Suncorp Targets Elevated Dividend Ratio After Fiscal Year Profit Rises 3.6%

By Robb M. Stewart Features Dow Jones Newswires

MELBOURNE, Australia--Suncorp Group Ltd. (SUN.AU) flagged plans to maintain a dividend payout ratio above its usual target range for the year ahead as it committed to returning surplus capital to shareholders.

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The decision, which it said was aimed at offsetting the impact on cash earnings of additional investment, followed a modest increase in Suncorp's full-year profit as a jump in earnings from its Australian insurance operation offset weakness in New Zealand and in its banking and wealth division.

Net profit rose 3.6% to 1.08 billion Australian dollars (US$856.6 million) in the year through June from A$1.04 billion the year before, the insurance and regional-banking company said. Revenue was 12% higher at A$17.4 billion.

Suncorp said it would pay a final dividend of A$0.40 a share for a full-year dividend of A$0.73, up from a A$0.68 payout last year. The full-year dividend represents a payout ratio of 81.9% of cash earnings, slightly above the top end of its 60%-80% target, and the company said it intended to increase the payout ratio for the 2018 financial year above the top end of the range.

Suncorp said it would invest a further A$100 million in its "marketplace" strategy, which seeks to create a single digital network accessible through an online app, and also aims to refresh the Suncorp brand and accelerate the connection of new third-party partners.

A focus on customers had led to an increase in numbers over the last year, Chief Executive Michael Cameron said.

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Brisbane-based Suncorp, which until the late 1990s was owned by Queensland's state government, said net profit at its Australian insurance arm climbed 30% to A$723 million thanks to strong top-line growth and lower claims costs. Gross written premium increased by 3.9% to A$8.11 billion, while reserve releases of A$301 million remained above long-term expectations, it added.

Suncorp's banking and wealth business recorded a profit of A$400 million, down from A$418 million, which it said reflected investment in the core platforms to support its strategy. Lending grew 1.9% thanks to improved momentum in the second half of the financial year, it said.

Profit in the New Zealand division dropped to A$82 million from A$183 million, impacted by the cost of Kaikoura earthquake and additional claims from the 2010-2011 Canterbury earthquakes.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 02, 2017 19:16 ET (23:16 GMT)