Bendigo & Adelaide Bank Ltd. · ASX:BEN

Bendigo & Adelaide Bank — UBS Financial Services Conference 2008

36 slides from Bendigo & Adelaide Bank's conference presentation, Jun 26, 2008

  1. Slide 1: Volatility – friend or foe?

    For personal use only UBS Financial Services Conference Volatility – friend or foe? Jamie McPhee Chief Executive – Wholesale Bank Bendigo and Adelaide Bank Ltd June 2008 1

  2. Slide 2: Agenda

    Agenda For personal use only 1. Overview 2. Group context 3. Retail 4. Margin Lending 5. Wholesale Mortgages 6. Portfolio Funding 7. Merger 8. Summary 2

  3. Slide 3: 1. Overview

    For personal use only 3 1. Overview

  4. Slide 4: Overview

    Overview For personal use only ƒ Domestic economy continues to remain strong ƒ Credit growth is slowing, but remains at a reasonable level ƒ Planning for global funding markets to remain difficult throughout 2008 ƒ Non-retail funding – reduced availability and higher costs ƒ Securitisation – assumpt

  5. Slide 5: 2. Group context

    For personal use only 5 2. Group context

  6. Slide 6: Organisational design

    For personal use only Organisational design Retail Wholesale Business Wealth Banking Mortgages Partners Management • Branch • Product • Portfolio • Margin Network Manufacture Funding Lending • Business • Third-party • Specialised • Funds Banking Distribution Lending Management • Direct Profit contri

  7. Slide 7: Source of flows

    For personal use only Source of flows Retail Wholesale Business Wealth Banking Mortgages Partners Management Assets: ƒ Branch ƒ Product ƒ Portfolio ƒ Margin Network Manufacture Funding Lending ƒ Business ƒ Third-party ƒ Specialised ƒFunds Banking Distribution Lending Management ƒ Direct Funds Liabil

  8. Slide 8: 3. Retail

    For personal use only 8 3. Retail

  9. Slide 9: Overview

    Overview For personal use only Growth Assets 9.8% annualised year to date Liabilities 14.8% annualised year to date Branches 31 per year1 Customer numbers 75,000 per year2 400 branches 4 80 38 35 49 ACT 3 177 1. New branches per year since 2003 TAS 14 2. New customers per year since 2005, excluding

  10. Slide 10: Assets

    For personal use only Assets Total Retail Assets $bn (31 Dec 07) Mortgages $9.8 Consumer $3.3 Business Banking $2.8 TOTAL $15.9 Retail Assets $bn 9.5 7.5 5.5 3.5 1.5 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Residential Consumer Business Banking 10

  11. Slide 11: Branch profile

    For personal use only Branch profile Branches by Age# 35 30 No. of branches 25 20 15 10 5 0 0 1 2 3 4 5 6 7 8 9 Age of branch in years Deposits per Community Bank® branch* CAGR 20.3% 37.2 38.3 32.9 34.0 29.5 23.8 17.9 5.3 10.5 *As at 31 Dec 2007 <1 1 2 3 4 5 6 7 8 Age of branch in years #As at 20 Ju

  12. Slide 12: Customer satisfaction

    Customer satisfaction For personal use only ƒ Our retail customers want to do business with us Customer Satisfaction* 100% 90% 80% 70% 60% 50% Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Bendigo Bank Big Four Avg *Roy Morgan Research 12

  13. Slide 13: Customer satisfaction

    Customer satisfaction For personal use only ƒ Our business customers want to do business with us Business Banking Customer Satisfaction* 100% 90% 80% 70% 60% 50% Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Bendigo Bank Big Four Avg *TNS Market Research Banking satisfaction report BFN Jan 2008 13

  14. Slide 14: Credit quality

    Credit quality For personal use only ƒ Performing well ƒ No ‘bad boy’ exposures ƒ More challenging environment into the future Gross impaired loans/ total assets (%) 0.10 0.08 0.08 0.07 Dec 2005 Dec 2006 Dec 2007 May 2008 14

  15. Slide 15: 4. Margin Lending

    For personal use only 15 4. Margin Lending

  16. Slide 16: Margin Lending

    Margin Lending For personal use only ƒ 12 consecutive down days (most since 1982) ƒ 18% cumulative decline ƒ 12th day – down 7.26% (1989 – fell 8.09%) ƒ Significant volatility (highest since 1987) ƒ Single large stock falls - Allco, MFS, ABC, Centro ƒ All margin calls made, all settlements met ƒ No

  17. Slide 17: Margin Lending: Weighted & Unweighted Average LVRs

    Margin Lending Weighted & Unweighted Average LVR's For personal use only 70% 60% 50% 40% 30% 20% Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 F eb-08 Mar-08 Apr-08 May-08 Weighted Average LVR Unweighted Average LVR 17

