National Australia Bank Limited · ASX:NAB
National Australia Bank — Bank of New Zealand (BNZ) — Investor Presentation (June 2015)
38 slides from National Australia Bank's investor presentation, Jun 5, 2015
Slide 1: BNZ Investor Presentation June 2015
bnz* Be good with money “si fii.) ; - Bank of New zealand — Investor Presentation June 2015 9:20 AM Accounts
Slide 2: Important notice
Important notice This document is a visual aid accompanying a presentation to analysts by Anthony Healy, Managing Director and Chief Executive Officer BNZ, Adrienne Duarte, Chief Financial Officer BNZ, and Peter Whitelaw, Chief Risk Officer BNZ on 5 June 2015. It is not intended to be read as a stan
Slide 3: Agenda
Agenda BNZ overview – Anthony Healy, Managing Director & Chief Executive Officer Strategic priorities – Anthony Healy Financial performance – Adrienne Duarte, Chief Financial Officer Risk and regulatory considerations – Peter Whitelaw, Chief Risk Officer Summary – Anthony Healy Q&A 3
Slide 4: The Executive Team – passionate, driven, experienced
The Executive Team – passionate, driven, experienced Anthony Healy Adrienne Duarte Annie Brown Craig Herbison David Bullock Managing Director & Chief Financial Officer Director People and Director Retail and Director Products and Chief Executive Officer Communications Marketing Technology • 6 years
Slide 5: Key messages
Key messages Long history of consistent earnings growth Traditional strength in business banking, especially SME and Agri Differentiated brand positioning and focus on customer experience delivering better customer advocacy Broadening retail reach through broker and Auckland uplift Market
Slide 6: BNZ Overview
BNZ Overview Anthony Healy Managing Director and Chief Executive Officer
Slide 7: BNZ overview
BNZ overview Proud history in New Zealand Substantial market shares in all key segments1 Founded in 1861, part of NAB since 1992 1.2 million customers and 5,500 staff 26.5% 24.4% 22.2% 23.4% Focused on supporting 15.8% 18.1% New Zealand customers ‘Be Good With Money’ Business Agribusiness Hous
Slide 8: Strong contributor to NAB Group earnings
Strong contributor to NAB Group earnings NZ Banking cash earnings NZ Banking contribution to NAB cash earnings2 (NZ$m) 11.8% 12.4% 807 11.3% 11.0% 741 788 10.5% 9.0% 8.5% 612 482 517 524 430 418 364 Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Mar 15 Mar 15 1 ex UK Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Se
Slide 9: NZ economic outlook
NZ economic outlook Economic Economic growth running at an annualised rate of around 3.25% in the final Indicators (%) CY12 CY13 CY14 CY15(f) CY16(f) quarter of 2014 Forecast annual rate of GDP expansion to slow to under 2.5% by the end of GDP growth1 2.4 2.3 3.3 2.8 2.0 2015 and 2.0% for calend
Slide 10: Key trends shaping our strategy
Key trends shaping our strategy Auckland demographics… … driving higher and less volatile growth Half of total New Zealand population growth is in Auckland – GDP – annual % change year end March2 2x national rate1 Auckland City’s 39% of residents born overseas (23% in Asia)1 economic strategy is
Slide 11: BNZ Strategic priorities
BNZ Strategic priorities Anthony Healy Managing Director and Chief Executive Officer
Slide 12: Our focus
Our focus Strong NZ franchise • Leveraging investment in BNZ Partners and Retail • Customer experience – Get the basics right – Fix pain points – Digital enablement • Clear segment and geographic focus – SME – Home loan customers – Auckland • Culture – Bold, Brave and Blue – Living the customer prom
