Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 2015 Earnings Presentation
31 slides from Bank Of Queensland's earnings presentation, Mar 26, 2015
Slide 1: Results presentation for the half year ended 28 February 2015
Results presentation for the half year ended 28 February 2015 26 March 2015 Bank of Queensland Limited ABN 32 009 656 740. AFSL No 244616.
Slide 2: Agenda
Agenda Jon Sutton Result overview Managing Director & CEO Anthony Rose Financial overview Chief Financial Officer Jon Sutton Summary & outlook Managing Director & CEO 2
Slide 3: 1H15 overview
1H15 overview 1 Solid first half result 2 Growth without compromising price or quality 3 BOQ Specialist tracking to expectations 4 Foundations set for sustainable future 3
Slide 4: Key metrics strong in 1H15
Key metrics strong in 1H15 +19% +14% +20bps +430bps 1.97 48.1 BOQ 1.87 BOQ Specialist Specialist Property & CRM impact 43.9 4
Slide 5: Key metrics strong in 1H15
Key metrics strong in 1H15 +60bps Flat +6% +13% 5
Slide 6: Delivering against strategy in 1H15
Delivering against strategy in 1H15 Customer in charge Grow the right way There’s always a better way Loved like no other Group total lending up 7% (0.9x system) Lending growth heading back to system(1) Retail growth of 0.8x system driven by broker expansion & BOQ Specialist Business growth of
Slide 7: BOQ Specialist delivering to expectations
BOQ Specialist delivering to expectations Key metrics disclosed at acquisition Loan growth momentum maintained Announcement 1H15 guidance performance $19m Cash earnings is on track for $38m Commercial lending growth 11-13% In line guidance Asset Spread 4.70% Slightly above Margins remain healt
Slide 8: Management targets
Management targets Excludes Virgin Money Australia and BOQ Specialist Metrics(1) 1H15 Results FY15+ Target Management targets set at the (from 2H12) end of FY12 BOQ asset growth -Retail 0.5x system 1.2x system New measures to track delivery -Business(2) 1.3x system 1.5x system against strategy b
Slide 9: Financial overview
Financial overview Anthony Rose Chief Financial Officer
Slide 10: Solid underlying financial performance
Solid underlying financial performance BOQ Specialist Group ex-BOQ 1H15 v 1H15 v Group 1H15 1H15 Specialist 1H15 2H14 1H14 2H14 1H14 Net interest income $448m $61m $387m $390m $362m (1%) 7% Non interest income $84m $5m $79m $86m $82m (8%) (4%) Total income $532m $66m $466m $476m $444m (2%) 5% Operat
Slide 11: Underlying earnings momentum
Underlying earnings momentum +14% +27% (5%) (3%) +14% +19% +7% +7% Note: All figures in the chart are presented on a post-tax basis 11
Slide 12: Cash to statutory reconciliation
Cash to statutory reconciliation 1H14 2H14 1H15 Cash earnings after tax $140m $161m $167m Legacy items dealt with Amortisation of customer contracts ($2m) ($4m) ($5m) BOQ Specialist integration & Hedge ineffectiveness ($1m) ($1m) $1m transaction costs within assumed profile Government guarantee
Slide 13: Loan portfolio returning to growth
Loan portfolio returning to growth Total lending up 7% annualised Prior year initiatives and investments bearing fruit 39.7 38.4 34.6 35.3 (1) Includes BOQ Specialist from acquisition in 2014 13
Slide 14: Growth emerging across all portfolios
Growth emerging across all portfolios Housing growth supported by broker expansion and BOQ Specialist Commercial and Leasing growth ahead of system Housing loan growth ($m) Commercial loan growth ($m) Leasing growth ($m) 0.8x 1.2x 813 system 385 system 293 110 63 0.3x system 0.5x 0.8x system sys
Slide 15: Deposit target range maintained
Deposit target range maintained Continuing to derive benefits of credit rating upgrade Deposit pricing and mix initiatives implemented 42.5 43.4 9.4 38.7 8.4 7.9 68% 69% 67% Deposits to Loans ratio 15
Slide 16: Continued strong margin management
Continued strong margin management Improvement in funding 2.27% costs offsetting tighter 2.10% 2.18% 2.05% lending spreads 2.00% Commercial loan and BOQ Specialist growth reducing third party cost impact (1) NIM 3rd Party costs (1) Excluding BOQ Specialist 16
