Suncorp announces new partnership with rediATM network

Suncorp has today announced it has entered a new partnership with Cuscal Limited, owners of the rediATM network, to significantly increase the number of direct-charge-free ATMs for its customers.

Suncorp CEO Customer Platforms, Gary Dransfield, said from 1 August, 2017, Cuscal Limited will become the exclusive provider of Suncorp’s ATMs.

“Suncorp customers will soon have fee-free access to more ATMs, in more locations than ever before, following the announcement of this new partnership,” Mr Dransfield said.

“The agreement will see the number of fee-free ATMs available to customers more than double to 3,300, up from the current 1,600.

“This partnership meets all of our requirements as a business, and is a great result for customers who will benefit from increased ATM access and functionality enhancements across the rediATM network.”

Commenting on the news, Cuscal MD Craig Kennedy said:

“We’re very pleased to welcome Suncorp to the rediATM network. It will make the network stronger and is great news for our 90 plus financial institution members, as well as their 11 million cardholders who have charge-free access to the rediATM network,” he said.

“We’ve been providing safe, convenient, reliable ATM services for more than 30 years and with our recent investment in refreshing our entire rediATM network, we’re looking forward to doing so for many years to come.”

Suncorp Rejigs Mortgage Rates

Suncorp has today announced several changes to its home lending interest rates to better balance the needs of investors and owner-occupiers, whilst adhering to industry-wide regulatory settings.

For owner-occupiers, Suncorp will reduce two and three-year fixed rates by 0.10% p.a. effective 3 July, 2017.

It will also maintain its exclusive offer for first home buyers, with Suncorp’s Home Package Plus Special Offer for First Home Buyers allowing customers to choose from a standard variable rate, or a five-year fixed rate of 3.99% p.a. on new lending of $150,000 or more.

Variable interest rates on all new and existing investor home loans, as well as new one and two-year investor fixed rates will increase by 0.12% p.a from 3 July, 2017.

The change will bring the Standard Variable rate for investor loans to 5.99% p.a. Investor rates for three and five-year fixed rates remain unchanged.

Suncorp banking & wealth CEO David Carter said the decision would ensure the bank maintained its position relative to regulatory changes, and give additional support to customers in the owner-occupier market.

“We have made a decision to prioritise the owner-occupier market to help customers who are wanting to buy and live in their own home,” Carter said.

“The bank’s interest only and investor profile remains within APRA’s macro-prudential settings because we have been deliberate in shaping the portfolio through our focus on risk selection.

“We responded early to signals by the regulators to improve our position relative to updated macro-prudential settings and with an expectation for modest growth across the portfolio, we need to implement these changes.

“With the market having effectively repriced investor lending and with some lenders having opted out of certain aspects of the investor market, it’s important for us to manage the demand for new business.

“The measurement of new business includes refinancing existing investor loans from other lenders, as well as loans for new investment properties.

“The decision to increase some investor lending rates was also influenced by incremental increases to funding costs, along with the costs involved in compliance.

“The rates across the portfolio remain highly competitive and the majority of customers will continue to pay rates well below the headline rate, due to our products’ various features and benefits.”

Suncorp Launches Another New Style Store

Suncorp has today unlocked the doors to a new financial services experience in Queensland, opening its second Concept Store in the Brisbane suburb of Carindale.

The Carindale Concept Store brings together solutions and services from across the company’s brands, including Suncorp, AAMI, Shannons and Apia, as well as solutions from other providers, to help customers with life’s key financial decisions, such as purchasing a home.

Suncorp’s CEO Customer Platforms Gary Dransfield said the Store leverages insights gained from the Parramatta Concept Store, Brisbane city Co-Creation Lab and understanding of the Queensland market to create an innovative store experience in a unique retail environment.

“We’ve reimagined the experiences customers expect to receive when they visit a traditional bank branch or insurance store to make it easier for them to make decisions around the moments which matter most,” Mr Dransfield said.

