COVID-19 pushed Suncorp to accelerate digital as ongoing business profit drops
Suncorp Group remained profitable for the 2020 financial year amid what its CEO Steve Johnston labelled a challenging year.
After-tax profit increased year over year by AU$738 million to AU$913 million. It was comprised mostly of AU$285 million in after-tax profit from the sale of the Capital SMART and ACM Parts business and included an AU$89 million non-cash impairment charge relating to the core banking platform.
Suncorp's Australian insurance arm pulled in AU$384 million in after-tax profit, down nearly 34%; banking and wealth accounted for AU$242 million, down 33.5%; and its New Zealand operations remained the same with after-tax profit of AU$245 million.
Cash earnings for the 12-month period were AU$749 million, down 32.8% on the prior year. Operating expenses increased 2.3% and revenue for the year was AU$14.7 billion.
In delivering Suncorp's results, Johnston said the group continued to leverage its investment in digital and data, with 14% growth in digital users and continued increase in new business sales and claims lodgements through digital channels.
"Suncorp entered the COVID-19 crisis in a solid position and responded quickly to keep our people safe and our customers in need protected through access to financial relief measures. At the same time, we have maintained the financial and operational strength of our business," he added.
"While our financial performance, particularly in the second half, has not been immune from the negative impacts of COVID-19, there were a number of highlights which demonstrate the group has solid foundations."
Johnston said digital channels helped drive growth in the group's Australian motor and home insurance portfolios, with natural hazard costs and larger home liability claims accounted for mostly in the second half of the year in the wake of the country's bushfire season.
He also said that while the pandemic would have long-lasting health and economic implications, it presented opportunities for Suncorp to accelerate the pace of organisational transformation.
"The growing preference for digital and reliance on technology is shifting the way we work and the way we support customers," Johnston told shareholders.
"Our teams embraced more agile ways of working to fast-track digital solutions, including enhanced web chat capabilities, online claims functionality, and virtual claims assessments.
"This period has fundamentally changed our perspective on what's possible and how quickly and efficiently we can adapt to deliver new customer experiences and drive greater efficiencies within the organisation."
In July, Suncorp announced a new operating model, aimed at improving the performance of its core insurance and banking businesses.
The new function -- technology and transformation – is led by Suncorp's recently appointed CIO Adam Bennett, who joined the group from the Commonwealth Bank of Australia. Within this function, Bennett is responsible for driving the group's technology infrastructure and delivery, digital platforms, data, automation agenda, and the group's overall digital-first approach.
"This model aims to reduce duplication, embed more efficient ways of working, and embrace opportunities for greater innovation," Johnston said on Friday.
"The health and economic headwinds of COVID-19 will continue to be felt for some time, but the lessons of the past year position us to withstand future challenges and to continue executing against our key priorities."
Johnston said the priorities include improving the performance of its core business, improving operational efficiency, leveraging its investments in data and digital, and embracing regulatory change.
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