Suncorp-Metway Ltd’s first half profit has declined by 32.8 per cent after the banking and insurer firm was hit by higher bad debts and claims surged because of severe weather events.

Net profit for the six months ended December 31 was $258 million, down from $384 million in the previous corresponding period.

The group had flagged the figure to the market earlier this month, when it also launched a minimum $900 million capital raising and announced that chief executive John Mulcahy would be stepping down.

The Brisbane-based company said on Tuesday in a statement that chief financial officer Chris Skilton will be acting chief executive until a successor to Mr Mulcahy is found.

But Mr Skilton won’t be staying with Suncorp beyond a new chief executive selecting a new chief financial officer to replace him.

Mr Mulcahy will step down on March 2, and will receive a $2 million payment, equivalent to 12 months remuneration.

Mr Skilton had agreed with the board that he would leave Suncorp after the new CEO appoints a replacement CFO.

Suncorp said conditions would remain challenging and economic activity subdued over the short to medium term.

Revenue grew 8.1 per cent to $7.48 billion for the six months to December 31, Suncorp reported on Tuesday.

The banking division was on track to achieve the forecast growth in full-year profit before tax and impairment charges in the high teens.

Suncorp said the banking unit’s first-half profit before tax and bad debts grew 39 per cent to $448 million, while profit before tax slumped 68 per cent to $97 million.

The general insurance division’s full-year gross written premiums would be in the range of four per cent to six per cent, as forecast previously.

Gross writted premiums for the six months to December grew 5.9 per cent, as profit before tax for the insurance unit increased 47 per cent to $253 million.

Suncorp more than halved its first-half dividend to 20 cents per share from 52 cents the year before.

“Like many companies, we have faced numerous external challenges in the financial year to date and we have made a number of difficult short term decisions, such as reducing the half year dividend, which will help insulate the Group and shareholders from the worst impacts of the deteriorating economic environment,” chairman John Story said in the statement.

The company said it was targeting underlying profit after tax for the full year to be unchanged from the $136 million in 2007/08, but there was a risk that it would not be achieved because of the economic slowdown.

Profit before tax for the first half at the wealth management unit declined eight per cent to $115 million.

“Although the headline financial result was disappointing, each of our business lines again achieved strong underlying growth during the half and are competing strongly in their market segments,” Mr Mulcahy said.

The company forecast that bad debts for the full year were likely to be one per cent to 1.3 per cent of gross loans, advances and other receivables.

The insurance business was likely to be hit by $180 million of costs before reinsurance recoveries for the Victorian bushfires and flooding in North Queensland.

Suncorp said the integration with Promina was on track and the company would achieve the target cost savings ahead of schedule.

AAP