Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — FY2014 Earnings Presentation
52 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 11, 2014
Slide 1: Results Presentation for the year ended 30 June 2014
Bendigoand > AdelaideBank Results Presentation For the year ended 30 June 2014 Mike Hirst Richard Fennell Managing Director Chief Financial Officer
Slide 2: For personal use only
This document is a presentation of general background information about the Group’s activities current at the date of the presentation. It is information in a summary form and no representation or warranty is made as to the accuracy, completeness or reliability of the information. It is to be read i
Slide 3: Agenda
For personal use only • Overview • Financial performance • Summary & Outlook • Appendices Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our full year result
Our full year result Financial performance - statutory profit after tax Financial performance - cash basis earnings For personal use only • Statutory profit after tax $372.3m • Cash earnings of $382.3m • Full year dividend of 64.0¢, fully franked1 • Cash earnings per share 91.5¢ • Final dividend of
Slide 6: Consolidation to investment
Consolidation to investment Consolidation Strengthening For personal use only Investment • Rating agency upgrades • BEN buys Australian arm • Basel II Advanced (Fitch “A-”, S&P “A-”) of Bank of Cyprus – later Accreditation naming it Delphi Bank • BEN’s securitisation • Industry consolidation program
Slide 7: Great Southern
Great Southern • BEN has entered into an agreement (subject to court approval) to conclude the class actions brought For personal use only by investors in managed investment schemes operated by Great Southern • BEN’s borrowers who are members of the class actions have admitted that their loans are v
Slide 8: Unique and valued customer proposition
Unique and valued customer proposition Voted one of Australia’s most trusted brands3 For personal use only Business bank of the year4 for 2011, 2012 & 2013 Bendigo SmartStart Super® awarded 5 star rating by Canstar Leading financial institution for customer loyalty 20135 1. Roy Morgan Resear
Slide 9: Loan approvals continue to grow
Loan approvals continue to grow For personal use only • Continued growth in new loan approvals • Accelerated amortisation of back book impacting net growth • Half-on-half seasonality evident in loan growth 1. Adjustment to Jun-14 loan growth of $704m has been made to take into account a change to ce
Slide 10: Second half growth outcome
Second half growth outcome For personal use only Source: APRA statistics June 2014 (including Rural Bank), Nomura research 1. Data is based on 6 month growth (annualised) Overview 10
Slide 11: Financial performance
For personal use only Richard Fennell Chief Financial Officer Financial performance 11
Slide 12: At a glance
At a glance Change Change FY14 FY13 FY13 – FY14 1H14 – 2H14 For personal use only Cash earnings $382.3m $348.0m 9.9% 5.6% Statutory NPAT $372.3m $352.3m 5.7% 6.0% Cash EPS 91.5¢ 85.4¢ 6.1¢ 1.5¢ Net interest margin 2.24% 2.19% 5 bps - Expense to income ratio 55.4% 57.0% (160 bps) 10 bps Expense to av
Slide 13: Strong cash earnings growth
Strong cash earnings growth For personal use only • Disciplined margin management • Growth in contribution from Homesafe portfolio • Staff costs reflect investments in Basel II, payment innovations and salary adjustments Financial performance 13
Slide 14: Positive earnings momentum
Positive earnings momentum For personal use only Financial performance 14
Slide 15: Steady growth in ROE
Steady growth in ROE For personal use only • Improved ROE outcome • ROTE stable • Capital base strengthened for RFC acquisition Return on Equity (ROE) is the net income returned as a percentage of shareholders equity Return on Tangible Equity (ROTE) is the net income returned as a percentage of shar
Slide 16: Net interest margin
Net interest margin • NIM growth reflects brand value and disciplined approach to pricing in a competitive environment For personal use only • Continued improvement in wholesale funding spreads • 2H14 asset price competition and customer propensity for fixed rate mortgages impacting NIM • Liquidity
