Cash earnings at Suncorp plummeted some $749 million, with insurance falling 33.9 per cent to $384 million and banking and wealth falling 33.5 per cent to $242 million, while the bank’s collective provision increased to $255 million.
“It has been a challenging 12 months for Suncorp and for the customers and communities we support: first a season of extreme weather conditions, and then the global COVID-19 pandemic which will result in long-lasting economic disruption and fundamentally change the way we live,” said group CEO Steve Johnston.
“Suncorp entered the COVID-19 crisis in a solid position and responded quickly to keep our people safe and our customers in need protected through access to financial relief measures. At the same time, we have maintained the financial and operational strength of our business.”
While COVID-19’s impact on the insurance business was “broadly neutral” it still took a hit off the back of lower prior year reserve releases, higher reinsurance costs and the low-yield environment. Suncorp’s natural hazard costs were i -line with its FY20 allowance of $820 million despite the “significant” weather events that occurred during the year.
The banking business was dragged by higher impairment charges, while wealth delivered a $6 million loss from reduced revenue fees and elevated regulatory costs.
Net profit after tax of $913 million was boosted by the $285 million sale of its Capital SMART and ACM Parts businesses. Suncorp will pay out a fully franked dividend of 10 cents a share, but indicated that future dividend decisions will be based on the economic outlook.
“The group’s base case economic assumptions allow for a sharp deterioration in forecast [macro-economic] conditions before the economy is assumed to begin recovery from 2021,” Suncorp said in a statement. “Economic assumptions will be reviewed on an ongoing basis to take into account any major changes to the outlook including, for example, the impact of Victoria’s recently imposed mobility restrictions.”
Suncorp’s brush with the bushfire crisis has also driven it to call for national action on climate change and cease underwriting new oil and gas projects by 2025.
“Suncorp has long argued for a national, coordinated response to disaster mitigation and natural hazard resilience to deal with the impacts of climate change,” Mr Johnston said. “This can no longer remain in the too-hard basket.
“Now is the time for governments at all levels to work with businesses, big and small, and to invest in a nation-building program encompassing infrastructure, incentives, improved building standards and the removal of inefficient taxes and charges.”
