Suncorp warns on pandemic hit, banking CEO departs
Suncorp has warned its insurance division took a $205 million hit from market volatility in the March quarter, as it also flagged higher provisions for bad loans and the underpayment of some of its employees.
In a wide-ranging market update on Monday, Suncorp revealed the impact of volatility, and said its banking division would take a $133 million hit from provisions for the potential economic damage caused by the pandemic.
Suncorp said its banking division would take a $133 million hit from provisions for the potential economic damage caused by the pandemic.Credit:AAP
Suncorp banking chief Lee Hatton is also departing after only three months in the job, after she accepted a job with Afterpay.
Suncorp also became the latest major Australia company to reveal historical underpayments of staff, saying early analysis pointed to errors in its payment of overtime, shift penalties, and public holiday loadings. It estimated the combined costs of reimbursing staff and correcting errors in its systems would be between $40 million and $70 million.
The Brisbane-based financial conglomerate that there was a $205 million market to market loss in its insurance division's investment portfolio in the March quarter, though some of this impact had been unwound with the market's bounce in April.
As well, the company said it expected higher and more frequency claims on its landlord insurance policies, which cover against loss of rental income. Against those higher costs, it has been receiving fewer claims for motor cover in both Australia and New Zealand since movement restrictions were imposed to contain the pandemic.
Suncorp banking CEO Lee Hatton is leaving after just three months in the job.Credit:Dominic Lorrimer
Suncorp's banking division took a $133 million provision for bad loans caused by the pandemic, based on economic scenario modelling that included an 11 per cent slump in house prices and surge in the unemployment rate to 11.5 per cent.
The bank said Ms Hatton was leaving the lender after only three months in the position. Ms Hatton, the former chief of National Australia Bank's digital offshoot UBank, had accepted a role with Afterpay.
Suncorp chief executive Steve Johnston said: "Lee is a highly capable executive and I am disappointed to see her depart after a short time with the group. I respect her desire to spend more time closer to home and I wish her well."
The bank also flagged a $90 million non-cash impairment on its core banking platform, as the bank said it expected loan growth would contract in the fourth quarter.
On the underpayment, Suncorp said it had reported the issue to the Fair Work Ombudsman, after the concerns were raised following an internal review launched in November last year. it has engaged Deloitte to assist the board will hold regular meetings to monitor progress with the review.
Mr Johnston said: "As a Suncorp employee of long standing I am incredibly disappointed that we have let our people down - there is no excuse and we need to get this right. I want to offer my sincere apologies to those who may have been affected."