Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 FY2005 Earnings Presentation
39 slides from Bank Of Queensland's earnings presentation, Apr 7, 2005
Slide 1: Bank of Queensland Half-Year Results
Bank of Queensland Half-Year Results 28 February 2005 bank different
Slide 2: Agenda
Agenda ® Results Overview ¢ Strategy Implementation and Outlook bank different
Slide 3: Result Highlights
Result Highlights CRETE bank different, 4HO5 1HO4 a % | Net Profit $35.9m $28.1m Loan Approvals $3.5b $4.2b Loan Approvals (excl mortgage brokers) $3.5b $3.5b Assets Under Management $13.3b $11.3b Retail Deposits $5.4b $4.6b Dividend 23¢ 21¢ 28% 17% % 418% W17% W10% Continuing strong profit growth w
Slide 4: Report Card for the Half
Report Card for the Half... cet FERED EER EAU SERENE EPEC LUE SF EELP ECP EEE SEERET EEE EPEC CEE EESEEFEA bank different FYO5 Financial Goals » Substantially above system growth: » lending 1.5x system » deposits 2x system » Maintaining credit quality. » Cash EPS growth of 10%-12%. » Cost to income
Slide 5: Report card: strategic objectives
» Continue interstate branch » 15 interstate branches opened this expansion + expand business half. Opened 2 new business banking. banking centres, now 13. » Leverage infrastructure » Driving benefits from the new investment. banking platform, eg easier to deliver new products. » PEP Il commenced, t
Slide 6: Summary of Results
Summary of Results Net Interest Income Non Interest Income Total Income Total Expenses Underlying Profit Bad Debts Profit Before Tax Goodwill Income Tax Net Profit After Tax Cash EPS Cost to Income Ratio 88.2 15% 53.9 479 13% 155.5 136.4 14% 99.7 86.1 16% 55.8 50.0 12% 5.7 8.6 -34% 50.4 41.4 21% 1.4
Slide 7: Lending and Deposit Growth
Lending and Deposit Growth bank different
Slide 8: Annualised 1H05 Lending Growth
Annualised 1HO5 Lending Growth SRR PURER RECEP ROPER PPE UPPER ERR OP IPO LPL EEE OPP OP POPE PRR PEELE OPO CEL OPPO REE ro rororereecececeniecrccrnnaa honk diflerernk » Ontrack to replace monthly mortgage broking volumes by August 2005. » Full impact of initial interstate branches will come through
Slide 9: Housing Loan Growth
Housing Loan Growth » Housing loan growth . $7b has continued at greater than the $6b Direct Portfolio target 1.5x system ea “direct” portfolio. $4b - » The mortgage broker originated $3b - housing loan $2b - Broker Originated portfolio is running- —_—-s-—_—.. off at an acceptable $1b rate. . . $0b
Slide 10: Sales (Loan Approvals)
Sales (Loan Approvals) » Approvals from direct channels remain buoyant. » Final impact from mortgage brokers came through in July 2004: $4.2b 1HO3 2HO3 1HO4 2HO4 1HO5 «/ Retall/Commercial l@ Mortgage Brokers a0)
Slide 11: Loans Under Management
Loans Under Management bank different » Diversified lending growth maintained $12b > $10b $8b ~ $6b - $4b $2b - 1HO3 2HO03 1HO4 2HO04 1HO5 HM Housing MConsumer | Business 7 Leasing
Slide 12: Asset Quality
Asset Quality bank different » Significant growth without compromising asset quality: » Strong credit standards; and » Control over exposure to large credit risks. » Well secured SME lending. » Minimal levels of low doc loans » $117m portfolio of low doc loans, 1.5% of housing LUM. » Problems were r
Slide 13: Low Impaired Assets
Low Impaired Assets Impaired assets » (Unsecured portion of non-accrual, past due and restructured loans) 4HO3 2HO3 41HO4 2HO4 4HOS Impaired assets to average assets » Continuing low levels of impaired assets.
