Bank of Queensland Limited · ASX:BOQ
Bank of Queensland — FY2002 Earnings Presentation
25 slides from Bank of Queensland's earnings presentation, Aug 31, 2002
Slide 1: Bank of Queensland: 2002
Bank of Queensland: 2002 Presentation to analysts and investors for the year ended 31 August 2002 1 2002: A record year • Record profitability – $28.7m NPAT • Record sales – $3.7b in approvals • Record assets under management – $6.6b • Record EPS Growth – 18.7% 2 1
Slide 2: Profitability summary ($m)
Profitability summary ($m) 2001 2002 Var Net Operating Income 163.2 173.9 7% Ongoing Op Expenses 118.9 117.7 -1% Underlying Profit 44.3 56.2 27% Less: Significant Items 5.2 6.3 21% Bad Debts 7.8 9.3 19% Tax 7.2 11.9 65% Op Profit After Tax 24.1 28.7 19% 3 2002: Key highlights • Asset growth – 27% gr
Slide 3: 2002: Key highlights
2002: Key highlights • Business mix – Business lending growth kept pace with housing boom • Margin pressure due to RBA rate cuts - 75bp in BOQ Q1 – Margin 2.36% (2001 2.74%) • Collection of fees and other non-interest income – Non-interest income up 14% 5 2002: Key highlights • Capital management –
Slide 4: Major features of 2002 results
Major features of 2002 results • Income & expense management – Performance Enhancement Program – Outsourcing – Net Interest Margin adversely impacted by RBA rate cuts - 75 bp in BOQ’s 1st Qtr 02 (50 bp rise late in 02 has had little effect in 02) 7 Income & expense management 200 150 $ Millions 100
Slide 5: Results of Performance Enhancement Program
Results of Performance Enhancement Program • We have in place programs to derive (for year ending 31 August 2003): – $6m per annum in revenue enhancements; – $10m savings in operating expenses compared with prospective costs. • 68% target Cost to Income Ratio in 2003 • 64% target Cost to Income Rati
Slide 6: Comparative margins
Comparative margins 3.0% 2.5% 2.0% 1.5% 2.68% 2.77% 2.36% 2.35% 1.0% 2.14% 1.93% 0.5% 0.0% BOQ ADB BWA BEN STG SUN Source: latest published financial reports 11 Cost to income ratio (Headline Expenses) 78% 30% Growth in Income & Expenses 76% 25% Cost to Income Ratio 74% 20% 72% 15% 70% 10% 68% 5% 66
Slide 7: Comparative cost to income
Comparative cost to income 80.0% 70.0% 60.0% 50.0% 71.3% 70.5% 67.7% 40.0% 59.8% 59.7% 30.0% 52.7% 50.9% 20.0% 10.0% 0.0% BOQ BOQ ADB BWA BEN STG SUN (Adj for signif. item) Source : Latest Published Financial Reports 13 Profitability NPAT up 19% to $28.7m 35 28.7 30 24.1 25 22.2 $ Millions 19.3 20 1
Slide 8: Earnings per share
Earnings per share EPS (diluted) growth of 18.7% 45 25.0% Earnings per share (cents) 20.0% EPS Growth Rate 40 15.0% 35 10.0% 30 5.0% 25 0.0% 20 -5.0% 1998 1999 2000 2001 2002 EPS Diluted (LHS) EPS Growth Rate (RHS) 15 Return on average equity 13.5% 13.0% 12.5% 12.0% 13.3% 11.5% 12.9% 12.7% 11.0% 12.
