Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — FY2010 Earnings Presentation
44 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 9, 2010
Slide 1: Bendigo and Adelaide Bank 2010 full year results
For personal use only Bendigo and Adelaide Bank 2010 full year results August 9, 2010 1
Slide 2: Disclaimer
Disclaimer: 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 does not purport to be complete. It is to be read in conjunction with the Bank’s full year results filed with th
Slide 3: Agenda
For personal use only • Overview • Financial performance • Outlook Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our result
Our result For personal use only Financial performance •Cash earnings $291.0m •Cash EPS 83.3¢ •Net profit after tax $242.6m Growth •Retail deposits up by 18.1% •Loans increased by 12.3% •Total branches increased by 22 Funding and liquidity •Issued $3.6bn in RMBS since Dec-09 •88% retail funded, on b
Slide 6: A strongly diversified business
A strongly diversified business Business Segment Value proposition For personal use only •#1 customer advocacy with consistently high customer satisfaction Consumer and SME banking •Strong demand for Community Bank® business model •Building momentum in asset and liability growth •Market values our o
Slide 7: Our platform for growth
Our platform for growth Business Opportunity For personal use only •Scale, scope and reach in a relatively immature network •Customer satisfaction and advocacy – people want to do business with us •Significant investment in business banking and customer relationship systems •Restructured commissions
Slide 8: The future…
The future… For personal use only • Focus on growth, funding and efficiency • Investments driving revenue generation – Retail customer relationship system – Business banking expansion – Third Party banking platform – Developing strategy in wealth • Opportunistic approach to M&A Overview 8
Slide 9: Financial performance
For personal use only Richard Fennell Chief Financial Officer Financial performance 9
Slide 10: Financial performance
For personal use only $m FY June 2009 FY June 2010 % change (pcp) Cash EPS 62.9¢ 83.3¢ 32.4% Cash earnings 182.2 291.0 59.7% Net profit after tax 83.8 242.6 189.5% Dividend per share* 43.0¢ 58.0¢ 34.9% Financial performance *includes 28 cents per share dividend in 1st half for FY10 10
Slide 11: Group performance
Group performance For personal use only Financial performance Note: figures are for six-monthly reporting periods 11
Slide 12: Contribution by business units
Contribution by business units • Merger complete • Merger rationale proven during GFC • Profit contribution well diversified For personal use only Financial performance Figures exclude central functions 12
Slide 13: Net interest margin (%)
Net interest margin (%) For personal use only June 2008/09 June 2009/10 Key segments Drivers of change Asset mix Faster growth in mortgages Liability mix Continued growth in core and term deposits, while securitisation and warehouse portfolios amortise Pricing Expensive term deposits have matured at
Slide 14: Net interest margin
Net interest margin For personal use only • Delivered predicted improvement in NIM • Diligent and prudent pricing – particularly in TD market • Current NIM run-rate of 2.21 per cent gross, and 1.91 per cent net of Community Bank® and Alliances Financial performance 14
Slide 15: Return on equity
Return on equity For personal use only • Significant ROE improvement over prior corresponding period • Forward looking ROE improvement target of circa 1 per cent p.a. • Goodwill tested – no impairment Financial performance Figures are for six-monthly reporting periods Return on Equity (ROE) is the n
Slide 16: Cost to income
Cost to income For personal use only • Revenue driving ratio improvement • Capacity retained within the network • Technology value review during FY11 • Improvement in second half offset by: – Award staff pay increase in Dec-09 – Margin lending portfolio – Change in collective provision calculation F
Slide 17: Operating expenses
Operating expenses For personal use only • BEN BAU (business as usual) predominately staff pay rise and bonus accrual Financial performance 17
Slide 18: On balance sheet funding / Total funding
On balance sheet funding Total funding For personal use only • Low-risk funding base • Cost and volume of securitisation funding improving • Net stable funding ratio exceeds minimum Financial performance All figures include Rural Bank 18
Slide 19: Retail deposits
• Term deposits priced to manage liquidity Retail deposits • Successful growth and retention strategies in place • Not a price leader – leveraging brand and customer satisfaction metrics For personal use only $18bn $11bn Financial performance 19
Slide 20: Capital
Capital For personal use only June 10 June 09 Dec 09 June 10 pro forma* Tier 1 7.43% 8.95% 8.57% 10.44% Tier 2 3.48% 3.02% 2.60% 3.16% Total Capital 10.91% 11.97% 11.17% 13.60% • Conservative capital levels provide substantial flexibility • Total capital increased from 10.91 per cent to 11.17 per ce
Slide 21: Capital adequacy ratio
Capital adequacy ratio For personal use only Financial performance *Illustrates the potential impact of Bendigo and Adelaide Bank using the advanced approach under Basel II. This would result in an assumed reduction in risk weightings for residential 21 mortgages to 20 per cent from 40 per cent unde
Slide 22: Total provisions and reserves for doubtful debts
Total provisions and reserves for doubtful debts ($m) • Total provisions increased $14.2 million over the For personal use only past 12 months • $13.3m of these provisions were acquired through the business combination with Rural Bank • Increase from June-09 largely reflects loan growth • Great Sout
Slide 23: Total provisions and reserves for doubtful debts
Total provisions and reserves for doubtful debts ($m) For personal use only Financial performance - credit 23
Slide 24: Arrears performance
Arrears performance For personal use only Financial performance - credit Figures exclude Rural Bank 24
Slide 25: Outlook
For personal use only Mike Hirst Group Managing Director Outlook 25
Slide 26: Our point of difference
Our point of difference Attribute Measure For personal use only Customer advocacy •Our group and business unit brands World class Net Promoter Score of +37 (April 2010)1, are strongly differentiated Highest customer advocacy of any Australian bank 31% open advocates of Bank2 •The group enjoys high l
Slide 27: A better banking experience
A better banking Rank Personal loan 4U Rank Cards 4U For personal use only 1 Bendigo and Adelaide 1 Bendigo and Adelaide experience 2 Suncorp 2 Bankwest 3 ANZ 3 NAB 4 NAB 4 Citbank Rank Transaction 4U Rank Mortgage 4U Rank Savings 4U 1 Bendigo and Adelaide 1 ME Bank 1 ING Direct 2 Bankwest 2 Bendigo
Slide 28: Our point of difference
Our point of difference For personal use only • Materially better NPS than peers • This provides tangible benefits, pricing, scale, retention and attraction of customers Outlook Source: Newfocus, April 2010 survey 28
Slide 29: Strong momentum in the business
Strong momentum in the business For personal use only • Leveraging conservative funding and capital platform • Customer demand for service and brand appreciation is strong Outlook Source: June APRA Monthly Banking Statistics – growth for the three months to June, annualised 29
Slide 30: A final word….
