Suncorp's FY21 profit surpassed $1b mark as tech investments continue

Technology upgrades might have cost Suncorp AU$19 million in FY21, but the company still achieved significant growth in net profit and cash earnings.
Written by Aimee Chanthadavong, Contributor

Suncorp Group has reported bumper profits for the 2021 financial year while investments in strategic initiatives such as technology upgrades continued.

For the period to 30 June 2021, Suncorp Group recorded after-tax group net profit of AU$1.03 billion, up 13% from AU$913 million last year, while cash earnings lifted 42% to AU$1.06 billion.  

Group operating expenses were AU$2.8 billion, slightly up from AU$2.75 billion, which the company attributed to a temporary increase in initiatives such as technology upgrades and higher marketing spend. The company outlined that technology costs came in AU$19 million and another AU$31 million was spent on "projects costs".

"Project costs have increased over the year, primarily due to the temporary step up in spending on strategic initiatives," Suncorp Group CFO Jeremy Robson told shareholders on Monday.

"The majority of spending this half has been on digital-first experiences and revitalising growth in insurance. In banking, our investment has been focused on winning in home lending. We also saw a modest increase in growth-related costs, with increased marketing offset by lower commissions.

"Technology costs increased mostly in relation to the new telephony platform and increased cloud hosting costs from digitising the business."

More specifically, its banking and wealth business saw after-tax profit rise by 69% to AU$419 million, which was partly offset by a 3.7% increase in operating expenses to AU$731 million for the full year due to investment in technology and a temporary increase in spending on strategic initiatives.

"The investment in strategic initiatives was primarily in winning in home lending, optimising blended distribution, digitisation, and automation. Branch optimisation resulted in the bank having 29 fewer branches at the end of FY21," Suncorp reported.

Digital engagement also progressed well in FY21, the group said, reporting that the average monthly Sun App logins per customer increased by 34% where there are now over 600,000 digitally active customers and over 1 million Sun App logins recorded each week. The portion of products originated digitally rising from 8% in FY20 to 15% for home loans and from 63% to 64% for deposit accounts, Suncorp added.

The increase in digital engagement corresponded with the bank reporting a decline in contact centre calls of 19% and branch transactions of 20% in the last year, and by 57% compared to four years ago.

Similar levels of digital engagement were also experienced by the group's insurance business where, during the year, 21% of consumer motor and home claims were lodged via online channels.  

"Following growth in FY20, there was a further 13.7% increase in digital sales volumes and 13% increase in digital service transaction volumes for the group's mass brands, across home, motor, and CTP products," Suncorp said.

Over in New Zealand, its profit after tax was down 17% to NZ$215 million, which the company blamed on higher natural hazard costs and lower investment income.

Despite this, Suncorp New Zealand continued to consolidate to a single claims platform and roll out its ongoing automation initiatives.

"In New Zealand, we have made good progress growing our brands and partnerships. Again, you can see that in these numbers. Our best in class claims program is progressing and we are continuing to automate, reduce manual processes, and simplify our customers' claims journey," Suncorp Group CEO Steve Johnston assured.

Looking ahead, the company said as it continues to invest in the business, it expects group operating expenses to be around AU$2.8 billion in FY22, and by FY23 it will return to around AU$2.7 billion.

"The initiatives we have are clear and simple and we believe the results we are presenting today confirm the good progress we are making," Johnston said.

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