Shareholders in Brisbane-based financial services group, Suncorp, face a smaller dividend after the company unveiled an 8.4% fall in net profit for the year to June 30.
The company said yesterday that full year profit fell to $1.038 billion, mainly due to increased insurance payouts from the massive storms and huge tides which hit the east coast of Australia in June, and storms and earlier in the year.
The company declared a fully franked final dividend of 38 cents a share, bringing the total for the year to 68 cents, a payout ratio of 80% of cash earnings, which is at the top of Suncorp’s very wide payout range of 60% to 80%.
But that was down on last year’s 76 cents because of the lower profit and with a solid chance of more pressure on margins this year,especially in banking, there’s very chance the payout could dip again.
“The final dividend reflects the tangible benefits of the group’s diversified insurance and banking businesses,” chairman Ziggy Switkowski said yesterday’s statement without acknowledging the reason for the fall.
Group revenue was down 7.39% to $15.48 billion for the 12 months to June.
The Suncorp Bank increased its net profit after tax by 11% to $393 million, from $354 million, mainly due to a 5.9% rise in home lending, better margins and a fall in bad loans.
Net profit from ordinary business, before amortisation and costs including oa ne-off $55 million charge for an organisational restructure completed last month, dipped 6.2%cent to $1.16 billion in the year to June.
However, the general insurance profit of $624 million was down 17% on the $756 million from the previous year.
The company trades under a number of insurance brands, such as AAMI, Suncorp, Bingle, Shannons and GIO.
“Natural hazard claims for the year were $60 million above the allowance,” the company explained. The higher losses has seen Suncorp purchase an additional $300 million worth of reinsurance cover the the current financial year.
Suncorp Life, which includes Asteron Life, showed a lift in net profit after tax to $142 million, up from $125 million the previous year.
CEO Michael Cameron said in the statement that an organisational restructure, completed in early July, has positioned the business to deliver on its strategy.
“We have completed our transition to the new operating model, removing structural constraints to enable the business to deliver its unique customer marketplace strategy,” he says.
"The strategy focuses the business on elevating the customer to drive growth and increase resilience to volatility. The benefits of this strategy will continue to be seen over the medium term."
Suncorp Group said its capital levels “remain strong” with both the banking and insurance businesses having strengthened their capital buffers over the year to levels above the top of the regulators’ target ranges.
Suncorp shares rose 0.6% to $13.30.