Slide 14: Bad Debts Expense
Bad Debts Expense bank different » Underlying bad debts have increased slightly, but remain at low levels. » Maintained the General Provision at 0.5% of RWA and minimal movements in the specific provision - results in 8x coverage of impaired assets. Provision Balances: Specific $ 4.7m General $ 50.0
Slide 15: Balanced Funding Mix
Balanced Funding Mix » On balance sheet growth in 1HO5 saz funded by retail $9b deposits : $6b $3b $0b $4.96 Beg 1HO3 2HO03 1HO4 2HO4 1HOS MRetail @ Wholesale & Other MSecuritisation & Capital
Slide 16: Revenues and Expenses
Revenues and Expenses bank different
Slide 17: Net Interest Income and Non-Interest Income
» Growth off the back of asset and deposit growth. Net Interest Income 41HO3 2HO3 1HO4 2HO4 4HOS Growth in Income LHOS 2HO03 1HO4 2HO4 LHOS ren bank different » Flat this half with short-term lower loan approvals the main contributor, due to exit from mortgage broker market. Non-Interest Income $48m
Slide 18: Margin Increased
Margin Increased bank different, Interest Margin » Strong performance: : (before payments to 3rd Parties) » avery competitive market for retail funds; and 2.70% ~ » after incurring the major 2.60% - ~eo% impact of repricing retail at call funds. 2.50% » Increase of Official Cash Rate 2.40% . oy as b
Slide 19: Margin Movements
Margin Movements bank different . . Cash Asset » Increased volume of retail deposits Bills . : Capital =qxen962 and reduced wholesale funding credit Liability spreads contributed 5bp towards the Mi pick-up in margin. » Increased capital levels contributed 5bp improvement. » Cash/Bills spread contrac
Slide 20: Retail Funding Mix
Retail Funding Mix bank different » Around 75% of retail funding is already in price sensitive 100% term deposits and Cash 90% - | Management Accounts 80% » Cash Management Account 70% pricing is at or near the top of market and has been for the 50% last half. 50% » Term Deposit pricing is also 40%
Slide 21: Operating Expenses
Operating Expenses 3% $100m 13%, 06am *227™ $80m $60m $40m $20m $0m 1HO3 2HO3 1HO4 2HO4 1HO5 Note: excludes significant items bank different, #2 Admin © Operating 2 Computer % Occupancy
Slide 22: Cost to Income Ratio
Cost to Income Ratio 74% 72% ~- 70% -- 68% ~- 66% 64% -- Cost to Income Ratio 62% ~~ 60% i i } j i 1HO2 2HO2 1HO3 2HO3 1HO4 2HO4 1HO5 Excludes impact of significant items 20)
Slide 23: Cash EPS Performance
Cash EPS Performance Cash EPS growth of 11% on pcp 34c » 32c 30c - 28c ~ 26¢ 24¢ 22¢ - 20¢ » 1HO3 2HO3 1HO4 2HO04 1HO5 Excludes impact of significant items
Slide 24: Return on Equity/Assets
Return on Equity/Assets bank diferent, . tee T Return on Equity * » There is short term pressure 15% on ROE and ROA during our 12% + period of strong growth. 9% + 6% ~~ 3% 4 0% 4HO3 2HO3 4HO4 2HO4 THOS Return on Assets* 0.71% . «gt . 4HO3 2HO3 1HO4 2HO4 4HOS * = excludes impact of significant items
Slide 25: Capital
Capital bank different
Slide 26: Capital
Capital bank different » Proposed Capital Issuance: B p 14%, Capital Adequacy Ratio » Other than DRP, no further capital : 12% issuance forecast for FYO5 10% » Capital raising not expected until 1% calendar quarter 2006 8% > Will be looking to roll hybrid in October ©" 2005, subject to APRA treatmen
Slide 27: Strategy Implementation and Outlook
Strategy Implementation and Outlook bank different
Slide 28: Our Strategic Focus
Our Strategic Focus bank different » We are differentiating through our distribution focus. » We will continue to build on our Corporate branches, our Qld owner managed branches and expand interstate with the OMB model. » The OMB model drives shareholder value through: » empowerment, and » rewarding
Slide 29: Interstate Expansion
» Interstate Expansion PPR ERECR EER PREECE CEC RT CPP EPP RTE EP OP REP ECP ET REE PEP PCPS PSEC bank different Targeting 100 branches interstate by 31 August 2006 (at 7 April 2005 there were 22). Strong interest from potential owner managers. Targeting consumer and SME market segments. Business ba
Slide 30: Success of Initial Branches
Success of Initial Branches » First 5 interstate branches opened in July/August 'O4: » Byron Bay » Kingscliff » North Parramatta » Frankston » 455 Bourke St, Melbourne oc]
Slide 31: Our Interstate Expansion is on Target
Our Interstate Expansion is on Target bank different Forecast 240 - 200 » OMB - Interstate 160 » 120 - OMBs - Qld 80 40 Corporate oO 0 Aug01 Aug02 AugO3 Aug04 Today Aug05 Aug0d6
Slide 32: Interstate branches Business Banking Centres
20 Interstate branches 13 Business Banking Centres including 8 BOQ Equipment Finance offices
Slide 33: BOQ Equipment Finance
BOQ Equipment Finance bank different, >» BOQ now has $1.5b in equipment finance receivables under management. » Diversified assets geographically. » Committed to continuing sourcing broker generated business. » Diversified across various Bi Other industries. W Furniture & Fittings Office machines M
Slide 34: ATM Solutions
ATM Solutions bank different ATM Locations » ATM Solutions currently have over 2,100 ATMs deployed nationally. » Enables BOQ to directly service all our customers around Australia. » BOQ branding has been rolled out to more than 1,200 ATMs. » In 1HO5 averaged 55 new machines per month, plus one acqu
Slide 35: IT Infrastructure
IT Infrastructure bank different » Continuing our strong outsourcing partnership with EDS, measured against 44 critical service levels. » Significant achievements in transforming our IT infrastructure. » New banking platform now delivering benefits: » Provided the capability to expand interstate. »
Slide 36: FY05 Goals
FY05 Goals » Financial goals for 2005: » Substantially above system asset (1.5x system) and deposit growth (2x system). » Maintain credit quality. » Cash EPS growth of 10%-12%. » Cost to income ratio of 63%. » Key objectives for our 2005 financial year are to: » Continue the interstate branch networ
Slide 37: Growing Strongly
Growing Strongly bank different > Our growth strategy will create substantial shareholder value. > Weare differentiating with our distribution focus through our unique, differentiated retail franchise model. > This is not a short-term strategy but a long term driver of shareholder value.
Slide 38: Growing customers
Growing customers New customers drive increased value changemybank.com.au
Slide 39: Bank of Queensland
Bank of Queensland bank different