Slide 17: Flexible funding structure
Flexible funding structure • Leveraging core strengths of the retail brand and network For personal use only • We continue to issue in wholesale markets to achieve diversity, tenor and pricing benefits • RMBS issue in 2H14 • Completed first Swiss Franc senior debt deal Note : Term funding maturity p
Slide 18: Retail funding
Retail funding • Management target of 75-80% retail funding maintained For personal use only • Term deposit retention rate consistently above 80% • Growth in at-call deposits • Preparation well underway for Basel III liquidity 1Source: Company data Financial performance 18
Slide 19: Efficiency focus remains
Efficiency focus remains • Impact on costs For personal use only - New Adelaide head office - Basel II Advanced Accreditation project - Brand campaign 2H14 • ‘JAWS’ management will remain a focus Financial performance 19
Slide 20: Capitalised software
Capitalised software • Capitalised software balance increased due to enhancements to our third party For personal use only lending platforms and ongoing CRM improvements • Will increase as strategic initiatives are finalised including Basel II Advanced Accreditation • $38.6m of Basel II costs (to da
Slide 21: Improved capital position
Improved capital position • Common equity Tier 1 capital improved to For personal use only 8.02%1 • Capital position strengthened through $230m institutional share placement, $150m SPP and $300m Basel III compliant tier 2 sub debt 1 1. Shows pro-forma impact to capital adequacy of the Rural Finance
Slide 22: Basel II Advanced Accreditation
Basel II Advanced Accreditation For personal use only • Model development substantially complete across all risk areas • Independent model validation well advanced • Enhanced risk-adjusted performance measures and capital allocation methodologies being rolled- out • Internal estimates reflect low ri
Slide 23: Business segment performance
Business segment performance For personal use only Note – Graphs refer to operating segment performance on p20 in 4E, excludes central functions. Financial performance 23
Slide 24: Homesafe investment property portfolio
Homesafe investment property portfolio For personal use only • Asset growth driven by: New business (properties acquired) Portfolio revaluation (income contribution) o Change in property prices – residex index increase for 12 months1; Melbourne +8.3% Sydney +15.4% o Ageing of portfolio • Average
Slide 25: Bad and doubtful debts
Bad and doubtful debts • Retail BDD charge in 2H14 impacted by one large For personal use only exposure • Northern Australia cattle property values stabilised in 2H14 • Improvement in Third Party Lending predominantly due to Great Southern MIS portfolio Financial performance 25
Slide 26: Bad and doubtful debts cont
Bad and doubtful debts cont For personal use only • Increase in collective provisions in 1H14 • Portfolio remains well secured, with low LVR’s * Collective provision (adjusted for tax) & GRCL to risk weighted assets Financial performance 26
Slide 27: Arrears – days+
Arrears – 90 days+ For personal use only Financial performance 27
Slide 28: Outlook
For personal use only Mike Hirst Group Managing Director Outlook 28
Slide 29: Digital technologies: providing customers greater choice and flexibility
Digital technologies: providing customers greater choice and flexibility Mobile website redy For personal use only We’ve made it easier to get redy rewards you, what you the answers you need when care about and the places you’re on the go. Working you shop. Unique in the with feedback from our Austr
Slide 30: Digital technologies cont: coming soon
Digital technologies cont: coming soon Business Banking app Mobile e-banking app For personal use only A stylish interactive new look and feel Providing our business that can be personalised depending customers with quality on a customers preferences. The information on topics of app includes all th
Slide 31: In summary….
