Suncorp Cuts New Mortgage Rates

Suncorp has unveiled a number of discounts on its investor and owner occupier loan products in response to being awarded Bank of the Year – Fixed Rate Home Loan by CANSTAR.

Effective from today (12 September), the bank’s Investment Home Package Plus two and three year fixed rates will drop by 0.20% p.a. and 0.30% p.a. respectively, bringing both rates to 4.29% p.a.

The follow additional special offer discounts for new standard variable lending will also come into effect today:

Back to Basics LVR New Loan Amount Current new business interest rate Additional discount Special discounted rate
Owner-occupied ≤90%
(inclusive LMI)
≥$150,000 3.78% p.a. 0.10% p.a. 3.68% p.a.
90% – ≤95% (inclusive LMI) 4.03% p.a. 0.10% p.a. 3.93% p.a.


Back to Basics LVR New Loan Amount Current new business interest rate Additional discount Special discounted rate
Owner-occupied ≤90%
(inclusive LMI)
≥$150,000 3.89% p.a. 0.10% p.a. 3.79% p.a.
First Home Buyers
≤95% (inclusive LMI) ≥$150,000 3.89% p.a. 0.10% p.a. 3.79% p.a.

In addition to the fixed rate award, Suncorp also received a five star rating for two of its home loan products:

  • Bank to Basics Owner Occupied Construction Loan
  • Home Package Plus Owner Occupied Fixed Rate Loan

“The CANSTAR award and five star ratings are further confirmation that we are offering products that deliver value for our customers,” said Suncorp banking & wealth CEO David Carter.

“In June this year, we announced some changes to interest rates to give additional support to customers in the owner-occupied market, and from today I am pleased to say we will go further. This is a reflection of recent reductions to fixed rate funding costs, allowing us to lower our two most popular fixed rate loan products for investors.”

The rate changes and special offers come into effect in what is traditionally a busy season for home buyers, he added.

“Customers who take advantage of these offers will also have the convenience of being able to access more than 3,300 fee-free ATM’s, as part of Suncorp’s new partnership with the rediATM network.”


Cross-selling ‘doesn’t work’, says bank CEO

From The Adviser.

Suncorp Group CEO Michael Cameron has suggested that cross-selling products to customers “doesn’t work”, but has touted the group’s new Marketplace model as being of benefit to brokers and customers alike.

Speaking after the release of the group’s full-year financial results, the CEO and managing director of the Suncorp Group said that its Marketplace model—which brings together products and services from across the company’s brands, including Suncorp, AAMI, GIO and Apia, as well as solutions from other providers—aims to provide customers with the option to find, use and buy additional services without being actively “cross-sold”.

The model takes advantage of the group’s buying and procurement power to give its customers access to a range of services and goods (such as car hire) from outside the group.

In a media briefing, Mr Cameron explained: “[The] traditional cross-sell doesn’t work. It hasn’t worked in Australia or anywhere else in the world. That goes along with both insurance and finance [products], which are really about creating value from your customers. But we are about creating value for our customers by providing access via call centres, apps, over-the-counter advisers, etc., to a huge suite of products and services and brands that we don’t manufacture or we bring from outside of the organisation.”

Mr Cameron added that the Marketplace model goes as far as potentially providing access to “many of [the group’s] competitors products”.

According to the group CEO, this Marketplace model, and associated app, is in the process of being rolled out to intermediaries, including brokers, and could benefit their business.

When The Adviser asked Mr Cameron about Suncorp’s broker strategy and remuneration, he said: “It is a very important area and I think if I look at it from a regulator’s perspective, there has been a lot of focus on reward and performance around some of the third-party intermediary distribution.

“Most brokers or distributors in this area tend to be very singularly focused on a particular product and very much shop around for various deals across the industry. By providing the Marketplace capability not only to ourselves, but to our intermediaries and our partners, we are actually able to put them into a position where they can provide a broader range of products and services with different brands. [This is] very much a complimentary type of service[s] that will allow more of a journey of buying a home, rather than just simply getting a loan.”

He added: “What we are going to be doing is putting into the hands of our intermediaries the skills, capabilities and, more importantly, the platform to be able to broaden that service that they provide to their ultimate customer.

“That is quite exciting, and I think the customers will be the real winners. And I also feel . . . that it is the sort of thing that our regulators will be pleased about as well as we create [model] for our customers rather than from our customers.”

The Suncorp CEO said that it is working on the Marketplace “single digital experience” (and will be investing an additional $100 million [after tax] to deliver the “key components” of this in the coming financial year), which is already being rolled out to the broker network.

He said: “We are already starting to roll out, through parts of our network, some of those benefits to our brokers today, and it will probably be never-ending. . . . We will continue to add access to a variety of products and services.”

While the group has been investing heavily in the Marketplace model and technology, the endeavour has not been without its hurdles.

The bank’s migration of loans and lending origination to the core banking platform, supplied by Oracle, began last year but has “taken longer than expected to fully embed and adapt for use in the Australian market”.

The group has revealed that while it will soon complete the final migration phase for the remaining retail loans, it will then “pause the migration of deposits and transaction banking products, pending further system enhancements from the vendor”.

Speaking at the briefing on 3 August, Mr Cameron said: “Just in relation to Oracle and our relationship there, what we have chosen to do with just a small group of our products is to leave them running on the old system rather than take a chance or risk in actually launching on a new platform.

“At the end of the day, the customer experience is what counts. We don’t want to be in a situation where we are getting outages, so all we are really doing is waiting for a new version of the same software to be released, which incorporates the sorts of things that we want rather than build them ourselves internally.”

