Suncorp profit to shine despite slowdown

Suncorp’s wealth management business is unlikely to match its buoyed half yearly profits but chief executive John Mulcahy is projecting an increase in underlying profit of at least 25 per cent across the group this financial year.

For the first half, the period ending December 31 2003, the wealth management business reaped $36 million before tax and goodwill depreciation - an increase of 112 per cent or $17 million compared to the previous corresponding six month period.

Mulcahy has attributed the projected drop-off in wealth management profit to reduced investment returns at the beginning of the reporting period, but says while gross retail sales remain subdued, net retail inflows are expected to show an improvement compared to the first half.

“We remain confident of reporting an annual increase in profits of more than 30 per cent,” he says.

As for Suncorp’s banking business, it is experiencing the effects of a market slow down according to Mulcahy. Despite this, the group has reported an improvement in home lending due to a combination of increased sales through proprietary and third party distribution channels, and higher retention rates.

Meanwhile, the general insurance business is also unlikely to match the half yearly profit levels posted in December last year, but Suncorp says the conditions in the industry remain favourable as such should convert into a full year result of 10-13 per cent.

“We have made significant operational improvements across the group, and the benefits of those initiatives will be reflected in the full year results,” Mulcahy says.

Suncorp’s full year results are schedule to be released in August.