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What is MM’s current view on Suncorp (SUN)?

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What is MM’s current view on Suncorp (SUN)?

Hi James and Team Can I please have your view on Suncorp. Especially in regards to the divestment of Suncorp Bank to ANZ. When is the sale transaction likely to be completed? Would you be holding for the proceeds to be returned to shareholders via return of capital/ fully franked dividend.... Has all this been factored into the current price? It has run up recently and I'm pretty much break even with my cost price (excluding dividends received over the years). regards Debbie


Hi Debbie,

SUN has rallied strongly over recent weeks making fresh 3-year highs in the process. In February they posted a mixed 1H23 update – Cash NPAT was around 7% below consensus at the group level, however, General Insurance (GI) margin was solid and their soon-to-be-jettisoned banking division did particularly well, with Net Interest Margins (NIM) of 203bps, ahead of expectations. i.e. good news for the buyer ANZ. Importantly the company reaffirmed key guidance measures and the momentum, particularly at the top line (gross written premiums of $4.9bn up 8%) was good.

The stock is inexpensive in our view, currently trading on an Est 13.4x PE for 2023, stripping out net proceeds from selling the Bank (i.e. estimated $4.1bn) implies SUN is extremely cheap compared to say IAG.

  • We like SUN as an insurance play but it’s no longer on the MM banking radar.

NB The ACCC’s final decision on the sale of SUN’s banking division to ANZ Bank (ANZ) is currently scheduled for 12 June 2023.

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Suncorp Group Ltd (SUN)
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