Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — 1H22 Earnings Presentation
55 slides from Bendigo & Adelaide Bank's earnings presentation, February 2022
Slide 1: Results Presentation
rsonal use only Presenter Name Results Presentation For the half year ended 31 December 2021 Bendigo and Adelaide Bank Limited ABN 11 068 049 178
Slide 2: Contents
rsonal use only Contents 1 Overview and Focus Area 1 Marnie Baker Page 3 2 1H22 Financials and Focus Area 2-4 Travis Crouch Page 11 3 Results in Brief Page 27 4 Appendix Page 40 2
Slide 3: Overview
rsonal use only Overview Marnie Baker Managing Director 3
Slide 4: Strategy delivering value
Strategy delivering value 1H22 overview rsonal use only • Continued lending and deposit growth • Earnings growth across all customer divisions • Maintained market leading customer advocacy and trust • Transformation on track but the emphasis on execution has heightened • Ferocia acquisition complete
Slide 5: Key performance indicators
Key performance indicators Consistently performing on key indicators 26.5 27.3 29.7 Customer 2.12m Net promoter rsonal use only 2.05m score3 0.7 1.6 1.96m numbers -0.6 Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 74.9% 47 44 Market 74.5% MFI business 41 74.0% share1 2.41% NPS4 -14 -13 -10 2.34% 2.36% D
Slide 6: Strategy driving results
Strategy driving results 1H22 financial result 1H22 1H22 vs 1H22 vs ($m) 2H21 1H21 rsonal use only Statutory net profit $321.3 14.7% 31.7% Cash earnings $260.7 9.8% 18.7% Total income $873.4 2.3% 2.9% Operating expenses $517.7 1.5% 0.1% - CTI 59.3% (50bps) (160 bps) Earnings per share 47.0c 6.6% 13.
Slide 7: Key focus areas
rsonal use only Key focus areas 1. Ferocia acquisition accelerates strategy 2. Net interest margin and the rising interest rate environment 3. Transforming our business and returns 4. Capital considerations 7
Slide 8: Shaping the future of banking
Shaping the future of banking Our strategy VISION: Australia’s bank of choice rsonal use only PURPOSE: To feed into prosperity, not off it Reduce Invest in Tell our IMPERATIVES: complexity capability story Customer Centric Customer Growth & Operating Model Value Proposition Transformation Digital by
Slide 9: Focus area 1: Ferocia acquisition accelerates strategy
Focus area 1: Ferocia acquisition accelerates strategy Technology enables us to leverage our strengths From Towards rsonal use only Customer First Bank Customer First Bank 1 • Highest NPS score for listed bank in Australia • Strong deposit gathering capability • No adverse findings at Royal Commissi
Slide 10: Australia's leading digital bank
Focus area 1: Ferocia acquisition accelerates strategy Australia’s leading digital bank Favourable customer demographics and macro factors #1 2/3 rsonal use only Rated banking app with NPS of 57 of new customers are referrals, who are delivering 70% 50% better retention of Australia’s of Australian
Slide 11: 1H22 Financials and Focus Areas
rsonal use only 1H22 Financials and Focus Areas 2 – 4 Travis Crouch Chief Financial Officer 11
Slide 12: Financial performance
Financial performance 1H22 2H21 1H21 1H22 1H22 ($m) ($m) ($m) v 2H21 v 1H21 rsonal use only Total income $873.4 $853.5 $849.0 2.3% 2.9% Operating expenses $517.7 $510.0 $517.4 1.5% 0.1% Pre-provision profit $355.7 $343.5 $331.6 3.6% 7.3% Credit expenses ($17.8) ($1.5) $19.5 Large Large Cash earnings
Slide 13: Focus area 2: Net interest margin and the rising rate environment
Focus area 2: Net interest margin and the rising rate environment Lending growth profile – 1H22 annualised1 2 Total lending Residential lending Business lending 1 rsonal use only 10.6% 8.3% 8.4% 7.6% 4.3% -4.9% -8.3% Reflects seasonality -13.4% Total Lending Total Housing 1 APRA Monthly Banking Stat
Slide 14: 1H22 impacts
Focus area 2: Net interest margin and the rising rate environment 1H22 impacts Historical NIM (%) • Lending portfolio rate lower due to continued growth 2.37 2.29 2.30 2.23 2.09 0.38 in fixed lending and competitive new business 0.36 0.33 rsonal use only 0.31 0.29 • Higher average balance of liquids
Slide 15: 1H22 impacts
