Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 2016 Earnings Presentation
48 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 15, 2016
Slide 1: Half year ended 31 December 2015 results
AS A BANK WE ARE GOOD WITH BUT IT’S BIGGER THAN THAT. WE ARE MORE INTERESTED IN THE GOOD THAT MONEY CAN DO WE CARE ABOUT DEQPLE AND WHAT THEY CARE ABOUT. PEOPLE SHOULD BE TREATED FAIRLY AND DECENTLY NO MATTER THEIR CIRCUMSTANCES. WE KNOW PEOPLE WITH A PURPOSE tunes tiaeren COMMUNITY IS AS IMPORTANT
Slide 2: Disclaimer
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 and outlook Appendices Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our 1H16 result
Our 1H16 result Financial performance For personal use only Cash earnings of $223.7m Net Interest Margin down 1bps half-on-half to 2.16% Cash earnings per share 48.9¢ Expense to Income ratio unchanged at 55.6%2 Statutory profit after tax $208.7m Total Operating expenses down 0.1%2 Inte
Slide 6: Annual growth outcome
Annual growth outcome For personal use only Source: Credit Suisse, APRA statistics Dec 2015 1. Data is based on 12 month growth, excludes RBL Overview 6
Slide 7: Housing lending growth
Housing lending growth July 2015 APRA announcements have improved the For personal use only competitive environment Partial levelling of the playing field is having a positive impact on recent growth rates Improved performance in Broker Direct channel follows relaunch of Adelaide Bank proposit
Slide 8: Customer repayments remain strong
Customer repayments remain strong Amortisation of back book continues to impact net loan For personal use only growth but improves customer’s financial position 14% increase in excess repayments since 1H15 12% growth in Offset portfolio since December 2014 43% of home loan customers are ahea
Slide 9: Levelling the playing field
Levelling the playing field For personal use only Advanced Banks 25% Mortgage Risk Global regulation and FSI is Weight Floor helping to level the playing field D-SIB Charge Staged Advanced Accreditation The benefits of advanced accreditation remain material Other regulatory changes including life Op
Slide 10: Strong capital position
Strong capital position For personal use only 3 1 1. Shows pro-forma impact to capital adequacy ratios of the Rural Finance acquisition which was completed on 1 July 2014 2. S&P RAC ratio, Major 1,2 & 3 as at 30 Sept 2015, Major 4 & BEN as at 30 June 2015 3. Unrealised Homesafe revaluation revenue e
Slide 11: Our organisation
Our organisation For personal use only Overview 11
Slide 12: Unique and valued customer proposition
Unique and valued customer proposition Business Bank of the year for four Best consecutive years (2011 – 2014)1 #1 in #1 Business Innovative For personal use only Customer miBanker app won the 2015 Victoria Bank1 Banking Satisfaction5 iAwards for financial services Product6 Best rated Australi
Slide 13: Financial performance
For personal use only Richard Fennell Chief Financial Officer Financial performance 13
Slide 14: At a glance
At a glance Change Change 1H16 2H15 1H15 1H16 vs 2H15 1H16 vs 1H15 For personal use only Cash earnings $223.7m $214.5m $217.9m 4.3% 2.7% Statutory NPAT $208.7m $196.6m $227.3m 6.2% (8.2%) Cash EPS 48.9¢ 47.1¢ 48.1¢ 3.8% 1.7% Net interest margin 2.16% 2.17% 2.24% (1 bps) (8 bps) Expense to income rat
Slide 15: Cash earnings growth
Cash earnings growth Margin performance improved over the half For personal use only Homesafe portfolio providing earnings diversification Costs continue to be well managed Improved underlying credit performance Financial performance 15
Slide 16: Net interest margin
Net interest margin NIM pressure in first 2 months reflects competitive For personal use only lending environment Asset pricing impact due to competition and customer preference for fixed rates, partially offset by variable lending portfolio repricing Positive impact of flows into call deposit
Slide 17: Strong funding position
Strong funding position Leveraging core strengths of the retail brand and For personal use only distribution network Strong growth in retail at call continues across a range of deposit products Basel III liquidity transition successfully completed Average LCR of 118% for 1H16 LCR of 117% a
Slide 18: Focus on efficiency
Focus on efficiency For personal use only Expense impacts — Project Reset established — Wage inflation approximately 3% — FTE lower by 39 FTE half-on-half Financial performance 18
Slide 19: Basel II & technology investment
Basel II & technology investment Enhancements to data, decision making For personal use only processes and risk and return measurements improving how we serve our customers Actively engaging with APRA APRA have taken up the FSI recommendation by permitting ADI’s to obtain partial accreditation
Slide 20: Business segment performance
Business segment performance For personal use only 1. Graphs refer to segment results (cash basis) beginning on p39 in the 4D, excludes central functions. Financial performance 20
Slide 21: Homesafe investment property portfolio
Homesafe investment property portfolio Asset growth driven by: For personal use only New business (properties acquired) Portfolio revaluation (income contribution) □ Change in property prices – Residex index increase for 6 months1; Melbourne +9.4% (60% of portfolio) Sydney +11.0% (40% of p
Slide 22: Homesafe investment property portfolio
Homesafe investment property portfolio Property growth rate (12months) For personal use only -3% 0% 3% 6% Income Contribution -$1.7 $15.1 $32.1 $49.1 (Discount + Property Revaluation) ($m) Note – Income contribution sensitivities based on portfolio balance as at 31-Dec-15 with no new or completed co
Slide 23: Great Southern paying down as expected
Great Southern paying down as expected Total loans net of specific provisions has reduced by 36%, For personal use only from $323.8m to $207.4m since 31 December 2014 Specific and collective provisions at December 2015 were $13.6m and $25.3m respectively Total borrowers: 3,321 at December 20
