Suncorp wealth management struggles

Big Queensland-based financial service shouse Suncorp has acknowledged that its wealth management business has been significantly impacted by the downturn in investment markets and the increase in discounts, resulting in a decline in profits in the order of $15 million to $20 million.

The downgrading of the wealth management division profit came at the same time as Suncorp said its unaudited, preliminary financial net profit after tax was now expected to be between $525 million and $550 million, inclusive of the impact of the Promina acquisition items.

In a market update released to the Australian Securities Exchange today, Suncorp chief executive John Mulcahy said that the tougher times in the wealth management business would result in an underlying profit for 2007-08 of between $130 million and $135 million compared to a proforma after tax result of $150 million the previous financial year.

Mulcahy said the primary cause of this disappointing result was negative investment markets impacting on funds under administration, funds under management and the value of the assets backing the annuity book.

He said New Zealand investment and superannuation returns had also been impacted.

Looking over the horizon, Mulcahy said he expected that wealth management conditions would remain challenging, with the group forecasting a flat underlying profit result compared to 2007-08.