Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — Investor Day (February 2020)
46 slides from Bank Of Queensland's investor day presentation, Feb 27, 2020
Slide 1: BOQ Investor Day 2020
BOQ» | INVESTOR GrRouP | DAY 2020
Slide 2: Important Information and Disclaimer
IMPORTANT INFORMATION AND DISCLAIMER Summary information Implementation of transformation strategy This is a presentation of general background information about Bank of Queensland Limited’s There is a risk that the objectives, key deliverables and targets of the transformation strategy (BOQ’s) acti
Slide 3: Why We Are Here
WHY WE 01 ARE HERE 04 Present our refreshed Group strategy 02 03 Provide clear, near and medium term operational and financial targets Detail our points Explain how we will of differentiation transform our business 3
Slide 4: Agenda
AGENDA 9:45am Registration and coffee BOQ Strategy 10:00am Introduction Cherie Bell, General Manager Investor Relations 10:05am Strategic context George Frazis, Managing Director and CEO George Frazis, Managing Director and CEO Debra Eckersley, Group Executive People and Culture Lyn McGrath, Group E
Slide 5: BOQ Strategy
BOQSTRATEGY GEORGE FRAZIS : INVESTOR DAY 2020
Slide 6: Overview
OVERVIEW • BOQ has been serving our customers for 145 years • We are addressing this with a comprehensive strategy — With distinctive brands built on five pillars — Highly specialised bankers — Branches run by small business owners who are • We have laid out our operational and financial targets dee
Slide 7: BOQ Has Been Serving Customers for Years
BOQ HAS BEEN SERVING CUSTOMERS FOR 145 YEARS with distinctive brands, highly specialised niches and Owner Managed branches Evolution of BOQ 1971 2012 2014 1874 BOQ ASX 1974 2003 2013 2020 listed 1 BOQ has successfully grown organically and added differentiated capability in niche segments through “b
Slide 8: With a Significant Presence Around Australia
…WITH A SIGNIFICANT PRESENCE AROUND AUSTRALIA 165 910K 1 BRANCHES • 94 Owner Managed Customer base 3,201 4,446 Brokers Branches • c.210k VMA customers Brokers Accredited Accredited • 62 Corporate branches • c.500k BOQ Retail with VMA Customers with BOQ • 9 Transaction and Service centres • c.80k BOQ
Slide 9: Past Underperformance and Its Causes
PAST UNDERPERFORMANCE RESULTING FROM A CHALLENGING ENVIRONMENT, ONEROUS PROCESSES, COMPLEX SYSTEMS AND UNDERINVESTMENT — ALL ADDRESSED BY OUR STRATEGY Customer and Environment Operations Technology Employees • Low growth • Complex product-set, over 220 • Multiple banking systems • Declining customer
Slide 10: Changes in the Environment Are Creating Opportunities for BOQ
CHANGES IN THE ENVIRONMENT ARE CREATING OPPORTUNITIES FOR BOQ KEY TRENDS OPPORTUNITIES FOR BOQ • Customers moving to mobile banking, diminishing advantage of large distribution footprints Shifting customer preferences, including • Customers choosing regional, challenger banks post Financial Services
Slide 11: Group Strategy Built on What Differentiates Us
GROUP STRATEGY BUILT ON WHAT DIFFERENTIATES US Unique brands Innovative digital with proud history offering and loyalty • BOQ’s proud history within Queensland, 145 years • New mobile app for BOQ Specialist with Apple Pay • Virgin Money Australia as an iconic, nationally • Investment in Virgin Money
Slide 12: We Are Re-Imagining BOQ
WE ARE RE-IMAGINING BOQ A distinctive approach for A comprehensive Delivering sustainable profitable our customers and people digital transformation growth and attractive returns • A culture built with empathy at • All the strengths of an established • Growing above system from FY20, its heart, with
Slide 13: We Have Evolved Our Strategic Priorities
WE HAVE EVOLVED OUR STRATEGIC PRIORITIES Return to profitable and 01 sustainable growth Embed our purpose-led 02 customer culture Strong financial and Our empathetic Simplify our business, improve risk position, with culture sets us 03 productivity and address costs attractive returns apart Close th
Slide 14: Moving With Pace and Creating Momentum
MOVING WITH PACE AND CREATING MOMENTUM FY20 key initiatives delivered Material improvements in our mortgage process, improved Identified and largely delivered FY20 productivity savings (gross) time to conditional yes for mortgages from 5 days to 1 day and improved mortgage NPS from -201,3 to +52,3 (
Slide 15: Strong Growth and Margin Management
