Humm Group Limited · ASX:HUM
Humm — Investor Presentation (August 2023)
33 slides from Humm's investor presentation, Aug 24, 2023
Slide 1: FY23 Results
RESULTS Stuart Grimshaw | CEO Adrian Fisk | CFO 24 August 2023 Authorised for release by the hummgroup Board of Directors humm Group Limited, ACN 122 574 583 Level 1, 121 Harrington Street, The Rocks, Sydney NSW 2000
Slide 2: Agenda
FY23 RESULTS // August 2023 01 | HIGHLIGHTS 02 | COMMERCIAL UPDATE AGENDA 03 | CONSUMER FINANCE 04 | GROUP FINANCIALS 05 | SUMMARY 2
Slide 3: FY23 Highlights
FY23 RESULTS // August 2023 FY23 HIGHLIGHTS CREATING ‘LARGER’ SHAREHOLDER ROBUST CREDIT COST OUT STRONG BALANCE TRANSACTION VALUE VALUE PERFORMANCE EXECUTION SHEET POSITION FINANCIER $75.0m $4.2b Normalised cash profit (after tax) $112m 1.8% $18.6m in FY23 2% down on pcp in receivables +28% on pcp 2
Slide 4: To be the provider of finance for bigger purchases
FY23 RESULTS // August 2023 TO BE THE PROVIDER OF FINANCE FOR BIGGER PURCHASES CONSUMER FINANCE #1 POS financer for ANZ leading provider POSITIONING transactions over $1,000 of specialist asset finance CORE EXPERTISE RECEIVABLES $1.8b $2.4b >> Instant credit decisioning VERTICALS/ Health // Car Serv
Slide 5: Contribution from underlying products
FY23 RESULTS // August 2023 CONTRIBUTION FROM UNDERLYING PRODUCTS HUMMGROUP ($M) FY23 FY22 MVMT 90.0 POSPP $6.7M Ireland and Canada Normalised cash profit 75.0 76.9 (1.9) investment (after tax) 14.0 AASB9 Credit Provision (9.2) 7.3 (16.5) 80.0 75.0 Suspended products (4.7) (33.2) (20.1) (13.1) 20.6
Slide 6: Commercial Update
01 COMMERCIAL UPDATE
Slide 7: Non-bank lenders overtake banks as providers of SME lending
FY23 RESULTS // August 2023 NON-BANK LENDERS OVERTAKE BANKS AU AND NZ’S LEADING PROVIDER SPEED TO DECISION AND AS PROVIDERS OF SME LENDING OF SPECIALIST ASSET FINANCE SETTLEMENT, WITH SPECIALIST Equipment finance TAM $45b (AU) and $8b (NZ) delivered solely through the broker channel OFFERING A KEY D
Slide 8: FY23 growth delivers increased net interest income for FY24
FY23 RESULTS // August 2023 FY23 GROWTH DELIVERS INCREASED NET INTEREST INCOME FOR FY24 QUARTERLY VOLUMES: AU AND NZ COMMERCIAL EXCELLENT GROWTH & MOMENTUM FROM STRATEGIC SHIFT >> 57% growth in receivables to $2.4b >> 43% growth in volumes to 1.6b >> Seasonal peak of $437m in 4Q23 due to end of fina
Slide 9: Credit quality – strong diversification
FY23 RESULTS // August 2023 CREDIT QUALITY – STRONG DIVERSIFICATION SECTOR CONCENTRATION STATE CONCENTRATION BROKER CONCENTRATION WA ACT Agriculture, Forestry and Fishing 1 Other 10.2% 0.8% 7.4% 9.3% 15.7% 101-750+ NSW 29.1% 2-5 Manufacturing VIC 29.7% Engineering, 15.2% 4.7% 25.6% Civil and Infrast
Slide 10: Consumer Finance
02 CONSUMER SINVANIG=
Slide 11: Consumer business repositioned for growth
FY23 RESULTS // August 2023 CONSUMER BUSINESS REPOSITIONED FOR GROWTH NON-CORE PRODUCTS COST OUT MARGIN PROFITABLE REMOVED INITATIVES MANAGEMENT GROWTH Focus on capital allocation $18.6m in costs removed in FY23 Consumer repricing improving Growth in core ‘larger transaction and unit economics value
