Suncorp Targets Elevated Dividend Ratio After Fiscal Year Profit Rises 3.6%
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.
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.
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.
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(END) Dow Jones Newswires
August 02, 2017 19:16 ET (23:16 GMT)