Liberty Financial Group Ltd · ASX:LFG
Liberty Financial — FY2024 Earnings Presentation
40 slides from Liberty Financial's earnings presentation, Aug 26, 2024
Slide 1: Liberty Financial Group FY24 Full Year Results
Liberty Financial Group FY24 Full Year Results 26 August 2024
Slide 2: Acknowledgement of Country
Acknowledgement of Country Liberty acknowledges the traditional owners of country throughout Australia. We acknowledge their continuing connections to the lands, waters, cultures and communities. We pay our respect to Elders past and present. In doing so we also acknowledge that sovereignty has neve
Slide 3: Presenting today
Presenting today James Boyle Peter Riedel Chief Executive Officer Chief Financial Officer |3
Slide 4: Agenda
Agenda 01 Overview 02 Results Analysis 03 Business Update 04 Outlook 05 Summary 06 Questions
Slide 5: Overview
O01 Overview
Slide 6: Overview
Overview Result reflects competitive environment % NIM lower but stabilising Portfolio growth through targeted diversification Investment grading rating upgraded to BBB with 11% ROE Higher bad debt provisions supporting customer hardship Strong and stable broker and customer net promotor score Conti
Slide 7: Financial Highlights
Financial Highlights % Underlying NPATA Net revenue NIM $132m ($187m) $583m ($590m) 2.51% (2.76%) (29%) (1%) (25bps) BDD Cost to income Distribution 25bps (13bps) 28.0% (26.9%) 25c (45c) +12bps +110bps (44%) |7 *Balances represent: FY24 (FY23) change between the periods
Slide 8: Operating Highlights
Operating Highlights Average financial assets New assets originated Impaired loans $14.1b ($13.2b) $5.7b ($5.4b) $309m ($198m) +7% +5% +56% Average FTE Staff Broker NPS Customer NPS 535 (546) 82 (82) 60 (59) (2%) -% +2% |8 *Balances represent: FY24 (FY23) change between the periods; NPS=Net Promotor
Slide 9: Results Analysis
02 Results Analysis
Slide 10: Profit Performance Full Year
Profit Performance Full Year Statutory NPATA ($m) Underlying NPATA ($m) $192.9 $186.5 $127.1 $132.0 FY23 FY24 FY23 FY24 Reduction in Underlying NPATA FY24 v FY23 explained by Impact of moving to full ownership of ALI • Reduction in net interest margin (25bps) partly offset by higher average • FY23:
Slide 11: Profit Performance Half Year
Profit Performance Half Year Statutory NPATA ($m) Underlying NPATA ($m) $83.0 $81.6 $69.6 $64.0 $63.1 $62.4 2H23 1H24 2H24 2H23 1H24 2H24 Reduction in Underlying NPATA in 2H24 v 1H24 explained by Impact of moving to full ownership of ALI • Reduction in net interest margin (9bps) partly offset by hig
Slide 12: Profit Drivers
Profit Drivers Total Revenue ($m) Loan Impairment (bps) Increase in impaired loans $731.9 13 driving higher specific $707.8 12 $635.6 11 provisions (10bps) Total revenue growth +15% (2H24 Increase in collective provision v 2H23) and +3% (2H24 v 1H24) (3bps) reflecting mix shift driven by increased y
Slide 13: Revenue
Revenue Average Assets ($b) Lending Income ($m) Average asset growth 7% (2H24 v $13.8 $14.3 2H23) and 4% (2H24 v 1H24) $44 $46 $13.3 driven by Secured and Financial $38 Services segments Movement in lending income between periods largely consistent New originations $2.8b in 2H24 with movement in new
Slide 14: Funding
Funding Cost of Funding Term Funding ($b) 6.14% 5.82% 2.3 10.4 1.5 10.3 5.17% 9.8 1.82% 1.79% 1.78% (1.6) (1.7) 4.03% 4.32% 3.39% 2H23 1H24 2H24 Jun-23 Repaid New Dec-23 Repaid New Jun-24 Issues Issues Average funding benchmark cost in 2H24 includes 4bps basis cost above RBA cash rate increase (not
