Suncorp’s full year profit failed to meet market expectations, but a bonus payout to shareholders pleased investors.
The banking and insurance company will pay $192 million in special dividends, or 15 cents per share, meeting its board’s commitment to return surplus funds to shareholders.
The bonus payment illustrates the board’s confidence in its strategy and Suncorp’s ability to grow and meet future challenges, chairman Ziggy Switkowski said on Wednesday.
Suncorp made a net profit of $724 million in the year to June 30, a rise of 60 per cent from the previous year, in which the company incurred massive costs from natural disasters.
Cash earnings in the year to June were $819 million, up 29 per cent from the previous year, but below analyst expectations of $848 million.
“Our profit … is still below what we’d like to be delivering,” chief executive Patrick Snowball told analysts.
“But I’m sure you’ll recognise that we have been managing through another year of major natural hazards, volatile investment markets, and weak property prices.”
Weighing on the group was a $263 million full year loss from its ‘non-core’ banking operations – corporate loans and property investments it is seeking to exit.
“Unfortunately, with property prices falling, and only a limited market for some of the assets that we’re exposed to, the loss of the non-core bank will continue to receive attention,” Mr Snowball said.
“But the strategy … has not changed.”
The non-core bank was valued at $4.5 billion at June 30, but that is expected to come down to under $3 billion by June 30, 2013, Suncorp said.
Profit from insurance operations, which includes the AAMI and GIO brands, rose in the 2011/12 financial year, due mainly to premium price rises.
The company’s insurance margin, a measure of the profit it makes on premiums, rose to 12.1 per cent as of June 30, and Mr Snowball said the margin would be maintained or increased in 2012/13.
Meanwhile, Mr Snowball’s pay package rose to $8.3 million for the 2011/12 financial year, from $5.5 million in the previous year.
He was paid $3.98 million in cash in the year, with the remainder made up of shares and potential long-term incentives.
Suncorp’s special dividend was declared in addition to a final dividend of 20 cents per share, the same amount it paid out at the end of the previous year.
The company’s shares were up 29 cents, or 3.3 per cent, at $9.11 at 1232 AEST.