Slide 24: Bad and doubtful debts
Bad and doubtful debts Bad and doubtful debts charge of $20.6 million, down For personal use only 32% from 1H15 and down 46% from 2H15 Portfolio remains well secured, with low LVR’s 1 1. Collective provision (adjusted for tax) & GRCL to risk weighted assets Financial performance 24
Slide 25: High quality mortgage customers
High quality mortgage customers Mortgage For personal use only Average VEDA score for mortgage customers Source VEDA Financial performance 25
Slide 26: Arrears – days+
Arrears – 90 days+ For personal use only Financial performance 26
Slide 27: Summary and Outlook
For personal use only Mike Hirst Group Managing Director Summary and Outlook 27
Slide 28: Summary and outlook
Summary and outlook 1 Competition barriers falling For personal use only 2 Market leading value proposition 3 Significant investments coming on stream 4 Well placed for current market conditions 5 Strong capital position 6 Strong credit position 7 Strong funding position Summary and Outlook 28
Slide 29: Questions
For personal use only Questions 29
Slide 30: Appendices
For personal use only Appendices 30
Slide 31: Positive earnings progression
Positive earnings progression For personal use only Appendices 31
Slide 32: A portfolio of diverse businesses
A portfolio of diverse businesses Business Segment For personal use only Domestic bank operating seven • Challenges through continued regulatory change distinct brands • Unique community, customer, and partner proposition • #1 banking brand for customer and business satisfaction, and advocacy Consum
Slide 33: Executive team
Executive team For personal use only New Executive team members • Alexandra Gartmann joined the Bendigo and Adelaide Bank Group as Rural Bank Chief Executive Officer in October 2015, having been a member of the Board since November 2014. Before joining Rural Bank, Alexandra was CEO of the Foundation
Slide 34: Our organisation
Our organisation For personal use only Appendices 34
Slide 35: Retail banking
Retail banking Leading Consumer and Business satisfaction ratings For personal use only Strong focus on Customer strategy execution Highly competitive lending market Low cost deposits yield impacted by RBA cash rate reductions in 2H15 Continued strong growth with in excess of $1bn into Eas
Slide 36: Third party banking
Third party banking Deep price discounting prevalent in the broker market For personal use only Responding through targeted, tactical activity across key partners in lieu of broad-based discounting Replacement of existing lending system with integrated solution in progress Credit expenses in
Slide 37: Wealth
Wealth Margin Lending portfolio steady not withstanding volatility For personal use only in equity markets Leveraged ranked #1 for overall client satisfaction2 Smart Start Super continues to perform strongly with a 47% increase for the year NII impacted by deposit portfolio management 2 1 -
Slide 38: Agri-business
Agri-business Underlying improvement in operating performance For personal use only Strong retention of Rural Finance customer base Cost synergies from Rural Finance delivered ahead of schedule Continued reduction in non-performing loans Improving macro environment 1 - Graph refers to segm
Slide 39: Diverse geographic footprint
Diverse geographic footprint 1659 ATM’s 527 branches For personal use only 1 4 8 0 4 127 351 49 47 73 44 13 3 43 7 1 2 1 93 4 112 24 14 102 168 16 51 16 8 4 407 836 189 87 37 58 141 11 605 311 Community Bank® 26 1 9 11 Bendigo branded (3rd party) ATM’s 218 8 14 2 11 Appendices 39
Slide 40: The Community Bank model
The Community Bank® model 18 years old $148m in community grants1 since inception – For personal use only delivering tangible benefits for these communities and our business 311 Community Bank branches with more than 90 in communities where there is no alternative provider Proven, reliable and
Slide 41: Secure and low risk loan portfolios
Secure and low risk loan portfolios For personal use only Residential Mortgages3 Dec-15 Jun-15 Dec-14 98.4% secured Owner occupied 65.2% 64.8% 65.0% 97.7% secured by mortgages and Investment Lo Doc 34.8% 2.6% 35.2% 2.9% 35.0% 3.4% listed securities Retail mortgages 54.7% 53.6% 52.1% Third Party
Slide 42: Specific provisions
Specific provisions For personal use only Represented by Provision as % of each Retail Business 3rd Party Delphi Great Rural Rural Alliance Consumer Wealth BEN total portfolio’s Mortgages Lending Mortgages Bank Southern Bank Finance Partners gross loans June 2015 0.03% 0.51% 0.60% 0.03% 0.03% 6.19%
Slide 43: Funding
Funding For personal use only Dec-14 Dec-15 Dec-15 1. Company data Appendices 43
Slide 44: Key capital ratios & LVR breakdown
Key capital ratios & LVR breakdown For personal use only 1H15 2H15 1H16 Common equity tier 1 8.14 8.17 8.24 Additional tier 1 1.88 2.43 2.44 Tier 1 Capital 10.02 10.60 10.68 Tier 2 2.17 1.97 1.98 Total regulatory capital 12.19 12.57 12.66 Risk weighted assets (RWA) ($bn) 34.5 34.7 34.5 Dec-15 1. Bre
Slide 45: Contributions by segment
Contributions by segment For personal use only 1. Graph refers to segment results (cash basis) beginning on p39 in the 4D, excludes central functions. Appendices 45
Slide 46: Agri-business exposure by industry and state
Agri-business exposure by industry and state For personal use only Appendices 46
Slide 47: Residential/Business exposure and arrears by state
Residential/Business1 exposure and arrears by state For personal use only 1. Excludes Agri-business. Appendices 47
Slide 48: Contact
Analysts Media For personal use only Travis Crouch Silvana Arena 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 8 8220 7784 Mob: +61 418 552 922 Mob: +61 402 110 445 Email: travis.crouc
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