The company, which announced the sale of its banking business to ANZ, has bumped up its natural hazard allowance for 2023 to $1.16 billion as the chance of a third La Nina wet season looms as a possibility. That follows 35 separate natural hazard events in 2022.

The company’s dividends totalled 40 cents for the year with the final dividend at 17 cents. The full-year payout was down almost 40 per cent and investors dumped the stock on the market this morning.

Suncorp shares were down more than 3 per cent mid-morning.

But chair Christine McLoughlin said the lower payout was appropriate given the uncertain outlook which included a possible third consecutive La Nina, which brings more rain to the east coast.

She said company had built a new level of agility and resilience, but there were still significant challenges ahead.

Suncorp’s net profit after tax for the financial year was $681 million, short of the $700 million the market was anticipating. Cash earnings were down 36 per cent to $673 million. The company said rising yields and widening credit spreads down a net loss of $190 million and the retained cost of natural hazard events was $101 million above the annual allowance.

Its net investment losses were $133 million. The combined impact of investment market losses and natural hazards was $700 million pre-tax compared with 2021.

Earnings from its insurance business were down 68 per cent because of an “intense” natural hazard season, but the bank said the momentum in the business was strong. Earnings in the Banking were down 12 per cent and its New Zealand operations were down 22 per cent.

Chief executive Steve Johnston said it had been a challenging year but the company had delivered on its strategic initiatives, which included supporting customers affected by natural disasters.

He said the investment market losses related to steepening yield curves, wider credit spreads and the accounting rules that meant the company had to report mark-to-market losses.

“However, given we hold these assets to maturity the majority of these losses will unwind over the 2023 year. This, and our strong underlying performance means we have been able to reaffirm our 2023 targets.”

Its home lending was up 9 per cent and Johnston said the was increased momentum in the second half. Bank deposits were also up 16 per cent.

In its outlook for the current year, Suncorp said the environment was still challenging with slower economic growth, rising interest rates and supply chain issues adding to geopolitical concerns and continued Covid.

Aequitas co-chief investment officer David Berthon-Jones said the result was solid, despite missing expectations.

“The underlying margins are robust and the banking arm (is) returning to growth with solid loan underwriting outcomes (which) helps the right timing for an exit strategy,” he said.