-sale reserve Foreign currency translation reserve Total
	$m $m $m $m $m
	147 (107) (5) (90) (55)
	(14) - - - (14)
	- 23 8 - 31
	- 15 (12) - 3
	- (16) 1 - (15)
	- - - 12 12
Balance as at 31 December 2012	133 (85) (8) (78) (38)
Balance as at 1 July 2011 Transfer from retained profits Amount recognised in equity Amount transferred from equity to profit or loss Income tax Exchange differences on translation of foreign operations	157 (61) 37 (100) 33 19 - - - 19 - 56 (44) - 12 - 4 (22) - (18) - (18) 20 - 2 - - - (12) (12)
Balance as at 31 December 2011	176 (19) (9) (112) 36

14. Changes in the composition of the Suncorp Group

The Suncorp Group did not acquire nor dispose of any material subsidiaries or interests in joint venture entities or associates during the current or prior interim reporting periods.

15. Related parties

Except as disclosed below, arrangements for related parties continue to be in place as disclosed in the 30 June 2012 consolidated annual financial report.

Changes in the composition of key management personnel

Following the expiry of Robert Stribling’s employment contract with the Suncorp Group on 30 June 2012, Clayton Herbert was appointed as the Group Chief Risk Officer on 1 July 2012.

Share-based payments

Under the terms of the Executive Performance Share Plan disclosed in the Suncorp Group’s consolidated financial report for the year ended 30 June 2012, the following grants were made during the interim period:

• Rights to 1,020,377 shares (December 2011: 1,160,435 shares) were offered to executives as part of their remuneration package on 1 October 2012 (December 2011: 1 October 2011). The fair value per share at grant date was $5.93 (December 2011: $5.27).

• Rights to 446,752 shares (December 2011: nil) were offered to the Group CEO as approved and resolved by shareholders at the 2012 Annual General Meeting on 25 October 2012. The fair value per share at grant date was $6.41.

Unconditional ownership of the shares does not occur until the performance targets have been achieved.

16. Contingent assets and liabilities

There have been no material changes in contingent assets or contingent liabilities since 30 June 2012.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 20

Notes to the consolidated interim financial statements (continued)

17. Subsequent events

Since 31 December 2012, the Suncorp Group has received approximately 23,000 claims associated with Ex-Tropical Cyclone Oswald, which has impacted communities across areas of Queensland and New South Wales. The Suncorp Group’s 30% quota share arrangement on the Queensland home insurance portfolio will limit the net claims costs associated with this event. At the date of this report, the Suncorp Group anticipates the net claims costs associated with these events to be between $200 million and $220 million.

On 14 January 2013, the Suncorp Group repurchased Government guaranteed debt with a carrying value of $250 million for $253 million. On 15 February 2013, the Suncorp Group repurchased Government guaranteed debt with a carrying value of $892 million for $897 million. These repurchases resulted in a loss of $8 million.

Except as noted above, there has not arisen in the interval between 31 December 2012 and the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Suncorp Group, the results of those operations, or the state of affairs of the Suncorp Group.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 21

Directors’ declaration

In the opinion of the directors of Suncorp Group Limited (the Company):

1. The consolidated interim financial statements and notes set out on pages 7 to 21, are in accordance with the Corporations Act 2001 , including:

2. a) giving a true and fair view of the Suncorp Group’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

3. b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

4. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the directors:

Dr Zygmunt E Switkowski Chairman

Patrick J R Snowball Managing Director

20 February 2013

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 22

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Independent auditor’s review report to the members of Suncorp Group Limited

We have reviewed the accompanying interim financial report of Suncorp Group Limited, which comprises the, consolidated interim statement of financial position as at 31 December 2012, consolidated interim statement of comprehensive income, consolidated interim statement of changes in equity and consolidated interim statement of cash flows for the half-year ended on that date, notes 1 to 17 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Suncorp Group comprising the Company and the entities it controlled at the half-year’s end or from time to time during the half year.

Directors’ responsibility for the interim financial report

The directors of the Company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Suncorp Group’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of Suncorp Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Suncorp Group Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the Suncorp Group’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

KPMG

Paul Reid Partner

Brisbane 20 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG Liability limited by a scheme approved International Cooperative (“KPMG International”), a Swiss entity. under Professional Standards Legislation.

SUNCORP GROUP LIMITED | CONSOLIDATED INTERIM FINANCIAL REPORT 2012/13 23