Slide 9: Vibrant sales activity
Vibrant sales activity …. Loan approvals up 31% to $3.7 billion 4% 22% 74% Housing Business Consumer 17 …leading to strong growth Assets under management of $6.6B 27% growth on 2001 7.0 30% Asset Growth Rate 6.0 25% 5.0 20% $ Billions 4.0 15% 3.0 10% 2.0 1.0 5% 0.0 0% 1998 1999 2000 2001 2002 Assets
Slide 10: Asset mix
Asset mix Stable mix of assets under management despite record housing lending 2001 2002 13% 13% 3% Housing 3% Business 21% Consumer Other 21% 63% 63% 19 Well-balanced funding base $7 $6 1.3 $5 1.0 Billions $4 0.7 1.9 0.2 0.5 1.3 $3 1.2 0.8 0.9 $2 2.6 3.0 $1 1.9 1.9 2.2 $0 1998 1999 2000 2001 2002 R
Slide 11: Retail funds growth above average
Retail funds growth above average Retail growth of 15.6% 18% 16% 14% 12% 10% 8% 15.6% 16.0% 15.7% 6% 12.0% 11.9% 4% 2% 5.1% 0% BOQ ADB BWA BEN STG SUN Individuals Average Source: latest published financial reports 21 Wholesale funding • Fine margins for A2 / BBB rating • Loyal domestic short-term cu
Slide 12: Capital management
Capital management • Capital raisings in the year were balanced between: – Dividend Reinvestment Program – Share Purchase Plan aimed at retail holders – Wholesale placement – RePS • Subordinated Debt issues well received 23 Dilution of capital raisings • Raising capital is seemingly dilutionary • BU
Slide 13: Comparative capital positions
Comparative capital positions 14% 11.3% 11.8% 11.7% 12% 10.2% 10.8% 10.5% 2.4% 10% 4.1% 5.1% 2.7% 3.1% 3.5% 8% 6% 9.3% 4% 7.2% 7.5% 7.7% 6.7% 7.0% 2% 0% BOQ * ADB BWA BEN STG SUN * A further 0.6% Tier 1 was raised in Sept 02 Tier 1 Tier 2 Source: Latest Published Financial Reports 25 5-year Market V
Slide 14: MVA performance comparison
MVA performance comparison BOQ has slightly outperformed its banking peers in terms of value created per dollar of invested Capital MVA/Capital 140% 120% 100% 80% 60% 40% 20% 0% 1998 1999 2000 2001 2002 Market Regional Banks BOQ 27 Source: Stern Stewart & Co 5-year Economic Value Added (EVA®) perfor
Slide 15: Credit quality
Credit quality • Credit scoring implemented for all housing and consumer lending • Credit review section created to manage continuing business lending expansion • Large exposures: – 25 connections have an exposure of $4m or greater (total exposure of $213.7m) – 95% of large exposures secured by real
Slide 16: Diversifying income streams
Diversifying income streams • Start-up business streams will pay dividends in time – Insurance – Wealth management • Business Banking – Expanded resources including new GM – Positioned to build on 25% growth of 2002 • Greater emphasis on less capital- intensive activities such as FX 31 What we need
Slide 17: Our goal
Our goal We will be Australia’s best regional bank Our Vision: To be a great Queensland company working hard to provide new ideas in banking and the best customer service experience 33 Our strategic intent • Grow reach and scale • Broader business mix • Differentiate our service - customer choice, c
Slide 18: How are we going to get there?
How are we going to get there? Strategy only gets you started…... Winning is all about narrowing the gap between strategy and execution 35 Blueprint for growth: 5 core programs The Capability Acquisition & Corporate Strategy program provides direction for the Customer Relationship Services, Multi-Ch
Slide 19: Capability Acquisition & Corporate Strategy
Capability Acquisition & Corporate Strategy (CACS) CACS focuses on: • Developing corporate strategy; • Managing third-party relationships; • Articulating strategic intent to both internal and external stakeholders. 37 Customer Relationship Services (CRS) CRS program focuses on: • Refreshing the BOQ
Slide 20: Multi-Channel Expansion
Multi-Channel Expansion (MCE) MCE program focuses on: • Enhancing BOQ’s distribution network through: – physical expansion; – electronic expansion; – channel functionality; • Operational enhancements. 39 People Development Program (PDP) PDP focuses on: • Realigning BOQ’s organisational structure wit
Slide 21: Metrics and Measurement
Metrics and Measurement (MM) MM focuses on: • Defining organisation-wide and specific profitability targets that will enable BoQ to quantify its desired financial outcomes and will be the basis against which success is measured 41 Business customer acquisition • Increased resources • Improve new bus
Slide 22: Retail customer acquisition
Retail customer acquisition • Expand network through OMB distribution model • Improve productivity • Focus on training • Improve product range • Empower staff 43 An efficient engine room • Sales performance relies on efficient back- office to maximise results • Outsourcing contract with EDS in place
Slide 23: EDS outsourcing scope
EDS outsourcing scope ATMs ATMs Switching Internet Internet Switching Banking Banking Core CoreBanking Banking Call Call System System EDS EDS Centre Centre Telephone Telephone Loan Loan Banking Banking Processing Processing Credit CreditCard Card Processing Processing 45 Outsourcing objectives on t
Slide 24: 2003 Environment
2003 Environment • Housing sector expected to slow but not collapse – To date we have not experienced any slow down in loan approval activity • Moderate strengthening in Qld and national economies • Construction industry to ease slightly • Interest rates will remain low 47 2003: Capitalising on stre
Slide 25: Our goals for 2003
Our goals for 2003 • Continued strong asset growth • Double digit EPS growth • Cost to income ratio of 68% • ROE of 14% • Expansion of branch network to 120 branches 49 25