Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — Investor Presentation (April 2016)
52 slides from Bendigo & Adelaide Bank's investor presentation, Apr 14, 2016
Slide 1: 2016 Business Strategy Update
For personal use only 2016 Business Strategy Update 14 April 2016
Slide 2: Today's agenda
Today’s agenda For personal use only Business Strategy Update Mike Hirst, Managing Director and CEO Marnie Baker, Chief Customer Officer Alexandra Tullio, Executive Local Connection Bruce Speirs, Executive Partner Connection Alexandra Gartmann, Managing Director and CEO, Rural Bank Q&A Trading Updat
Slide 3: Our Executive
Our Executive For personal use only Mike Hirst Marnie Richard Alexandra Robert Tim Piper Bruce Stella Alexandra Andrew Managing Baker Fennell Gartmann Musgrove Chief Risk Speirs Thredgold Tullio Watts Director Chief Customer Chief Financial Managing Executive, Officer Executive, Executive, Executive
Slide 4: Operating Environment
Operating Environment For personal use only 10 GFC Moderate system growth 110 Merger/integration Low rates and hyper competition Funding & Capital issues from Advanced Accredited Banks 9 100 Low demand for credit Economy in transition Additional capital Disruptor models emerging 8 & regulation Envir
Slide 5: System growth
System growth For personal use only Total lending growth 15% 15% 10% 10% 5% 5% 0% 0% System -5% BEN -5% BEN (retail) -10% -10% Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Note: Roling 12 months growth rate Environment
Slide 6: Macro trends in Australian Banking
Macro trends in Australian Banking For personal use only Outside our Control Some Control Within our Control Macro Customer Trust & economic Regulation Disruption Digitalisation in charge security conditions Environment
Slide 7: Customer Engagement
Customer Engagement For personal use only Vision, Strategy & Purpose Strategic Assets Banking Customer Brand Distribution People Culture Partnerships Products Licences Knowledge Advocacy Networks Omni Channel Digital Platform Customer Experiences Operational Efficiencies Core Banking Systems Staff E
Slide 8: Our vision, strategy and purpose
money AS A BANK Our vision, strategy ARE G WE OOD W BUT IT I TH ’S BIG INTERE GE STED IN R T H A N T H AT. W and purpose THE GO E ARE OD TH MORE AT M O WE CARE NEY CA N DO. PEOPLE For personal use only AND WH ABOUT AT T H E PEOPL E SHO Y CARE DECEN U T LY N O L D B E T R E A A B O U T. Our vision Ou
Slide 9: Our value proposition
we we Our value proposition For personal use only UNDERSTAND STRENGTHEN through listening RELATIONSHIPS & leading TO MERS | through quality engagement US PE C O for the long term PL | E EHOLDERS Value we we | PARTNER of being connected R HA RESPOND CREATE AND S S | | CO through innovating MMUNITIES
Slide 10: How do we measure success?
how do we measure success? For personal use only Customer People Par tner • New to lost customers • Diversity • Partner advocacy • Average products per • Staff engagement customer • Partner performance • Productivity • Customer advocacy Risk Financial • Credit loss % risk • Cash EPS weighted assets
Slide 11: Business unit RAROC
Business unit RAROC For personal use only Our risk adjusted business unit performance provides a sound financial base Segment RAROC ROTE $2,370m Group 19.2% 13.1% Retail 17.5% 11.6% Third Party 25.3% 12.7% Group Economic Capital Leveraged & Wealth 14.3% 31.0% Credit Risk Op Risk Other (Homesafe) Bus
Slide 12: Chief Customer Officer Update
For personal use only Chief Customer Officer Update Marnie Baker
Slide 13: Chief customer officer
Chief customer officer For personal use only Customer experience voice capability connection feedback payments face to face insights digital par tner research mobile phone marketing products online Chief Customer Officer Update
Slide 14: Our customer strategy
For personal use only Our customer strategy We understand where and a with who we already resonate R et i n and are doubling our efforts to + leverage these opportunities CUSTOMER Expl STRATEGY w ro Based on our value proposition, r e o G we are identifying who we align more closely with and buildin
Slide 15: Retain, Grow, Explore
For personal use only Retain Grow Explore Existing Customers Where we Baby Boomers Where we already Socially Conscious can more resonate Small to Medium Enterprises closely Farming Community align Millennials Educated and Affluent Chief Customer Officer Update
Slide 16: The customer landscape has changed
The customer landscape has changed For personal use only Customers are: In more control of their choices and experience Hyper connected and more mobile More socially and environmentally aware Expecting real time availability and accessibility Fast adopters of new technologies Expecting ease, persona
Slide 17: So has the customer experience
For personal use only So has the customer experience Single Multi Cross Omni channel channel channel channel Chief Customer Officer Update
Slide 18: And plays to our strengths
For personal use only online environment levels the playing field And plays to our strengths An environment Trust and reputation where reach and Authentic customer centric culture customer access Clear value proposition is not limited Purpose based ethos displaying tang by bricks and ible outcomes m
Slide 19: Ongoing Investment
For personal use only Ongoing Investment Investment has been focussed on our customer value proposition and digital assets to ensure we deliver on the omni channel customer experience and take advantage of current and future opportunities. Omni Channel delivering on our customer value proposition Di
Slide 20: Our digital platform
Our digital platform For personal use only Connected Customers Connect miVoice Website miBanker ... Workflow Integrated Partners Lendfast Digital wallet Card management management ... Driven by Right-time insights Social media LINX Customer analytics Customer Insights ... New Payments Scalable Infra
Slide 21: Flexibility to leverage digital investment
Flexibility to leverage For personal use only digital investment Open architecture Digital Platform Digital only Consolidation Chief Customer Officer Update
Slide 22: Local Connection
For personal use only Local Connection Business Strategy Alexandra Tullio
Slide 23: Local Connection: Who are we?
