Financial services company Suncorp expects margins to grow in the second half of the financial year after lifting its revenue and dividend but reporting a relatively flat net profit in the first half.
Queensland-based Suncorp on Thursday reported a net profit for the half-year ended December 31, 2016 of $537 million - up 1.3 per cent on the profit of $530 million a year earlier.
The result included a loss of $25 million on the sale of its New Zealand Autosure car insurance business, and lower investment earnings of $79 million, down from $133 million a year earlier.
Cash earnings grew to $584 million, from $556 million and revenue lifted 10.8 per cent to $8.64 billion.
Suncorp said growth in insurance premiums and a strong focus on claims management are expected to deliver an improvement in the underlying insurance trading ratio in the second half.
"Across its business portfolio, Suncorp's outlook is for margin growth," the company said on Thursday.
Also, Suncorp Bank's recent increase in mortgage rates, and aggressive competitor behaviour, is expected to deliver an improved net interest margin in the second half.
Suncorp said it is targeting a flat cost base in the 2017 and 2018 financial years, and remains committed to returning surplus capital to shareholders.
The group lifted first-half dividend by three cents, to 33 cents per share, saying the increase reflected a strong capital position, improved cash earnings and confident outlook.
In the first half, Suncorp's Australian insurance business lifted its profit by 42.5 per cent to $369 million due to a 6.2 per cent lift in gross written premiums, lower claims costs and expense management.
The banking and wealth business generated a profit of $208 million, marginally higher than the profit of $207 million in the prior corresponding period, reflecting improved operating expenses and strong credit quality.
The net interest margin was 1.78 per cent - impacted by the lower cash rate and aggressive competition - but Suncorp says it remains in the target range of 1.75 to 1.85 per cent.
Profit from Suncorp's New Zealand business fell to $36 million from $78 million, impacted by the Kaikoura earthquake and more claims from the 2010/11 Canterbury earthquake.
Suncorp shares were 4.5 cents higher at $13.075 at 1136 AEDT.
SUNCORP seeks to LIFT MARGIN AFTER FLAT H1 PROFIT
* First-half net profit up 1.32pct to $537m
* Revenue up 10.79 per cent to $8.64bn
* Interim dividend of 33 cents a share, fully franked, up from 30 cents.
