Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 2007 Earnings Presentation
36 slides from Bank Of Queensland's earnings presentation, Feb 28, 2007
Slide 1: Bank of Queensland Half-Year Results
Bank of Queensland Half-Year Results 28 February 2007 1
Slide 2: Agenda
Agenda Result highlights David Liddy Managing Director Financial result in detail Robert Hines Chief Financial Officer Strategy and outlook David Liddy Managing Director FY07 Half-Year Results 2
Slide 3: Result highlights
Result highlights David Liddy, Managing Director 3
Slide 4: Result highlights
Result highlights Record NPAT up 21% Sector leading growth in lending and deposits Improving shareholder returns Stable margin Continuing double digit EPS growth Sound credit quality FY07 Half-Year Results 4
Slide 5: Strong financial results
Strong financial results 1H06 1H07 Net profit after tax $40.0m $48.4m Ï 21% Cash distributable earnings $37.6m $45.9m Ï 22% Cash EPS (diluted, distributable earnings) 35.5¢ 40.8¢ Ï 15% Ordinary dividend 27¢ 32¢ Ï 19% Loan approvals $4.5b $5.6b Ï 24% Loan growth * 19% 26% 1.7x system Retail deposit g
Slide 6: Continuing strong lending growth
Continuing strong lending growth Strong growth in all areas * Overall 1.7x system growth * 31% 26% 27% 22% 17% 14% 15% System 12% BOQ System System System BOQ BOQ BOQ Housing Commercial Consumer Overall lending growth * Includes growth upon the acquisition of Pioneer Permanent Building Society Ltd.
Slide 7: Increasing sales flowing through to growth
Increasing sales flowing through to growth Loan approvals Lending growth exceeding system* % 25% 24 BOQ 22% $5.6b 19% $4.5b 16% System $3.5b 13% 10% 1H05 1H06 1H07 6 6 06 07 6 -0 -0 -0 b- b- ug ov ay Fe Fe A N M Source: RBA * Excludes the growth upon acquisition of Pioneer Permanent Building Society
Slide 8: Excellent retail deposit growth
Excellent retail deposit growth 30% 18% 11% 9% System System BOQ BOQ 1H06 1H07 System: APRA monthly statistics, household deposits * Includes growth upon the acquisition of Pioneer Permanent Building Society Ltd. If growth upon acquisition excluded overall growth was 23%, 2.1x system, FY07 Half-Year
Slide 9: Increasing shareholder returns
Increasing shareholder returns 24% average 5 year annual total shareholder return $2,900 $2,700 $2,500 30¢ $2,300 25¢ $2,100 $1,900 $1,700 $1,500 32¢ 27¢ $1,300 23¢ $1,100 $900 2005 2006 2007 2 3 4 5 6 7 -0 -0 -0 -0 -0 -0 ar ar ar ar ar ar 1st half 2nd half -M -M -M -M -M -M 01 01 01 01 01 01 BOQ Al
Slide 10: The result in detail
The result in detail Robert Hines, Chief Financial Officer 10
Slide 11: Summary of results
Summary of results 1H06 1H07 % Change $m $m vs PCP Total operating income 177.1 219.6 24% Total expenses 113.5 141.7 25% Underlying profit 63.6 77.9 22% Impairment on loans and advances 3.4 9.3 174% Profit before tax 60.2 68.6 14% Income tax 20.2 20.2 0% Net profit after tax 40.0 48.4 21% Movement i
Slide 12: Margin improvement
Margin improvement (0.02%) 0.10% (0.06%) 1.85% 1.83% ix ix 06 07 s 'n m m 2H 1H st g t se di in n n gi gi nd As rty ar ar Fu pa M M d 3r FY07 Half-Year Results 12
Slide 13: Growing income
Growing income Strong growth flowing through to total income, up 24% Net interest income Non interest income 21% 31% $66m $154m 0 $127m $50m 1H06 1H07 1H06 1H07 FY07 Half-Year Results 13
Slide 14: Expenses
Expenses Expenses Cost to income ratio $142m * 25% $6m Admin $114m $5m $42m Operating 0.5% $34m Computer 0.2% $32m $26m 64.5% $9m Occupancy $8m 63.8% $53m Employee $41m 1H06 1H07 Reported Amortisation Pioneer Adjusted cost to of customer integration cost to income contracts costs income * Excluding
Slide 15: Expenses
Expenses Expense growth impacted by growth and volume of new business: Employee costs IT Processing Processing OMB Commissions $53m $23m $15m $5m $14m $41m $17m $3m 1H06 1H07 1H06 1H07 1H06 1H07 1H06 1H07 FY07 Half-Year Results 15
Slide 16: Continuing strong asset quality
Continuing strong asset quality Focus remains on well secured Impaired assets to housing and SME lending non-securitised lending Minimal levels of low doc loans: - $0.4b of low doc loans, 3.6% of housing LUM 0.08% 0.08% 0.08% 0.07% Underlying bad debts 0.06% $8.6m $7.9m $4.1m 1H06 2H06 1H07 1H05 2H0
Slide 17: Increasing shareholder returns
Increasing shareholder returns Cash EPS growth* Cash return on equity** % 40.8¢ + 1.1 14.0% % 15 12.9% 35.5¢ 1H06 1H07 1H06 1H07 * Diluted EPS cash distributable earnings ** Cash distributable earnings, weighted average basis FY07 Half-Year Results 17
Slide 18: Growing loans under management
Growing loans under management $17.0b 26%* 13% $15.1b $2.3b leasing $13.5b $2.1b 18% $12.4b $3.0b commercial $11.4b $1.9b $1.7b $2.7b $0.6b 4% $1.5b consumer $2.5b $2.3b $0.5b $2.1b $0.4b $0.3b $0.3b $11.1b $9.8b 65% $8.1b $8.7b housing $7.5b 1H05 2H05 1H06 2H06 1H07 Housing Consumer Business Leasin
Slide 19: Strong retail deposit growth
Strong retail deposit growth Retail Deposit Growth Deposit growth exceeding system 22% BOQ** 30%* $8.3b 19% $6.4b $5.4b 16% 13% System 10% 7% 6 6 06 07 6 1H05 1H06 1H07 -0 -0 -0 b- b- ug ov ay Fe Fe A N M * 23% growth if deposits acquired through the acquisition of Pioneer Permanent Building Society