For personal use only Local Connection: Who are we? Total loans & deposits +1.5 million customers $71.2b 1 514 branches Full range of consumer and business banking products and solutions Bendigo Consumer Banking Delphi Bendigo Business Banking Financial Markets 1 As at 31 March 2016 Local Connection
Slide 24: Our point of difference
For personal use only Our point of difference • Enviable reputation • Passion for customer Passionate and and community COMMUNITY engaged staff • Customer service + BANK 1,900+ Community excellence A clear and Bank® directors • Customer led compelling point of difference 73,000 Community distributio
Slide 25: Current state
Current state For personal use only • Australia’s 5th largest retail bank • 44% of Group 1H16 cash earnings • National mortgage market share 2% • FTE 33481 including 1380 Community Bank • Local Connection - truly unique Our but complex model (Community Banks) Market The • Loan portfolio $31bn1 Posit
Slide 26: Key focus areas
For personal use only Key focus areas: Melbourne Small & Sydney Business Broaden mobile face-to-face 1 distribution Deepen penetration into small 2 business communities Customer Build sustainable & mutually 3 profitable partnerships Mobile Partnerships Distribution Accelerate investment in 4 Melbour
Slide 27: Partner Connection
For personal use only Partner Connection Business Strategy Bruce Speirs
Slide 28: Partner Connection: Who are we?
For personal use only Partner Connection: Who are we? Includes $22.7bn of Loans & Deposits 1 +323k Customers +730 Partners Banking, wealth and protection solutions Mortgage Managers Bendigo Financial Planners Other 1 As at 31 March 2016 Stockbrokers Mortgage Brokers Partner Connection Update
Slide 29: Our point of difference
For personal use only Our point of difference Our purpose is to enable customer choice thro ugh par tnership Customer Partner Partner • Choice • Trusted Partner • Partner Best of Breed centric • Nimble • Trusted Institution • Holistic & Tailored solutions Customer chooses > Par tner chooses > BEN Pa
Slide 30: Current state
Current state For personal use only • Third Party Mortgage proposition challenged by • 21% Group 1H16 cash earnings partner specific and channel skew issues • FTE 4541 • Maintaining strong market share in Margin Lending • Cost to income, Third Party Banking 31%, • Well positioned for wholesale fundi
Slide 31: Key focus areas
For personal use only Key focus areas: Performance Test and Leverage new system and perform Measures Learn 1 measurement capabilities ance Execute on Portfolio Funding 2 opp ortunities Par tner 3 Wealth cost to income improvement Holistic Centric Distribution Efficient Model delivery 4 Local Connect
Slide 32: New capabilities
New capabilities For personal use only Risk Adjusted Performance Measures (RAPM) Lendfast Processing Platform • Material improvement in FTE processing times • The Right Partners • Increased capacity to manage variability • The Right Return in volumes • The Right Exposures • Improved Partner experien
Slide 33: Rural
For personal use only Rural Business Strategy Alexandra Gartmann
Slide 34: The Rural Business: Who are we?
For personal use only The Rural Business: Who are we? Total Lending por tfolio $5.1b1 by industry +8k customers +120 Specialist Relationship Managers Solutions for agricultural farm businesses Mixed Farming Other Mixed Livestock Dairy Sheep Hort./Vit. 1 As at 31 March 2016 Beef Cropping Rural Update
Slide 35: Who is our customer?
