Suncorp expects earnings increaseSource: SYDNEY AAP Date:...

Suncorp expects earnings increase
Source: SYDNEY AAP
Date: 2005-Feb-25 08:56 AM

Financial services group Suncorp-Metway expects to see a substantial increase in underlying earnings in the 2004/05 year.

It said the increase would be driven by improvements made to the business and a strong first half.

"The first half profit was clearly a very strong result, and while we will be working hard to maintain that profit growth momentum in the current half, there were some factors in the first six months, like strong investment returns, that may not be repeatable," chief executive John Mulcahy said.

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Suncorp has announced a net profit of $413 million for the six months to December 31, up 47 per cent on the previous corresponding period.

It also declared a fully franked interim dividend of 42 cents, up from 30 cents for the first half of 2004.

"This is an excellent set of results, exceeding expectations at the start of the year," chairman John Story said.

"Each of the business lines - banking, insurance and wealth management - is now performing well.

"The problems that the group was experiencing two years ago have been fixed and the company is now fit and competitive."

Mr Mulcahy said the first half had been a period of progress.

"The competitive environment in financial services is tough, and only getting tougher, but we are now well positioned to confront the challenges and are making excellent progress," he said.

The banking business contributed $220 million to pre-tax and goodwill profit of $608 million, general insurance $341 million and wealth management $42 million.

All three sectors improved on the previous first half with banking earnings up 24.3 per cent, general insurance up 58.6 per cent and wealth management up 16.7 per cent.

Suncorp said that despite a slowing home lending market, it had consolidated the strong improvement in home loan sales of the June half and is now outperforming the market.

Home loan receivables were up 18.8 per cent to $18.5 billion, compared with 14.9 per cent growth for the home lending market as a whole.

The general insurance result was driven by good revenue growth, improved claims experience and increased investment income.