Suncorp Group Limited · ASX:SUN
Suncorp — Suncorp Metway — Asia-Pacific Financial Institutions Conference 2003
35 slides from Suncorp's conference presentation, Jul 7, 2003
Slide 1: Suncorp Metway Ltd – Asia-Pacific Financial Institutions Conference
SUNCORP METWAY LTD Asia-Pacific Financial Institutions Conference London, July 7, 2003 1
Slide 2: Agenda
Agenda • Overview - Strong strategic base - Our path to unlocking shareholder value • Business Unit Strategies - Retail Banking - Business Banking - General Insurance - Wealth Management • Financial Goals and Outlook 2
Slide 3: Our history
Our history Suncorp is Australia’s second largest general insurer and sixth largest bank, and has been created from two major mergers. METWAY BANK SUNCORP Diversified SUNCORP GIO QIDC Financial METWAY ACQUIRED (GOE) Services Dec 1996 Jun 2001 Company SUNCORP June 2003 (GOE) 3
Slide 4: Solid strategic foundation
Solid strategic foundation We have built a solid base in each of our three business lines Banking Gen Insurance Wealth Management Assets NEP Premiums Sales * $A23bn $A2bn $A910m Consumer Investment 2% 6% Residential Comrcl Super mortgages Home 21% 37% 59% Comrcl 16% 15% Motor External Property CTP 2
Slide 5: Unique business mix
Unique business mix Suncorp is the most diversified of the major financial services companies in Australia – making us distinct as a ‘financial services conglomerate’ Non-Banking Profit (% of profit before tax and goodwill) 38% 5-16%range Suncorp Other Major Banks Non GI / Wealth Profit • No other m
Slide 6: National distribution network
National distribution network Extensive national distribution footprint provides platform for growth Queensland 2 million customers Rest of Australia 172 branches & agencies 1.8 million customers 121 FAs, mobiles 99 branches & agencies 13 LJ Hooker consultants 33 FAs, mobiles 120 AMP insurance advis
Slide 7: Customer satisfaction
Customer satisfaction Suncorp has a loyal customer base and we have improved our satisfaction ratings over the last 3 years Customer Satisfaction Ratings 73% July 2000 69% Feb 2003 59% 59% Suncorp* Big 4 Average * Excluding GIO. Australians 14+ who hold a transaction account . Source: Roy Morgan Res
Slide 8: Financial performance
Financial performance Underlying profit* ($m) (Diluted, cps) 469 41.5 41.7 429 39.0 35.2 35.2 377 34.0 34.1 28.5 25.3 Cash EPS 22.9 231 18.5 16.7 17.9 15.9 12.9 14.1 11.1 11.8 11.0 10.7 Cash ROE 1999 2000 2001 2002 Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- Jun- Dec- 98 98 99 99 00 00 01 01 02 02 54 52
Slide 9: Competitive environment
Competitive environment • Financial services convergence • Customer ownership • Customer cross-sales • Customer service standards 9
Slide 10: Strategy parameters
Strategy parameters • Retain all three business lines • Manufacturer and distributor • Organic growth strategy priority 10
Slide 11: Unlocking shareholder value
Unlocking shareholder value Australia’s most successful financial services conglomerate Under-performing Conglomerate “Discount to Sum of the Parts” (1 + 1 + 1 = 2.5) 11
Slide 12: Unlocking shareholder value
Unlocking shareholder value Australia’s most successful financial services conglomerate Performing Conglomerate Under-performing Conglomerate “Sum of the Parts” (1 + 1 + 1 = 3) “Discount to Sum of the Parts” (1 + 1 + 1 = 2.5) 12
Slide 13: Unlocking shareholder value
Unlocking shareholder value Australia’s most successful financial services conglomerate Successful Conglomerate Performing Conglomerate “Secure Synergies” (1 + 1 + 1 = 4) Under-performing Conglomerate “Sum of the Parts” (1 + 1 + 1 = 3) “Discount to Sum of the Parts” (1 + 1 + 1 = 2.5) 13
Slide 14: Unlocking shareholder value
Unlocking shareholder value Australia’s most successful financial services conglomerate TORY WTH S Powerful T GRO corporate trader ISTEN S CON Successful “Corporate Conglomerate Transformation” Performing “Secure Synergies” (2 x 4) Conglomerate (1 + 1 + 1 = 4) Under-performing Conglomerate “Sum of t
Slide 15: Financial conglomerate model
Financial conglomerate model Corporate Centre Operating Synergies Opex Revenue Innovation Capital General Retail Business Wealth Insurance Banking Banking Management Customer-centric, service orientated 15
Slide 16: Cross sell and retention
Cross sell and retention Suncorp is Australia’s leading financial services company in products per customer Increase from Products per MFI Customer (# products) 1998 to 2002 (# products) 3.7 Mar-98 Dec-02 SUN 0.41 WBC 0.28 2.57 2.6 2.42 2.22 2.03 NAB 0.16 ANZ 0.11 SGB 0.06 CBA 0.01 SGB CBA ANZ WBC N
Slide 17: Leveraging shared processes
Leveraging shared processes Suncorp’s banking operations have And remain competitive with much reduced costs consistently…... larger peers 80% 80 2.03 2.0 72.1 70% 1.8 BEN 70 BOQ 1.60 Banking ADE 60% BWA 1.6 1.49 Cost-to-assets (%) 60 1.44 CBA 1.41 1.36 1.34 1.38 1.4 50% WBC 57.4 Suncorp SGB NAB 52.
