Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — Investor Presentation (March 2011)
34 slides from Bank Of Queensland's investor presentation, March 2011
Slide 1: Offshore Investor Presentation March 2011
Bank of Queensland Offshore Investor Presentation March 2011
Slide 2: Agenda
Agenda Introduction to Bank of Queensland Owner-Managed Branch model Financial performance Strategy update BOQ opportunity
Slide 3: Introduction to Bank of Queensland
Introduction to Bank of Queensland
Slide 4: Background on BOQ
Background on BOQ BOQ is a regional retail bank headquartered in Queensland and listed on the Australian Securities Exchange BOQ is one of Australia’s top 100 ASX listed companies with current market capitalisation of approximately $2.2b Assets under management of $39b as at 31 August 2010 The Bank
Slide 5: Our goal: To be the real alternative in financial services
Our goal: To be the real alternative in financial services 5 Bank of Queensland Limited ABN 32 009 656 740
Slide 6: Australian banking landscape
Australian banking landscape Market share 82.8% % Gross loans and advances 30% 26.1% 25% 23.3% 20% 17.5% 15.9% 15% 10% 5% 2.9% 2.5% 1.9% 1.4% 0.9% 0.8% 0.8% – Source:APRA, Capital IQ, company filings. Note: Market data as at 25 October 2010, calendarised to 31 August FYE. 6 Bank of Queensland Limite
Slide 7: Competition in Australian banking
Competition in Australian banking The amount of genuine competition in banking is currently ‘under the spotlight’ post-GFC and consolidation Positive The Government competition watchdog – ACCC – indicated last year it would be for difficult for further major bank consolidation Australian Federal Gov
Slide 8: Strength in high growth Queensland
Strength in high growth Queensland BOQ #2 branch network in the state Queensland’s economy is fundamentally strong with major contributors to its growth including the resources sector, property, business services, construction, manufacturing, commodity activities and finance and insurance Queensland
Slide 9: 10 years of continuous growth in assets and net profit
10 years of continuous growth in assets and net profit $197m $187m $155m $106m $32b $82m $29b $61m $68m $26b $45m $24m $29m $19b $15b NPAT $11b $12b $6b $7b $5b Loans 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 9 Bank of Queensland Limited ABN 32 009 656 740
Slide 10: BOQ strategy evolution
BOQ strategy evolution High margin/ Expand / acquire high low capital margin / low capital intensity products Value Accretion Acquisition of Pioneer & Geographic, Home in WA- focused higher scale M&A growth geo plays Interstate Organic expansion into a expansion national footprint & ATM fleet High g
Slide 11: Operating business model
Operating business model Customers Segment Value proposition Housing 71% of total lending Ave loan size: Your own personal ~ $250k bank Retail Banking Ave LVR: low 60s Relationship based SME ~33% securitised service model – SME ~ 16% of total lending ~40% secured by residential property ie. Owner Ma
Slide 12: Owner-Managed Branch model
Owner-Managed Branch model
Slide 13: Unique OMB model
Unique OMB model BOQ’s Owner-Managed Branches (OMB) are a unique concept in the provision of face-to-face banking services in Australia Partnership between BOQ and an experienced bank manager who ‘owns’ and manages the branch OMBs are full-service branches which offer committed staff and managers an
Slide 14: OMB model: A win-win proposal
OMB model: A win-win proposal Attract OMBs rewarded for excellent customer Grow service Retain Customers are valued Shareholders benefit through strong growth Communities benefit from having an SME operator in their community for the long haul 14 Bank of Queensland Limited ABN 32 009 656 740
Slide 15: OMB model based on alignment of interests
OMB model based on alignment of interests Individual remuneration together with growing a valuable business has been the key to the success of the model The Owner Manager covers: The Owner Manager receives: Set-up and ongoing operating Share of net revenues generated costs from lending and deposits
Slide 16: Model consistently delivers superior growth - 1.5x – 2.0x market
Model consistently delivers superior growth - 1.5x – 2.0x market BOQ 27% 27% 26% System 22% 23% 19% 14% 18% 17% 16% 13% 14% 11% 14% 10% 10% 13% 12% 8% 6% 4% 4% Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 1) Represents whole of Bank growth in total loans under managem
Slide 17: Financial performance
Financial performance
Slide 18: 2010 Results
2010 Results 2009 2010 Normalised cash NPAT $187.4m $197.1m 5% Cash EPS (normalised fully diluted) 98.4¢ 83.4¢ 15¢ Ordinary dividend 52¢ 52¢ - Loan growth (pcp) 10% 11% Retail deposit growth (pcp) 16% 11% Net interest margin 1.56% 1.60% 4bps Cost-to-income ratio (normalised 49.9% 45.8% 4.1% cash) 18
Slide 19: Retail focus with growing SME and leasing businesses
