Liberty Financial Group Ltd · ASX:LFG
Liberty Financial — H1 2024 Earnings Presentation
37 slides from Liberty Financial's earnings presentation, Feb 26, 2024
Slide 1: FY24 Half Year Results
Liberty Financial Group FY24 Half Year Results For personal use only 26 February 2024
Slide 2: Acknowledgement of Country
Acknowledgement of Country Liberty acknowledges the traditional owners of country throughout Australia. We acknowledge their continuing connections For personal use only to the lands, waters, cultures and communities. We pay our respect to Elders past and present. In doing so we also acknowledge tha
Slide 3: Presenting today
Presenting today For personal use only James Boyle Peter Riedel Chief Executive Officer Chief Financial Officer |3
Slide 4: Agenda
Agenda 01 Overview For personal use only 02 Results Analysis 03 Business Update 04 Outlook 05 Summary 06 Questions
Slide 5: Overview
For personal use only 01 Overview
Slide 6: Overview
Overview For personal use only Sound performance underlying profit decline NIM stable through 1H24 Continued portfolio growth through diversification Strong balance sheet with 12% underlying cash ROE Proactive arrears management resulting in low bad debts Strong and stable broker and customer net pr
Slide 7: Financial Highlights
Financial Highlights For personal use only % Underlying NPATA Net revenue NIM $69.6m ($104.9m) $292.8m ($301.4m) 2.54% (2.88%) (34%) (3%) (34bps) BDD Cost to income Distribution 12bps (2bps) 28.7% (26.0%) 12c (21c) +10bps +270bps (43%) |7 *Balances represent: 1H24 (1H23) change between the periods
Slide 8: Operating Highlights
Operating Highlights For personal use only Average financial assets New assets originated Impaired loans $13.8b ($13.0b) $2.9b ($2.9b) $204m ($135m) +6% +1% +51% Average FTE Staff Broker NPS Customer NPS 556 (537) 77 (79) 58 (55) +4% (3%) +5% |8 *Balances represent: 1H24 (1H23) change between the pe
Slide 9: Results Analysis
For personal use only 02 Results Analysis
Slide 10: Profit Performance
Profit Performance Statutory NPATA ($'m) Underlying NPATA ($m) For personal use only $109.9 $104.9 $83.0 $81.6 $69.6 $64.0 1H23 2H23 1H24 1H23 2H23 1H24 Reduction in Underlying NPATA (1H24 v 1H23) explained by • Reduction in net interest margin to 2.54% ($13m) Impact of moving to full ownership of A
Slide 11: Profit Drivers
Profit Drivers For personal use only Total Revenue ($'m) Loan Impairment (bps) $707.8 12 Increase in specific provisions (5bp) $635.9 11 $554.2 Total revenue growth +28% (1H24 and collective provision (7bp) to v 1H23) and +11% (1H24 v 2H23) reflecting mix shift towards Secured driven by increased yi
Slide 12: Revenue
Revenue For personal use only Average Assets ($'b) Average asset growth 6% (1H24 v Lending Income ($'m) 1H23) and 3% (1H24 v 2H23) $13.3 $13.8 $44 $13.0 driven by Secured and Financial $40 $38 Services segments Movement in lending income Record new originations $2.9b between periods largely consiste
Slide 13: Funding
Funding For personal use only Cost of Funding Term Funding ($b) 5.82% 2.3 10.4 5.17% 3.3 9.8 1.79% 8.4 3.88% 1.78% (1.7) 1.65% (1.9) 4.03% 3.39% 2.23% 1H23 2H23 1H24 Dec-22 Repaid New Jun-23 Repaid New Dec-23 Issues Issues 1H24 term issuance ($2.3b) supporting Residential and Secured Average funding
Slide 14: Loan Impairment
Loan Impairment For personal use only 1H23 (2 bps) 1H24 (12 bps) 4 7 2 5 5 1 -5 -5 Realised Loss Specific Specific Collective Specific Specific Provision Provision Provision Realised Provision Provision Collective (Release) (Increase) Loss (Release) (Increase) Provision 2H23 (11 bps) 6 5 Impairment
Slide 15: Loss Provisions
Loss Provisions For personal use only Provisions by Nature ($'m) Portfolio by Stage Collective Provision $88 $74 ($m) by Stage ($m) $65 $14,024 $71 Increase in specific and $13,531 $71 $13,171 $62 $62 collective provisions reflecting $54 $54 mix shift towards Secured and $13,476 $12,950 $58 Financia
Slide 16: Expected Credit Loss
Expected Credit Loss For personal use only ECL Economic Scenarios ($m) ECL by Segment $123 $3.1 $71.5 $7.6 $71 $62.1 $15.1 $54 $12.1 ($1.3) $48 $47.8 $40.2 ECL Movement (-) ($24m) ($17m) $51m Calculated 100% 100% 100% $9.9 ECL upside baseline downside $8.6 Expected Jun-23 Residential Secured Fin Ser
Slide 17: Operating Expenses
Operating Expenses For personal use only Operating expenses ($m) 1H23 2H23 1H24 Personnel 44 47 47 Lower net revenue contributed to the increase in Other 34 33 37 cost to income 1H24 v 1H23 Cash expenses 78 80 84 Personnel cost 1H24 v 1H23 reflects wage inflation and FTE increase to 558 (from 550) t
Slide 18: Distribution
Distribution For personal use only 49c 45c Interim distribution 12 cents paid in Dec-23 for 5-month earnings period to Nov-23 28c 24c Implied annualised yield of 7% based on security price of $4.05 (29-Dec-23) Final distribution for 7-month earnings period to 21c 21c 30-Jun-24 expected to be paid en
