Suncorp Faces Loan Arrears Concerns as QBE Shares Surge on Strong Performance

Highlights:

• Suncorp grapples with increased loan arrears, raising concerns over its loan book stability.
• QBE Insurance Group witnesses a 1.1% surge in share price fueled by robust Q1 2024 performance.
• Suncorp reports a notable 1.4% growth in its home lending portfolio, outpacing the Australian loan system, amidst challenges in other lending segments.

Suncorp Faces Share Price Decline Despite Positive Quarterly Update

Suncorp Group Ltd (ASX: SUN) experienced a slight dip of around 1% in its share price following the release of its quarterly banking update. The company, known for its insurance operations under brands like AAMI and GIO, also operates Suncorp Bank, which is currently in the process of being acquired by

ANZ Group Holdings Ltd (ASX: ANZ).

Positive Home Lending Growth

Suncorp reported a notable increase of $803 million, or 1.4%, in its home lending portfolio during the March quarter, outpacing the growth of the Australian loan system. The company attributed this growth to factors such as positive net refinance rates and improved customer experiences. Additionally, business lending and agribusiness portfolios saw growth, although there was a contraction in the commercial real estate segment due to external refinances and heightened competition.

Concerns Over Arrears

Despite the positive lending figures, concerns arose over an increase in loans past due by at least 90 days, reaching $510 million, up 11 basis points from the previous quarter. Retail loans past due also saw a significant year-on-year increase, indicating potential challenges ahead for Suncorp's loan book.

QBE Share Price Rises on Strong Performance

Meanwhile, QBE Insurance Group Ltd (ASX: QBE) witnessed a 1.1% increase in its share price following the release of its Q1 2024 performance update. The company reported a 2% year-on-year increase in gross written premium and reaffirmed its full-year guidance, expecting mid-single-digit growth in constant currency gross written premium.

Optimistic Outlook for QBE

QBE's positive performance in the first quarter, supported by renewal rate increases and strong investment returns, has bolstered investor confidence. With expectations of continued premium rate increases and a forecasted group combined operating ratio of approximately 93.5% for FY 2024, QBE remains optimistic about its future prospects.

In summary, while Suncorp faces challenges with its loan arrears, QBE's strong performance in the first quarter signals a promising outlook for the insurance giant.

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