Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — UBS Australian Financial Services Conference 2009
20 slides from Bank Of Queensland's conference presentation, Jun 24, 2009
Slide 1: Bank of Queensland
Bank of Queensland UBS Australian Financial Services Conference 2009 24 – 25 June 2009
Slide 2: Banking landscape
Banking landscape Economic growth slowing and unemployment rising towards expectations of 7-8%. Plan for economy to bottom mid-2010 Credit growth continuing to slow, next year in housing expect 4-6% and SME lending -3% to 5% Impact of real economy on credit cycle only just starting to take hold, cor
Slide 3: Trading update
Trading update Asset growth continuing above system with demonstrated ability to cherry pick better commercial deals Sticking to our knitting... continue to avoid high risk property and corporate lending opportunities. Focus on lower risk SME market Non performing loans continue to grow quickly but
Slide 4: Superior growth vs market
Superior growth vs market The unique productivity uplift gives rise to superior lending growth in both expanding and contracting economic environments The unique OMB model is a very effective retail banking distribution platform – in our view, its level of productivity is unmatched The Bank is focus
Slide 5: OMBs remain core to our strategy
OMBs remain core to our strategy The rest of the OMB network is performing in line with expectations The productivity of the model is unmatched We have now converted 36 corporate branches to OMBs Average monthly settlements have increased 64% post conversion Annualised growth before and after conver
Slide 6: OMB income streams now largely recurring in nature
OMB income streams now largely recurring in nature OMB commissions are now skewed towards recurring income, providing earnings stability in a slowing economic environment The majority of OMB income now comes from existing balance sheet with less reliance upon upfront commissions Sales capability now
Slide 7: Funding our growth
Funding our growth ‘Sticky’ retail funding has continued to support lending growth ` Access to diversified funding sources with historic focus on growing ‘sticky’ retail deposits, and increasing long-term wholesale component ` Retail deposits have funded ~ 170% of 1H09A asset growth – Focused on sus
Slide 8: Targeting retail deposit self sufficiency
Targeting retail deposit self sufficiency Bank strategy has been able to Retail deposits secure a larger deposit base OMB model highly effective in 45% CAGR $16.1b securing new retail deposits Retail deposits + matched RMBS $14.0b funding sufficient to cover all Retail $12.9b lending allowing quick
Slide 9: NIM pressure in 1H09... Bounce in 2H09
NIM pressure in 1H09... Bounce in 2H09 Excess liquidity and the Mar ‘09 RMBS enables better margins in 2H09 Similar trend to FY08, with improvement in second half expected NIM up 8bps in 2H08 NIM down 18 bps in 1H09 31bps (23bps) (23bps) 4bps 15bps 4bps 1.70% (4bps) 1.62% (30bps) 1.77% (8bps) (4bps)
Slide 10: Funding costs… re-establishing competitiveness
Funding costs… re-establishing competitiveness Government guarantee cost differential drives uneconomic term debt for regionals vs majors Cost of securitisation is no longer allowing equalisation of term debt costs vs the majors Uniform cost of guarantee plus expansion of AOFM assisted RMBS issues w
Slide 11: Risk adjusted NIM….. temporary stalemate
Risk adjusted NIM….. temporary stalemate Reported NIM adjusted for impairment charges shows a more even playing field across the banking sector Major bank risk adjusted NIM could be under greater pressure in a prolonged down turn, equally improvement in BDD allows cross-subsidisation to price out co
Slide 12: Differentiated risk profile & fully provisioned
Differentiated risk profile & fully provisioned BOQ lending: secured, small exposures, avoid non-recourse lending, high pre-sales on development Housing Personal Leasing Commercial Large exposures 70% of total 2% of total 11% of total 12% of total 5% of total lending lending lending lending lending
Slide 13: Opportunities arising from a consolidating market
Opportunities arising from a consolidating market BOQ’s national footprint, combined with the ongoing strength of its OMB distribution model, has placed the Bank in an ideal position to take advantage of the opportunities arising from a rapidly consolidating Australian banking sector Housing loans (
Slide 14: Addressing the 'market void'
Addressing the ‘market void’ As a strong challenger brand, BOQ is ideally positioned to capitalise on the current ‘market void’ ` The Australian banking industry has recently undergone a period of consolidation – BankWest (loan assets ~$55bn1) was acquired by Commonwealth Bank Industry – St. George
Slide 15: Project Pathways… 3yr plan
Project Pathways… 3yr plan Repositioning BOQ to achieve its strategic vision Efficiency Program Repositioning `Restructured cost base for future growth and expansion 1 `Forecast to save ~$50m Creates a lean and 2 complementary paths for growth (~13% from FY10E cost base) efficient cost base, and a b
Slide 16: Efficiency program overview
Efficiency program overview Annualised Benefit Organisational alignment Completed ~$20m Phase One Expense optimisation Completed ~$30m ~$50m WIP TBD Phase Two Simplification Sourcing Review & Opportunities WIP TBD UBS Australian Financial Services Conference 2009 16
Slide 17: A more efficient model to challenge scale players
A more efficient model to challenge scale players Current efficiency initiatives executed give line of sight to dramatic improvement in our cost to income ratio, challenging the majors whilst 1/15th their size Cost to income ratio targets 64.5% 62.6% 56.1% 54.3% - 1H09(A) Step change improvements in
Slide 18: Improving ROE levels – 3yr plan
Improving ROE levels – 3yr plan Project Pathways is designed to deliver a significantly enhanced investment opportunity in the BOQ platform delivering higher growth and lower risk through the credit cycles The current efficiency initiative enables BOQ to be competitive, whilst a transformational sca
Slide 19: Summary
Summary Strong performance given current economic climate Very successful in retail and wholesale funding growth OMB network resilient despite conditions NSW consolidation and maturing profile increases resilience and performance Single channel to Retail & SME market strengthens our model Strong cre
Slide 20: Bank of Queensland
Bank of Queensland
Bank of Queensland — UBS Australian Financial Services Conference 2009 on 6ix