Slide 13: Auckland key to retail growth
Auckland key to retail growth Underweight Auckland market Auckland accounts for 35% of NZ GDP and targeted to grow at Total Auckland housing lending 5% per annum next 3 years1 Significant underweight position in Auckland housing Retail main bank market share in Auckland only 9% NZ$26.2bn Dis
Slide 14: Accelerating housing lending growth through broker channel
Accelerating housing lending growth through broker channel Re-entered broker market Regulatory changes driving shift to broker Re-entered mortgage broker market on May 18 2015 (%) BNZ housing lending market share1 16.2 RBNZ Introduced LVR Partnered with NZ Financial Services Group – New Zealand’
Slide 15: Leveraging digital capability
Leveraging digital capability Investing in digital innovation YouMoney Dedicated digital team (132 FTE) Launched YouMoney in 2013 Uses agile operating model and high release frequency to both 163k registered customers lead and fast-follow market Delivered material increase in Strong emph
Slide 16: Customer centric approach to business banking
Customer centric approach to business banking Business banking model Revenue contribution BNZ Partners Launched 2008 for all Agri, Property, Private Bank and business Retail 37% customers with turnover greater than $1m Commercial and Medium Enterprises 20% 33 dedicated Partners Centres for custo
Slide 17: Small business (<$1m turnover) – Auckland growth a priority
Small business (<$1m turnover) – Auckland growth a priority Market leading proposition Leading to material improvements in NPS1 CANSTAR Small Business Bank of the Year 2011 to 2014 Net Promoter Score (Main Bank) 30 Total small business Market leading customer access – dedicated business teams 16
Slide 18: Medium and Commercial Business – strong franchise position
Medium and Commercial Business ($1m – $20m turnover) – strong franchise position Strong gains in customer advocacy1 Recent market share performance1 Net Promoter Score 35% 20 15 10 31% 7 30% 0 25% -10 24% -20 20% -30 -40 15% 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 1Q10 3Q10 1Q11 3Q11
Slide 19: Agribusiness – material to NZ and BNZ
Agribusiness – material to NZ and BNZ Agri underlying fundamentals remain robust Steady growth in Agribusiness share Agribusiness market share Traditional backbone of NZ economy – 40% of exports 40% 32% Ministry of Primary Industries’ goal to double Agri exports from 30% $32b in 2013 to $64b in
Slide 20: Financial performance
Financial performance Adrienne Duarte Chief Financial Officer
Slide 21: Key messages
Key messages Track record of consistent growth in earnings Expenses well contained – CTI now below 40% Good margin management in a competitive environment Strong balance sheet metrics – capital, funding and liquidity Robust asset quality and provision coverage 21
Slide 22: Consistent growth in earnings
Consistent growth in earnings Cash earnings Underlying profit (NZ$m) Sep 06 – Sep 14 CAGR 10.5% (NZ$m) Sep 06 – Sep 14 CAGR 9.0% 788 807 1,174 1,197 741 943 1,028 1,118 612 918 482 517 524 685 763 430 418 599 627 364 Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11 Sep 12 Sep 13 Sep 14 Mar 15 Sep 06 Sep 07
Slide 23: Good margin management, improving lending and deposit balances
Good margin management, improving lending and deposit balances Net interest margin and proportion housing Housing market share vs Housing margin1,2 book fixed rate 3.0% (%) 16.3% 2.8% 80% 75% 2.6% 65% 58% 68% 71% 58% 16.1% 2.4% 45% 37% 43% 49% 32% 38% 2.2% 15.9% 2.0% 1.8% 2.35 2.41 2.38 2.40 2.33 2.
