Brisbane-based Suncorp has joined the dividend slashing club as the COVID-19 pandemic, lockdowns, and bushfires saw earnings fall by a third in the year to June.
Suncorp said earnings from its domestic insurance (led by AAMI) and banking businesses by fell by a third.
Full-year cash earnings, a measure favoured by the finance industry, fell by a third to $749 million. While statutory net profit rose more than four-fold to $913 million, that included gains from an asset sale.
The board declared a final dividend of 10 cents a share, down more than 75% on last year’s payment of 44 cents. But it comes at a time when some rivals (Westpac and IAG and Bendigo and Adelaide Bank) have scrapped dividends altogether.
Suncorp paid a 26 cents a share interim in March, so the total for the year is 36 cents, more than half the 83 cents a share paid in 2018-19.
ANZ this week said it would pay a 25 cents a share interim, down from 80 cents a share ago for 2019-20.
Suncorp said that while it remained committed to paying out 60% to 80% of cash earnings as dividends, the size of the payouts would be affected by the economic outlook and the results of stress testing.
“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,” CEO Steve Johnston said in Friday’s statement.
“The strength of our balance sheet has enabled the board to determine a fully franked final ordinary dividend of 10 cents per share. It is pleasing we are able to deliver on our commitment to shareholders by paying a modest final dividend.”
Looking to the rest of the 2020-21 year Suncorp said the operating environment remains highly uncertain, and it was assuming a sharp deterioration in the economy before conditions would start to improve in 2021.
In its insurance business, which sells policies under brands including AAMI, GIO, and Bingle, profits fell 34% to $384 million as the company took extra provisions for COVID-19 impacts, including claims for landlord insurance and potential claims for business interruption insurance.
Offsetting that were fewer motor vehicle claims because of the lockdowns, stay at home workers, and less traffic movement on the nation’s roads as a result.
The banking division topped up its provisions for bad debts to $255 million, from $233 million in March, which it said reflected the uncertain economic outlook. Profits from banking fell by nearly a third to $242 million, while earnings were flat in its New Zealand business where the lockdowns were tougher than Australia’s.
