Suncorp Metway’s $1.26 billion acquisition of GIO seems to have paid off, with the group’s annual net profit up by 23%. But the impressive results haven’t stopped the group’s share price declining more than 20 cents.

The Brisbane-based bancassurance business posted a full-year net profit of $384 million, up 23% from last year. The general insurance division’s second half earnings increasing by an impressive 140% to $161 million.

But analysts say although the group’s profits are pleasing, Suncorp isn’t meeting the same standards as major insurance groups like Promina and IAG. Perhaps not, but MD John Mulcahy heaped praise on the group’s insurance division, saying it’s a sign the GIO integration has been successfully completed, saying it had “delivered the targeted savings and significantly improved efficiency and profitability”.

Mr Mulcahy says the increase in profits “was mainly driven by the strength of the general insurance division”. Group Chairman John Story says the 2003/04 financial year has started well and “assuming there are no dramatic swings in financial markets, or unusual insurance claims events” it expects to further improve its profits.

“While global economic conditions are somewhat subdued, within Australia the economy appears to be resilient, with good growth and low inflation forecast to continue,” he said.

Mr Story says Suncorp’s primary markets are in good shape, with general insurance enjoying higher profitability, banking showing lending growth and investment markets demonstrating signs of recovery.

Mr Mulcahy expects premiums to remain “relatively stable”, although he’s also predicting further consolidation in the financial services sector in the medium term.