Suncorp stock price outperforms as home loan portfolio grows by $800 million
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the Suncorp Group Ltd. (ASX:SUN) The stock price defied much of today’s decline after the release of the company’s quarterly banking sector report.
Suncorp shares slump only slightly, while the broader market suffers. the S&P/ASX 200 Index (ASX:XJO) is currently down 1.05%.
At the time of this writing, Suncorp’s stock price is $11.27, 0.4% lower than its previous close.
Here’s what the banking and insurance provider announced today.
Suncorp share price outperforms on bank growth
- Suncorp Bank’s home loan portfolio increased $803 million, or 1.7%, in the March quarter
- Meanwhile, its business loan portfolio grew by $91 million, or 0.8%
- Home loan deposits were also up 21% from the quarter ended Dec. 31
- The bank’s impairment charge for the period was only $1 million
- As of April 30, 111 mortgage lender customers were in difficulty due to flooding
What else happened during the quarter?
Suncorp Bank’s home loan portfolio returned to above-system growth in February and March.
This allowed it to post an annualized growth rate of 6.9%, which increased to 7.5% when discontinued line of credit products are excluded.
Meanwhile, its deposit growth was driven by consistent competitive offers and improved execution times.
The bank says its mortgage portfolio is “high quality and conservatively positioned”. It favors homeowners with a loan-to-value ratio of less than 80%.
The bank’s business loans rose $91 million (0.8%) last quarter, or 3.3% annualized.
It also continued to grow trading account balances by 19.3% annualized. Its higher-margin retail term deposits grew 6.1% year-on-year, while its savings portfolio fell 8.1% year-on-year.
The bank’s total impairment charge of $1 million was equivalent to less than 1 basis point of annualized gross loans and advances.
Suncorp Bank’s liquidity coverage ratio and net stable funding ratio were 143% and 142%, respectively, as of March 31, 2022.
What did management say?
Suncorp Bank CEO Clive van Horen commented on the news which helped support Suncorp’s share price today.
Horen said the bank’s home lending momentum was due to the implementation of a targeted work program improving the customer and broker experience. He continued:
Turnaround times were consistently competitive during the quarter, reflecting improvements in back-end processes to support higher deposit volumes. The growth momentum also extended to the business loan portfolio, which grew by $91 million in the March quarter and by more than $130 million in April.
Mr van Horen said the bank’s strong loan portfolio helped it report an outlay of just $1 million for the quarter.
Today’s release did not provide any guidance to Suncorp Bank.
However, he noted that the bank’s positive momentum continued in April, with growth of more than $550 million.
Additionally, the bank reported rising construction costs. He said he expects his construction and development portfolio to be affected by supply chain dislocation and recent flooding.
Finally, the bank plans to reduce its committed liquidity facility limit from its current position of $1.5 billion. Its limit is expected to drop by $500 million in May, September and January.
Suncorp stock price overview
Suncorp’s stock price is still in the red over the long term. However, it outperforms the ASX 200 year to date.
The company’s share price has fallen 1.8% since the start of 2022. Meanwhile, the index has fallen 6%.
Looking back, the company’s shares have gained 1.9% since this time last year. The ASX 200 fell 0.5% during this period.