Brisbane-based Suncorp (SUN) told an investors day briefing that it is now targeting what it calls "top line growth" of 7% to 9% over the next couple of years and wants to boost return on equity to 10% by 2015.
In other words, it reckons its mix of general insurance and regional banking can generate revenue growth as fast, if not faster than its bigger banking and insurance rivals – such as the CBA and NAB, and IAG and QBE.
And, if there’s super performance and a lot of cash generated, shareholders will benefit. Suncorp pointed out that it has more than half a billion dollars of franking credits ready to use in any capital management plan.
Suncorp CEO Patrick Snowball said the company wants to maintain a dividend payout ratio of 60% to 80%. Andy additional earnings will be returned to shareholders.
Suncorp Group Investor Day Presentation
Mr Snowball told the briefing that some of this extra growth will come from the company’s continuing cost cutting and process reform called its "simplification program".
He says the program will see benefits increase to $225 million in the 2015 financial year and $265 million in 2016.
Mr Snowball says Suncorp is undergoing a transformation to become more streamlined and efficient and has so far achieved results ahead of plan.
Suncorp reported an interim net profit for the 2012-13 year of $577 million.
The briefing was held at the company’s new joint venture smash repair facility, Q-Plus at Riverwood in Sydney, which it described as a state-of-the-art repair centre and one of the largest in Australia.
“Suncorp is the largest user of smash repair services in the country. Our customers told us they wanted more consistent, quality repairs with faster turnaround times. This joint venture and investment in the smash repair industry delivers for customers as well as providing scale and cost savings for the Group,” Mr Snowball said.
(Suncorp has major insurance brands such as AAMI, APIA, Shannons, Suncorp and GIO.)
“Q-Plus caters for more complex repairs and expands on Suncorp’s SMART smash repair joint venture which now has 23 facilities. Q-Plus and SMART are indicative of the innovation and scale opportunities being realised within the Suncorp Group."
“Our strategy is clear. We remain focussed on organic growth. Our businesses are growing strongly in low risk, target markets. We expect this will result in growth across the Group of 7% to 9% each year for the next two years. There’s plenty more gas in the tank,” he added.
Suncorp shares closed at 2% at $12.59 in yesterday’s mostly firmer market.
