Liberty Financial Group Ltd · ASX:LFG
Liberty Financial — FY2022 Earnings Presentation
36 slides from Liberty Financial's earnings presentation, Aug 29, 2022
Slide 1: Liberty Financial Group FY22 Full Year Results
Click to edit Master text styles Liberty Financial Group FY22 Full Year Results 29 AUGUST 2022
Slide 2: Presenting today
Presenting today… Click to edit Master text styles James Boyle Peter Riedel Chief Executive Officer Chief Financial Officer 2
Slide 3: Agenda
Agenda Click to edit Master text styles 01 Highlights 02 Results Analysis 03 Business Performance 04 Outlook 05 Conclusion 06 Questions 3
Slide 4: Highlights
Click to edit Master text styles 01 Highlights
Slide 5: Highlights
Highlights Click to edit Master text styles Record loan originations with portfolio and profit growth % Stable NIM against industry trend Stable cost to income ratio $ Stronger balance sheet with 20% ROE Portfolio risk exposure managed effectively Customer experience improvements through digitisatio
Slide 6: FY22 Financial Highlights
FY22 Financial Highlights % Click to edit Master text styles [ Underlying NPATA Net revenue NIM $231m ($226m) $635m ($600m) 3.08% (3.08%) +2% +6% Stable BDD Cost to income Distribution 0bps (0bps) 23% (23%) 49bps (46bps) Stable Stable +7% *Balances represent: FY22 (FY21) change between the periods 6
Slide 7: FY22 Operating Highlights
FY22 Operating Highlights Click to edit Master text styles Average financial assets New assets originated Impaired loans $12.7b ($12.1b) $5.6b ($4.1b) $152m ($243m) +5% +36% -37% FTE Staff Broker NPS Customer NPS 524 (500) 81 (75) 64 (54) +5% +8% +19% *Balances represent: FY22 (FY21) change between
Slide 8: Results Analysis
Click to edit Master text styles 02 Results Analysis
Slide 9: Profit Performance
Profit Performance Underlying NPATA ($m) Statutory NPATA ($m) Click to edit Master text styles $226.1 $231.1 $231.1 $28.8 $197.2 $108.8 $108.8 $197.3 $88.9 FY21 2H22 FY22 FY21 2H22 FY22 Growth in underlying NPATA One-time IPO costs explains difference between FY21 • Underlying NPATA growth 2% in FY2
Slide 10: Profit Drivers
Profit Drivers Total Revenue ($'m) BDD (bps) Click to edit Master text styles $440.6 1 $428.5 Total revenue growth +2% (2H22 v Consistent low loss performance as $419.9 2H21) driven by increased new 0 impaired loans reduces and realised originations and average assets losses covered by specific prov
Slide 11: Revenue
Revenue Average Assets ($'b) Lending Income ($'m) Click to edit Master text styles $38 $12.7 Average asset growth +5% (2H22 v Movement in lending income $36 $12.4 2H21) and +3% (2H22 v 1H22) between periods consistent with $32 movement in new loan origination $12.1 New financial asset origination $2
Slide 12: Funding
Funding Cost of Funds Total Financing ($'b) Click to edit Master text styles 2.04% 0.2 12.6 0.0 12.8 1.85% 1.87% 2H21 1H22 2H22 Dec-21 Term Issues W'sale Mov't Jun-22 RBA rate increase of 75bps (to 85bps at 30-Jun-22) and funding Obtained $4.6b in net new funding in FY22 and $2.1b in 2H22 rate (1M B
Slide 13: BDD
BDD 2H21 (0 bps) 2H22 (1 bps) 3 3 3 Click to edit Master text styles 2 -6 0 -4 0 Realised Loss Specific Specific Collective Realised Loss Specific Specific Collective Provision Provision Provision Provision Provision Provision (Release) (Increase) (Release) (Increase) 1H22 (-1 bps) 11 Impairment exp
Slide 14: Loss Provisions
Loss Provisions Provisions by Nature Portfolio by Stage Collective Provision Specific provisions at 2H22 ($11m) Click($m) to edit Master text styles ($'m) by Stage ($m) $75 consistent with 1H22 and lower than $12,935 $65 $64 2H21 due to discharge of impaired $12,281 $12,487 $54 $53 $53 loans $54 $53
Slide 15: Cost to Income
Cost to Income $m 2H21 1H22 2H22 Growth in 2H22 v 2H21 from higher network Click to edit Master text styles Fees and commissions (gross) 100 116 113 loan origination and growing aggregation networks Decline in 2H22 v 1H22 from slowdown in NZ transaction volume Operating expenses Personnel 38 42 42 P
Slide 16: Distribution
Distribution Click to edit Master text styles Final distribution for 7 month period to 30-Jun-22 (28c) to be paid 31- Aug-22. 28c FY22 distribution (49 cents) 24c providing approximately 10% yield based on recent security price FY22 payout ratio 68% NPAT Future distribution payout policy of 22c 21c
Slide 17: Financial Position
Financial Position $m Jun-21 Jun-22 Click to edit Master text styles Cash 604 654 Stable balance sheet and leverage Investment grade rating BBB- Financial assets 12,239 12,916 (positive outlook) Loans to related parties 157 140 FY22 ROE 20% with conservative leverage Other assets 559 615 Financing (
Slide 18: Business Performance