Slide 24: Improved funding, liquidity and capital profile
Improved funding, liquidity and capital profile BNZ Stable Funding Index (SFI) NAB Group debt funding of BNZ (NZ$m) 85% 89% 89% 89% 79% 80% 72% 22% 19% 20% 23% 905 22% 23% 19% 27% to 23% 905 22% to 11% 905 67% 70% 69% 5,481 905 57% 57% 62% 53% 4,270 2,830 2,491 905 715 715 Sep 09 Sep 10 Sep 11 Sep 1
Slide 25: Asset quality metrics reflect well managed risk
Asset quality metrics reflect well managed risk B&DD charge and B&DD as a % of GLAs1 Total 90+ DPD and GIAs as % GLAs (NZ$m) (NZ$m) 0.34% 0.34% 972 2.40% 0.27% 849 860 0.17% 0.16% 710 1.80% 0.14% 0.13% 0.13% 0.14% 0.14% 678 488 511 1.20% 188 187 286 151 98 99 0.60% 67 87 71 106 53 52 46 0.00% Sep 06
Slide 26: Risk and regulatory considerations
Risk and regulatory considerations Peter Whitelaw Chief Risk Officer
Slide 27: Overview
Overview Well positioned for regulatory restrictions on housing lending Agriculture portfolio geographically diversified and well secured Long term fundamentals underpin dairy industry Expect some deterioration in the portfolio given lower dairy payout 27
Slide 28: Housing lending – well positioned for regulatory changes
Housing lending – well positioned for regulatory changes Macro-prudential tools Lowest proportion of >80% LVR mortgages versus key peers1 October 2013 Limited >80% LVR mortgage lending to 10% of new mortgage lending May 2015 Residential property investors in Auckland required to have ≥30% deposit (<
Slide 29: Agribusiness key to New Zealand economic prospects
Agribusiness key to New Zealand economic prospects Key messages Agriculture NZ$12.7bn – 19% of total GLAs 22.2% Agribusiness lending market share1 – stable Other 2 since June 2013 33% Drystock 18% Agriculture, Mortgages Forestry and Diversified by geography and type, but dairy the 48% Fishing Fo
Slide 30: Dairy fundamentals robust, but near term outlook challenging
Dairy fundamentals robust, but near term outlook challenging Key messages Dairy the largest primary export to China1 Long term fundamentals positive – Chinese dairy Composition of primary exports to China demand remains strong Potential near term industry stress given low 14/15 forecast payout N
Slide 31: Summary
Summary Anthony Healy Managing Director and Chief Executive Officer
Slide 32: Summary
Summary Leveraging strong position in key segments – BNZ Partners and Retail Investing in Auckland growth opportunity Significant progress improving customer experience through innovative digital solutions Well placed for near-term challenges – housing lending controls and lower dairy payout
Slide 33: Questions and Answers
ne bnz* Be good with money Questions and Answers
Slide 34: Appendix
ne bnz* Be good with money Appendix
Slide 35: Reconciliation of NZ Banking to BNZ Banking Group
Reconciliation of NZ Banking to BNZ Banking Group NZ Banking vs BNZ Banking Group Consists of NZ Markets and Corporate office; less BNZ Insurances 27 8 65 502 483 418 Mar 15 Cash Earnings (NZ Structural differences Mar 15 Cash Earnings Fair value movements and Taxation on reconciling Mar 15 net prof
Slide 36: New Zealand: Housing lending – Key metrics
New Zealand: Housing lending – Key metrics New Zealand Housing lending Sep 13 Mar 14 Sep 14 Mar 15 Low Documentation 0.23% 0.21% 0.18% 0.15% Proprietary 100% 100% 100% 100% Third Party Introducer 0.0% 0.0% 0.0% 0.0% Variable rate lending drawn balance 46.6% 38.3% 28.2% 25.5% Fixed rate lending drawn
Slide 37: Commercial Real Estate – NZ Banking
Commercial Real Estate – NZ Banking Total NZ$7.0bn 10.6% of Gross Loans & Acceptances Region1 Auckland Other Regions Total Location % 43% 57% 100% Loan Balance < NZ$5m 27% 43% 36% Industrial Loan Balance > NZ$5m<NZ$10m 15% 15% 15% 18% Loan Balance > NZ$10m 58% 42% 49% Residential 8% Loan tenor < 3 y
Slide 38: Investor Relations
For further information visit www.nab.com.au or contact: Ross Brown Meaghan Telford Investor Relations Group Media Mobile | +61 (0) 417 483 549 Mobile | +61 (0) 457 551 211 Dan Colman Investor Relations Mobile | +61 (0) 401 617 167 38
Bank of New Zealand (BNZ) — Investor Presentation (June 2015) on 6ix