STRONG GROWTH AND MARGIN MANAGEMENT FOR VMA AND BUSINESS BANK, WITH STABILISING BOQ RETAIL Loans to households: gaining market share1 Loans to business: maintaining momentum1 FY19 (Sep - Dec) FY20 (Sep - Dec) FY20 (YTD)1 FY19 (Sep - Dec) FY20 (Sep - Dec) FY20 (YTD)1 Bank 1 +32.3% Intl 1 +12.1% 1.4x
Slide 16: Differentiated Strategy Built on Five Pillars
WE HAVE A DIFFERENTIATED STRATEGY BUILT ON FIVE PILLARS – Delivering an exceptional customer experience with specialised bankers and increasing long term shareholder value Strong financial and Our empathetic risk position, with culture sets us attractive returns apart Simple and intuitive Distinctiv
Slide 17: Pillar 1: Our Empathetic Culture Sets Us Apart
PILLAR 1 OUR EMPATHETIC CULTURE SETS US APART 17
Slide 18: Building a Distinctive Purpose-Led Culture
BUILDING A DISTINCTIVE PURPOSE-LED CULTURE, WITH EMPATHY AT THE HEART Purpose Creating prosperity for our customers, shareholders and people through empathy, and values integrity and by making a difference. What this Our customers Our people means for… Delight our customers Inspire people to delight
Slide 19: Purpose-Led Culture Combined With Enhanced Capability
BUILDING A DISTINCTIVE PURPOSE-LED CULTURE, WITH EMPATHY AT THE HEART, COMBINED WITH ENHANCED CAPABILITY Empathy apacity to understand and feel with another person, what they are experiencing then acting to help them C OQ today, when we are at our best B Opportunity to distinguish from competitors P
Slide 20: Enhanced Owner Managed Branch Proposition
WE HAVE ENHANCED OUR OWNER MANAGED BRANCH PROPOSITION RESET Location of branches has been optimised NETWORK and reset for growth Developed clear recruitment criteria ensuring FOCUSED OM candidates have significant banking experience RECRUITMENT Growing pipeline of internal candidates Implemented a r
Slide 21: Owner Managers Deeply Anchored in Their Communities
OWNER MANAGERS AS LONG STANDING SMALL BUSINESS OWNERS ARE DEEPLY ANCHORED IN THEIR COMMUNITIES Owner Managed branch model is a Group asset and differentiator Seizing its potential to drive profitable growth 122 Owner >11 years Align our branch network to target markets Managers avg OM in 94 tenure l
Slide 22: Pillar 2: Distinctive Brands Serving Niche Segments
PILLAR 2 DISTINCTIVE BRANDS SERVING ATTRACTIVE NICHE CUSTOMER SEGMENTS 22
Slide 23: A Portfolio of Distinctive Brands
A PORTFOLIO OF DISTINCTIVE BRANDS EMPATHETIC THE BANK OF BIGGER SPECIALISED SME AND NICHE BUSINESS BANKING SOLUTIONS THAT RELATIONSHIP-LED POSSIBILITIES MEET CORE BUSINESS AND PERSONAL NEEDS BANKING EXPERIENCE CUSTOMERS ~500k ~210k ~80k ~30k ~90k ASSETS $22.1bn $2.5bn $7.6bn $8.8bn $5.1bn DEPOSITS $
Slide 24: Deepening BOQ's Proven Niche Segment Strategy
DEEPENING BOQ’S PROVEN NICHE SEGMENT STRATEGY TO DRIVE PROFITABLE GROWTH Our niche strategy has delivered sustainable growth Successful niche strategy in action 4.9% CAGR1 $21b $20b Specialist Bankers Life cycle lending $19b and risk personnel 25% 23% 24% 27% 28% 25% Strong professional c. 1000 BOQ
Slide 25: Grow Faster in SME Banking
GROW FASTER IN SME BANKING SME is a critical segment for BOQ Group… Our niche strategy will focus on key SME segments where we are building and leveraging capability 111%1 Deposit to loan ratio Strong source of deposits Deep SME Established Focus is on Existing Relationship Leading asset experience
Slide 26: Pillar 3: Digital Bank of the Future
PILLAR 3 DIGITAL BANK OF THE FUTURE WITH A PERSONAL TOUCH 26
Slide 27: Digital Will Underpin Our Business Transformation
DIGITAL WILL UNDERPIN OUR BUSINESS TRANSFORMATION To become the digital bank of the future with a personal touch Building the future cloud-based Indicative timing FY20 FY21 FY22 FY23 FY24 platform for growth, migrating Migrate key data centres to private cloud existing customers to the new Modernise
Slide 28: Building the Digital Bank of the Future
BUILDING THE DIGITAL BANK OF THE FUTURE A neobank with existing customer scale Globally recognised aspirational brand OUR AMBITION OUR PURPOSE WE WILL ACHIEVE THIS BY CUSTOMER BENEFITS EXCITING MOMENTUM Be one of Creating bigger Re-imagining Improved 210K+ Customers Australia’s possibilities banking
Slide 29: Pillar 4: Simple and Intuitive Business
PILLAR 4 SIMPLE AND INTUITIVE BUSINESS, WITH STRONG EXECUTION CAPABILITY 29
Slide 30: A Simple Intuitive Business With Strong Execution Capability
A SIMPLE INTUITIVE BUSINESS, WITH STRONG EXECUTION CAPABILITY Operations Technology Capability Risk and and processes and digitisation and culture compliance • Minimum banking product- • Transforming the • Best in class execution • Continuing sector focus set focused on target customer and banker ca