“The Store connects customers to new technologies and digital solutions to help customers buy and protect their home or car, start a family, or start and grow a business.”

Taking inspiration from international retailers, the Carindale Concept Store utilises innovation to make customer experiences interactive and tailored to support their individual needs.

Mr Dransfield said the company’s strong brand heritage in Queensland would help deliver the benefits of Suncorp’s marketplace strategy to local customers through connecting them to a wider range of products and services from across the company’s many brands.

“We’re creating unique experiences that help educate, inspire and delight our customers, with the express goal of helping them in those areas we know can be confusing, complex and intimidating,” Mr Dransfield said.

“The Store’s test and learn environment also enables us to trial new concepts with customers and make changes based on their feedback before introducing them in other locations.”

Key experiences and technologies include:

Design – Interactive format which allows customers to experience retail zones specific to their individual need. The modular design allows for the store to change its format to suit monthly themes and workshops. The modern appearance has a light space, with greenery to create a visually appealing store.

Key features – Simplified transactional space, Open 7 days, concierge greeting, designated self-service area, multi-brand offering, workshops and seminars, free wifi and refreshments.

Discovery Tool – Connects customers with Suncorp solutions, as well products and services from other companies, across an entire journey (example: Buying a Home. Starting a Business) Companies featured – Jim’s Building Inspections, Lawlab, Hipages, JB Hi-Fi

Suncorp 3Q17 Update – Tough Times

Suncorp Bank today provided its quarterly update on Bank assets, credit quality and capital as at 31 March 2017, as required under Australian Prudential Standard 330.

The home lending portfolio grew modestly over the quarter, reflecting challenging market conditions.

Suncorp Banking and Wealth CEO David Carter said the Bank continued to focus on targeted segments of the market, prioritising risk selection and quality, and was well positioned in its standing relative to regulatory changes.

“We responded early to signals by the regulators to improve our position in relation to changes to macro-prudential settings, particularly APRA’s interest-only and investor lending,” Mr Carter said.

“We have been deliberate in shaping the portfolio through our focus on risk selection and expect modest growth in home and business lending as our competitors align to more conservative positions.”

Business lending growth was flat, with strong new business volumes offset by repayments from successfully completed property developments and favourable conditions for agribusiness customers leading to repayment of loans.

Credit quality across Suncorp Bank’s business loan portfolio remains sound, with very little exposure to the higher risk lending segments of inner-city apartments and businesses affected by the resources industry slowdown.

The benefits of prudent risk management are reflected in the continued strong credit quality performance over the quarter, with impairment losses of $7 million, or 5 basis points of gross loans and advances (annualised).

The Bank’s funding strength was demonstrated during the quarter through the successful pricing of a $1.25 billion Residential Mortgage-Backed Security (RMBS) and an increase in the Net Stable Funding Ratio (NSFR) position, closing at 109%.

Following the payment of the interim FY17 dividend to Suncorp Group Limited, the Bank’s Common Equity Tier 1 (CET 1) ratio continues to be strong at 9.19% and remains above the target range of 8.5% to 9.0%.
Suncorp is also in the process of determining the impacts on the business, following several announcements in the Federal Budget impacting the financial services sector.

“Australia has a strong banking system and Suncorp supports the principles of the Financial Services Inquiry to achieve competitive neutrality,” Mr Carter said.

“The Treasurer announced two measures that have the potential to support competitive neutrality – the Bank levy and the harmonisation of supervision of the ADI and non-ADI sector.

“These measures have the potential to further improve the effectiveness of the macro prudential settings that have recently been introduced and will go some way to realising a more level playing field.”

Suncorp Targets First Time Buyers

Suncorp has announced an exclusive new offer for first home buyers to “help them realise their property ownership dreams”.

Suncorp’s Home Package Plus Special Offer for First Home Buyers allows customers to choose from a Standard Variable rate or a 5 Year Fixed rate of 3.99% p.a. on new lending of $150,000 or more.