Retail focus with growing SME and leasing businesses 19% CAGR A$32.0b 12% A$28.9b $3.8b leasing A$26.3b $3.2b $5.2b $3.0b 16% $4.7b SME and A$19.2b $4.4b 23.0b commercial $21.0b $2.7b $18.9b $3.4b $13.1b 72% retail 2007 2008 2009 2010 Retail Business Leasing Focus continues to remain towards retail
Slide 20: Geographic diversification continues
Geographic diversification continues Consistent pattern of growing geographic diversity – less reliance on Queensland Strongest growth from interstate franchise, particularly VIC and NSW 2006 2010 FY10 – Growth rate % QLD 62% QLD 81% QLD 5% NSW NSW18% NSW 9% NSW 13% Vic VIC 34% VIC WA 1% 7% WA 1% Ot
Slide 21: Large exposures
Large exposures Largest exposures by ANZSIC Group The Bank has 25 connections Retail Financial and Insurance with exposures >$20m Arts & Recreation 2% 4% Services 3% Personal Total commitment exposure 2% Property & Other $796m (drawn balance $691m) 5% Construction 27% 2.5% of total loans under manag
Slide 22: Bad debt update
Bad debt update As per guidance, commercial bad debts impacted in 1H’11 by $25m-$30m as a result of two large exposures in Queensland retail shopping centres; Top 250 accounts reviewed in detail (November 2010) $45m collective provision to be booked to cover impact of January 2011 weather events and
Slide 23: Strong capital base and liquidity
Strong capital base and liquidity Tier 1 and total capital levels remain in excess of APRA and internal benchmarks Conservative liquidity position maintained during half to ensure smooth completion of recent acquisitions and recently buoyed by record post-GFC securitisation issue Capital adequacy Li
Slide 24: Consistent capital management
Consistent capital management Dividend policy aimed at preserving capital strength Excess equity capital diluted EPS during the period, but provides platform for future growth and bolt-on acquisition opportunities A number of proposed regulatory changes in progress that may impact capital position.
Slide 25: Funding profile
Funding profile High liquidity levels enabled more selective funding options Opportunistic issuance of long term debt lengthening funding profile to 2.4 years Recent record securitisation issue and significant warehouse capacity providing further room to grow 2009 Funding 2010 Funding S/T S/T Wholes
Slide 26: Wholesale funding task manageable
Wholesale funding task manageable Wholesale Funding ($b) Long Term Debt Issuance ($b) $5.4 0.1 $17.4 $17.5 - $18.3 2.5 $15.5 0.5 0.5 0.3 5.0- 5.4 $3.0-$3.6 5.3 0.2 5.6 $2.3 0.7 1.6 - 1.8 6.0 6.2 - 6.4 0.3 2.8 6.1 0.4 - 0.6 1.3 5.6 5.8 - 6.0 0.8 - 1.0 3.4 2009 2010 2011E 2009 2010 2011E Term Debt Syn
Slide 27: A more efficient model to challenge scale players
A more efficient model to challenge scale players Current efficiency initiatives executed give line of sight to dramatic improvement in our cost-to-income ratio, challenging the majors whilst 1/15th their size Cost-to-income ratio 64.5% 62.6% 56.1% Step change improvements in Phase 1 – Efficiency co
Slide 28: BOQ opportunity
BOQ opportunity
Slide 29: Addressing the 'market void'
Addressing the ‘market void’ As a strong challenger brand, BOQ is ideally positioned to capitalise on the current ‘market void’ ` The Australian banking industry has recently undergone a period of Industry consolidation with the acquisitions of BankWest & St. George Bank consolidation ` Consolidatio
Slide 30: BOQ as the real alternative
BOQ as the real alternative Customer satisfaction with the major banks continues to decline and will accelerate as acquired regional banks are integrated into the big bank model The OMB model is uniquely qualified and productive in growing our lending platform and successfully leveraging our persona
Slide 31: Improving ROE key to unlocking value in BOQ stock
Improving ROE key to unlocking value in BOQ stock Price to book 2.3 BOQ traditionally traded 1.8 1.7 at a 30% premium to 1.4 0.9 0.9 Majors; currently trading 0.8 ~20% discount CBA ANZ WBC NAB BOQ BEN SUN Improving ROE critical to closing the gap; BOQ targeting15% ROE ROE% 19% Recovery of funding 16
Slide 32: Pathway to 15% ROE aspiration
Pathway to 15% ROE aspiration NIM improvement as funding markets recover and BBB+ spreads reduce relative to A/AA banks; Government Guarantee debt begins to roll-off in October 2011 Credit rating upgrade and Basel II advanced status are game-changers in the medium term strategy Bad debt normalisatio
Slide 33: Summary
Summary Headwinds Tailwinds Margin pressure still present 2010 acquisitions performing better Funding costs still high than pro-forma Significant regulatory and Growth opportunities in our model in technology spend our 3 business lines Ongoing payment of GG term debt Cost disciplines holding costs a
Slide 34: Bank of Queensland Limited
34 Bank ofBankQueensland of Queensland Limited Limited ABN32 ABN 32009 009 656 656 740 740
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