Slide 15: Portfolio Risk
Portfolio Risk 30+ Day Delinquency 90+ Day Delinquency 3.79% 2.11% 3.14% 2.97% 1.47% 1.45% 2H23 1H24 2H24 2H23 1H24 2H24 Later-stage delinquency higher at Jun-24 v Jun-23 as small group Early-stage delinquency higher at Jun-24 v Jun-23 driven by higher of customers having difficulty catching up miss
Slide 16: Loan Impairment
Loan Impairment 2H23 (11 bps) 2H24 (13 bps) 6 5 9 4 6 -4 3 -5 Realised Loss Specific Specific Collective Specific Specific Provision Provision Provision Realised Provision Provision Collective (Release) (Increase) Loss (Release) (Increase) Provision 1H24 (12 bps) 7 5 5 Impairment expense 13bps in 2H
Slide 17: Loss Provisions
Loss Provisions Portfolio by Stage ($m) Collective Provision Provisions by Nature ($m) by Stage ($m) $98 $14,638 $88 $75 $74 $13,531 $14,025 $71 Increase in specific and $62 $75 $71 collective provisions reflecting $62 $13,950 mix shift towards Secured and $12,950 $13,477 $56 $23 Financial Services
Slide 18: Expected Credit Loss
Expected Credit Loss ECL by Segment ECL Economic Scenarios ($m) $4.8 $0.5 $75.4 $152 ($1.4) $71.5 $15.6 $15.1 $75 $61 $53 $47.8 $52.6 ECL Movement (-) ($22m) ($14m) $77m Calculated 100% 100% 100% $8.6 $7.2 ECL upside baseline downside Expected Dec-23 Residential Secured Fin Serv Jun-24 Loss Economic
Slide 19: Operating Expenses
Operating Expenses Operating expenses ($m) 2H23 1H24 2H24 Relatively stable net revenue Personnel 47 47 46 throughout the period Stable personnel costs, with wage Other 33 37 33 inflation in 2H24 offset by lower average FTE Cash expenses 80 84 79 Effective cost management in 2H24 IP amortisation 6 6
Slide 20: Distribution
Distribution 49c 45c 28c 24c Final distribution 13 cents for the 7-month 25c period to 30-Jun-24 to be paid 30-Aug-24 FY24 distribution 25 cents provides 6.6% yield 13c based on security price of $3.76 (28-Jun-24) 21c 21c FY24 payout ratio 66% of NPAT 12c FY22 FY23 FY24 Final Interim | 20
Slide 21: Financial Position
Financial Position $m Jun-23 Jun-24 All wholesale facilities due for renewal in FY24 extended Cash 1,342 941 ($5.4b), with limit increases on existing facilities ($0.8b) Financial assets 13,535 14,638 New facilities established to support anticipated growth in Secured and Residential ($1b) Loans to
Slide 22: Business Update
O03 Business Update
Slide 23: Business Update
Business Update Record group originations with continued portfolio growth Residential originations recovering and discharges slowing Continued growth in SME and SMSF lending Auto momentum supported by new distribution partnerships Fin Services benefitting from continued growth in PL lending Ceased w
Slide 24: Segment Loan Origination
Segment Loan Origination Residential ($m) Secured ($m) $1,510 $1,538 $1,125 Record FY24 originations ($2.1b) FY24 originations ($3.0b) $1,047 $985 with 5% increase from FY23 $1,301 consistent with FY23 12% decrease in 2H24 v 1H24 Increase in 2H24 v 1H24 (2%) reflecting increased competitive reflecti
Slide 25: Segment Loan Portfolio
Segment Loan Portfolio Residential ($m) Secured ($m) $8,093 $8,033 $5,655 $7,905 $5,276 $4,732 Portfolio growth in 2H24 v 1H24 as Continued growth in Secured loan credit growth improves and portfolios as new origination higher discharges stabilise than discharges and amortisation 2H23 1H24 2H24 2H23
Slide 26: Relative Value Drivers