Slide 19: Financial Position
Financial Position For personal use only $m Jun-23 Dec-23 Cash 1,342 990 Strong liquidity position with aggregate total ($7.5b) and available ($3.7b) limits at 31-Dec-23 considering Financial assets 13,535 14,031 LTM originations ($5.5b) Loans to related parties 122 127 Reduction in cash due to pre-
Slide 20: Business Update
For personal use only 03 Business Update
Slide 21: Business Update
Business Update For personal use only Higher group originations with continued portfolio growth Residential originations recovering and discharges slowing Continued growth in SME and SMSF lending Auto momentum supported by new distribution partnerships Fin Services benefitting from continued growth
Slide 22: Segment Loan Origination
Segment Loan Origination For personal use only Residential ($'m) Secured ($'m) $1,747 $1,125 $1,047 Record 1H24 new originations 17% $1,510 1H24 originations 14% below 1H23, $960 $1,301 due to lower credit growth given above 1H23 interest rate cycle 8% increase in 1H24 v 2H23 16% increase in 1H24 v
Slide 23: Segment Loan Portfolio
Segment Loan Portfolio For personal use only Residential ($'m) Secured ($'m) $8,348 $5,276 $8,093 $4,732 $7,905 $4,206 Portfolio growth continues to be Continued growth in Secured loan impacted by higher than trend portfolio driven by growth in auto discharges and amortisation, finance lending, with
Slide 24: Portfolio Risk
Portfolio Risk For personal use only +30 Day Delinquency +90 Day Delinquency 3.1% 1.5% 1.5% 3.0% 2.2% 1.0% 1H23 2H23 1H24 1H23 2H23 1H24 Early-stage delinquency higher 1H24 v 1H23 driven by higher Customers in repayment variation has stabilised number of customers seeking repayment variations Longer
Slide 25: Relative Value Drivers
Relative Value Drivers For personal use only Net Interest Margin Cost to Income Ratio 2.54% 57.8% 58.0% 56.1% 1.99% 2.06% 1.95% 47.8% 46.5% 47.5% 1.83% 44.0% 43.7% 1.70% 1.74% 1.76% 43.6% 1.69% LFG Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Non-Bank 1Non-Bank 2 LFG Bank 1 Bank 2 Bank 3 Bank 4 Bank 5
Slide 26: Outlook
For personal use only 04 Outlook
Slide 27: Outlook
Outlook For personal use only Economic indicators support improving credit demand Refinance activity stabilising Increasing provisions from change in asset mix % NIM stable as funding cost return to longer term average Inflationary pressure impacting operating expenses Customers seeking improved dig
Slide 28: Summary
For personal use only 05 Summary
Slide 29: Summary
Summary For personal use only Diverse customer solutions driving portfolio growth Leading peer NIM delivering peer leading return on assets Sound underlying performance Strong liquidity and capital position to support growth Continuing investment in diversifying customer solutions Ongoing investment
Slide 30: Questions
For personal use only 06 Questions
Slide 31: Appendix
For personal use only Appendix
Slide 32: Who is LFG?
Who is LFG? For personal use only Liberty Financial Durable Business Model Diversified Portfolio Started 1997 and only investment Advanced risk-management grade non-bank (BBB-/positive/A-3) capabilities Pioneered specialty finance industry Proprietary technology supports in Australia and New Zealand
Slide 33: Products and Services
Products and Services Residential Finance Financial Services For personal use only Australian mortgages Personal loans • Personal loans in Australia • Prime and custom lending for residential owner occupier and investment properties SME loans • SME loans in Australia New Zealand mortgages General in
Slide 34: Segment Performance
Segment Performance For personal use only Closing Portfolio Net Contribution 3% 3% 4% 5% 5% 9% 8% 14% 12% 10% 28% 29% 32% 35% 43% 43% 38% 41% 45% 51% 69% 68% 64% 60% 57% 48% 49% 45% 43% 39% 1H22 2H22 1H23 2H23 1H24 1H22 2H22 1H23 2H23 1H24 Residential Secured Fin Services Residential Secured Fin Ser
Slide 35: Reconciliation Statutory to Underlying
Reconciliation Statutory to Underlying $m 1H23 2H23 1H24 $m 1H23 2H23 1H24 For personal use only Statutory NPAT 104.0 77.1 58.1 Statutory NPAT 104.0 77.1 58.1 IP amortisation 5.9 5.9 5.9 IP amortisation 5.9 5.9 5.9 Statutory NPATA 109.9 83.0 64.0 Statutory NPATA 109.9 83.0 64.0 MPRE sale-related adj
Slide 36: Disclaimer
Disclaimer The information provided in this presentation and any information supplied in connection with this No offer of securities For personal use only presentation (“Presentation”) has been prepared by Liberty Financial Group Limited (ACN 125 611 574) This Presentation is not, and does not const
Slide 37: Thank you
For personal use only Thank you
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