Suncorp cash earnings dive 30% as banking group calls for national response to climate change

One of Australia’s most prominent banking groups has called for a national response to climate change as its cash earnings plummet.

Banking and insurance group Suncorp says governments can no longer leave climate change in the “too-hard basket”, warning extreme natural disasters will hurt businesses already grappling with the effects of COVID-19.

In its results for the 2020 financial year, the company said bushfires that swept across Australia last summer and the onset of the pandemic had slashed its profits by one-third.

Suncorp posted a cash profit of $749 million, a 33 per cent slump compared with the previous year, describing 2019-20 as “challenging”.

The group’s statutory net profit was $913 million, up more than fourfold from $175 million the prior year, driven by proceeds from the sale of its Capital SMART and ACM Parts businesses and a non-cash impairment charge of $89 million related to its core banking platform technology.

Insurance profit for the period was down 34 per cent to $384 million, while banking profits tumbled 33.5 per cent to $242 million.

The Queensland-based company blamed bushfires and the global coronavirus pandemic for a more than 30 per cent dip in profit. Picture: Supplied

Suncorp chief executive Steve Johnston said governments rightly respond to the initial impact of the health crisis, but climate change remained an ongoing risk for communities and the economy.

“This can no longer remain in the too-hard basket,” he said.

“Suncorp has long argued for a national co-ordinated response to disaster mitigation and natural hazard resilience to deal with the impacts of climate change.”

Mr Johnston said a nation-building program to mitigate climate risks would benefit communities and provide much-needed economic stimulus.

Natural hazard costs remained in line with its allowance of $820 million despite significant bushfire, flooding, hail and storm events.

Suncorp CEO Steve Johnston says climate change is major risk to communities and the economy. Picture: John Feder/The Australian.

Suncorp blamed COVID-19 for a $140 million negative impact on its result due to lower new business volumes for insurance, reduced claims and banking impairment losses caused by a greater need of provisioning capital.

Repayments on 9800 customer loans were suspended through hardship measures.

Around 31,000 motor and home insurance customers received three-month premium waivers or discounts, while 26,000 doctors, nurses, hospital staff and first responders received free AAMI roadside assistance.

S&P Global Ratings said the results were sound despite particularly challenging operating conditions, and broadly consistent with its expectations and outlook.

“Defensive management actions and a conservative balance sheet structure subdued the effects of heightened natural hazard claims, material market volatility, and strengthened provisions,” the ratings agency said.

Suncorp declared a final dividend of 10 cents per share, bringing the full year payout to 36 cents per share.

The company’s shares jumped more than 9 per cent to $9.53 in intraday trade.