Stormy weather for Suncorp

Suncorp Metway’s (Suncorp) bottom line has taken a hit in the past financial year, with ‘severe weather events and volatile investment markets’ playing a major role in the company’s performance.

Net profit after tax for the full year to June 30, 2008, was $556 million, a significant reduction from last year’s profits and a result the group’s chairman said investors would find “disappointing”.

The underlying profit of the group’s wealth management business was down to $136 million, again a significant reduction from last year’s result.

The group’s general insurance profit before tax of $307 million was also significantly down on last year’s figure of $835 million, however the group reported “all insurance brands continued to perform well”, with “good premium growth across short-tail products”.

Suncorp’s bank profit before tax was up 11.2 per cent to $633 million despite the impact of the credit crunch, and displayed “maintenance of disciplined credit practices”, the group said.

Suncorp chief executive John Mulcahy said the group is responding to current market conditions by reducing discretionary spending and reducing duplication, among other actions.

As a result, the group will be merging its retail and business banking operations, with current retail bank group executive David Foster to lead the combined banking business.

There will also be further changes to the Suncorp management team, with personal insurance group executive Robert Belleville announcing his intention to retire.

Bernadette Inglis, currently group executive for strategy, people and corporate services, will take Belleville’s place during a three-month transition period.

Belleville will then continue to work with the group in a nine-month consultancy role.

Stuart McDonald, who currently heads up Suncorp’s business bank, will now replace Inglis in her role.

On the outlook for the group for the financial year 2009, Mulcahy said “while it’s likely the level of non-performing loans will increase in 2008-09, the impairment loss expense should continue to be below the levels experienced by our major bank competitors”.

Mulcahy said “like most Australian financial services companies, our results for the last financial year were directly and indirectly impacted by external events”.

He did say, however, that the group is “well placed to ride out any further deterioration in the market”.

While “external factors” significantly affected the group’s bottom line, chairman John Story assured investors that the result featured solid underlying business performance.

Final ordinary dividend payment of 55 cents per share, fully franked.