Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 2010 Earnings Presentation
40 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 15, 2010
Slide 1: Bendigo and Adelaide Bank 2010 interim results
For personal use only Bendigo and Adelaide Bank 2010 interim results February 15, 2010 1
Slide 2: Disclaimer
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 does not purport to be complete. It is to be read in conjunction with the Bank’s Interim results filed with the
Slide 3: Agenda
For personal use only • Overview – Mike Hirst • Results – Richard Fennell • Going forward – Mike Hirst Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our commitments and achievements
Issue Our commitment Our achievement Dislocated debt markets •Restructure balance sheet (~80% retail funding target) •Low risk balance sheet (80%+ retail funded) •Prudent and sustainable approach to credit growth •Credit growth aligned to long-term funding capacity •Short-term NIM contraction •Impro
Slide 6: Our result
Our result Financial performance •Cash earnings $139.7m For personal use only •Cash EPS 41.2¢ •Profit after tax before significant items $134.2m Risk management •Prudent provisioning •% gross impaired loans to total assets, 50bp (41bp excluding Rural Bank) Capital and dividends •Tier 1 ratio of 8.95
Slide 7: The future
The future… For personal use only • Continued focus on asset growth at profitable prices • Well positioned to realise revenue growth opportunities • Cost to income improvement (income the predominant driver) • Continued demonstration of our prudent and sustainable business model • Opportunistic appr
Slide 8: Results
For personal use only Richard Fennell Chief Financial Officer Results 8
Slide 9: Results summary
$m HY Dec 2008 HY June 2009 HY Dec 2009 % change (pcp) For personal use only Cash earnings 112.3 69.9 139.7 24.4% Profit after tax before significant items 108.9 64.3 134.2 23.2% Profit after tax 50.6 33.2 104.1 105.7% Cash EPS 40.7¢ 22.9¢ 41.2 ¢ 1.2% Dividends per share 28.0 ¢ 15.0 ¢ 28.0 ¢ - Resul
Slide 10: Group performance
Group performance For personal use only • Result was achieved with the flexibility of greater fundamental capital December 2008 June 2009 December 2009 Results 10
Slide 11: Net interest margin (%)
Net interest margin* (%) • TD repricing has flowed through the balance sheet For personal use only • Liquidity levels managed down to longer-term trends • Some margin expansion on the asset side • Forecasts of an increasing official cash rate are expected to assist margins June 09 Dec 09 Results 11
Slide 12: Net interest margin
Net interest margin For personal use only • Strong improvement in NIM • TD repricing complete • Current NIM run-rate of 2.27 per cent gross, and 1.99 per cent net of Community Bank® and Alliances Results 12
Slide 13: Cost to income
Cost to income For personal use only • Revenue drives ratio improvement • Long-term cost to income of 55% realistic in medium term • Retained capacity within the network Results 13
Slide 14: Operating expenses
Operating expenses For personal use only • Approx. $23m of increase over Dec-08 due to Macquarie margin lending and Rural Bank acquisitions Results 14
Slide 15: Merger integration
Merger integration For personal use only • The Bank exceeded planned cost savings by December 2009 • All major IT and systems integration complete Results 15
Slide 16: Funding mix
Funding mix* Total funding For personal use only • Low-risk retail funding base • Opportunistic approach to future securitisation and/or wholesale issuance Results *On-balance sheet, including internal securitisation 16
Slide 17: Total provisions and reserves for doubtful debts
Total provisions and reserves for doubtful debts ($m) For personal use only • Provisions increased $7.7m over the past six months • $13.3m was acquired through the business combination with Rural Bank • Provisions decreased on a stand alone basis Results 17
Slide 18: Arrears performance
Arrears performance* For personal use only Results *excludes Rural Bank 18
Slide 19: Strong fundamentals at group level
Strong fundamentals at group level For personal use only • Strong cost controls • Focus on efficiency • Significant recovery in revenue Results 19
Slide 20: Capital
Capital For personal use only • Capital management will continue to reflect the low risk nature of the loan book • Total capital 11.97% • Tier 1 capital 8.95% • Tier 1 capital position boosted by Aug/Sept capital raising of $300m, ~120bp • Thawing of securitisation markets also assisted Results 20
Slide 21: Results: Capital
For personal use only Results Capital 21
Slide 22: Going forward
For personal use only Mike Hirst Group Managing Director 22
Slide 23: Our point of difference
Our point of difference •Our group and business unit brands are strongly differentiated For personal use only •The group enjoys high levels of customer, shareholder and community trust and advocacy Attribute Measure Customer advocacy World class Net Promoter Score of +33 (June 2009), Highest custome
