Suncorp CEO Patrick Snowball has announced an improved half-year profit of $364 million, but says the Queensland-based bancassurer still has a long journey ahead before it’s sitting comfortably.

The significance of Suncorp’s 41% rise in net profit after tax was downplayed by Mr Snowball as “coming off a very low base” – an opinion shared by investors who fled the stock in droves following the earnings announcement.

Investors were unimpressed with an interim dividend of 15 cents per share, five cents lower than last year’s dividend. The result falls between Suncorp’s previous guidance of net profit after tax of $355 million to $375 million.

A drop in claims and improved investment returns helped bolster Suncorp’s general insurance division to a net profit after tax of $347 million, up 89% on the previous corresponding period. Claims fell by more than 20% to $2.19 billion while gross written premium (GWP) rose 4.4% to $3.49 billion.

Mr Snowball, who joined Suncorp in September last year, says he is focused on stabilising the business. 

“It can’t be fixed overnight, but we are on top of the job,” he said. “We know what needs to be done and importantly we are getting on with it.”

Home and motor business posted strong growth in GWP in the first six months, up 13.9% and 6.8% respectively. Commercial premium gains were dogged by continued hard market conditions, although rate rises were passed on in most short tail-lines.

Suncorp’s half-year insurance trading result result was $408 million or a ratio of 12.8%.

The group’s banking division was the worst performer, lodging a meagre profit of $4 million. Suncorp quarantined its banking assets into core and non-core departments last year, the former consisting primarily of personal banking and mortgages.

Non-core assets, a $15.6 billion collection of bad debts resulting from the credit crunch, are in run-off, costing the bank $211 million this year. Core banking compensated for non-core losses to post a profit of $224 million.

Mr Snowball would not be drawn on future return on equity targets, saying “guidance is not in my DNA”. He says an update on Suncorp’s general insurance business will be provided in May.

Suncorp also announced plans to sell back its stake in RACQ and RAA by August. The group has a 50% stake in each, with $130 million in equity tied up in the two insurers.