Slide 18: Leveraging shared processes
Leveraging shared processes Suncorp’s GI operations have Suncorp’s expense ratio is below our significantly reduced expenses major competitors 27.2 28 25.4 25.1 24.4 24.2 22.1 22.1 Jun-01 Dec-02 Jun-02 Dec-02 Promina QBE IAG/CGU Suncorp General Insurance Expense Ratio (%) General Insurance Expense R
Slide 19: Synergies - Innovation & Capital
Synergies - Innovation & Capital • Innovation - transfer of best practices across business lines. • Capital - Capacity to share excess capital across business lines. Leads to capital relief from ratings agencies 19
Slide 20: Organisational restructure
Organisational restructure Revised structure, March 2003 Corporate Centre General Retail Business Wealth Insurance Banking Banking Management Authority, Accountability, Responsibility for P&L Customer-centric, service orientated 20
Slide 21: Accountable business units
Accountable business units Each Business Unit has a consistent design, with clear P&L accountability Business Unit Functional Structure Business Distribution Customer Processing Finance Development Management • Cross-sales • Implement • Product & • Implement • Finance development design service devt
Slide 22: Retail Banking portfolio
Retail Banking portfolio Retail Banking’s portfolio is dominated by low risk housing, predominantly in the Queensland market, but with growing presence in other states. By Segment By State By Distribution Channel* Mobiles Other WA 3% Victoria 6% 1% 72% Hooker 7% Housing NSW 94% Brokers 13% 17% Qld 7
Slide 23: Retail Banking initiatives
Retail Banking initiatives Home Loan Receivables A program of initiatives has $bn 13.47 13.59 been implemented to regain 13.37 13.15 13.22 13.29 home loan momentum • Tactical initiatives launched Dec 02 • Customer segmentation • Simplify and rationalise Oct Nov Dec Jan Feb Mar home loan product set
Slide 24: Retail Banking initiatives
Retail Banking initiatives The distribution network is being reorganised inside Queensland and nationally Rest of Australia Queensland • Drive new business via • Regional Manager Intermediaries, Alliances model, run like a small and GIO customer base. business • Review branch network • Direct accoun
Slide 25: Business Banking portfolio
Business Banking portfolio The business banking portfolio is well diversified by class of business and by geography By Segment By State Devt Commercial Finance 38% 14% Qld $1.29 bn 61% $3.39 bn $2.26 bn Property WA $2.12 bn Investment 1% 25% NSW Agribus. 23% Vic 23% Other 14% 1% (As at December 2002
Slide 26: Business Banking initiatives
Business Banking initiatives Commercial Business Banking Assets ($m) • Grow at twice system while maintaining asset quality 8593 9065 7649 7818 • Achieve “natural” market share in Qld 7092 7237 • Interstate - Redesign broker model. Boost cross-sales to GIO customer base Agribusiness • Grow at system
Slide 27: GI structural recovery
GI structural recovery (Annual price increase, %) 29 2001/02 Fire & ISR 20 2000/01 22 Public Liability 15 Professional 24 Indemnity 27 10 Marine and Aviation 3 6 Home 3 2 Motor 6 3 CTP 0 Source: ACCC. Second Insurance Industry Pricing Review, Sept 2002 27
Slide 28: General Insurance portfolio
General Insurance portfolio The majority of Suncorp’s business is in personal lines GWP ($m) National market shares Total 2166 June 2002 (%) WC 133 22 Commercial 498 17 15 14 CTP 483 Personal 10 Motor 616 Lines = 71% Home 436 12 months to Dec 02 Home Motor CTP WC Comcl Short tail business makes up a
Slide 29: General Insurance performance
General Insurance performance General Insurance has achieved considerable improvements in management of claims and expenses, delivering underwriting profits and increased ITRs Combined 118 8.0 Ratio 7.7 104 102 99 4.8 Loss 91 80 77 77 Ratio Expense 27 24 25 22 0.3 Ratio Jun 01* Dec 01 Jun 02 Dec 02
Slide 30: General Insurance initiatives
General Insurance initiatives Personal lines business to grow at GIO New Business Risks above-system rates (000)* • Rebuild GIO brand momentum • Maintain growth momentum in Qld home and motor • Introduce pricing engine to produce more competitive pricing Motor Commercial Insurance to be a Home sourc
Slide 31: Wealth Management FUM
Wealth Management FUM In funds management, General Insurance provides the business with the necessary critical mass FUM at March 2003 ($m) 9,626 9,626 External 674 Property 1348 341 Institutional World Fixed Int 613 World Equities 2001 3456 Cash Retail Aust Fixed 4118 Interest General 4822 Insurance
Slide 32: Wealth Management initiatives
Wealth Management initiatives Core market is Qld via SUN internal distribution network 3-Year Performance Ranking (%) • Focus: grow share of retail bank customer wallet from 8% to 10% Q4 Q3 Q2 Q1 Shares • Segmentation aligned to customer Bonds needs to drive growth in new customer segments - pre-ret
Slide 33: Long term financial goals
Long term financial goals Total Shareholder Return Five years to June 02. Top 200 Australian Companies(1) 200 • Grow revenue faster than 1st Quartile system 150 Suncorp • Annual productivity gains of 5-10% 2nd Quartile 100 • Banking PBT - high single digit growth 3rd Quartile 50 • ITR maintained 10-
Slide 34: Outlook for Full Year 2002/03
Outlook for Full Year 2002/03 • Banking: 8-10% increase in pre-tax profit • General Insurance: 9-12% Insurance Trading margin, assuming no major claims events • Wealth Management: second half profit flat on first half, lower over full year • Consolidated: 20% increase in underlying operating profit
Slide 35: Questions
Questions 35
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