Slide 24: Growth and opportunities
Growth and opportunities Third Party Banking • Margins improving • Partners desire a genuine alternative Retail Banking For personal use only • Variable cost base 35% • 1.4m customers • Funding options emerging • 1.9 products per person • 442 branches Wealth – 191 Bank owned – 251 Community Bank® br
Slide 25: Towards a resolution
Towards a resolution • Initial court actions commenced against borrowers • We remain confident of our position For personal use only • Majority of arrears are ‘strategic’ - borrowers have capacity to pay Great Southern Note: Percentages based on value of loans in arrears at 31 December 2009. 25
Slide 26: Outlook
Outlook For personal use only Cautious optimism for the future • Low risk businesses and assets Potential upside • Retained capacity in network for growth • Re-opening of securitisation market • Normalised credit spreads in wholesale funding markets • Expansive share market growth Group objectives 2
Slide 27: Appendices
For personal use only Appendices 27
Slide 28: Systematic growth in retail
Systematic growth in retail For personal use only • 23 branches opened in 2009 • 25+ branches to be opened in 2010 • Relatively immature network Deposits per Community Bank® branches Community Bank® branches by age Going forward – Community Bank® and retail 28
Slide 29: Opportunities in Third-Party Banking
Opportunities in Third-Party Banking • Opportunity now to grow the business For personal use only • Partners desire maintaining a genuine funding alternative • Variable cost base • Commissions have been adjusted • Margins improving • Focus shifting to growth Going forward – Third Party Banking 29
Slide 30: Fundamentals remain attractive for Margin Lending
Fundamentals remain attractive for Margin Lending For personal use only • Customer appetite for risk and gearing is improving • Independent margin loan provider of choice • Strong long term relationships with many financial advisory firms • Strong margins • Low cost to income • Capacity for signific
Slide 31: Wealth management growth expected
Wealth management growth expected For personal use only • Value chain under pressure • Strong industry drivers remain - ageing population, compulsory super • Independence and trust to the fore - an opportunity for a trusted institution • Advice structure changing to meet customer preference - bank’s
Slide 32: Secure and low risk group loan portfolio
Secure and low risk group loan portfolio • 98% secured For personal use only • 75% secured by residential mortgages and listed securities • Commercial mortgage increase due to Rural Bank • Residential lending – improvement in arrears observed in 1st half 2009 continued – average LVR 65%* • Margin le
Slide 33: Portfolio breakup
Portfolio breakup – total $42.2bn Mortgages Dec 09 Owner occupied 64.1% Investment 35.9% For personal use only Lo Doc 7.8% Retail mortgages 53.2% Third Party mortgages 46.8% Mortgages with LMI 39.0% Mortgages without LMI 61.0% Customers ahead 3 payments or more 45.2% Customers ahead 3 monthly paymen
Slide 34: MIP geographic distribution
MIP geographic distribution For personal use only Credit Includes Commercial property MIP and Business Banking portfolio 34
Slide 35: Commercial loans typically small
Commercial loans typically small For personal use only • Predominantly SME • Average loan size $180k • 67 loans >$10m totalling $1,273m (3.0% of BEN loans) • Diversity by geography and industry Credit 35
Slide 36: Commercial industry split
Commercial – industry split* For personal use only Credit *As at 31 December 2009. Agriculture, forestry and fishing increase due to Rural Bank. 36
Slide 37: Home loan stress testing results benign
Home loan stress testing results benign • Harsh recession scenario based on experience Expected Loss ($m) Trough PD stress factor of UK recession (1992) which saw: For personal use only Property Value x2 x4 x6 x8 • Up to 6 fold increase in delinquency rates from peak to trough No decrease 8.3 20.8 3
Slide 38: Funding
$millions For personal use only $18bn $11bn Funding *Excludes Rural Bank 38
Slide 39: Borrower characteristics
Borrower characteristics Great Southern For personal use only Borrower profile* % of portfolio Income > $100k 79% Net assets > $500k 66% Loan balances < $250k 84% Professional (by occupation) 66% Great Southern *% based on value of loans as at 31 December 2009. Income and net assets at loan originat
Slide 40: Contact
For personal use only Analysts Media Will Rayner Owen Davies Head of Investor Relations and Corporate Affairs General Manager Marketing and Communications Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 8 8220 7764 Tel: +61 3 5485 7108 Mob: +61 437 794 366 Mob: +61 418 5
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