Slide 1: Investor Presentation Half Year FY2019
DRAFT 7.0 31 JAN 2019 – 11:30am February 2019 February 2019 INVESTOR PRESENTATION HALF YEAR FY2019 1. Highlights & strategy Melos Sulicich - Managing Director & CEO 2. Financial results David Harradine - Chief Financial Officer 3. Strategy & outlook Melos Sulicich - Managing Director & CEO
Slide 2: Agenda
AGENDA 1H19 INVESTOR PRESENTATION 1. Highlights & strategy Melos Sulicich - Managing Director & CEO 2. Financial results David Harradine - Chief Financial Officer 3. Strategy & outlook Melos Sulicich - Managing Director & CEO FY19 HALF YEAR INVESTOR PRESENTATION | 2
Slide 3: Highlights & Strategy
HIGHLIGHTS & STRATEGY Melos Sulicich FY19 HALF YEAR INVESTOR PRESENTATION | 3
Slide 4: Key Highlights
KEY HIGHLIGHTS CORE STRATEGY DISCIPLINED EXECUTION CONTINUED INVESTMENT • Digital bank • Tight cost management • Wealth products + • Record online origination • Flat operating expenses systems • New online products • Appropriately capitalised • Brand • Service proposition • Single bank brand • Loan
Slide 5: Key Metrics and Performance Drivers
KEY METRICS AND PERFORMANCE DRIVERS Home loan book: $4.6b +10.3% 2x SYSTEM LENDING GROWTH 2.1x system driven by superior customer service proposition and advocacy Customer deposits: $3.4b +10.6% STRONG CUSTOMER DEPOSIT GROWTH supported by digital platform Total capital ratio: 13.05% -34bps and produ
Slide 6: Financial Results
FINANCIAL RESULTS David Harradine FY19 HALF YEAR INVESTOR PRESENTATION | 6
Slide 7: Results Summary
RESULTS SUMMARY Change Softer 1H19 result given challenging 1H19 1H18 (v 1H18) external environment Total operating income ($m) 60.73 62.67 -3.1% Strong lending growth supported Total expenses (excl. BDD) ($m) 40.57 40.01 +1.4% interest earned despite competitive market pricing Net profit af
Slide 8: Margin Compression Due to Increased Funding Costs
MARGIN COMPRESSION DUE TO INCREASED FUNDING COSTS BBSW changes Elevated wholesale funding spreads continued in 2.0% 1.97% 1H19 at c. 27bp above 1 month BBSW pcp Average over 6 month period 1.93% 1.89% Heightened front book pricing competition 1.9% limited scope for asset repricing in 1H19, with
Slide 9: Disciplined Cost Control
DISCIPLINED COST CONTROL Flat cost profile maintained for 1H19, with costs increasing+1.4% on pcp Technology and digital platform investment related depreciation and amortisation were drivers of the increase on pcp Several one off costs were absorbed during 1H19, including a brand refresh and
Slide 10: NPAT Bridge
NPAT BRIDGE Net interest income fell below the pcp and was adversely impacted by external funding markets and competitive market pricing for home loans Interest earned grew $4.9m (+5.2%) on pcp Interest expense rose $6.5m (+13.4%) on account of elevated wholesale funding spread, up c.27bp on t
Slide 11: Strong 1H Lending Growth
STRONG 1H LENDING GROWTH Home loan book – applications and settlements ($b) 2.00 Loan book grew approximately 2x system during 1.80 1.68 1.79 Applications 1H19 with record applications and settlements 1.60 1.42 Settlements (+33% ; +42% on pcp). Strong pipeline for 2H19 1.40 1.19 1.20 1.11 1.05 1.0
Slide 12: Continued Strong Credit Quality
CONTINUED STRONG CREDIT QUALITY Impairments remain at historic lows 30+ Days S & P Arrears Data 30 and 90 day arrears below peers and stable 3.00% 2.50% No signs of stress across the loan book 2.00% 1.50% AASB 9 has been adopted with an increase in 1.00% provisions 0.50% Home loan book LVR p
Slide 13: Improved Funding Mix
IMPROVED FUNDING MIX Customer deposits ($m) $3,267 $3,443 $3,113 Stable funding mix enhanced by growth in customer deposits 1,717 1,858 1,571 Customer deposit growth supported by introduction of Bonus Saver, Glide 1,542 1,550 1,585 transaction account and online TDs 1H18 2H18 1H19 Programmatic
Slide 14: Well Capitalised to Support Growth
WELL CAPITALISED TO SUPPORT GROWTH Robust capital position supporting peer leading ROE Capital base underpinning growth and investment in digital Well positioned to meet regulatory changes Total capital movements (FY18 – 1H19) 13.47% 0.91% 0.46% 0.84% 0.76% 0.02% 13.05% 0.03% Tier 2 1.96% 1.96
Slide 15: Wealth Business
WEALTH BUSINESS Funds under management and funds under advice ($m) Wealth NPAT steady on pcp 740 778 815 809 779 FUM slightly lower on pcp, driven by capital distributions and volatile equity markets 1,008 1,089 1,159 1,153 +6%1,130 FUA declined slightly on pcp with financial FY16 FY17 1H18 2H
Slide 16: Strategy & Outlook
STRATEGY & OUTLOOK Melos Sulicich FY19 HALF YEAR INVESTOR PRESENTATION | 16
Slide 17: Our Strategic Priorities
OUR STRATEGIC PRIORITIES Our GOALS are to be Our STRATEGY is focused on Simpler, more relevant, accessible for our customers and easier to “use” Building out and operationalising our digital bank, digital capabilities and brand Evermore digitally enabled so that we can attract the target customers w
Slide 18: Sector Overview
SECTOR OVERVIEW Lending market remains competitive, some industry participants taking Industry the opportunity to reprice both back and front books dynamics Funding costs remain elevated $ Economic indicators still strong; unemployment remains low but credit growth still slowing and likely to
Slide 19: Outlook
OUTLOOK FY19 HALF YEAR INVESTOR PRESENTATION | 19
Slide 20: Glossary
GLOSSARY 1H: First half of financial year IO: Interest only 2H: Second half of financial year IRB: Internal ratings-based ADI: Authorised deposit-taking institution LVR: Loan to valuation ratio APRA: Australian Prudential Regulation Authority MYS: MyState Limited Avg: Average MSB: MyState Bank ASX:
Slide 21: Appendix: Changes in Accounting Policy and Disclosures
APPENDIX Changes in accounting policy and disclosures The Group has adopted two disclosure changes that impact on the reporting of net interest margin (NIM). These have been applied retrospectively in the financial statements and this investor presentation. 1. Inclusion of Bond Issuance costs in the
Slide 22: Disclaimer
DISCLAIMER Summary Information This Presentation contains summary information about MyState and its activities current as at the date of this Presentation. The information in this Presentation is of a general nature, is subject to change without notice and does not purport to be complete or comprehe