Slide 17: Other income flat
Other income flat St Andrew’s claims experience higher than usual 84 87 Continued pressure on fee 80 82 income with shift to fee free products Virgin Money provides positive contribution to other income 17
Slide 18: Underlying expense growth stable
Underlying expense growth stable Expenses impacted by BOQ Specialist, one-off property costs and CRM impairment Amortisation profile rising as expected with investment in digitisation On track for underlying cost to income ratio of 45% for 2H15 256 107.5 99.1 213 83.3 83.8 66.3 68.7 68.0 64.4
Slide 19: Impairment expense improving
Impairment expense improving Overall portfolio quality improving BOQ Finance returning to through-the-cycle trends (1) Including BOQ Specialist 19
Slide 20: Further reduction in impaired assets
Further reduction in impaired assets 382 Down 298 12% 125 293 110 259 88 82 20
Slide 21: Arrears levels appear to have bottomed
Arrears levels appear to have bottomed Seasonal uptick in Housing arrears Commercial remaining flat BOQ Finance uptick attributable to seasonal issues and small number of larger accounts (1) Including BOQ Specialist (2) Housing including Lines of Credit 21
Slide 22: Sound housing portfolio
Sound housing portfolio Quality continues to improve under revised risk appetite Historical portfolio weighting to Investor loans (44%), with 1H15 settlements 40% Investor lending growth – well below 10% level being monitored by APRA Portfolio metrics (%) 1H14 2H14 1H15 Settlement metrics (%)
Slide 23: Capital generation
Capital generation Underlying capital generation impacted by one-offs and stronger RWA growth Current level of ROE capable of supporting higher levels of growth Underlying capital generation (1) “Cash Earnings” has been adjusted for one-off non-recurring items. “Other” includes a reduction in de
Slide 24: Ongoing investment in risk management
Ongoing investment in risk management Building blocks in place for advanced accreditation What’s to come Increased sophistication in portfolio management ► Enhanced collateral management framework & process What we’re currently enhancing ► Operational risk system implementation ► Collective prov
Slide 25: Summary & outlook
Summary & outlook Jon Sutton Managing Director & CEO
Slide 26: Business environment
Business environment Economy running below long-run trend Sustained improvement will require pickup in consumer and business confidence Outlook will remain uncertain over the short- to medium-term State economic performance mixed 26
Slide 27: Capital – the need for timely regulatory action
Capital – the need for timely regulatory action FSI recommendations need to be implemented – risk weighting changes in particular Basel committee consultations will take time but capital levels heading higher, particularly for IRB banks BOQ remains well capitalised on all measures Building b
Slide 28: Strategic journey
Strategic journey FY15 Laying the foundations • Restoring the balance sheet • Opening new distribution channels • Risk frameworks & culture • Refreshed branding • Compliance • Niche market acquisitions – Virgin Money, BOQ Specialist Digitising & transforming • Back office digitisation • Building onl
Slide 29: Priorities & outlook
Priorities & outlook Continued growth through new channels – Broker, 1 BOQ Specialist, Virgin Money mortgages Growing the right way – targeted business segments, 2 risk sophistication, new OMB commission agreements Delivery of transformational projects – lending 3 program, IT services contract 4 Sub
Slide 30: Important notices
Important notices Financial amounts All dollar values are in Australian dollars (A$) and financial data is presented as at the date stated. Pro-forma financial information and past information provided in this Presentation is for illustrative purposes only and is not represented as being indicative
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