Focus area 2: Net interest margin and the rising rate environment 1H22 impacts -4bps variable Favourable movement in mix -5bps fixed due to drawdown of TFF Non-interest bearing liabilities and equity and the relative value of this interest free portfolio rsonal use only reduced in 1H22 vs prior half
Slide 16: Medium term influences
Focus area 2: Net interest margin and the rising rate environment Medium term influences Residential lending portfolio Funding mix v peers3 - fixed vs variable1 rsonal use only 100% 7% 7% 8% 7% 8% 13% 10% 15% 20% 16% 11% 15% 6% 13% 8% 50% 69% 69% 71% 67% 60% 0% BEN Major bank 1 Major bank 2 Major ba
Slide 17: Focus area 3: Transforming our business and returns
Focus area 3: Transforming our business and returns Investment spend ($m)1 Investment classification 5% 10% 4% rsonal use only 11% 96.0 21% 24% 46.2 31% Asset lifecycle management 82.2 Foundation technology 44% 31% 40.1 Risk and compliance Growth and productivity 69.0 54% 31.6 30% 35% 54.8 FY20 FY21
Slide 18: Short-term deliverables
Focus area 3: Transforming our business and returns Short-term deliverables rsonal use only • Delivery of Up digital home loans to market • Delphi Bank integration - ~$4m savings per annum • Document and collateral management system • Business and Agribusiness restructure • Establishment of Chief Op
Slide 19: Focus area 3: Transforming our business and returns
Focus area 3: Transforming our business and returns FY19 1H22 FY24 rsonal use only # brands 13 10 3 Simplification # core banking systems 8 8 1 # IT applications 650 570 325 Modernisation % applications in the Cloud 1% 13% 50% % of API re-use 0% 25% 40% Median time to decision (home loans)1 22 days
Slide 20: FY22 and beyond
Focus area 3: Transforming our business and returns FY22 and beyond CTI: path towards 50% rsonal use only Key revenue drivers • Above system residential lending growth 60% • Improving margin outlook • Transformation initiatives • Up/digital home loans 50% FY19 FY20 FY21 FY22e FY23e FY24e Key expense
Slide 21: Focus area 4: Capital considerations
Focus area 4: Capital considerations • Increase in earnings and DRP participation has improved CET1 Total capital & CET1 - historical (%) by 28bps on June 2021 to 9.85% rsonal use only • Fully franked interim dividend of 26.5c 14.45% 13.98% 13.21% • Completed a $125m Tier 2 issuance in October 2021,
Slide 22: Focus area 4: Capital considerations
rsonal use only Focus area 4: Capital considerations New Board • Expectations for above system residential lending growth continues target CET1 capital • APS 110 and 112 changes coming into effect from January 2023 – range of broadly neutral net outcome 9.5% - 10.0% • Dividends managed to target ran
Slide 23: 2H22 financial outlook
2H22 financial outlook • Residential loan growth expected to exceed system rsonal use only • Seasonal uplift in credit growth in Agribusiness Net Interest Income • Continued margin pressure with headwinds expected to moderate by end of 2H22 • NII decline in 2H22 with margin pressure offsetting loan
Slide 24: Medium-term considerations
rsonal use only Medium-term considerations • Rising interest rates positive for our deposit-heavy funding mix • Increasing customer shift towards younger demographic, digital banking channels for both deposits and residential mortgages with Up and Tic:Toc well placed to capitalise • Consolidation of
Slide 25: Closing comments
rsonal use only Closing comments Marnie Baker Managing Director 25
Slide 26: Questions
rsonal use only Questions Marnie Baker – Managing Director Travis Crouch - Chief Financial Officer 26
Slide 27: Results in Brief
rsonal use only Results in Brief 27
Slide 28: Residential lending activity
Residential lending activity Shift to variable in 2Q22 Third Party Banking – settlements breakdown Retail - settlements breakdown ($m)1 ($m)1 $6,000m $6,000m rsonal use only 1Q22 splits: 2Q22 splits: 1Q22 splits: 2Q22 splits: Variable - 36% Variable - 40% Variable - 43% Variable - 55% $5,000m Fixed
Slide 29: Focus area 2: Net interest margin and the rising rate environment
Focus area 2: Net interest margin and the rising rate environment Residential lending portfolio Residential lending portfolio – fixed vs variable1 – fixed rate maturities ($b) rsonal use only 90% 80% 6.7 70% 4.8 4.0 2.9 60% 2.3 2.1 1.3 50% 2H22 1H23 2H23 1H24 2H24 1H25 2H25 40% Residential lending -