The initial Home Package Plus annual fee will be waived and most customers will also be eligible for savings on their Lenders Mortgage Insurance (LMI) , as well as building and contents insurance.

Suncorp EGM Stores and Specialty Banking, Lynne Sutherland, said buying a home is one of the biggest financial commitments customers make and it’s becoming increasingly difficult for those looking to enter the market for the first time.

“Housing affordability is creating a barrier for young people wanting to purchase their first home,” Sutherland said.

“The average age of home owners across the country has increased by 10 years, and while we know property ownership isn’t for everyone, it’s still a goal for many Australians.

“Our Home Package Plus Special Offer for First Home Buyers gives customers choice by providing the same low rate on a Standard Variable or 5 Year Fixed loan, while also offering a range of discounts on some of the additional fees and products that go with home ownership.

“Where the customer is borrowing more than 80% of the property’s value, we will contribute $1,000 towards their mortgage insurance premium.

“Eligible customers will also be offered 20% off the first year’s premium for Suncorp issued building and contents insurance, as well as savings on Suncorp Home Loan Protect for new policies issued.

“This offer is especially timely for first home buyers in Queensland, with the Government’s First Home Owner’s $20,000 grant only available until 30 June 2017.

“Entering the property market can be daunting, but these savings could be the difference for many of our customers in realising home ownership.”

Suncorp Bank Upsizes $1.25 billion RMBS issue

Suncorp Bank today confirmed it had finalised pricing for the APOLLO Series 2017-1 Trust transaction, which was upsized from $500 million following its launch on 20 February, 2017. It shows the securitisation market is accessible, at reasonable prices.

After investor meetings in London, Melbourne, Sydney and Brisbane, a total of 60 bids from investors were received from Asia, UK, New Zealand and Australia. Six classes of notes were offered to the market and the best was A$1,150,000,000 at BBSW + 113 bps.

Suncorp Banking & Wealth CEO David Carter said the transaction demonstrates Suncorp’s strong position in the market, and ability to access a diversified group of investors onshore, and offshore.

Suncorp has now completed 22 APOLLO transactions since 1999. It forms an important part of our diversified funding program, supporting the strength of the balance sheet and profitable growth,” Mr Carter said.“It is also reflective of the quality of Suncorp Bank residential mortgage backed securities and the value placed upon the APOLLO program by investors.”

Suncorp wealth arm placed on ‘negative watch’

From InvestorDaily.

Suncorp’s life insurance and superannuation division has been placed on ‘negative watch’ by S&P after the bank revealed it is considering “strategic alternatives” for the business, including divestment.

In a statement released yesterday, S&P Global Ratings said the strategic importance of Suncorp Life and Superannuation Limited (SLSL) has “weakened” following statements made in Suncorp’s annual result.

In last week’s annual result announcement, Suncorp revealed it is implementing an “optimisation program” for its Australian life insurance business as well as “exploring strategic alternatives”.

In response, S&P has lowered its financial strength and issuer credit ratings on SLSL to ‘A’ from ‘A+’, which it said “reflects a reduced level of uplift in the rating from group support”.

S&P said it has also placed Asteron Life’s ‘A+’ rating on watch with “negative implications, reflecting uncertainty as to the level of integration of the entity with the group”.

The research house said Asteron Life is now only “strategically important” for Suncorp – a downgrade from its previous “core status”.

“This downgrade follows Suncorp’s announcement that it has undertaken a strategic review of its Australian life insurance operations, which includes potential divestment of the operations. As such, we no longer consider SLSL as being highly unlikely to be sold,” said S&P.

“The weak operating performance of the life operations relative to group expectations has  triggered the group’s strategic review. This weaker performance also contributes to our assessment of slightly lower group support for SLSL compared with that for Asteron Life,” said S&P.