He continued: “It will actually cost us a little less. It will de-risk the operations from a customer perspective, and it means just running two systems for a period of time.

“Whilst it’s not ideal, it’s something we thought long and hard about. But it certainly won’t be getting in the way of building and launching a single digital platform and, in many ways, it does help us free up capacity to do that.”

Overall, the full-year results show that the group made $1.07 billion of net profit after tax, up 3.6 per cent on the prior year, which Mr Cameron said was indicative of “disciplined management of margin and sensible balance between reducing overheads and investing in the future”.

Suncorp Bank’s housing portfolio now sits at $44.8 billion (up from $44.27 billion in 2016), with 66 per cent coming from the “intermediary channel”.

Suncorp FY17 Results – Margin Still Under Pressure

Suncorp Group Limited today reported NPAT of $1,075 million (FY16: $1,038 million) for the 12 months to 30 June 2017, an increase of 3.6%. They announced a a final dividend of 40 cents per share fully franked, bringing the total dividend to 73 cents per share (FY16: 68 cents) which represents a payout ratio of 81.9% of cash earnings. The results were helped by overall lower provisions. The repricing of mortgages helped also, but despite this bank NIM fell and home lending past due rose a little. So, its still a tough gig!

Suncorp is a complex portfolio of businesses, with a significant concentration in Queensland, so you have to look at each element. Given our focus on retail banking we will dive a little deeper there.

The Insurance business delivered NPAT of $723 million, up 30%, due to strong top-line growth and lower claims costs. The General Insurance business continued to see strong progress in remediating claims cost issues in the Home and Motor portfolios. GWP increased by 3.9% following strong growth in New South Wales CTP, premium increases in Home and Motor products and the successful entry into the South Australian CTP scheme. Commercial insurance GWP reduced 2.2% as pricing increases and strong retention in the SME segment was offset by lower retention in the Corporate segment. Reserve releases of $301 million (FY16: $348 million) remain well above long-term expectations of 1.5% of Group net earned premium (NEP). Life Insurance planned margins and underlying profits remained stable.

Suncorp’s additional reinsurance aggregate cover purchased for FY17 created significant shareholder value and increased resilience to natural hazards. Given the success in FY17, a similar cover has been purchased for FY18. The new cover provides $300 million of cover once the retained portion of natural hazard events greater than $10 million exceeds a total of $475 million. The retained natural hazards allowance has increased to reflect the higher natural hazards costs experienced in recent years.
The upper limit on Suncorp’s main catastrophe program, which covers the Group’s Home, Motor and Commercial Property portfolios for major events, will remain unchanged at $6.9 billion for the 2018 financial year.

The Banking & Wealth business delivered NPAT of $400 million, impacted by investment in the Core Banking and Wealth platforms to support Suncorp’s strategy.

The Banking business achieved NPAT of $396 million with a focus on sustainable profitable growth while adapting to changing economic and regulatory dynamics.

Lending growth of 1.9% reflected improved momentum in the second half of the financial year. They have throttled back on higher LVR loans.

Home lending remains a large part of the business, with about three quarters of loans principal and interest, and with a concentration in Queensland.

The past due has risen this past year.

NIM of 1.83% reflects targeted repricing of mortgage rates, but is still down on FY16.

The cost to income ratio of 52.7% was a result of stable operating expenses and the subdued growth environment.

Impairment losses reduced to $7 million, representing 1 basis point of gross loans and advances.

The Wealth business NPAT of $4 million reflects the cost of completing the Super Simplification Program and lower investment returns. Funds under management and administration increased by 0.8%.

They continue to drive “Project Ignite” (migration of core banking to its new Oracle platform), but said they would halt the migration of deposits and transaction banking products while it waits on upgrades from the vendor.

New Zealand achieved NPAT of A$82 million, impacted by claims costs associated with the Kaikoura earthquake and the associated reinsurance reinstatement expense. New Zealand General Insurance profit reduced to A$45 million, however underlying ITR was above the Group’s target of 12%. GWP growth of 6.3% was primarily driven by the Motor and Home portfolios. New Zealand Life Insurance delivered NPAT of A$37 million with a stable underlying profit of A$39 million, offset by negative market adjustments. During the financial year, the New Zealand business disposed of its Autosure motor insurance business. The sale resulted in a release of capital of A$30 million and will be accretive to the New Zealand long-term return on equity. A goodwill write-off of A$25 million has been included as a non-cash item in the Group result.

Capital and Dividend
The Board has determined a fully franked final dividend of 40 cents per share. This brings total ordinary dividends for the 2017 financial year to 73 cents per share, up 7.4%. This represents a dividend payout ratio of 81.9% of cash earnings, slightly above the top end of the 60% to 80% dividend payout range and reflects the Board’s confidence in the outlook for the Group.

After accounting for the final dividend, the Suncorp Group’s Common Equity Tier 1 (CET1) is $377 million above its operating targets.

The General Insurance CET1 is 1.32 times the Prescribed Capital Amount and Bank CET1 is 9.23% are above the top end of their target ranges.
The Group has $235 million of franking credits available after the payment of the final dividend. It has a strong capital position.




Suncorp Lifts Fixed Investor Loan Rates

Suncorp has lifted rates on new and in flight fixed investment home loan offers effective today, impacting Home Package Plus Fixed, Standard Fixed and Annual Interest in Advance Loans (AIIA) interest rates.

They say this is to “ensure the bank remains compliant with regulatory caps on investor and interest only lending.”



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.”