Bloomberg News

Suncorp Drops Most in 5 Months on Profit Fall: Sydney Mover

July 31, 2013

Suncorp Group Ltd. (SUN), an Australian lender and insurer, fell the most in 5 months in Sydney trading after saying full-year profit declined as much as 34 percent, wider than analysts’ estimates.

Suncorp shares dropped 3.4 percent to A$12.38 at 11:38 a.m. in Sydney, on course for the most since Feb. 26. The benchmark S&P/ASX200 index rose 0.4 percent.

The Brisbane-based insurer estimates a year-to-June 30 profit of A$480 million ($430 million) to A$500 million, compared with A$724 million a year earlier, according to a statement yesterday. That is lower than the A$586 million mean forecast of 10 analysts surveyed by Bloomberg before the company’s statement.

The lower profit includes a full-year A$630 million loss from its non-core loans portfolio, it said in the statement. Suncorp received A$940 million from Goldman Sachs Group Inc. (GS:US) for the sale of mostly bad loans, which it sold at 60 cents for every dollar. Suncorp said June 13, the non-core portfolio had shrunk to A$2.8 billion as at May 2013.

The company’s board intends to declare a special dividend of 20 cents a share, in addition to a final dividend of 30 cents, it said.

Suncorp still has “downside earnings risk” for the next year and the “potential for further special dividends is low,” Credit Suisse Group AG’s (CSGN) Sydney-based analyst, Andrew Adams, said in a note to investors today.

To contact the reporter on this story: Narayanan Somasundaram in Sydney at nsomasundara@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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