In summary…. For personal use only Performance Future • Disciplined • Asset price competition management of margin and balance sheet • Market disruption • Investing in customer • Financial System experience and Inquiry innovation • Basel II work advancing • Credit solid • Expanded Agri- business cap
Slide 32: Questions
For personal use only Questions 32
Slide 33: Appendices
For personal use only Appendices 33
Slide 34: A portfolio of diverse businesses
A portfolio of diverse businesses Business Segment For personal use only Domestic bank operating five • Challenges through continued regulatory change distinct brands • Unique community, customer, and partner proposition • #1 banking brand for customer and business satisfaction, and advocacy Consume
Slide 35: The Community Bank model
The Community Bank® model 16 years old • More than $120m in community grants since inception – delivering tangible benefits for these For personal use only communities and our business • 305 Community Bank branches with more than 90 in communities where there is no alternative provider • Proven, rel
Slide 36: Diversity of revenue and profit contribution
Diversity of revenue and profit contribution For personal use only Note – Graphs refer to operating segment performance on p20 in 4E, excludes central functions. Appendices 36
Slide 37: Third party banking
Third party banking For personal use only • Investment in third party lending systems upgrades delivering benefits • Market conditions remain highly competitive, especially in the broker channel Appendices 37
Slide 38: Margin Lending portfolio
Margin Lending portfolio For personal use only • Margin lending portfolio stabilised • Restablished our commitment to our customers and partners • Positioned to take advantaged of upswing in equities and renewed interest in leveraging products Source: RBA/APRA/Thomson one 1. Excludes protected finan
Slide 39: Great Southern – loan pool summary
Great Southern – loan pool summary For personal use only Note - Data as at 30 June 2014 Appendices 39
Slide 40: Rural Finance Corporation
Rural Finance Corporation • A$1.7b rural loan book in Victoria For personal use only • 11 offices across Victoria with Head office in Bendigo - BEN company branches co-located in 9 towns • Circa 115 staff • Customer value proposition underpinned by: • 70-year history • Specialist focus on agri-busin
Slide 41: Rural Finance Corporation
Rural Finance Corporation Current product offering For personal use only • RFC offers a broad range of agri products but does not Farm business loans have a retail deposit offering Agcess overdraft and visa card Vehicle, plant & equip finance • Community activities include the administration o
Slide 42: Diverse geographic footprint
Diverse geographic footprint 1793 ATM’s 523 branches For personal use only 1 4 8 0 3 147 350 51 46 76 54 14 3 43 7 1 2 1 102 4 78 24 13 118 249 16 50 16 8 4 425 900 191 87 49 59 139 11 707 305 Community Bank® 24 1 9 10 Bendigo branded (3rd party) ATM’s 186 9 14 2 11 Appendices 42
Slide 43: Community Bank footings growth
Community Bank® footings growth For personal use only Appendices 43
Slide 44: Community Bank maturing
Community Bank® maturing For personal use only Appendices 44
Slide 45: Operating expenses
Operating expenses For personal use only Appendices 45
Slide 46: Specific provisions
Specific provisions For personal use only Represented by Provision as % of Retail 3rd Party Commercial Delphi Great Consumer Rural Bank Wealth BEN total portfolio Mortgages Mortgages / Business Bank Southern June 2013 0.03% 0.03% 0.17% 0.29% 0.35% 3.50% 1.31% - 0.21% June 2014 0.03% 0.03% 0.23% 0.52
Slide 47: Secure and low risk loan portfolios
Secure and low risk loan portfolios For personal use only • 98.3% secured • 97.8% secured by mortgages and listed securities • Residential lending – average LVR 62.4% • Margin lending – average LVR 29.1% – 77% of portfolios held ≥ 4 stocks Appendices 47
Slide 48: Group exposure – total $53.1b
Group exposure – total $53.1b For personal use only Residential Mortgages1 Jun-14 Dec-13 Jun-13 Owner occupied 65.10% 64.95% 64.41% Investment 34.90% 35.05% 35.59% Lo Doc 3.92% 4.48% 5.18% Residential Detail Retail mortgages 51.96% 53.75% 53.23% Third Party mortgages 48.04% 46.25% 46.77% Mortgages w
Slide 49: Business – industry split
Business – industry split For personal use only Note: All loan data above represented by security as per page 22 in the 4E. Appendices 49
Slide 50: Construction portfolio
Construction portfolio For personal use only • $1.2b of loans • 2.2% of total loans • $245k average loan size • $16.2m largest loan size • Geographic spread • $10.1m impaired loans (0.9%) • $15.4m in arrears (1.1% 90 days+) Note: Excludes Rural Bank Appendices 50
Slide 51: Rural Bank – loan portfolio
Rural Bank – loan portfolio For personal use only Appendices 51
Slide 52: Analysts and Media contacts
Analysts Media For personal use only Travis Crouch Owen Davies Head of Capital and Investor Relations Head of Public Relations Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 3 5485 6261 Tel: +61 3 5485 7108 Mob: +61 418 552 922 Mob: +61 418 521 817 Email: travis.crouch@
Bendigo and Adelaide Bank — FY2014 Earnings Presentation on 6ix