Quarterly Results Showed Suncorp Is Maintaining Its Home Lending Portfolio Within APS330 Range

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Suncorp Group (ASX: SUN) has shared a quarterly update for the quarter ended 30 September 2018, as per the Australian Prudential Standard 330. Total growth in the lending was 0.5% over the quarter. The home lending portfolio remained within the range set by the macroprudential.

David Carter, the CEO of Suncorp Banking and Wealth stated that the results of this quarter reflected company’s ongoing commitment towards accountable and sustainable lending practices performed which is essential to remain in a competitive market. As compared to the previous quarter, this quarter the growth in the home lending portfolio is up by 0.8% or $361 million. Suncorp continues to focus considering the current risk appetite of the company for driving sustainable, profitable growth. They are also looking forward to focus on the additional verification of the home lending customers. By following this in the long run, the group will be able to moderating the ongoing growth in home lending by FY2019.   

This quarter experienced a slight contraction in the business lending growth. There was a moderate growth seen in commercial and small business portfolios as a result of reduction in agribusiness lending followed by the repayment of debt.

Considering the risk appetite of the company, the next step of the company will be to target new business opportunities across various other industries. The company also highlights about the agricultural sector that is facing challenge. However, it is also hopeful about the economy, that is benefitted by a relative weaker Australian dollar, continuous strengthening of the resource sector and historically low interest rates. The company remains strong in terms of credit quality even though there was a net positive movement in impairment losses. It was also driven by recovery of small number of unique customers. The stability of gross impaired assets of $140 million was maintained over the quarter.

A continuous impact was seen in the wholesale funding cost due to the increased elevated Bank Bill Swap Rate (BBSW) which was in line with the broader industries. In order to support a sustainable and diversified funding base and also achieve a strong increase in at-call deposits which have grown significantly over the quarter, Suncorp issued a five-year $750 million covered bond. The net stable funding ratio of the company was 111% by 30 September 2018.

Based on the payment of FY2018 and interim dividend to Suncorp Group, Common Equity Tier 1 ratio of 8.9% represents a healthy capital status as per the upper end following in the range of 8.5% to 9.0% of the targeted operating range.

The company has some how managed to maintain a positive performance since its inception. The 1 year, 5 years and 10 years’ performance of the company have been 1.39%, 8.52% and 74.14%, respectively. The YTD performance of the company is 1.61%. The 6 months’ performance of the company is -0.12%.The current market price of the share is A$13.83 which has gone down by 1.214% since morning which is equivalent to -0.17 points. The market capitalization is A$18.18 billion and PE ratio is A$17.04.


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