So why did Suncorp Metway pay a final dividend, in fact why did it pay an interim, when it didn’t earn enough profit to cover the near $1 billion payment?

By any measure, the 2009 Suncorp result tells us this is a financial group in awful trouble. A banking profit of just $117 million for the full year; including a tiny $20 million for the second half.

The company said in its ASX statement that group profit before tax and the impact its acquisition of insurer Promina was $799 million, against guidance of $790 million to $810 million.

Net profit for the year ended June 30 was $348 million, down from $588 million in the previous year.

Suncorp didn’t earn enough for the full year to pay the final dividend, let alone the interim.

Dividend payments of 20 cents for the final, 20 cents for the interim, making 40 cents for the year, might be down sharply from the 50 cents final paid for the last half of the 2008 financial year and the $1.07 paid for all of that year.

But paying the 20 cents a share final will cost $523 million, (it was boosted by the capital issue earlier in the year). Paying the interim cost $407 million. A total of $920 million. Its banking operations are stricken with the highest level of bad debts in the country, and the only thing it can do is to continue to drive its insurance arm. That’s about $570 million Suncorp has had to find from borrowings or capital to pay the two dividends for the full year.

The advisability of paying any dividends must be questioned, so bad is the situation at the Metway banking operations. Surely it would have been better to conserve cash (such as Fairfax Media is doing) by omitting paying at least one dividend.

The insurance businesses, Promina, GIO and Suncorp, are all ring-fenced and any surplus capital has to remain there to benefit the policy holders and clients. The insurance companies can lend to the parent, but it has to be secured.

Given the appalling state of Metway’s assets, you’d had to ask if there’s any assets left unpledged from the borrowings already undertaken to keep the bank going.

At the start of 2009, the so-called ”bad” bank in Metway contained nearly $17 billion of poorly performing borrowings, primarily property and development loans, now being run-off. Suncorp yesterday said that it had found more dodgy loans and transferred another $1.5 billion of loans to its unwanted portfolio.

The banking business made a profit before tax, bad debts and one-off items of $781 million, down from $668 million in the previous year.

It contributed a pre-tax $117 million to the overall result after weathering a full year impairment charge of $710 million, which was in with guidance.

But that was still a shockingly high figure and came because of the heavy lending to Queensland property groups.

This represented 1.28% basis points of gross loans advances and other receivables, which is the worst disclosed by a major bank so far.

It’s much larger than the bigger Commonwealth Bank, which last week reported an impairment charge of 0.72% of gross loans and acceptances and Westpac’s update on Friday gave a bad debt figure of 0.76% of gross loans and assets.