A final word…. For personal use only • Significant organic growth opportunity • Proven M&A capability • Capital flexibility • Volatility and uncertainty expected to continue • Funding, pricing and equity markets the key swing factors Outlook 30
Slide 31: Appendices
For personal use only Appendices 31
Slide 32: Geographic spread
1900 ATM’s 450 branches For personal use only 9 0 1 4 11 169 336 50 43 58 25 30 3 40 12 26 9 114 4 66 105 299 14 44 55 404 878 86 56 189 115 123 720 19 0 261 Community Bank® 9 6 Bendigo branded (3rd party) ATM’s 302 5 Geographic spread 32
Slide 33: Systematic growth in retail
Systematic growth in retail For personal use only • 22 branches opened in FY2010 • 20+ branches to be opened in FY2011 • Relatively immature network Deposits per Community Bank® branches Community Bank® branches by age Community Bank® and retail Note: Branches that opened in years 10 and 11 typicall
Slide 34: Growth – retail banking
Growth – retail banking • Continued growth in retail network For personal use only • Strong pipeline for Community Bank® branches. Retail banking Source: BEN internal data. Notes: 2001 includes FABS acquisition, 2007 includes ADB merger. Excludes Alliances & Private franchises. 34
Slide 35: Growth – retail banking
Growth – retail banking • Still a relatively immature branch For personal use only network • Growth expected in both liabilities and assets • Plan to grow by 20+ branches in the coming financial year • Community Bank® model proven through the GFC • Footings maturity achieved post six years Retail ne
Slide 36: Opportunities in Third-Party Banking
Opportunities in Third-Party Banking For personal use only • Partners welcome a genuine funding alternative • Variable cost base • Commissions have been adjusted Growth 36
Slide 37: Fundamentals remain attractive for Margin Lending
Fundamentals remain attractive for Margin Lending For personal use only • Customer appetite for risk and gearing is improving • Independent margin loan provider of choice • Strong long term relationships with many financial advisory firms • Strong margins • Low cost to income • Capacity for signific
Slide 38: Towards a resolution
Towards a resolution • Class action launched and welcomed • Nine test cases launched against defaulting borrowers, For personal use only more to come Great Southern Note: Percentages based on value of loans in arrears at 30 June 2010. 38
Slide 39: Secure and low risk group loan portfolio
Secure and low risk group loan portfolio • 99.6% secured For personal use only • 89.7% secured by residential mortgages and listed securities • Commercial mortgage increase over prior corresponding period due to Rural Bank • Residential lending – improvement in arrears observed in FY09 continued – a
Slide 40: Group exposures – total $43.7bn
Group exposures – total $43.7bn Mortgages Jun-10 Dec 09 For personal use only Owner occupied 69.4% 64.1% Investment 30.6% 35.9% Lo Doc 6.0% 7.8% Retail mortgages 52.9% 53.2% Third Party mortgages 47.1% 46.8% Mortgages with LMI 40.5% 39.0% Mortgages without LMI 59.5% 61.0% Average loan balance $157k
Slide 41: MIP geographic distribution
MIP geographic distribution MIP #: 0% For personal use only MIP Blce: $0m Portfolio: $1160m %MIP/Port Blce: 0.0% MIP #: 24.8% MIP Blce: $16.061m Portfolio: $7,312bn MIP #: 11.3% %MIP/Port Blce: 0.22% MIP Blce: $6.584m Portfolio: $4,368bn %MIP/Port Blce: 0.15% MIP #: 8.3% MIP Blce: $11.144m Portfolio
Slide 42: Commercial loans typically small
Commercial loans typically small For personal use only • Predominantly SME • Average loan size $201k • 62 loans >$10m totalling $1,171m (2.7% of BEN loans) • Diversity by geography and industry Credit 42
Slide 43: Commercial – industry split
Commercial – industry split For personal use only Credit 43
Slide 44: Contact
Analysts Media For personal use only Will Rayner Lauren Treacy Head of Capital and Investor Relations Head of Media and Communications Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 8 8220 7764 Tel: +61 3 5485 7109 Mob: +61 437 794 366 Mob: +61 407 340 283 Email: wrayne
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