Slide 30: Wholesale funding composition
Focus area 2: Net interest margin and the rising rate environment Wholesale funding composition1 Funding profile ($b) rsonal use only 6% 9% Long term 18% Short term 21.6 21.4 Dec-21 TFF 18.2 45% 18.5 22% Securitisation 18.5 Loan Capital 19.8 21.1 21.7 74.1% Term funding maturity profile2,3 Customer
Slide 31: Customer deposit mix
Focus area 2: Net interest margin and the rising rate environment Customer deposit mix Funding mix v peers2 7% 7% 8% 7% 8% rsonal use only 29.9% 13% 10% 15% 42.0% 37.3% 33.8% 20% 16% 46.6% 11% 15% 6% 13% 8% Awaiting LHN 62.7% 66.2% 70.1% 69% 69% 71% 67% 53.4% 58.0% 60% Dec-19 Jun-20 Dec-20 Jun-21 De
Slide 32: Total income
Total income +2.3% or $19.9m Driven by higher lending portfolio balances – up $1.5b on June 2021 rsonal use only Lower merchant services fees due to sale to Tyro and Government Services (Agribusiness) partially offset by higher FX fees $3.9m $873.4m $4.7m $869.5m $11.2m $4.3m $4.4m $864.8m $860.4m $
Slide 33: Operating expenses
Operating expenses +1.5% or +$7.7m rsonal use only Higher staff costs were offset by lower redundancies $9.5m $517.7m $517.4m $3.3m $7.7m $2.5m $512.4m $510.0m $509.9m $0.1m $507.9m $507.9m $508.1m Additional staff costs, software amortisation and marketing Lower consulting costs and Higher software
Slide 34: Consumer division performance
Consumer division performance • Net interest income increase driven by continued strong • Increase in operating expenses with higher growth in both Retail and Third Party Banking channels, remediation, intangible amortisation and staff costs partially offset by margin pressure due to an increase in
Slide 35: Business division performance
Business division performance • Lower net interest income reflects a decline in deposit • Flat operating expenses reflects lower staff margin and in the lending portfolio from a reduction in (redundancies) and advertising costs assets under management and commercial loans under rsonal use only Delph
Slide 36: Agribusiness division performance
Agribusiness division performance • Net interest income growth primarily driven by • Lower operating expenses due to reduced staff realising deferred interest on finalised longstanding levels in government services business to match asset management loans decline in activity rsonal use only • Strong
Slide 37: Homesafe investment property portfolio
Homesafe investment property portfolio • Strength in property prices, as well as higher completions in the Homesafe portfolio & funding balance ($m) portfolio, drove largest net realised income half on record • Proceeds on contracts completed during 1H22 exceeded carrying Dec-21 split: 1 1,004.3 rso
Slide 38: Credit expenses
Credit expenses 1H22 2H21 1H21 2H20 • 1H22 credit expense represents -5bps of total gross ($m) ($m) ($m) ($m) loans Consumer division ($5.4) $5.9 $2.4 ($3.5) rsonal use only • Total impaired assets continues to reduce, down ~27% from June 2021 as longstanding asset Business division $0.9 $13.6 $4.1
Slide 39: Arrears
Arrears Residential loan arrears Business loan arrears 6.0% 1.0% Uptick due to 3 larger loans with expired rsonal use only 5.0% 0.8% facilities that have since been resolved 4.0% 0.6% 3.0% 0.4% 2.0% 0.2% 1.0% 0.0% 0.0% Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Res 90d+ (i
Slide 40: Appendix
ersonal use only Appendix > | Bendigoand AdelaideBank
Slide 41: Driving long term, sustainable ESG outcomes for stakeholders
Driving long term, sustainable ESG outcomes for stakeholders 1H22 outcomes Environmental Social Targets Governance rsonal use only • Installation of 200kW solar system • Release of free Up features like • Release of first Sustainability on the Bendigo Centre Pay Day and Spendable Balance Report and
Slide 42: The Community Bank model
The Community Bank model ‘Profit with purpose’ model 2 Community Bank footings ($b) • Over $272m in community contributions1 since Community Bank branches are a significant source rsonal use only inception, enabling tangible economic and social of stable customer deposits for the broader Group, 29.0
Slide 43: Leading Australia's digital home loan growth
