Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — RBS Regional Banks Conference 2009
20 slides from Bank Of Queensland's conference presentation, Nov 19, 2009
Slide 1: Bank of Queensland
Bank of Queensland RBS Regional Banks Conference 19 November 2009
Slide 2: Result highlights
Result highlights Strong cash profit growth – beating guidance at 21% growth ($187.4m) Continued outperformance of system – achieving 1.8x system lending 88% of LUM growth in retail deposits, maintaining record levels of liquidity Resilience of OMB model established - NSW consolidation completed Ass
Slide 3: Strong financial results in tough market
Strong financial results in tough market 2008 2009 Normalised cash NPAT $155.4m $187.4m 21% Cash EPS (normalised Fully Diluted) 99.9¢ 98.4¢ 1.5% Ordinary dividend 73¢ 52¢ 21¢ Loan growth (pcp) *23% 10% Retail deposit growth (pcp) *25% 16% Net interest margin 1.67% 1.56% 11bps Cost to income ratio (n
Slide 4: Prospects for FY10 & beyond
Prospects for FY10 & beyond With $340m of capital raised in Aug-09, management set target ROE of 15% by 2012. Focused on small acquisitions to address increasing capital intensity of current model Headwinds Tailwinds Retail cost of funds trending higher Cost disciplines holding, sustainable again re
Slide 5: Unique retail banking model
Unique retail banking model Retail Customers SME Customers Unsecured/Structured/High Risk Structured Business Banking Vehicles Australian Banking OMB Lending Mix ~$21.0B ~$4.7B ~$3.2B Large Corporate Large Exposures Retail Business Equipment Lending Finance Fully Secured/Low Risk Retail BOQ Customer
Slide 6: Unique OMB distribution productivity
Unique OMB distribution productivity Through the GFC the OMB model has continued to demonstrate unmatched productivity… both on the assets and liabilities side We have now converted 39 corporate branches to OMBs where average monthly settlements have increased 64% post conversion Key to unlocking sh
Slide 7: Resilience of the network proven
Resilience of the network proven Total OMB commissions OMB income split FY09 Upfront income 35% 32% $116.1m CAGR Share of fees $93.7m 16% $70.4m $47.6m Other income 14% Trail income 38% FY06 FY07 FY08 FY09 Total OMB commission payments Majority OMB income comes from continue to increase existing bal
Slide 8: Loans under management growth
Loans under management growth 24% CAGR $28.9b $26.3b 11% $3.2b leasing $3.0b $4.7b $4.4b 16% $19.2b commercial $21.0b $15.1b $2.7b $18.9b $3.4b $2.1b $2.7b $13.1b $10.3b 73% Retail 2006 2007 2008 2009 Retail Business Leasing Focus continues to remain towards retail mortgages and residentially secure
Slide 9: Margin improvement in 2H09
Margin improvement in 2H09 Increasing term and retail funding costs have impacted NIM Similar trend to FY08, albeit increased retail funding costs reduced quantum of NIM recovery in 2H09 NIM down 18 bps in 1H09 NIM up 7 bps in 2H09 15bps (23bps) 4bps 2bps 1.70% (30bps) 9bps (7bps) 1.77% (8bps) 1bp 3
Slide 10: Lending income strong… other income flat
Lending income strong… other income flat Net Interest Income Non Interest Income 14% (1%) $481m $150m $148m $421m 2008 2009 2008 2009 NII continues to grow with balance Strong underlying customer fee income sheet growth above system and growth was offset by impact of direct margin improvement in 2H0
Slide 11: Expense initiatives gaining traction
Expense initiatives gaining traction Meeting previous guidance with cost to income ratio of 49.9% Expect further improvements as efficiencies continue to gain traction Cost to Income Ratio Targets 64.5% 62.6% 56.1% 54.3% - 1H09(A) Phase 2 Savings are not Phase 1 – Efficiency program incremental to P
Slide 12: Geographic diversification growing
Geographic diversification growing BOQ historically has had most of its business in Queensland As a result of interstate OMB expansion and acquisition of Home there has been a material and growing geographic diversification trend 2005 2009 FY09 – Growth Rate % QLD 64% QLD 11% QLD 85% NSW 21% NSW NSW
Slide 13: Bad debt peaking in FY10
Bad debt peaking in FY10 Bad debts continue to increase, but tracking well below majors with early signs of improvement in housing as economy shows signs of improvement Leasing and commercial portfolios showed increased stress in 2H09 Expect to hit peak bad debts in FY10 Bad debts by product Underly
Slide 14: Asset quality remains strong
Asset quality remains strong Impaired assets have increased in line with deteriorating economy, but BOQ focus remains on well secured housing and SME lending We expect BDD / GLA to remain materially lower than 4 major banks BDD / GLA Performance* 0.77% $14.5m 0.44% BOQ Majors $11.2m 0.20% 0.16% 0.17
Slide 15: Portfolio quality
Portfolio quality Arrears 90+ days (% of portfolio, excluding securitised loans) 1.30% 1.25% 1H08 1.00% 2H08 0.81% 0.73% 0.75% 0.65% 1H09 0.50% 2H09 0.25% 0.00% Retail Business Leasing Total RBS Regional Banks Conference 2009 15
Slide 16: Prudent capital management
Prudent capital management Final dividend per guidance provides for greater organic capital generation Conclusion of Project Pathways delivering continued distribution and efficiency gains to improve earning base for organic capital generation Strategic focus on solving the capital intensity of the
Slide 17: Strong capital base and liquidity
Strong capital base and liquidity Tier 1 capital improved 1.7% to 8.9%, or 9.6% including retail entitlement High liquidity levels remain well in excess of APRA and internal benchmarks Capital adequacy Liquidity 12.2%* 16.3% 11.5% 11.0% 13.6% Tier 2 Tier 2 ratio 2.6% 11.1% Hybrid Tier 1 Tier 1 Tier
Slide 18: The new banking landscape… transformational opportunities exist
The new banking landscape… transformational opportunities exist Housing loans (August 2009)1 28.3% There is a ‘void’ created by the departures of 26.0% St George and BankWest – opportunity for a real alternative to the major banks ~$81bn ~$34bn ~$21bn 14.3% 14.0% 8.7% 3.7% 3.6% 2.8% 2.7% 2.2% 1.8% 1
Slide 19: Value Accretion
Evolution of existing strategy equally attractive 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 foo
Slide 20: RBS Regional Banks Conference 2009
RBS Regional Banks Conference 2009 20
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