Suncorp Group Ltd (ASX: SUN) is reportedly going to cut up to 10% of its workforce. Suncorp shares will be on watch this week.
Suncorp jobs to go?
The leadership of Suncorp is about to agree a plan that could lead up to 10% of jobs going at the diversified financial business, according to reporting by the AFR’s Street Talk.
One of the main ways that a business cuts cost is by reducing the wage bill. Suncorp has hired Bain & Co to review the business for how it can automate more processes and make the business more efficient with a focus on a digital and data transformation.
The AFR reported that the plan is expected to mean 5% to 10% of the workforce will leave. Some positions will move into customer facing positions.
When asked about the reports, a Suncorp spokesman said: “We are continuing to realign teams around our new operating model, announced on 1 July 2020.”
A few thoughts
This COVID-19 period has caused a lot of uncertainty for employees and businesses alike. Financial businesses in-particular are suffering from higher credit provisions.
Suncorp isn’t a terrible business, but I’m not a fan of insurance businesses. They get smashed every recession and from steadily more expensive natural hazard events.
I wouldn’t want to buy Suncorp shares today, I just don’t see market-beating earnings growth being possible. For a financial buy I would rather invest in something like Macquarie Group Ltd (ASX: MQG). However, for dividends I don’t think you can get something more reliable than Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
