Suncorp share price outperforms as home lending portfolio grows $800m

Suncorp Bank’s lending portfolio is recording notable growth in 2022.

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Key points

  • The Suncorp share price is outperforming the broader market after the company released a quarterly update for its banking division
  • Suncorp Bank's home lending portfolio grew by $803 million over the three months ended 31 March, while its business lending portfolio increased $91 million
  • The bank also reported its home lending portfolio's growth continued following the quarter's end, surging another $550 million in April

The Suncorp Group Ltd (ASX: SUN) share price is defying much of today’s dip following the release of the company’s banking segment’s quarterly report.

Suncorp shares are slumping only slightly, while the broader market suffers. The S&P/ASX 200 Index (ASX: XJO) is currently recording a 1.05% drop.

At the time of writing, the Suncorp share price is $11.27, 0.4% lower than its previous close.

Here’s what the banking and insurance provider announced today.

Suncorp share price outperforms following bank’s growth

  • Suncorp Bank’s home lending portfolio grew $803 million, or by 1.7%, over the March quarter
  • Meanwhile, its business lending portfolio grew $91 million, or 0.8%
  • Home lending lodgements also increased 21% on those of the quarter ending 31 December
  • The bank’s impairment expense for the period was just $1 million
  • 111 home lending customers were in hardship arrangements due to flood events as of 30 April

What else happened in the quarter?

Suncorp Bank’s home lending portfolio returned to above-system growth in February and March.

That saw it boasting a 6.9% annualised growth rate, which increased to 7.5% when discontinued line of credit products are excluded.

Meanwhile, its increased lodgements were driven by consistent competitive offerings and improved turnaround times.

The bank states its home lending portfolio is “high-quality and conservatively positioned”. It is weighted towards owner-occupiers with a loan-to-valuation ratio below 80%.

The bank’s business lending increased by $91 million (0.8%) last quarter, or 3.3% annualised.

It has also continued to grow transaction account balances by 19.3% annualised. Its higher margin retail term deposits have grown 6.1% annualised, whilst its savings portfolio dropped 8.1% annualised.

The bank’s $1 million total impairment charge was equivalent to less than 1 basis point of gross loans and advances annualised.

Suncorp Bank’s liquidity coverage ratio and net stable funding ratio were 143% and 142% respectively, as of 31 March 2022.

What did management say?

Suncorp Bank CEO Clive van Horen commented on the news helping to buoy the Suncorp share price today.

Horen said the bank’s home lending momentum is due to its delivery of a targeted program of work improving customer and broker experiences. He went on:

Turnaround times have been consistently competitive over the quarter, reflecting improved back-end processes to support the higher lodgement volumes. Growth momentum also extended to the business lending portfolio which grew $91 million during the March quarter and over $130 million in April.

Mr van Horen said the bank’s strong lending portfolio helped it report an expense of just $1 million for the quarter.

What’s next?

Today’s release didn’t provide any guidance for Suncorp Bank.

Though, it did note that the bank’s positive momentum continued in April, with over $550 million of growth.

Additionally, the bank flagged rising construction costs. It said it expects its construction and development portfolio will be impacted by supply chain dislocation and recent floods.

Finally, the bank is expecting to reduce its committed liquidity facility limit from its current position of $1.5 billion. Its limit is expected to drop by $500 million increments in May, September, and January.

Suncorp share price snapshot

The Suncorp share price is still in the long-term red. Though, it’s outperforming the ASX 200 year to date.

The company’s share price has slipped 1.8% since the start of 2022. Meanwhile, the index has tumbled 6%.

Looking further back, the company’s stock has gained 1.9% since this time last year. The ASX 200 has slumped 0.5% over that time.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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