Slide 20: Managing capital adequacy ratio
Managing capital adequacy ratio Projected to be under the 15% innovative capital limit by 1 January 2008 Remaining limit of 10% is available for the issue of non-innovative capital 12.4% 12.5% 12.1% 12% 11% 3.4% 4.3% 3.7% Target Total: 10% - 11% 10% 9% 8% 1.7% 1.4% 1.2% Target Tier 1: 7% - 8% 7% 6%
Slide 21: Strategy and outlook
Strategy and outlook David Liddy, Managing Director 21
Slide 22: Six year transformation, a platform for growth
Six year transformation, a platform for growth The next phase: Interstate Leverage our platform UFJ expansion & ATM commenced $17 for growth Solutions acquisitions Ceased Seek growth BOQ Share Price using mortgage Pioneer opportunities brokers Building Transformation commences Society Further expans
Slide 23: Building a national distribution presence
Building a national distribution presence 2,600 touchpoints FY07 Half-Year Results 23
Slide 24: Continuing branch expansion
Continuing branch expansion This half: 260 - 6 corporate branch conversions 240 - 4 new interstate OMBs 219 215 11 new interstate branches in 2nd 110 OMBs 90 Interstate half 173 79 75 142 34 5 120 98 Qld branches 139 140 140 150 150 137 120 98 40 62 79 82 85 91 OMBs OMBs OMBs OMBs OMBs OMBs Aug 02 A
Slide 25: Success of OMBs outside Queensland
Success of OMBs outside Queensland Average per interstate branch, (for all 46 branches Consolidating our presence open at least 12 months) across all States 79 branches outside Queensland $48m Footings (33 open less than 12 months) Providing platform for sustained $35m future growth Assets Overall g
Slide 26: Increased productivity from OMBs
Increased productivity from OMBs Now converted 10 corporate branches to OMBs (6 during this half) Positive outcomes from each: Annualised growth before and after conversion * Post Conversion 31% 6 months 18% Pre-Conversion 4% 5% Lending Deposits Lending Deposits * For the 8 branches converted with a
Slide 27: Growing our business banking presence
Growing our business banking presence Overall strategy continues to be to achieve SME dominance in chosen segments in Queensland Roll out of enhanced internet banking platform with additional features for SME customers Introduction of market competitive Small Business Package Strong growth in equipm
Slide 28: Satisfied customers
Satisfied customers 89% Retail Commercial 79% 80% 56.1 77% 53.1 71% 68% 68% 46.4 43.8 37.3 35.3 34.1 Z Z o p p A B A B Q e Q ac ac N N g or or rg B NA B A O O tp tp di A A C C N nc nc B B eo en es es Su Su G B W W St February 2007 Roy Morgan Research Queensland Customer Satisfaction February 2007 Ea
Slide 29: Pioneer Building Society merger
Pioneer Building Society merger Scheme of arrangement was approved, ownership effective from 5 December 2006 Integration commenced immediately, major milestone will be migration onto BOQ systems by end of calendar year Increase in customer numbers and business This is delivering: - A strengthened fo
Slide 30: Proposed merger with Bendigo Bank: Deal Outline
Proposed merger with Bendigo Bank Deal Outline Scrip and cash Scrip offer on exchange ratio of 0.748 BOQ shares and $5.50 in cash per BEN share (value of proposal $18.47)(1) Exchange ratio is calculated based on 1 month VWAP trading prices for BEN and BOQ Value EPS positive impact for year ended Aug
Slide 31: Two natural allies vs the big banks
Two natural allies vs the big banks 9 Potential value enhancement to BOQ and BEN shareholders (driven by potential pre-tax synergies of $70 million p.a.) 9 Enhanced banking proposition for regional and community banking in Australia 9 Significantly improved distribution platform … the merged entity
Slide 32: Status of merger discussions
Status of merger discussions Proposal announced 19 March 2007 BOQ funding in place Bendigo Bank Board stated willingness to engage Next steps, if the proposal proceeds, would be: - a Merger Implementation Agreement - due diligence Presentation to Bendigo Bank Board and management next week FY07 Half
Slide 33: Addressing market issues
Addressing market issues Integration Cultural Operating Models • Both banks experienced in • Both focused on ‘shop front’ • ABSOLUTE commitment to integration retain HQ in Bendigo and • Both embraced regional Brisbane • Retention of broad banking successfully management experience in • ABSOLUTE comm
Slide 34: Why BOQ/Why now?
Why BOQ/Why now? 9 Attractive premium with post merger upside 9 Similar business cultures and strong community focus 9 Natural progression for Australia’s two leading regional banks 9 We have been jointly discussing the merits of merging for two years 9 Preserve Bendigo Bank head office/Bendigo Bank
Slide 35: Outlook
Outlook Underlying BOQ business in a strong position: - Established retail and commercial national distribution points - Growing strongly and profitably - Healthy Queensland economy and expanding into other growth States Bendigo Bank merger to leverage this position Confirm financial goals for 2007
Slide 36: bank different
bank ditrerent® Bank of Queensland