Click to edit Master text styles 03 Business Performance
Slide 19: Business Performance
Business Performance Click to edit Master text styles % Record earnings, originations and portfolio growth Group NIM stable counter to industry trend Residential activity increase maintaining portfolio Continued growth in SME and SMSF lending Motor growth fuelled by new distribution partnerships Fin
Slide 20: Segment Loan Origination
Segment Loan Origination Residential ($'m) Secured ($'m) Click to edit Master text styles $2,029 $684 $714 $1,879 Record FY22 new loan origination Record FY22 new loan origination ($3.9b) with +28% growth on FY21 ($1.4b) with +66% growth on FY21 $1,583 $454 2H21 1H22 2H22 2H21 1H22 2H22 Fin Services
Slide 21: Segment Loan Portfolio
Segment Loan Portfolio Residential ($'m) Secured ($'m) $8,538 Click to edit $8,654 $8,527 Master text styles $3,504 $3,754 Portfolio growth continues to be $3,318 Continued growth in Secured loan impacted by higher than trend portfolio discharges and amortisation Steady discharges and amortisation 2
Slide 22: NIM Bank Comparison
NIM Bank Comparison NIM (%) Click to edit Master text styles 3.08% Premium NIM despite absence of 1.90% 1.90% 1.74% 1.63% 1.91% 1.74% deposits 1.58% Stable NIM despite market led price competition Liberty Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Bank 7 Asset mix diversification strategy supporting
Slide 23: Portfolio Risk
Portfolio Risk COVID Impacted Customers +90 Day Delinquency Click to edit Master text styles 9.7% 2.0% 1.4% 1.2% 0.7% 0.3% FY20 FY21 FY22 2H21 1H22 2H22 Material reduction in customers impacted by COVID between Consistent reduction in impaired loans through the periods FY20 and FY22 More customers w
Slide 24: ESG, People and Culture
ESG, People and Culture Click to edit Master text styles Certified B Corporation Committed to Carbon Neutral by 2030 Published Reflect Reconciliation Action Plan Improved gender diversity metrics Women in Finance Employer of the Year Expanded leave policies supporting diversity Finalising Financial
Slide 25: Outlook
Click to edit Master text styles 04 Outlook
Slide 26: Outlook
Outlook Click to edit Master text styles Economic indicators suggest slower credit growth Refinance activity to continue as fixed rate loans expire Greater customer support needed as rates increase % NIM reduction as funding costs normalise Accelerating auto finance growth Continue investment in imp
Slide 27: Conclusion
Click to edit Master text styles 05 Conclusion
Slide 28: Conclusion
Conclusion Click to edit Master text styles Measured growth in financial asset portfolio Strong liquidity and capital position to support growth % Focus on optimising earnings through the cycles Distributions providing healthy Securityholder return Diverse customer solutions balancing margin pressur
Slide 29: Questions
Click to edit Master text styles 06 Questions
Slide 30: Appendix
Click to edit Master text styles Appendix
Slide 31: Who is LFG?
Who is LFG? Click to edit Master text styles Liberty Financial Durable Business Model Diversified Portfolio Started 1997 and only investment Advanced risk-management grade non-bank (BBB-/positive/A-3) capabilities Pioneered specialty finance industry Proprietary technology supports in Australia and
Slide 32: Products and Services
Products and Services Residential Finance Financial Services Australian mortgages Personal loans Click to edit Master text styles • Personal loans in Australia • Prime and custom lending for residential owner occupier and investment properties SME loans • SME loans in Australia New Zealand mortgages
Slide 33: Segment Performance
Segment Performance Portfolio Net Contribution Click to edit2% 2% Master text styles 3% 3% 3% 6% 8% 8% 9% 8% 27% 27% 27% 28% 29% 45% 44% 44% 43% 43% 71% 71% 70% 69% 68% 49% 48% 48% 48% 49% 2H20 1H21 2H21 1H22 2H22 2H20 1H21 2H21 1H22 2H22 Net Revenue Relative segment portfolio mix continues its traj
Slide 34: Reconciliation Statutory to Pro-Forma
Reconciliation Statutory to Pro-Forma Click to edit Master text styles $m FY21 FY22 Statutory NPAT 185 219 IP amortisation 12 12 Statutory NPATA 197 231 Non-recurring personnel costs 20 - IPO offer costs 12 - Tax effect of adjustments (4) - Adjustments 29 - Underlying NPATA 226 231 34
Slide 35: Disclaimer
Disclaimer The information provided in this presentation and any information supplied in connection with this No offer of securities presentation (“Presentation”) has been prepared by Liberty Financial Group Limited (ACN 125 611 574) This Presentation is not, and does not constitute, an offer to sel
Slide 36: Thank you
Click to edit Master text styles Thank you
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