Who is our customer? For personal use only Farm turnover $750k to $5m Intergenerational ownership, clearly defined family corporate structure Sophisticated production and marketing High per capita users of technology Rural Update
Slide 36: Our point of difference
For personal use only Our point of difference THE ONLY AUSTRALIAN OWNED AGRI SPECIA LIST BANK The future for agriculture is bright We offer our customers: Provide exceptional • Specialist agri lenders financial services, • Industry insights to make informed business decisions knowledge and • Opportu
Slide 37: Current state
Current state For personal use only • 8% market share • 15% of Group 1H16 cash earnings • Very strong brands • FTE 2761 • Deep expertise in cropping, beef, sheep Our The • Loan portfolio $5.1bn1 and dairy Market Numbers • Deposit portfolio $3.4bn1 • Strong portfolio in Victoria and WA Position Achie
Slide 38: Key focus areas
For personal use only Key focus areas: Target Future growth farmers Targeting growth markets aligned with our 1 specialisation and experience 2 Enabling future farmers Customer 3 Innovation and knowledge partnerships Industry Knowledge opportunities partnerships 4 Aligned partners systems, processes
Slide 39: Wrap up
For personal use only Wrap up 2016 Business Strategy Update
Slide 40: Wrap up: key messages
For personal use only The customer is in charge Investment to level the playing field is largely complete How they want to interact with us is changing – mobile platforms are increasingly in demand Our business segments support a diversity of earnings, providing stability through the cycle We have o
Slide 41: Q&A
For personal use only Q&A Business Strategies
Slide 42: Trading Update
For personal use only Trading Update Richard Fennell Chief Financial Officer and Executive Corporate
Slide 43: Lending growth
Lending growth For personal use only 1Q16 2Q16 6.3% 3Q16 3.5% 1.3% 1.8% 0.0% -1.6% -1.4% -4.7% -14.8% Business Agri Residential ry – March 2016) er – December 2015), 3Q16 (Janua (July – September 2015), 2Q16 (Octob Note: Annualised 3 months - 1Q16 Trading Update
Slide 44: Net interest margin
Net interest margin • 3Q16 NIM includes 2bps negative impact from reclassification of certain loan products For personal use only • Business lending and retirement deposit account repricing recently undertaken Net interest margin (%) 3 monthly rolling NIM 2.4% 2.21 2.3% 2.23 2.24 2.24 2.21 2.20 2.19
Slide 45: Funding
Funding • Wholesale funding - 5 year issue completed, $650m at +146bps For personal use only • NSFR discussion paper - BEN’s ratio expected to comfortably exceed 100% Term funding maturity profile Retail deposit balances ($bn) 1000 $ Million 47.6 48.4 44.8 45.4 46.2 800 42.7 Pre-funding Completed 60
Slide 46: Homesafe investment property portfolio
Homesafe investment property portfolio For personal use only .64m pre-tax • 3Q16 Homesafe contribution -$1 vement for 3 months ; 1 per ty pric es – Res ide x ind ex mo • Change in pro io) • Melbourne -0.4% (60% of por tfol • Sydney -2.0% (40% of por tfol io) at 30 June 2016 • Existing overlay to be
Slide 47: Efficiency focus
Efficiency focus For personal use only Total expenses will reduce half on half Focus remains on resource alignment with business demand Project Reset benefits beginning to flow Cost reductions partially offset by restructuring charges and supplier repricing Trading Update
Slide 48: Residential lending
Residential lending For personal use only Residential Loan Arrears Residential Mortgages and Unemployment by State $b 1.6% 36 40% 8.0 EAD (% of Portfolio) Unemployment rate (15+) 1.2% 34 30% 6.0 0.8% 32 20% 4.0 0.4% 10% 2.0 30 0% Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 0% 0 Portfolio (RHS) 90d+ (LHS) VIC
Slide 49: Business and Rural lending
Business and Rural lending For personal use only Business Loan Arrears Rural Loan Arrears $b $b 3.0% $8.5 4.0% $6.0 $8.0 3.0% 2.0% $5.0 $7.5 2.0% 1.0% $4.0 $7.0 1.0% 0% $6.5 0% $3.0 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Portfolio (RHS) 90d+ (LHS) Portfolio (RHS) 90d+
Slide 50: Great Southern loan portfolio
Great Southern loan portfolio For personal use only $323.8m $257.7m $207.4m $185.1m Dec 15 Mar 16 Dec 14 Jun 15 Trading Update
Slide 51: Q&A
For personal use only Q&A Trading update
Slide 52: Contact details
Contact details For personal use only Analysts/Investors Media Travis Crouch Silvana Arena Head of Investor Relations Head of Public Relations Tel:+61 3 5485 6261 Tel:+61 8 8220 7784 Mob:+61 418 552 922 Mob:+61 402 110 445 Email: travis.crouch@bendigoadelaide.com.au Email: silvana.arena@bendigoadela
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