Slide 31: Home Buying Transformation Program
WE HAVE MADE SIGNIFICANT INROADS THROUGH OUR HOME BUYING TRANSFORMATION PROGRAM BUT THERE IS MORE TO DO... Simplified and streamlined Culture and capability Optimise channels process, products and systems • New Retail Bank leadership • Launched mobile mortgage • Simplified and digitised customer pro
Slide 32: Continued Capital Investment to Deliver Transformational Outcomes
CONTINUED CAPITAL INVESTMENT TO DELIVER TRANSFORMATIONAL OUTCOMES Targeted capital investment ($M) Capital investment profile and outcomes - deployed to grow long term shareholder value 100 100 100 92 Modernise Grow above system infrastructure 80 from FY20, optimising revenue and return Launch new B
Slide 33: Targeting Broadly Flat Cost Base
TARGETING “BROADLY FLAT” COST BASE OF <1% PER ANNUM IN FY21 AND FY22 Operating expense profile FY19 to FY22 c.+8% <1% p.a. c.$60M c.$45M Productivity Technology, digital, initiatives • “Broadly flat” underlying delivery and Expense c.+8% cost base profile in FY21 amortisation containment c.$25M and
Slide 34: Accumulating Productivity Benefits to FY23
ACCUMULATING PRODUCTIVITY BENEFITS OF C.5% P.A. FY20 TO FY22, TO $90M ANNUALISED BY FY23 Discipline Synergy Scale c.$30M c.$60M c.$90M annualised annualised annualised FY20 FY21 FY22 FY23 • Simplified organisational structure, • Optimised operating model, with • Consolidated core banking and with 4%
Slide 35: Pillar 5: Strong Financial and Risk Position
PILLAR 5 STRONG FINANCIAL AND RISK POSITION, WITH ATTRACTIVE RETURNS 35
Slide 36: Continuing to Strengthen the Bank
CONTINUING TO STRENGTHEN THE BANK Capital raising of $340M Capital deployed where ($250M placement, $90M SPP) we can achieve long term shareholder value growth Achieved peer leading capital position, with pro forma CET1 of >10% through a successful capital raising • Investment capacity and flexibili
Slide 37: Continuing to Strengthen the Bank - Risk Management
CONTINUING TO STRENGTHEN THE BANK - RISK MANAGEMENT Focus areas to support BOQ differentiated strategy Creating momentum… to support accelerated growth Managing portfolio Continue our sector focus, Ongoing credit model development reflecting our Automated scorecards quality and credit building compl
Slide 38: Closing Remarks and Guidance
CLOSING REMARKS & GUIDANCE GEORGE FRAZIS 38
Slide 39: BOQ's Key Targets
BOQ’S KEY TARGETS Our strategic priorities… driving to our targets… delivering strong returns Our empathetic culture • Top 3 NPS for personal and SME customers sets us apart • Employee engagement from 56% to top quartile Target ROE around • Grow customer base to c.1.5M customers by FY24 8% by FY22 a
Slide 40: Concluding Remarks
CONCLUDING REMARKS Delivering an exceptional customer experience, with specialised bankers, and increase long term shareholder value through sustainable profitable growth and attractive returns We are a niche player – we know our customers, we know where we want to play and we know digital will help
Slide 41: FY20 Guidance
FY20 GUIDANCE We had previously guided that FY20 will be a difficult year as we transition, with lower year on year cash earnings. We are now anticipating income growth and an improved impairment outcome, and accordingly anticipate FY20 cash earnings to be approximately 4% - 6% lower than FY191. Sta
Slide 42: Investor Day 2020
INVESTOR 42 DAY 2020
Slide 43: Appendix
APPENDIX INVESTOR DAY 2020
Slide 44: Customer Segments to Focus On
WE HAVE MADE CLEAR CHOICES ON WHICH CUSTOMER SEGMENTS TO FOCUS ON - WHERE WE CAN ACHIEVE ABOVE MARKET GROWTH AND RETURNS Personal Banking Business Banking Services to niche BOQ Finance Commercial/ Realising & Institutional Industries Micro SME Corporate BOQ Business SME Building Protecting Very High
Slide 45: Presenters
PRESENTERS GEORGE FRAZIS LYN MCGRATH DEBRA ECKERSLEY HUGH LANDER Managing Director & CEO Group Executive BOQ Retail Banking Group Executive People & Culture CEO BOQ Specialist George Frazis joined BOQ as Managing Lyn McGrath is the Group Executive Debra Eckersley joined BOQ as Group Hugh Lander is t
Slide 46: Presenters
PRESENTERS EWEN STAFFORD VERITY GILPIN Chief Financial Officer and GREG BOYLE ADAM MCANALEN CEO BOQ Finance Chief Operating Officer CEO Virgin Money Australia Chief Risk Officer Verity Gilpin joined Bank of Queensland Ewen Stafford joined BOQ as Chief Financial Since 2015, Greg Boyle has been Chief