Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — Investor Day (June 2013)
37 slides from Bendigo & Adelaide Bank's investor day presentation, Jun 4, 2013
Slide 1: 2013 Strategy briefing and investor day
For personal use only 2013 Strategy briefing and investor day Bendigo, Victoria June 4, 2013 1
Slide 2: For personal use only
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 half year results filed with the Australian
Slide 3: Agenda
Time Topic For personal use only 10.30 – 11.00 Registration and coffee 11.00 – 11.30 Welcome and Q&A panel: Mike Hirst and Richard Fennell 11.30 - 12.00 Retail and Community Banking: Marnie Baker 12.00 – 12.45 Case study – East Ivanhoe and Heidelberg Community Banks: Nan Caple 12.45 – 1.30 Informal
Slide 4: Speakers
Name Role For personal use only Mike Hirst Group Managing Director Richard Fennell Chief Financial Officer Marnie Baker Executive, Banking and Wealth Nan Caple Deputy Chair, East Ivanhoe and Heidelberg Community Bank branches Paul Hutchinson Managing Director – Rural Bank Andrew Cairns Head of Custo
Slide 5: Agenda – session one
For personal use only • Group Overview • Community Bank® - history and structure • The results • The future • Appendix Agenda – session one 5
Slide 6: Overview
For personal use only Overview 6
Slide 7: Our origins speak for today….and the future
Our origins speak for today….and the future For personal use only • Origins in the Bendigo and Adelaide communities • Established in 1858 • Banking licence obtained 1995 • Partner focus complimented with merger with Adelaide Bank in 2007 Overview 7
Slide 8: A well diversified business
A well diversified business Business Segment Business conditions For personal use only Domestic bank operating four • Difficult and uncertain market conditions remain distinct brands • Unique community, customer, and partner proposition • #1 banking brand for customer and business satisfaction, and
Slide 9: A well diversified business
A well diversified business Business Segment Business conditions For personal use only Margin lending, wealth management, •Independent provider of choice in select products superannuation • Increased investment in IT and distribution capability •Margin lending at inflection point • Growing brand and
Slide 10: A history of innovation
A history of innovation For personal use only • First Australian bank to introduce Visa debit and credit cards • Community Bank® • Rural Bank • Homesafe • Community Sector Bank • Community Telco • “Plan Big” Relevance to our customers and partners 10
Slide 11: In summary….
In summary…. Challenges Opportunities For personal use only • Low credit growth environment • Continued network maturity and growth • Strong competition for deposits • Funding diversity and tenor • Expense of advanced accreditation project • Further efficiency gains • Regulatory change • Banking / t
Slide 12: Community Bank® - history and structure
For personal use only Community Bank® - history and structure 12
Slide 13: The environment pre Community Bank®
The environment pre Community Bank® Industry BEN Communities For personal use only • A good reputation – beginnings • Most districts exporting capital – 6,917 6,507 in community and a customer community prosperity was often focused building society viewed as flat or declining 5,588 background • Key
Slide 14: Building a Community Bank®
Building a Community Bank® Origins How it works For personal use only Beginning in 1998, today over 60% of our retail network • A franchise model, where communities invest in consists of Community Bank® Branches (297 the rights to manage a Bendigo Bank branch branches). • Revenue is shared, reflecti
Slide 15: The model is highly flexible
The model is highly flexible Different distribution models For personal use only • Sub-Branches • Flexible trading • Virtual access Conducive to shared structures and site expansion • Joint sites • Multiple sites Management of company owned sites •6 company sites now managed by community companies W
Slide 16: Community company structure
Community company structure • Public company limited by shares For personal use only • A prospectus is issued where the community has the opportunity to purchase shares in the management company incorporated to manage the branch • Range of governance models (listed, low volume market) • Shareholders
Slide 17: The legal relationship
The legal relationship • Non-exclusive franchise agreement for the rights to manage a franchised Bendigo Bank branch For personal use only • Agreement falls within the Franchising Code Of Conduct • Potential 15 year term (5x5x5) • Performance responsibilities for both parties • Intellectual property
Slide 18: FSRA – Regulated Sales
FSRA – Regulated Sales • Financial Services Reform Act (FSRA) For personal use only o Single licensing regime o Consistent and comparable financial product disclosure • BEN appoints community companies as its authorised representatives • Community employees who have completed Tier 2 accreditation ar
Slide 19: Sources of income
Sources of income For personal use only Margin Income Fee Income Income on Deposit and Income from Fees Loan products that earn charged Margin Income Branch Income Trailer Commission Upfront Commission Trailer Product and Upfront Commission on Service Income Products and Services Model foundations 1
