Suncorp mortgage deferrals down to just 1% of loans

author-avatar By on February 09, 2021
Suncorp mortgage deferrals down to just 1% of loans

Suncorp's half-year results indicate a significant fall in its loan deferral numbers over the past six months, as well as a fall in profit.

The results released today show cash earnings were up 39.5%, while net profit was down 23.7% compared to the prior corresponding six months.

Net profit was $490 million over the six month period up to the end of December, while importantly for home loan customers, the latest prudential regulator data reveals Suncorp's loan deferrals amounted to 2,645 loans worth $644 million, or 1% of the total loan book, with housing making up $508 million of that. 

This is down from about 14,400 loans as at June 30, worth $4.8 billion.

Approximately $338 million in loans exited deferral in December 2020, while just $30 million worth were new or extended.

In terms of housing loans deferred, Suncorp is tracking better than the industry average, at 1% of loans deferred versus the 2% in the wider market.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Suncorp's results indicate $404 million worth of mortgages were past due 90 days or more, but 'not impaired', implying it expects borrowers to repay the full value of the loan, with COVID-19 deferrals not being treated as 'in arrears'.

This $404 million figure is down on results from $430 million as of 30 September.

On the other hand, $60 million worth of mortgages were impaired as of 31 December, which is up $7 million on 30 September's results.

Impaired assets in property investment are also at $19 million at the end of the year, up from $16 million as of 30 September.

Nonetheless, Suncorp Group CEO Steve Johnson said the brand's results were promising despite challenging pandemic conditions.

“Suncorp enters the second half of FY21 in good shape, with momentum starting to build across our businesses and our balance sheet remaining very strong,” he said.

“Over the past year, we have refocused our strategy, continued to implement the ongoing regulatory program of work, improved our customer service, reinvigorated our brands, further digitised our business and become more efficient.

“I am proud of how the Group has delivered on these commitments and been true to our purpose in a challenging year."

Mr Johnson said the Group's performance is in large part due to the strong insurance business.

“Suncorp will keep advocating for an urgent coordinated response from all levels of government to make our communities more resilient to natural disasters and ensure that insurance is affordable and accessible," he said.

Vice President of Moody's Investors Service Frank Mirenzi said the performance was also due to increasing insurance premium rates.

"Suncorp Group Limited’s strong earnings ... are underpinned by an improved economic outlook," he said.

"Expanding the bank’s lending portfolio will be a key challenge for the second half [of 2020-21 financial year]."

Suncorp was the first bank to publish its six-month results, and Westpac's credit strategy team said it sets the tone for the wider market.

"The mix of low asset growth, margin pressure, loan deferrals and provisioning impacts, and funding requirements (or lack thereof) will all be closely watched," they said.

CommBank's half year results are expected tomorrow.


Image: Harrison Astbury

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Harrison joined Savings in 2020. He is an experienced journalist, with previous stints at News Corp and financial comparison site Canstar. With a keen interest in personal finance, Harrison is passionate about helping consumers make more informed financial decisions.

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