Suncorp’s lending portfolio contracted -0.6% over the first quarter, resulting in a -0.1% decline on the prior corresponding quarter. UBS notes the larger housing book declined -0.6% reflecting increased competition and a subdued market backdrop.
The company continues to target growth in its Queensland home market. On a positive note, first half net interest margin is expected to be consistent with the second half of FY19, supported by solid deposit growth and improved wholesale funding costs.
UBS retains a Buy rating as the stock is performing in line with its FY20 outlook and offers a 5% dividend yield. Target is $14.15.
Target price is $14.15.Current Price is $13.27. Difference: $0.88 – (brackets indicate current price is over target). If SUN meets the UBS target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).