In its quarterly financial update, Suncorp has also admitted it had a $205 million pre-tax loss on its investment portfolio. It also revealed it had major errors in its payroll through underpayment of staff with a potential cost of between $40 million and $70 million in repayment and process improvements.

Property prices are tipped to fall 11 per cent and an even a higher 14 per cent in commercial property, while unemployment would reach 11.5 per cent.

Suncorp shares jumped 4 per cent on the ASX open this morning in response to the update.

Chairman Christine McLoughlin said the staff payments errors were a “letdown” for staff and shareholders and that the board was “deeply disappointed”.

It adds Suncorp to a long list of companies impacted by the “wage theft” issue.

In a letter to shareholders McLoughlin also outlined the drama of the past six months.

“First, we had several months of natural disasters across Australia with 12 major insurance events spanning bush fires, floods and storms deeply impacting many of the communities in which we operate. This period has been followed by the global COVID-19 pandemic,” McLoughlin said.

Adding to the list, the bank announced it had also lost its Banking and Wealth division chief executive Lee Hatton, who only started in the job in February. She has moved to another role in Sydney.

The bushfires had led to claims payouts so far of about $160 million. Because of the series of events it was unable to say whether there would be a final dividend this year.

Suncorp said since Covid-19 motor vehicle insurance claims had fallen as fewer people commuted, but it said there may be a spike when people feel more comfortable about making claims.

Suncorp managing director Steve Johnston said the company was well placed to deal with the pandemic despite the predictions of a real estate plunge and rising unemployment. However, the outlook was clouded.

“Quite clearly, there remains a significant amount of uncertainty for how the health aspect, and therefore the economic impact, of COVID plays out,” Johnston said.

“We expect lending growth to be negative overall, with some pockets of growth in agribusiness as our customers continue to recover from the drought, offset by negative growth in the mortgage book.

“We expect that COVID will result in a net increase in costs, the most material factor being the rollback of offshore processes. In addition, we will also now provide for the cost of the pay and leave entitlements review. Overall, our expectation is that group costs will ultimately be slightly above $2.7 billion.”

Its home lending has fallen by $278 million over the March quarter and it has taken a $90 million write down on the carrying value of the deposit and transactions modules of the Core Banking Platform.

Johnston said the increase in costs to deal with COVID-19 brings the company’s provisioning to $234 million, more than double the level at the end of the first half.

“This is underpinned by our view of unemployment reaching 11.5 per cent and an 11 per cent reduction in house prices, with property prices remaining depressed for a prolonged period of time,” Johnston said.

Suncorp also said its exposure to the crippled accommodation, cafe and pubs sector was about $1.7 billion, but this was a relatively small amount of its total lending portfolio.

“The significant market volatility seen over recent months resulted in significant mark-to-market losses on the investments portfolio to 31 March, albeit protected to a degree by the hedges we put in place.

“We expect there will be an increase in (landlord) claims frequency and severity for loss of rent claims however, the precise impact is hard to predict given the legislative responses at Federal and State levels. We expect many landlords and tenants will reach amicable arrangements, and in this scenario our policies do not trigger.

“Over the quarter we saw a modest increase in past-due loans, driven by a reduction in collections activity as resources have been redirected to support COVID related customer needs, as well as an increase in customer hardship following the summer bushfires.

“Out of our total lending portfolio, 5 per cent is property investment and 1 per cent is development finance. While these segments have been performing well and are well diversified on both a geographic and sector basis, given our expectations for material declines in commercial property prices we are maintaining a very strong focus on these portfolios. Overall commercial lending is 12 per cent of our book.”

2 Suncorp Group Limited | ABN 66 145 290 124 | Level 28, 266 George Street, Brisbane Qld 4000 suncorpgroup.com.au“We have already received thousands of requests for financial hardship from both our bank and insurance customers and have provided discounts and premium waivers to 12,300 insurance customers in Australia and New Zealand and approved $4.05 billion in loan deferrals.