Suncorp lowers dividend as profit hit by higher claims
A sharp rise in natural hazard claims has sparked a 29.1 per cent fall in Suncorp’s cash profits to $361 million for the first half, and a cut to the dividend.
The financial conglomerate on Tuesday said its natural hazard claims costs for the six months to December had hit $695 million, which was $205 million more than expected in the first half of the financial year.
Australia has been hit by several damaging storms over the past six months, leading to a high number of insurance claims. Credit:Brook Mitchell
While earnings in its flagship insurance division were bogged down by claim costs, Suncorp’s banking arm posted a 5.3 per cent rise in profit after tax to $200 million.
According to figures from Jarden, the result is ahead of analysts’ consensus.
Australia has been hit by several damaging storms over the past six months, leading to a high number of insurance claims.
Chief executive Steve Johnston said: “While we have been challenged by the La Niña climate pattern and the operational impacts of COVID-19, we continue to deliver against our strategic priorities and have good momentum as we move into the second half of 2021-22.”
In Suncorp’s flagship insurance division, insurance profit dropped 55.8 per cent to $114 million, after more than 50,000 natural hazard claims in the half.
In its banking arm, lending grew by 2.7 per cent in the half, but as seen among other banks, its net interest margin was squeezed, falling 12 per cent to 1.97 per cent.
As well as the hit from higher-than-expected claim costs, Suncorp said its income from investment markets was also down significantly.
Suncorp will pay a dividend of 23¢ a share, down from an interim payment of 26¢ last year. The dividend is at the upper end of its dividend payout ratio target range of 60 per cent to 80 per cent of cash earnings.
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