Slide 12: NZ Cards
FY23 RESULTS // August 2023 NZ CARDS FY23 • Normalised cash profit (after tax) down 30% to $20.6m – NZ CARDS VOLUME (A$M) PERFORMANCE mainly due to higher funding costs, lower revolve rates 434 CUSTOMER SPEND IMPROVES and lower LTIF spend over the past 2 years which has not 366 translated into inter
Slide 13: AU Cards
FY23 RESULTS // August 2023 AU CARDS FY23 • Normalised cash profit (after tax) up 17% to $5.4m – 597 AU CARDS VOLUME (A$M) PERFORMANCE mainly due to the combination of higher gross income 515 from interest rate increases, higher annual fee income and lower marketing and operating expenses • $515m vo
Slide 14: POS Payment Plans: Value Products
FY23 RESULTS // August 2023 FOCUS ON PROFITABLE LARGER TRANSACTION POS PAYMENT PLANS: VALUE PRODUCTS 437 FY23 • ‘Big things’ volume increase of 20% reflects growth focus PERFORMANCE supported by lower transaction value e-commerce purchases 342 • humm AU ‘Big things’ volume up $101m to $615m in FY23
Slide 15: Aligning product strategy to geography
FY23 RESULTS // August 2023 ALIGNING PRODUCT STRATEGY TO GEOGRAPHY CONSUMER NZ CONSUMER AU CONSUMER GLOBAL (IRE/CAN) BRANDS COMPETITIVE • Leading issuer of new credit cards in • Leading financer of larger value • Targeting untapped verticals (health, ADVANTAGE market (1 in every 4 cards issued is a
Slide 16: Group Financials
03 GROUP FINANCIALS
Slide 17: hummgroup Financial Performance
FY23 RESULTS // August 2023 HUMMGROUP FINANCIAL PERFORMANCE HUMMGROUP ($M) FY23 FY22 MVMT CASH NPAT Gross income 510.4 440.4 70.0 • Gross income of $510.4m a 16% increase on pcp • Net operating income down 6.0% due to margin compression from higher cost of funds and Net operating income 308.8 328.7
Slide 18: Commercial
FY23 RESULTS // August 2023 COMMERCIAL $M FY23 FY22 V PCP STRONG MOMENTUM IN COMMERCIAL SEGMENT Gross income 193.7 119.0 63% • Normalised cash profit (after tax) of $42.3m up 20% on pcp Net operating income 101.6 89.4 14% • 63% increase in Gross Income to $193.7m from strong loan volume growth with
Slide 19: Consumer Finance
FY23 RESULTS // August 2023 CONSUMER FINANCE $M FY23 FY22 V PCP REDUCED EARNINGS IN A CHALLENGING OPERATING ENVIRONMENT Gross income 316.7 321.4 (2%) Normalised cash profit (after tax) of $32.7m – down 22% on pcp a result of: • Margin compression as pricing increases have lagged cost of funds increa
Slide 20: Committed to cost transformation
FY23 RESULTS // August 2023 COMMITTED TO COST TRANSFORMATION HUMMGROUP OPERATING EXPENDITURE STRONG PROGRESS ON COST REDUCTIONS • Marketing reductions of $7.5m from the closure of suspended products, humm UK and lower spend on ‘Little things’ and the focus on larger transaction value PosPP • Lower d
Slide 21: Cost to income: committed to cost transformation
FY23 RESULTS // August 2023 COST TO INCOME: COMMITTED TO COST TRANSFORMATION COST TO INCOME RATIO1 COST TO INCOME RATIO IMPACTED BY LOWER NOI • Cost to income ratio is calculated as Operating Costs (Employment Costs, Group Group Group Marketing, Depreciation and Other Operating Costs) as a percentag