Leading Australia’s digital home loan growth Tic:Toc provides Bendigo and Adelaide Bank access to the Tic:Toc – portfolio balance ($m) fastest growing lending channel, generating industry leading 2,400.0 asset quality at low operational costs rsonal use only 2,000.0 1 Bendigo and Adelaide Bank has a
Slide 44: Residential lending portfolio
Residential lending portfolio Retail - portfolio ($b)1 Residential balance by state rsonal use only 25.8 25.2 Arrears seg 24.1 23.5 23.1 15% Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 8% 10% Third Party Banking - portfolio ($b)1 27% 26.3 24.6 Arrears 22.4 seg 38% 19.9 18.0 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21
Slide 45: Residential lending portfolio – total exposure
Residential lending portfolio – total exposure Retail lending - purpose (%) Retail lending - payment type (%) 15.1% 14.6% 13.6% 12.6% rsonal use only 15.9% 33.0% 32.8% 32.3% 31.6% 30.9% 73.1% 74.6% 76.1% 78.0% 79.8% 67.0% 67.2% 67.7% 68.4% 69.1% 11.0% 10.2% 9.3% 8.4% 7.6% Dec-19 Jun-20 Dec-20 Jun-21
Slide 46: Residential lending portfolio – key metrics
Residential lending portfolio – key metrics Home Loans 90+ days past due - by state1 Residential portfolio metrics 3 Dec-21 Jun-21 Dec-20 3.0% rsonal use only Retail loans 50% 51% 52% Third Party Banking loans 50% 49% 48% 2.0% Lo Doc 0.5% 0.7% 0.8% Owner occupied 67% 66% 65% 1.0% Owner occupied P&I
Slide 47: Business lending portfolio
Business lending portfolio Business portfolio ($b) Business balance by state rsonal use only 9.7 9.7 9.8 9.7 9.5 8.2 8.0 8.0 7.9 7.9 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 14% Portfolio Commitment 5% 9% SME segment ($b)1 6.3 12% 6.2 6.2 6.1 57% 6.0 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 3% 1 SME is an inter
Slide 48: Agribusiness lending portfolio
Agribusiness lending portfolio Agribusiness exposure by industry Agribusiness balance by state 4.6% rsonal use only 4.8% Grain/Sheep/Beef 7.3% Sheep/Beef 33.6% Beef 7.4% Grain Dairy 11.6% Sheep Other 13.1% 17.6% Hort./Vit. 9% 17% 18% Agribusiness portfolio ($b) 7.5 7.6 7.7 20% 7.2 7.3 6.1 6.2 5.9 5.
Slide 49: Specific provisions and total impaired
Specific provisions and total impaired Specific provision Specific provisions breakdown ($m) balance ($m) 60.0 rsonal use only 94.3 85.4 40.0 71.6 20.0 Represented by - Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 Dec-20 Jun-21 Dec-21 Dec-2
Slide 50: Collective provision – economic outlook
Collective provision - economic outlook The outlook has improved but uncertainty remains Unemployment (%) House prices (%) 8.00% 25.00% rsonal use only 7.00% 15.00% 6.00% 5.00% 5.00% -5.00% 4.00% -15.00% 3.00% -25.00% 2.00% -35.00% Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-21 Jun-22 Dec-22 Jun-2
Slide 51: Collective provision
Collective provision Total collective provision movements ($m) 11.2 14.1 19.6 0.2 10.0 rsonal use only 263.2 266.1 7.3 252.0 252.0 246.6 246.6 246.7 236.8 229.4 229.4 1 1 1 Jun-20 Economic forecast Additional overlays Dec-20 Economic forecast Additional overlays Jun-21 Economic forecast Additional o
Slide 52: Liquidity
Liquidity Liquidity coverage ratio LCR ($b)1,2 Net Stable Funding Ratio (NSFR) 137.4% as at 31 December 2021 150% rsonal use only 143% Wholesale 3.3 funding & other 2.9 $12.0b 11.8 10.9 APRA 10% overlay 0.9 Other loans 0.9 Other flows 1.7 1.7 Wholesale funding Customer deposits $17.0b 1.6 Retail & S
Slide 53: Capital
Capital Credit risk weighted assets ($b)1 Dec-21 Jun-21 Dec-20 Jun-20 (%) (%) (%) (%) rsonal use only 36.4 36.3 Common Equity Tier 1 9.85% 9.57% 9.36% 9.25% 35.3 34.3 Additional Tier 1 2.04% 2.04% 2.81% 2.34% 33.2 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Total Tier 1 11.89% 11.61% 12.17% 11.59% S&P RAC Ra
Slide 54: Important Information
Important Information 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 no representation or warranty is made as to the accuracy, completeness or reliability of the informati
Slide 55: Analysts Media
rsonal use only Analysts Media Karen McRae James Frost Head of Investor Relations Head of Public Relations T: +61 3 8414 7060 M: +61 419 867 219 M: +61 417 186 500 E: james.frost@bendigoadelaide.com.au E: karen.mcrae@bendigoadelaide.com.au Alex Hartley Manager Investor Relations T: +61 8 8300 6290 M
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