Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — FY2015 Earnings Presentation
32 slides from Bank Of Queensland's earnings presentation, Oct 8, 2015
Slide 1: For the Full Year Ended 31 August 2015
FOR THE FULL YEAR ENDED 31 AUGUST 2015 8 OCTOBER 2015 Bank of Queensland Limited ABN 32 009 656 740. AFSL No 244616.
Slide 2: Jon Sutton / Anthony Rose
JON SUTTON Managing Director & CEO ANTHONY ROSE Chief Financial Officer JON SUTTON Managing Director & CEO 2
Slide 3: Record result in challenging market
Record result in challenging market Strong performance relative to peers Returning to growth with further upside potential BOQ Specialist delivering above expectations Positioning for sustainable growth 3
Slide 4: Record cash earnings
Record cash earnings Underpinned by strong margin management … Cash earnings after tax ($m) +19% Cash net interest margin (%) +15 bps 357 1.97 0.11 301 BOQ 251 1.82 Specialist 0.01 1.67 1.69 1.81 1.86 31 FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 … focus on cost management … … and improved asset qualit
Slide 5: Cash ROE over 11% in H2
Cash ROE over 11% in H2 Cash ROTE at 15% in 2H Cash ROE (%) Cash ROTE (%) +200 bps +340 bps 11.2 15.0 9.7 10.3 10.4 10.3 12.3 13.2 13.2 13.8 9.2 11.6 1H13 2H13 1H14 2H14 1H15 2H15 1H13 2H13 1H14 2H14 1H15 2H15 Strong EPS growth Record dividend Cash basic EPS (cps) Dividends (cps) 13% CAGR 13% CAGR 5
Slide 6: Total Lending Growth FY15
Total Lending Growth FY15 Asset Growth by Segment versus System (x system) (% growth) 0.8 BOQ System 12.4 9.9 9.2 7.9 7.5 7.9 7.1 0.3 0.3 4.8 2.4 -0.1 FY13 FY14 FY15 Housing (total) Housing (owner Housing (investor) Business Asset finance occupier) x system 0.9x 1.7x 0.5x 0.9x Significant Note: Incl
Slide 7: Key commercial loan book metrics
Key commercial loan book metrics • $43m Cash earnings ahead of $38m disclosed at acquisition guidance Announcement FY15 guidance performance • Loan growth momentum maintained Lending growth 11-13% 14% • On-balance sheet mortgages ahead Asset Spread 4.70% Slightly above of target BDD/GLA Mid 20s In l
Slide 8: Anthony Rose
ANTHONY ROSE Chief Financial Officer
Slide 9: Cash earnings growth driven by better quality business
• Cash earnings growth driven by better quality business - higher NIM and lower impairments • Solid momentum with 7.5% annualised earnings growth rate from 1H15 to 2H15 FY15 v FY14 ex-BOQ 1H15 2H15 2H15 v 1H15 FY15 Group FY15 v FY14 Specialist Net interest income $448m $459m 2% $907m 19% 3% Non inte
Slide 10: BOQ Specialist Income Statement
• Integration completed and FY15 EPS accretion target of 2% exceeded • 2H15 Cash earnings increase of 26% BOQ Specialist Income Statement 22% FY15 ( ) Net interest income $129m Non interest income $12m Total income $141m Operating expenses ($71m) Underlying profit $70m Loan impairment expense ($8m)
Slide 11: Total lending up 7%, driven by new channels
• Total lending up 7%, driven by new channels • Diversification of lending portfolio continues – QLD below 50% for the first time (from 60% FY12) 41.0 38.4 34.6 35.3 (1) Includes BOQ Specialist from acquisition in 2014 11
Slide 12: Housing growth supported by broker expansion and BOQ Specialist
• Housing growth supported by broker expansion and BOQ Specialist • Balanced approach to owner occupied & investor lending • Branch network originations up year-on-year with smaller footprint Housing loan growth ($m) 1,869 FY15 0.9x system BOQ BOQ Specialist (1) Includes BOQ Specialist 12
Slide 13: Broker growth trajectory has returned
• Broker growth trajectory has returned with industry-wide changes to serviceability now in place Prudential Practice Guide on Industry residential mortgage lending changes in released serviceability (1) Source: AFG Competition Index 13
Slide 14: Commercial loan & leasing growth
Commercial loan & leasing growth ($m)(1) • Subdued economic conditions & lack of business confidence 698 • Not compromising credit quality or margin for growth BOQ Finance • Focus on niche segments 414 BOQ Specialist BOQ Business (1) BOQ Specialist growth for FY14 is a one-month growth figure follow
Slide 15: Continued to improve customer deposit mix
• Continued to improve customer deposit mix (portfolio up 3%) • Transaction account growth of 14% and shift away from higher cost at-call savings 42.5 43.5 43.4 9.3 38.7 8.6 7.9 8.0 68% 69% 66% 66% Deposits to Loans ratio 15