“We expect the continued strength in [Asteron Life]’s inforce premiums, operating experience and emergence of planned profit margins to support the financial contribution of the group’s New Zealand life operations, in contrast to SLSL’s weaker operating performance.”

Suncorp 1H to Dec 2016 – Looking Better

Suncorp today reported net profit after tax (NPAT) of $537 million (HY16: $530 million) for the six months to 31 December 2016. Profit after tax from business lines increased 12.7% to $613 million (HY16: $544 million).

The Group has been working hard to get performance up, and despite pressure on banking margins, and adverse insurance claims from New Zealand, management of the insurance businesses is clearly tighter.

The result included natural hazard claims costs of $350 million (HY16: $362 million), Investment earnings of $79 million (HY16: $133 million), reserve releases of $131 million (HY16: $137 million) and a loss on sale of Autosure of $25 million.

After accounting for the interim dividend, the Suncorp Group’s Common Equity Tier 1 (CET1) is $448 million above the operating targets.

The General Insurance CET1 is 1.23 times the Prescribed Capital Amount and Bank CET1 is 9.20%. The Group has $230 million of franking credits available after the payment of the interim dividend.

Shareholders will receive an interim dividend of 33 cents per share fully franked (HY16: 30 cents) representing a payout ratio of 72% of cash earnings.

Insurance (Australia)

Insurance (Australia) NPAT increased 42.5% to $369 million due to top line growth, lower claims costs and disciplined expense management.
Gross Written Premium (GWP) growth of 6.2% was primarily driven by the CTP portfolio. Consumer Insurance benefited from industry stabilisation with Home and Motor GWP increasing 2.4% and 1.6% respectively.The Commercial Insurance market continues to be highly competitive with GWP growth of 0.4% reflecting a prudent approach to pricing and risk selection.

CTP GWP increased 27.3% due to Suncorp’s successful entry into the South Australian market and growth in New South Wales which was supported by improving claims metrics. Insurance (Australia) reserve releases of $149 million reflect the benign inflationary environment and Suncorp’s management of long-tail claims.

Banking & Wealth

The Banking & Wealth business delivered NPAT of $208 million reflecting improved operating expenses and strong credit quality. In response to some unsustainable competitor pricing, the Bank focused on profitable growth through the optimisation of price and volume.

Lending grew 2.5% over the past 12 months.

Total assets were $54.2 billion, of which home lending was $44.1 billion, half of which is in QLD. 65% of business came through intermediaries. High LVR loans are down significantly. Overall home lending grew below system.  Deposit to loan ratio was 67.2% up a little on a year ago.  During the half, the Bank funding mix changed with a 5.5% reduction in retail term deposits and an increase of 6.7% in at call deposits primarily driven by growth in personal transaction accounts.

Following a targeted campaign in December, the housing loan portfolio is expected to grow in the second half.

The net interest margin (NIM) of 1.78% was impacted by the lower cash rate and aggressive competition, however it remains within the target range of 1.75% to 1.85%.

Operating expenses improved by 5.8% resulting in a reduction in the cost to income ratio from 53.0% to 51.4%.

Gross non-performing loans improved by 14.3% over the past six months resulting in impairment losses of $1 million (less than 1bps), well below the target range of 10bps to 20bps of gross loans and advances.

The Bank has a tiered management limit structure for the LCR to ensure that an adequate buffer to the APRA prudential limit of 100% is held. The LCR is managed to market conditions and has been maintained comfortably above the prudential minimum since being introduced in January 2015. The average LCR for the half ending 31 December 2016 was 133%, ending the half at 130%.

The Bank is well placed to meet the proposed NSFR requirements, which will be introduced from January 2018. The Bank’s estimated NSFR at the end of the period was 106%.

Discussions continue with the APRA as part of progressing towards Advanced Accreditation. In parallel the Bank has undertaken changes to its processes and retail credit models as part of an industry wide alignment of the treatment of hardship. The Bank expects these changes to have some effect on reporting but no material impact to the risk or loss experience.

