Is the Suncorp Group (ASX: SUN) share price a buy following its quarterly update?
Suncorp Group is a $17 billion insurance and banking company. It has its own brand of products but also operates under names like AAMI, GIO, Apia and Shannons. It also operates a regional banking division called Suncorp Bank.
Suncorp’s March 2019 Quarter Update
Suncorp released its Australian Prudential Standard (APS) March 2019 quarterly update.
The Queensland headquartered business reported that Suncorp’s total lending portfolio finished the March 2019 quarter at $58.9 billion, which reflected 1% growth from March 2018 but down 0.5% from December 2018.
The reason for the sluggish loan growth from last year was a $314 million contraction in home lending with price-driven competition and continuing credit market slowing.
But, Suncorp did say that it has remained focus on asset quality, managing its profit margin and supporting the broker channel, whilst improving operational efficiencies.
The business also warned that it is seeing rising hardship applications relating to the floods in Townsville, which is contributing to an increase in home loan arrears. Thankfully, Suncorp said this is likely to be temporary and most customers are likely to successfully recover after six months.
Over the next quarter Suncorp sees growth in small business lending and agribusiness lending. Suncorp recently pledged $3 billion of lending to these two sectors.
Suncorp said that after the payment of the FY19 interim dividend to Suncorp Group, its banking Common Equity Tier 1 (CET1) ratio of 9.1% reflected a “robust capital position” and was above the target operating range of 8.5% to 9%.
Suncorp Banking and Wealth CEO David Carter said: “We remain selective in our target markets and have maintained a high-quality lending portfolio.
“Our diversified, flexible and stable funding base allowed us to further bolster our balance sheet with the recent completion of an offshore USD senior unsecured transaction of $500 million.”
Is Suncorp A Buy?
With Suncorp considering divesting its banking division I don’t think this update is worth making any decision about Suncorp shares, but it’s interesting to see that loan growth is sluggish.
Out of the three proven ASX shares below or Suncorp, I would much rather go for one of the reliable businesses in the free report.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.