Pleasing strong first-half result
Suncorp Group Limited (ASX:SUN)
Baker Young recently added Suncorp Group Limited to its YMP portfolio.
Suncorp is one of the largest general insurers in Australia and New Zealand, with its smaller banking division contributing around one-third of group profits.
Suncorp reported a strong first-half result recently that pleasingly came in well ahead of market forecasts.
Despite higher costs for business interruption claims (COVID-19), the overall underlying trends were positive with growth in policies and pricing for insurance, while higher net interest margins and lower bad debt charges were encouraging for the banking unit.
Another positive feature of the result was the 124% boost to investment income as favourable moves in equities and bond markets saw returns on pooled funds (that are held and invested for future insurance claims) rise strongly, and these trends remain supportive to earnings.
Despite the strong result and positive outlook (that’s seen broker upgrades), the stock has pulled back to levels we’re happy to accumulate as we view the 5.5% sector high fully franked dividend as supportive.
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