Suncorp takes flak over debt
Suncorp is under fire this week from financial writers and analysts – and it has very little to do with its insurance arm. The Brisbane-based bancassurer’s share value has dropped 40% in the past year and analysts are keeping a wary eye on the banking arm’s exposure to property development loans.
In today’s Australian, columnist Adele Ferguson says the bank has a $13 billion loans exposure to the troubled property, construction and development sector.
“Added to the challenge is the integration of Suncorp and Promina,” she says, noting that the merger was meant to make the group a “top 10” company – it is at present at 25.
Ms Ferguson says Suncorp has “significantly under-performed IAG”, and may be an attractive takeover target for QBE and the Commonwealth Bank. “Or Commonwealth Bank might just take the lot.”
Australian Financial Review columnist James Chessel also hints today at a possible QBE and/or Commonwealth Bank move on Suncorp.
He quotes respected Citigroup insurance analyst Nigel Pittaway saying the $735 million hybrid issuer made by Suncorp earlier this year has “destroyed” the group’s ability to lower tier 2 debt.
Mr Pittaway says Suncorp is assuming it will receive a $150 million capital release from Vero Insurance and achieve earnings improvements from the general insurance business and from the sale of RAC Insurance. Moderate loan growth within the bank would lower demand for capital.
Mr Chessel says Citigroup estimates it will be difficult for Suncorp to materially improve its position beyond the first half of the 2009 financial year “if it maintains dividend payouts at present levels”.
In today’s Australian, columnist Adele Ferguson says the bank has a $13 billion loans exposure to the troubled property, construction and development sector.
“Added to the challenge is the integration of Suncorp and Promina,” she says, noting that the merger was meant to make the group a “top 10” company – it is at present at 25.
Ms Ferguson says Suncorp has “significantly under-performed IAG”, and may be an attractive takeover target for QBE and the Commonwealth Bank. “Or Commonwealth Bank might just take the lot.”
Australian Financial Review columnist James Chessel also hints today at a possible QBE and/or Commonwealth Bank move on Suncorp.
He quotes respected Citigroup insurance analyst Nigel Pittaway saying the $735 million hybrid issuer made by Suncorp earlier this year has “destroyed” the group’s ability to lower tier 2 debt.
Mr Pittaway says Suncorp is assuming it will receive a $150 million capital release from Vero Insurance and achieve earnings improvements from the general insurance business and from the sale of RAC Insurance. Moderate loan growth within the bank would lower demand for capital.
Mr Chessel says Citigroup estimates it will be difficult for Suncorp to materially improve its position beyond the first half of the 2009 financial year “if it maintains dividend payouts at present levels”.