Slide 16: Maintained NIM in a contracting market
• Maintained NIM in a contracting market • Dynamic market – margins playing out differently across segments 2.26% 2.26% 3rd Party costs ( ) ( ) NIM 16
Slide 17: St Andrew's Insurance contribution lower
• Banking income up $13m including BOQ Specialist contribution of $12m in FY15 • Virgin Money performing to expectations 96 88 and contributing to Other Income 82 84 • St Andrew’s Insurance contribution lower as expected 17
Slide 18: Cost to income ratio rebased at 45%
• Cost to income ratio rebased at 45% • 1H15 impacted by one-off property costs and CRM impairment • Amortisation profile rising with investment in digitisation 256 135 213 105 108 1.7% underlying 84 cost growth 68 61 60 62 18
Slide 19: Overall portfolio quality improving
• Overall portfolio quality improving • BOQ Finance uptick driven by QLD/WA mining exposed customers; majority of portfolio performing well Mining related increase (1) Includes BOQ Specialist 19
Slide 20: Down 19%
Down 298 293 19% 110 259 237 88 82 74 20
Slide 21: Good reduction in 30-day Housing arrears
• Good reduction is 30-day Housing arrears • BOQ Finance arrears showing improvement on 1H15 (1) Including BOQ Specialist (2) Housing including Lines of Credit 21
Slide 22: Quality continues to improve under revised risk appetite
• Quality continues to improve under revised risk appetite • Historical portfolio weighting to Investor loans (42%), with FY15 settlements 37% • Investor lending growth well below 10% level being monitored by APRA Portfolio metrics (%) 2H14 1H15 2H15 Settlement metrics (%) 2H14 1H15 2H15 Owner occup
Slide 23: LVRs managed across geography, density, size
Housing portfolio BOQ Finance Industry exposures • LVRs managed across geography, density, size and value with support of LMI and Housing industry data providers • No problem signs emerging in QLD & WA regional housing exposures Commercial & Leasing portfolio • No issues emerging • Limited exposure
Slide 24: Group & business unit appetite
• Group & business unit appetite Basel II: Advanced Accreditation embedded • Potential path to partial/staged • Basel II compliant credit risk models accreditation • Portfolio management & reporting • Well placed to commence formal • Governance framework program of work when benefits are • ALM syste
Slide 25: Current level of ROTE capable of supporting higher levels of growth
• Current level of ROTE capable of supporting higher levels of growth • Remain well capitalised relative to peers ( ) ( ) ( ) ( ) ( ) Underlying capital generation (1) Cash Earnings has been adjusted for one-off non-recurring items. Underlying RWA growth excludes the one-off impacts of APS210 transi
Slide 26: EPS growth has tracked DPS growth
• EPS growth has tracked DPS growth - this trend is expected to continue • We will move to a more conventional dividend profile with more conservative 1H dividend EPS CAGR 13% DPS CAGR 13% 26
Slide 27: Jon Sutton
JON SUTTON Managing Director & CEO
Slide 28: Laying the foundations
FY15 Laying the foundations • Restoring the balance sheet • Opening new distribution channels • Risk frameworks & culture • Refreshed branding • Compliance • Niche market acquisitions – Virgin Money, BOQ Specialist Digitising & transforming • Back office digitisation • Building online capability • N
Slide 29: National economic growth and confidence subdued
National economic growth and Regulatory State economic confidence subdued performance mixed & environment regional differences evolving across Queensland 29
Slide 30: Vision … Strategy … FY16 priorities …
Vision … Strategy … Focus on niche segments that value a more intimate banking relationship There’s always a better FY16 priorities … Customer in charge Grow the right way way Loved like no other 1. Expand accredited 1. Continue to increase 1. Roll out new Lending 1. Instill sales and service broker
Slide 31: Pleasing performance in FY15
Pleasing performance in FY15 Growth returning with more upside potential BOQ Specialist above expectations FY16 a key year for transformation delivery Outlook positive in challenging markets 31
Slide 32: First possible to LOVE A BANK
Firs possible to LOVE A BANK