Australian banking and insurance group Suncorp-Metway reported a 16.2 percent increase in net profit after tax to a record A$1.064 billion (US$877 million), which includes 15 weeks’ contribution from Promina, the insurer that Suncorp acquired through a merger agreement last year (See IJ web site Oct. 23, 2006).
Other earnings highlights included the following:
— Bank profit contribution before tax up 12.5 percent to A$569 million (US$469 million).
— General insurance full year profit before tax of A$835 million (US$688.3 million) with all insurance brands performing strongly.
— Building scale in wealth management with profit before tax of A$229 million (US$188.75 million).
— Promina integration “on track” with the Group’s new business model and senior management appointments confirmed, A$55 million (US$45.34 million) annualized synergies locked in.
— Final ordinary dividend payment of A55 cents (US 45.34 cents) per share, fully franked.
Promina’s contribution to earnings dates from the 21st of March until the closing of the accounts for the fiscal year on June 30. Suncorp also said it had managed to obtain the favorable results “despite the Queen’s Birthday weekend storms in New South Wales which cost the Group A$160 million [US$132 million] net of reinsurance recoveries. Removing the Promina contribution, Suncorp’s general insurance business delivered an insurance trading ratio of 19.6 percent, ahead of the 16 – 19 percent guidance.” Promina’s overall gross written premium rose by 4.3 percent last year, led by the homeowners and auto sectors.
Suncorp Chairman John Story said the strong results across the broad portfolio of businesses was further confirmation of the strategic rationale underpinning the merger with Promina. “This result highlights the complementary nature of the Suncorp and Promina businesses, as well as the huge opportunities available to us by successfully integrating them,” he explained.
CEO John Mulcahy added that the company had performed well despite continued intense competition across the financial services sector. He noted: “The 2007 financial year was particularly eventful for Suncorp given the successful completion of the Promina merger, one of Australia’s largest ever financial services transactions; post-merger integration activity; and severe storms in New South Wales and Victoria that impacted the enlarged insurance group.”
Addressing current fears over the U.S. subprime mortgage crisis, Mulcahy indicated that it is likely the Reserve Bank will continue to use monetary policy to address inflationary pressures and he would expect this to have a moderating impact on credit formation, particularly in the retail mortgage market. He also stressed that, while Suncorp had no direct exposure to the sub-prime mortgage market in the United States, the secondary impact of tightening liquidity and widening credit spreads could impact credit markets in Australia. He added that “Suncorp is well positioned to manage through these scenarios effectively and we continue to have confidence in the long term direction of the equity markets.”
Mulcahy restated the guidance figures for both the Suncorp (ITR 16 percent to 19 percent, excluding major weather events) and Promina (ITR 10+ percent, excluding major weather events) general insurance businesses. This would result in an ITR for the merged group in the range of 13 percent to 16 percent, excluding any major weather event.
The full report and additional information is available on the group’s web site at: http://www.suncorpmetway.com.au
Source: Suncorp Metway –
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