House Passes Budget to Ease $63 Billion in U.S. Spending Cuts
Suncorp Group Net Income Falls 32% on Banking Unit Loss
Suncorp Group Ltd. (SUN), an Australian lender and insurer, posted a 32 percent decline in full-year profit in line with its guidance last month.
Net income for the year to June 30 was A$491 million ($443 million) compared with A$724 million a year earlier, hurt by a loss on the sale of its mostly soured loan portfolio. Suncorp’s banking unit recorded a loss of A$343 million, compared with a profit of A$26 million a year earlier, the Brisbane-based company said in a statement today.
Chief Executive Officer Patrick Snowball has focused on exiting commercial property loans, corporate lending, and leases that were worth A$18 billion in 2009 to reduce risk and steer Suncorp toward insurance, and personal and small business lending. He is also paying out special dividends to return excess capital to shareholders.
“The sale of the non-core bank is a relief and enables the group to focus on the profitable core businesses,” David Ellis, a Sydney-based analyst at Morningstar Inc. (MORN), said in an e-mailed statement.
The company now has a clear structure with a single bank, single general insurance company and single life insurance business, Snowball said in an interview with Bloomberg Television.
Suncorp will pay a special dividend of 20 cents in addition to a final dividend of 30 cents, according to today’s statement. With A$847 million of capital in excess of operating targets, Snowball did not rule out further capital return.
“We are still using the assumptions of a year ago in establishing that surplus,” he said. “As we start to work through the changes, including the run off of the non-core bank, we will be revisiting the state of that surplus.”
The lender and insurer also said it expects annual cost savings to reach A$225 million in 2015 and A$265 million the next year.
Suncorp said July 31 it expected to post a full-year profit of A$480 million to A$500 million.
Shares in the company ended 1.5 percent higher at A$12.60 in Sydney, the highest closing level in three weeks. That extended gains for the year to 24 percent compared to a 9.7 percent gain for the benchmark S&P/ASX200 Index. (AS51)
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