New Zealand

New Zealand NPAT of NZ$37 million was impacted by the Kaikoura earthquake and aftershocks (NZ$23 million) and new ‘over-cap’ claims from the 2010/11 Canterbury earthquakes (NZ$18 million) being notified by the Earthquake Commission (EQC).

Net incurred claims (NIC) were $372 million, up 22.8%, driven by the Kaikoura earthquake as well as several large commercial claims and strong unit growth in the consumer portfolios.

GWP growth of 4.8% was delivered primarily from the Home and Motor portfolios.

Included in the result was the New Zealand Life Insurance NPAT of NZ$18 million reflecting a 41.2% increase in underlying profits, and positive claims and lapse experience of NZ$5 million.

 

Suncorp finalises execution on New Zealand Autosure disposal

Suncorp said today on 21 November 2016, Suncorp Group (Suncorp) announced that it had executed the sale of its New Zealand Autosure motor insurance business to Turners Limited.

The sale results in a release of capital of approximately A$30 million and a post-tax loss on disposal of A$25 million. The transaction will be accretive to the New Zealand business’s long term return on equity (ROE). The adjustment will be booked in the Group’s HY17 financial result as a non-cash item.

The New Zealand financial result will also be impacted by further claims arising from the 2010/11 Canterbury earthquakes and the 14 November 2016 Kaikoura earthquake.

2010/11 Canterbury earthquakes

The outstanding claims provision for the 2010/11 events has increased by NZ$112 million primarily due to the notification of new ‘over-cap’ claims from the New Zealand Earthquake Commission. While the majority of these costs will be absorbed by Suncorp’s reinsurance program, the Group expects to incur a net cost of NZ$18 million in the HY17 financial results.
Kaikoura Earthquake and Natural Hazard Costs

For the six months to 31 December 2016, natural hazard claims costs in Australia and New Zealand are estimated to be $350 million, $40 million above the natural hazard allowance of $310 million. This includes NZ$50 million for the net impact of the Kaikoura earthquake on 14 November 2016, $60 million for South Australian/Victorian storms in November 2016 and $50 million for Victorian/South Australian storms in December 2016.

Suncorp Group will present its financial results for the six months to 31 December 2016 on Thursday 9 February 2017.

Suncorp Appoints a Customer Advocate

Suncorp has today announced the appointment of a Customer Advocate to drive better outcomes and experiences for its nine million customers.

Chief Customer Experience Officer, Mark Reinke, said the new function would work across the business to identify and deliver opportunities to provide even better services to customers.

The function will be led by Executive General Manager Customer Experience & Group Customer Advocate, Debra Tagg. Ms Tagg has been instrumental in designing new and improved customer experiences, developing and embedding customer culture and leading customer strategy and insights since she joined Suncorp in 2010.

“With her passion for delivering strategic customer programs across Suncorp and her strong background in customer service, Debra is the ideal choice to drive Suncorp’s focus for this role,” Mr Reinke said.

“She will be an integral part of all strategic programs that influence customer outcomes, as well as play a leading role in Suncorp’s Financial Inclusion Action Plan.

“We’re committed to increasing transparency and accountability around the decisions we are making for our customers every day. This new function will challenge our current processes, identify areas for improvement and make it easier for customers when things go wrong.”

Banking & Wealth CEO David Carter said the appointment delivers on a banking industry commitment to better protect customer interests, but will also cover Suncorp’s significant insurance business.

“Suncorp’s new business strategy is centred on delivering greater value for our customers, which this new function will help us achieve,” Mr Carter said.

“With new products and services coming online this year to transform how we help Australians manage critical decisions in their lives, a Customer Advocate will help to ensure our approach is grounded and delivering for our customers.”

The Customer Advocate will have direct access to our Group CEO & Managing Director and will build on Suncorp’s culture where all employees put customer advocacy at the heart of what they do.