Suncorp’s dividend omen

Suncorp released its results this morning which included a 21% cut to the dividend:

Suncorp Group Limited (Suncorp) today reported net profit after tax (NPAT) of $530 million (HY15: $631 million) for the six months to 31 December 2015. Profit after tax from business lines was $544 million (HY15: $681 million). Chairman Ziggy Switkowski said Suncorp has declared an interim dividend of 30 cents per share fullyfranked (HY15: 38 cents) representing a payout of 69% of cash earnings. “The interim dividend reflects positive earnings contribution from across the Group’s diversified insurance and banking businesses. The half year net profit after tax of $530 million demonstrates the benefits of a financial services conglomerate with the Banking and Life operations delivering improved underlying profits at a time when General Insurance earnings have been impacted by external headwinds and operational issues,” Dr Switkowski said.

Hmm, wonder what they are? Shares were hammered on the open but rebounded to flat. The chart remains dire:

tvc_d6089551ab651b7e2df3d8cab99b2484

More broadly the banks are trying and failing to rally with CBA down -1.2%, WBC and NAB down -0.4%, ANZ flat, BOQ down -1.7% and BEN up 1.3%:

tvc_d97477d038367046cec566c0125c9e7f

The yield trade is busted, net interests margins are cooked and bad loans are coming.

David Llewellyn-Smith

Comments

  1. They will have to raise interest rates which will cause more defaults. This is going to end badly for property

    • Why will they have to raise interst rates?
      My bet is that unless the government voluntarily runs a bigger deficit to stimulate the economy using fiscal policy, the last 30 years show that interst rates have to keep getting eased to stimulate increased private debt to provide growth in the economy.
      Given the current US and Chinese and Australia outlooks I would bet on rates not being any higher in 1 and 2 years from now.

    • There is a very low correlation of interest rates to loan defaults. Of far greater concern would be a significant increase in unemployment. People can’t pay their loan when they don’t have an income. Most of the fall in profit vs forecast came as a result of the general insurance operation.

  2. QBE are more fucked…
    (soz it seems I have a slight dose of Tourette’s whenever posting here..not sure why)