Relative Value Drivers Net Interest Margin Cost to Income Ratio 2.51% 65.9% 57.8% 55.0% 1.99% 1.99% 2.00% 1.83% 50.4% 49.9% 48.8% 1.72% 1.75% 45.2% 46.1% 1.63% 45.0% 1.55% LFG Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Non-Bank 1Non-Bank 2 LFG Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Non-Bank 1Non-B
Slide 27: ESG, People and Culture
ESG, People and Culture Employer of the year (Women in Finance) Gold Employer Status (AU LGBTQIA+ Inclusion Awards) Innovate RAP endorsed (Reconciliation Australia) Gender pay gap 15% (industry average 29%) Preparation for Australian Sustainability Reporting 93% staff proud to work at Liberty | 27
Slide 28: Outlook
04 Outlook
Slide 29: Outlook
Outlook Economic indicators support portfolio growth Elevated customer hardship support ongoing Increasing bad debts from asset mix and hardship % NIM stabilising Automation to improve operational efficiency Investment in broker and customer digital experiences | 29
Slide 30: Summary
05 Summary
Slide 31: Summary
Summary Diverse customer solutions driving portfolio growth Leading peer NIM delivering leading return on assets Continued focus on exceptional service and cost to serve Strong liquidity and capital position to support growth Continuing investment in diversifying customer solutions Ongoing investmen
Slide 32: Questions
06 Questions
Slide 33: Appendix
Appendix
Slide 34: Who is LFG?
Who is LFG? Liberty Financial Durable Business Model Diversified Portfolio Started 1997 and only investment Advanced risk-management grade non-bank (BBB/stable/A-3) capabilities Pioneered specialty finance industry Proprietary technology supports in Australia and New Zealand operations $14.6b Over 5
Slide 35: Products and Services
Products and Services Residential Finance Financial Services Australian mortgages Personal loans • Personal loans in Australia • Prime and custom lending for residential owner occupier and investment properties SME loans • SME loans in Australia New Zealand mortgages • Prime and custom lending for r
Slide 36: Segment Performance
Segment Performance Closing Portfolio Net Contribution 3% 4% 5% 5% 6% 8% 14% 12% 10% 11% 29% 32% 35% 38% 43% 39% 41% 45% 51% 54% 68% 64% 60% 57% 55% 49% 45% 43% 39% 35% 2H22 1H23 2H23 1H24 2H24 2H22 1H23 2H23 1H24 2H24 Residential Secured Fin Services Residential Secured Fin Services Net Revenue 33%
Slide 37: Reconciliation Statutory to Underlying
Reconciliation Statutory to Underlying $m FY23 FY24 $m FY23 FY24 Statutory NPAT 181.1 115.3 Statutory NPAT 181.1 115.3 IP amortisation 11.8 11.8 IP amortisation 11.8 11.8 Statutory NPATA 192.9 127.1 Statutory NPATA 192.9 127.1 MPRE sale-related adjustments Commission income (42.5) (21.4) Commission
Slide 38: Statutory P&L
Statutory P&L $m FY23 FY24 Interest income on financial assets measured at amortised cost 962.7 1,206.5 Interest income on financial assets measured at fair value 2.6 3.0 Effective yield fee income on financial assets measured at amortised cost 39.9 43.7 Other financial income 225.5 205.7 Other inco
Slide 39: Disclaimer
Disclaimer The information provided in this presentation and any information supplied in connection with this No offer of securities presentation (“Presentation”) has been prepared by Liberty Financial Group Limited (ACN 125 611 574) This Presentation is not, and does not constitute, an offer to sel
Slide 40: Thank you
Thank you
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