Suncorp shines on for shareholders

SUNCORP plans to return $1 billion of capital to shareholders, including 100,000 Queensland investors, as it refocuses on its banking and insurance businesses.

The Brisbane-based financial group announced a 83.5 per cent drop in full-year profit to $175 million impacted by a $899 million loss on the sale of its life insurance business to Japan’s TAL Dai-ichi Life.

Stripping out one-off items, full-year cash profit rose 1.1 per cent to $1.115 billion, with revenue from continuing operations rising 9.65 per cent to $15.6 billion. The company confirmed it would hand another $506m back to shareholders from the sale of the life unit.

Suncorp acting chief executive Steve Johnston said a total of 83c per share would be given to shareholders, including a 44c per share fully-franked final dividend and proposed capital return of 39c per share.

Mr Johnston said it had been a watershed year for the banking industry dominated by the royal commission into financial services.

“Despite higher natural hazards and a significant increase in regulatory costs, the core businesses remain resilient,” he said.

Mr Johnston said he was positive about this state’s property market.

“Queensland did not see the property appreciation seen in Sydney and Melbourne, so there’s more of a case for growth in the market,” he said.

He said elements of the retail market faced tough conditions but overall he was positive about the state’s economy.

“The low interest rate environment and the stimulus from tax cuts should be a positive for the Queensland economy,” Mr Johnston said.

Suncorp’s home lending portfolio increased 0.4 per cent over the year, impacted by an increasingly competitive and slowing mortgage market.

Solid growth in commercial lending was partially offset by a reduction in agribusiness due to prevailing drought conditions and this year’s floods.

Suncorp also signalled a retreat from its unpopular “marketplace” strategy where it had ambitions to be the Amazon of financial services.

Mr Johnston said the company had been too ambitious and failed to explain what it had been trying to achieve.

“Clearly there are areas where we haven’t got it 100 per cent right,” he said.

“The more aspirational elements of the marketplace component of our strategy and the associated third-party revenues that were assumed to flow from those activities were too ambitious relative to where our business is at and the funds that we have available to invest.”