Slide 22: Credit risk management
FY23 RESULTS // August 2023 CREDIT RISK MANAGEMENT CONTINUED REDUCTION IN NET LOSS TO ANR ACROSS THE GROUP GROUP • Net loss/ANR of 1.8% down 60bps on FY22 reflecting our strength in credit decisioning and collections management practices across both the Commercial PRODUCT 1 DENOMINATOR FY23 FY22 FY2
Slide 23: AASB9 provision movements
FY23 RESULTS // August 2023 AASB9 PROVISION MOVEMENTS $M FY23 FY22 MVMT NET LOSS INCREASE OF $3.1M ON PCP 1 Net loss 85.1 82.0 3.1 • Net loss of $85.1m increased by $3.1m on pcp driven by increase in receivables. Net loss at Macro provision 2.6 (4.7) 7.3 Group level has reduced by 60bps to 1.8% for
Slide 24: Capacity to fund growth
FY23 RESULTS // August 2023 CAPACITY TO FUND GROWTH WHOLESALE FUNDING AND CORPORATE DEBT FACILITIES WHOLESALE FUNDING FACILITIES • Over $1b of public asset-backed securities issuance during FY23 despite Released approximately $695m of additional challenging funding markets, with strong support acros
Slide 25: Efficient and effective use of capital to drive returns
FY23 RESULTS // August 2023 EFFICIENT AND EFFECTIVE USE OF CAPITAL TO DRIVE RETURNS STRONG AND STABLE PRE-TAX DIVIDEND CAPITAL INITIATIVES BALANCE SHEET RETURN OF 6.2%1 TO DRIVE RETURNS Receivables grown Fully franked FY23 dividends Board approved share to $4.2b in FY23 totaling 2.0cps buy-back of u
Slide 26: Summary
04 SUMMARY
Slide 27: Outlook
FY23 RESULTS // August 2023 OUTLOOK PROFITABLE STRONG POSITIVE CREDIT EXECUTION OF CAPITAL GROWTH CAPITAL AND PERFORMANCE COST SAVINGS INITIATIVES WITH LOCKED BALANCE TO DRIVE IN NIM FOR SHEET IMPROVED FY24 POSITION SHAREHOLDER VALUE 27
Slide 28: Appendices
05 APPENDICES
Slide 29: flexicommercial
FY23 RESULTS // August 2023 FLEXICOMMERCIAL FLEXICOMMERCIAL FLEXICOMMERCIAL FY23 FY22 FY21 FY23 FY22 FY21 AUSTRALIA NEW ZEALAND Volume (A$m) 1,373.6 983.0 465.4 Volume (A$m) 190.7 113.3 74.8 Number of transactions 12,029 9,663 6,141 Number of transactions 3,335 3,445 7,545 Product yield1 (%) 10.5 10
Slide 30: Consumer Finance: humm Australia
FY23 RESULTS // August 2023 CONSUMER FINANCE: HUMM AUSTRALIA HUMM AUSTRALIA (‘BIG THINGS’) FY23 FY22 FY21 HUMM AUSTRALIA (‘LITTLE THINGS’) FY23 FY22 FY21 Volume (A$m) 614.6 513.5 553.4 Volume (A$m) 248.7 301.8 178.7 Receivables (A$m) 652.6 593.9 610.8 Receivables (A$m) 31.2 48.3 38.6 Product yield (
Slide 31: Consumer Finance: Cards
FY23 RESULTS // August 2023 CONSUMER FINANCE: CARDS NEW ZEALAND CARDS FY23 FY22 FY21 AUSTRALIA CARDS FY23 FY22 FY21 Volume (A$m) 747.6 693.8 695.4 Volume (A$m) 514.9 478.3 416.9 Receivables (A$m) 595.1 572.4 639.9 Receivables (A$m) 434.2 435.2 454.9 Interest bearing balances (%) 60.0 60.3 61.4 Inter
Slide 32: Disclaimer
FY23 RESULTS // August 2023 DISCLAIMER No recommendation, offer, invitation or advice and its related bodies corporate, directors, officers, employees, advisers and agents disclaim all This presentation is not a financial product or investment advice or recommendation, offer or liability and respons
Slide 33: Thank you
THANK YOU