  18. Slide 18: Margin Lending Portfolio

    Margin Lending Margin Lending Portfolio For personal use only 6 $ Billions 5 4 3 2 1 - Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 ƒ Growth of 25-35%pa was always unsustainable ƒ Decline has been in line with equity market falls ƒ Portfolio beginning to grow again 18

  19. Slide 19: Margin Lending Customer Accounts

    For personal use only Margin Lending Customer Accounts 27,500 27,000 26,500 26,000 25,500 25,000 Jan-08 Feb-08 Mar-08 Apr-08 May-08 # of Accounts 19

  20. Slide 20: Attractive market

    Margin Lending For personal use only ƒ Attractive market ƒ Improved equity market sentiment ƒ Further opportunities in financial planning sector ƒ Access to larger retail customer base 20

  21. Slide 21: Credit quality remains sound

    Credit For personal use only ƒ Credit quality remains sound ƒ Despite equity market volatility… ƒ Only 2 uncovered & non-paying positions ƒ Accounts total $4.8m ƒ Provisions of $2.7m 21

  22. Slide 22: 5. Wholesale Mortgages

    For personal use only 5. Wholesale Mortgages 22

  23. Slide 23: Securitisation: Costs have increased

    Securitisation For personal use only ƒ Costs have increased October 2006 October 2007 May 2008 0.20%* 0.43%* 1.45% Citi* $1.5 billion $505 million $500 million ƒ Continue to focus on profitable business (AGM 2006) *based on AAA portion of issue 23

  24. Slide 24: Portfolio re-pricing

    Portfolio re-pricing* For personal use only ƒ Existing portfolio Date Lo-Doc Full-Doc (% increase) (% increase) Sept 07 0.30% (0.55%) (0.25%) Dec 07 0.25% (0.50%) 0.25% (0.50%) Mar 08 0.15% (0.40%) 0.15% (0.40%) May 08 0.10% (0.35%) 0.10% (0.35%) ƒ New loans Date Lo-Doc Full-Doc (% increase) (% incr

  25. Slide 25: Managing for the new world

    Managing for the new world For personal use only ƒ Variable cost base ƒ Commissions being adjusted ƒ Focus on achieving an appropriate economic return Portfolio size $20 Billions $15 $10 $5 $0 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 25

  26. Slide 26: 6. Portfolio Funding

    For personal use only 6. Portfolio Funding 26

  27. Slide 27: Portfolio Funding

    Portfolio Funding For personal use only ƒ Funds portfolios originated by third parties ƒ Granular portfolios with high quality assets ƒ 22 partners with AUM $2.19bn ƒ Margins have been adjusted to reflect increased funding costs ƒ Reduced competition 27

  28. Slide 28: Portfolio Funding Case Study

    Portfolio Funding Case Study For personal use only 89.4% Class A Note ƒ Client in the business of P.O.S. IT leasing held by ABL ƒ Currently $54m portfolio ƒ Granular portfolio (> 21,000 loans) ƒ Average size $2,500 per loan ƒ Subordination > 10% of portfolio ƒ Current arrears (60-90 days) are < 2.20

  29. Slide 29: Industry Exposure April 2008

    Portfolio Funding Industry Exposure April 2008 For personal use only Health - Off BS, ƒ Agriculture & Forestry Wine, 0% Transport, 2% 17% ƒ > 15,501 loans Residential Property, ƒ Residential Property (off-B/S) ƒ > 2,384 loans 7% Personal & Other Services, 6% ƒ Residential Property - Health (off-B/S)

  30. Slide 30: Portfolio Funding - Credit

    Portfolio Funding - Credit For personal use only ƒ Strong credit quality ƒ Bank approves all partners lending policies ƒ Granular portfolios enables spread of risk ƒ Subordination provides additional credit protection ƒ Of the 22 portfolios, no credit losses in the history of the business 30

  31. Slide 31: 7. Merger

    For personal use only 31 7. Merger

  32. Slide 32: Merger

    Merger For personal use only ƒ Customer facing business units - minimal distraction from merger process ƒ Merger Integration Office ƒ 16 workstreams identified ƒ Synergies on track ƒ Integration of back-office functions 32

  33. Slide 33: Merger: Staff satisfaction remains very high

    Merger For personal use only ƒ Staff satisfaction remains very high ‘I would recommend the bank as a good place to work’ 100% 95% 93% 93% 90% 86% 85% 80% 75% 70% 2005 2006 2007 33

  34. Slide 34: 8. Summary

    For personal use only 34 8. Summary

  35. Slide 35: Summary

    Summary For personal use only ƒ Merger on track ƒ Cost of funds has increased ƒ Disciplined approach to writing profitable business ƒ Customer numbers and satisfaction continues to remain high ƒ Credit quality remains sound 35

  36. Slide 36: Questions

    For personal use only 36 Questions

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