Slide 20: Shared reward
Shared reward ADD Other Income For For personal use only Variable rate Example: LOANS made to - Commissions generate interest - Fee income Income is income SUBTRACT Direct Operating Costs SPLIT 50/50 (Overheads) For Example: between - staff wages Bendigo Bank - rental payments DEPOSITS and the - IT
Slide 21: Community Bank® - the results
For personal use only Community Bank® - the results 21
Slide 22: Significant contributions and outcomes
Significant contributions and outcomes 1 For personal use only • Over 210 local community enterprises, with >1,900 directors (mostly volunteers) • ~71,000 local shareholders, contributing over $157 million in local capital to fund the establishment of their franchises • 1,300 staff employed locally
Slide 23: Community Bank® footings growth
Community Bank® footings growth Community Bank® loans Community Bank® deposits Community Bank® footings For personal use only The results Note – Graphs shown are in financial years 23
Slide 24: Community Bank® - a key point of difference
Community Bank® - a key point of difference For personal use only • High customer advocacy • Strong goodwill and brand position • Enhanced relationships with customers (doing more with us) • New and strong source of customer acquisition in a highly competitive market • Increased connection with comm
Slide 25: Growing national network of branches and ATMS
Growing national network of branches and ATMS BEN branch expansion profile BEN ATM network1 For personal use only 482 488 20 460 441 291 297 8 0 558 Community 414 271 Bank 388 253 12 164 345 Company 228 147 49 345 206 Owned 319 74 51 288 191 22 261 169 145 227 122 184 89 188 109 5 507 56 182 186 188
Slide 26: Community Bank® - rapid customer acquisition
Community Bank® - rapid customer acquisition For personal use only Customer numbers ($’000) 1,360 1,383 Community 1,226 1,170 1,141 Company 1,085 1,016 560 598 All 941 866 529 458 497 406 774 353 726 294 241 179 507 415 386 799 785 301 726 683 697 625 647 663 680 673 595 507 386 415 301 1998 1999 20
Slide 27: Most liked nationally-operating bank
Most liked nationally-operating bank 100% Customer satisfaction1 For personal use only 90% 87.6% 80.3% 78.5% 80% 75.7% 74.0% • Continued maturation of Community Bank® and 70% retail network 60% • Brand and customer advocacy 50% BEN NAB CBA WBC ANZ – Voted Australia’s favourite bank3 – Voted best day
Slide 28: Continuing to grow in a muted economy
Continuing to grow in a muted economy Total lending growth - 6 months1 Housing lending growth - 6 months1,2 BEN 4.7% NAB 7.0% For personal use only NAB 3.5% BEN retail 5.1% ANZ BEN 4.0% 2.1% BOQ 3.5% System 2.0% System 3.4% BOQ 1.4% ANZ 3.3% WBC 1.0% CBA 3.1% CBA 0.8% WBC -0.1% Total deposit growth
Slide 29: Community Bank® - the future
For personal use only Community Bank® - the future 29
Slide 30: We started in rural communities
We started in rural communities For personal use only Henty Community Bank® • Launched in November 1998 • 1100 population “including cats and dogs” • ~$68m in footings • $250k pa profit before tax and distributions • ~$2m in distributions since inception (bank freehold, nursing scholarships, a GP re
Slide 31: We quickly learned that urban communities can rally too!
We quickly learned that urban communities can rally too! For personal use only Upwey Community Bank® • Launched in October 1998 • Outer east Melbourne suburb, 7,200 population • Initial catalyst – banking to ensure survival of business strip • Now four sites (Upwey, Gembrook, Belgrave, Olinda) + 2 a
Slide 32: A flexible model for growth
A flexible model for growth For personal use only Number of Community Bank® branches1 Number of major bank competitors by remoteness area in Community Bank® Markets2 1 other Bank No other 2 other Banks Banks 3 other Banks 4 other Banks 5 or more other banks The future 1. Branch numbers as at 30 June
Slide 33: Appendix
For personal use only Appendix 33
Slide 34: As sites mature, dividends are paid to shareholders
As sites mature, dividends are paid to shareholders Dividend Yield – FY12 all community companies 30% only • 54% of companies paid 25% shareholder dividends Dividenduse 20% • 77%% of sites >6 yr of age Yield paid shareholder dividends 15% For personal • Average shareholder dividend 10% yield is 9.3%
Slide 35: ROE performance reflects each company's maturity
ROE performance reflects each company’s maturity Average Community Bank® company ROE – 2009 - 2011 Attractive ROE’s For personal use only • Average ROE in FY11 for companies over 5 years of age was 9% • Companies typically take 3-4 years to generate positive ROE’s Model foundations, features & achie
Slide 36: Profits are primarily directed to community building
Profits are primarily directed to community building; more than $80m in community grants since inception For personal use only Cumulative Community Grants since Dec 2004 Community grants by company age $80 FY 30 June 2011 Millions 800 (each point represents a community company) $60 700 600 Profit an
Slide 37: Contact
For personal use only Will Rayner James Officer Head of Capital and Investor Relations Manager Investor Relations Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 8 8220 7764 Tel: +61 8 8300 6056 Mob: +61 437 794 366 Mob: +61 403 112 796 Email: will.rayner@bendigoadelaide