Suncorp chief's call for clarity in economic policy | The Australian 26/08/10 9:17 AM

The Australian
Suncorp chief's call for clarity in economic
policy
Scott Murdoch
From: The Australian
August 26, 2010 12:00AM

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SUNCORP chief executive Patrick Snowball has declared Australia's major
political parties lack a "clear economic policy".

This leaves the nation's banks too heavily exposed to volatile, competitive and
costly wholesale funding markets, he said.

The British-born banker at the helm of the Queensland-based bank for the past
year said the next government needed to develop policy that allowed banks to
diversify their funding sources.

Mr Snowball's claims came as Suncorp yesterday recorded a $780 million net

annual profit, up solidly from $348m.

The majority of the increase was driven by an improvement in general insurance

revenue, wealth management and a reduction in bad debt expenses in its core and
non-core banking businesses.
"I'm not a citizen, and I'm reluctant to tell other people how they should be
running their country," Mr Snowball told The Australian.

"But a clear economic policy is vital as is the whole aspect of the resolution of
uncertainty."

Mr Snowball said the banks in Australia could soon have to confront "crowding
out" issues in world debt markets, especially as their British counterparts look to
refinance their wholesale funding. "In Australia, almost 65 per cent of funding
comes from the markets. The government has to come up with an alternative to
that," he said.

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Suncorp chief's call for clarity in economic policy | The Australian 26/08/10 9:17 AM

"It's an increasingly competitive market, you have sovereigns issuing debt, you
have banks restructuring their balance sheets offshore.
"If Australia doesn't come up with an answer to that, it will be very expensive to
find funding.

"At the moment there is no clear economic policy in Australia. Until that comes
through and it seems to be business friendly and supportive of the big banks, then
I think Australia will struggle to get a fair crack of the whip in terms of accessing
the limited pool of funds that's available internationally."

Mr Snowball said the major British banks were due to refinance more debt in the
next 18 months than what was carried out in the five years leading up to the global
financial crisis.

Suncorp's $780m net profit exceeded the market's consensus of $733m, and the
majority of the profit was sourced through the bank's insurance business.

The general insurance division increased its profit by 34 per cent from $416m to
$557m.
Suncorp's wealth management business was also a star performer with its $220m
net profit increasing by 90 per cent, exceeding the $191m consensus.

The core bank, which holds Suncorp's retail and small to medium lending
businesses, recorded a $268m profit, while the non-core division made a $224m
loss.

The non-core bank holds Suncorp's troublesome institutional and corporate

lending portfolio, which is currently in rundown.

The Suncorp board declared a 20c final dividend, which took the total to 35c per
share, a payout ratio of 58 per cent.

The bank's shares rose by 2.44 per cent, or 19c, to $7.97.

Despite the lift in profit, Mr Snowball said the bank still had a "journey" in paring
back its diversified business model.

"Since I came here last year, it's been about regaining credibility and regaining the
confidence of the market," he said.

"My sense is that people are now letting us prove we are in control of the business
and know what we're doing."
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Suncorp chief's call for clarity in economic policy | The Australian 26/08/10 9:17 AM

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