Australia’s financial and property crisis has deepened with the country’s sixth biggest financial group, Suncorp Metway, revealing an unexpected $500 million plunge in forecast annual net profit for the year to June 30. Shares in Suncorp plunged almost 19%, or $2.48, to $10.90 in early trade before bouncing slightly to $11.56, off 13%. That was the largest fall in the company’s share price for almost 20 years.

In a market update today Suncorp estimated 2008 profit would be in the range of $525 million to $550 million, sharply down on the $1.064 billion earned in 2007.

For the second Friday in a row a leading financial stock has shocked the market. Last week it was news of the National Australia Bank’s $830 million in extra write-downs to its holding of US subprime mortgage based credit derivatives called CDO’s. The NAB subsequently revealed a change in CEO, although it insisted the two events were not related.

Suncorp said it will leave its 2008 final dividend unchanged at 55 cents a share, and has forecast flat dividend growth for fiscal 2009 after bad weather and the credit crunch crushed its profit. The bank and general insurer (it controls AAMI, Suncorp, APIA and other insurance brands) said ”Like all Australian financial services companies, our result for the 2008 financial year has been affected by external factors, including the global credit crunch, volatile equity markets and a succession of severe weather events.” This year’s full-year dividend was anticipated to stay at $1.07.

Suncorp said its banking business expected to increase its fiscal 2008 annual earnings before bad debts, tax and one-off items by about 12%, at the top end of its 10 to 12% guidance.

For fiscal 2009, it has forecast high single-digit growth on the same measure. But the insurance business was crushed (by the same problems that hit Insurance Australia Group: bad weather in NSW, Queensland, New Zealand, the impact of the credit crunch and stockmarket drop on its investment funds and funds management business, and a $35 million hole in its defined benefit superannuation fund for employees that needs filling.

The poor result came as leading property group, Mirvac, saw its shares sold off on news that it had frozen three investment funds it co-manages, and the Singapore controlled developer and investor, Australand struggled to convince its minority shareholders to contribute to an emergency funding raising issue designed to raise between $302 million and more than $500 million. The issue was made at 60 cents a share, a 38.5% discount to that closing price and an indication of the desperation of the company for the funds.

The Australand issue, 79% drop in interim profit, $34 million write-down on assets and a revamped distribution strategy were announced on Monday when the company asked for its shares to be suspended at last Friday’s level of 97.5 cents. The shares resumed trading as the Singapore parent, Capitaland, put in its $302 million and they asked shareholders for another $140 million-plus. The securities plunged from 97.5 cents to close at 66 cents on Thursday and were trading around 67 cents this morning. That’s a loss in market value of $300 million.

Capitaland itself is in a spot of bother. It reported in Singapore this morning that second-quarter profit fell 44% after home sales fell and one-time profits were not repeated. The company said the lower profit was struck on a 12% drop in sales for the quarter, while first half profit was 51% lower as sales income from China and Australia slowed.

Mirvac joins the $700 million Gold Coast-based MFS Premium Income Fund, which was frozen in January, while funds in the likes of Centro, Allco and other groups have been frozen or have had restrictions placed on withdrawals. Then there’s the likes of the unrated mortgage funds (Westpoint, Bridgecorp, Donovan Oates, Hanover in New Zealand this week) which have closed, collapsed or are tottering on the edge of default.

Standard & Poor’s Fund Services said yesterday that “it had placed the Mirvac AQUA High Income Fund, Mirvac AQUA Enhanced Income Fund, and the Mirvac AQUA Income Fund as ‘On Hold’ following notification yesterday from Mirvac AQUA that it had suspended processing of application and redemptions relating to each of the funds for a period of six months effective July 25, 2008, in line with the constitution. The Product Disclosure Statement has been withdrawn from the market, effective today.”