Bendigo & Adelaide Bank Ltd. · ASX:BEN

Bendigo & Adelaide Bank — FY2017 Earnings Presentation

44 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 14, 2017

  1. Slide 1: Results Presentation for the full year ended 30 June 2017

    For personal use only Results Presentation For the full year ended 30 June 2017 1

  2. Slide 2: Disclaimer

    Disclaimer This document is a presentation of general background information about the Group’s activities current at the date of the presentation. It is information in a summary form and no representation or warranty is made as to the accuracy, completeness or reliability of the information. It is t

  3. Slide 3: Overview, Financial performance, Summary and outlook, Appendices

    For personal use only Overview Financial performance Summary and outlook Appendices 3

  4. Slide 4: Mike Hirst, Group Managing Director

    For personal use only Mike Hirst Group Managing Director 4

  5. Slide 5: Our FY17 result

    Our FY17 result For personal use only Financial performance  Statutory profit after tax $429.6m  Net interest margin down 1bp to 2.22% year on year  Cash earnings of $418.3m  Net interest margin up 8bps to 2.26% half on half  Cash earnings per share 88.5¢  Cost to income down 2%2 to 56.1%  Fu

  6. Slide 6: Results drivers

    Results drivers For personal use only Productivity driven by Markets return to profitable pricing investment in new systems Ave Margin 4.3% • GL & HRP • Mobile 2.22% deposit • Lending platform Exit Margin growth • BPM • Risk 2.34% ‘Most Trusted’ #1 customer Portfolio acquisition flexibility supporte

  7. Slide 7: Most customer connected bank

    Most customer connected bank Rated Top For personal use only Bank in 6 out 2017 of 8 Victorian Categories - #1 in Forrester’s Corporate Mozo People’s Choice Citizen of Awards1 Australian Customer the Year2 Experience Index3 Leveraged Equities5 CANSTAR Innovation  - Highest Overall Stockbroker Satis

  8. Slide 8: Investment Profile

    Investment Profile Industry For personal use only Challenge Trust Technology Regulation Customer New Markets Risk Productivity Branches Macro Prudential BEN Opportunity 8

  9. Slide 9: Richard Fennell, Chief Financial Officer

    For personal use only Richard Fennell Chief Financial Officer 9

  10. Slide 10: Financial performance - at a glance

    Financial performance - at a glance Change Change For personal use only FY17 FY16 FY17 – FY16 2H17 - 1H17 Cash earnings $418.3m $401.4m 4.2% 5.6% Statutory NPAT $429.6m $415.6m 3.4% 5.6% Cash EPS 88.5¢ 87.3¢ 1.2¢ 1.5¢ Net interest margin 2.22% 2.23% (1 bps) 8 bps Expense to income ratio 56.1% 58.1%

  11. Slide 11: FY17 growth outcome

    FY17 growth outcome For personal use only Source: APRA statistics June 2017 Note - Data is based on 12 month growth and BEN includes Rural Bank 11

  12. Slide 12: Housing lending growth

    Housing lending growth  Strong growth across Retail channel 10% Investor For personal use only growth limit  2H17 growth has slowed as BEN aligns with new APRA limits  Investor credit growth sub 10%  Interest only flows reducing following price changes  Will achieve sub 30% interest only flows

  13. Slide 13: Cash earnings growth

    Cash earnings growth  For personal use only Strong margin expansion in 2H17  Efficiency focus delivering flat costs  Increased credit costs from Great Southern and Business Banking  Trading book contribution in FY17 of $19.8m ($7.2m in 2H17)  Cash earnings include Homesafe contribution on reali

  14. Slide 14: Net interest margin

    Net interest margin  Disciplined approach to front book mortgage pricing For personal use only  NIM pressure in 1Q17 reflected full impact of May and August cash rate decrease and additional liquidity for Keystart portfolio acquisition  Asset pricing favourable following market repricing in Augus

  15. Slide 15: Other Income

    Other Income  Trading Book contribution of $12.6m in 1H17, followed by $7.2m in 2H17  Commissions income increase from volume of third party products sold, including insurance and wealth For personal use only  Lower volumes of foreign exchange during FY17, launch of new travel card in 1H18  Laun

  16. Slide 16: Homesafe investment property portfolio

    Homesafe investment property portfolio  Average annual return on completed contracts since For personal use only inception 9.6%, pre funding costs  Proceeds on completed contracts continue to exceed pre-overlay values in FY17  Overlay reflects an assumed 3% increase in property prices for the nex

  17. Slide 17: Focus on efficiency

    Focus on efficiency For personal use only  Discretionary costs actively managed to support flat expenses outcome  118 FTE lower in FY17  Staff incentive accrual in 2H17 reflects strong business performance  Staff costs include redundancies of $4.2m (down $1.9m on FY16) 17

  18. Slide 18: Technology investment

    Technology investment  FY15 additions :  FY16 additions :  FY17 additions : For personal use only  Connect e-banking platform  Basel II advanced  Integrated General Ledger & accreditation HR platform  Online Account Opening  LINX CRM  Mortgage Broker lending  LINX CRM platform  Connect e-

  19. Slide 19: Business segment performance (cash earnings)

    Business segment performance (cash earnings)  Active margin management in all segments For personal use only  Community Bank balance sheet growth 9%2  Alliance Bank loan growth of 12%2  Managed funds up 10%2  Keystart NII contribution $11.3m  Strong cost control in all business lines  Increas

  20. Slide 20: Industry leading funding position

    Industry leading funding position For personal use only  Funding continues to be a strength providing flexibility for organic and inorganic asset growth  Retail deposits up 4.7% in FY17  LCR of 122% at 30 June 2017  Indicative NSFR ~110%  Increased activity by BEN in RMBS market in 2H17 Note -

  21. Slide 21: Strong CET1 organic growth in 2H17

    Strong CET1 organic growth in 2H17 For personal use only  Organic capital growth reflecting slower loan growth and increased RMBS activity in 2H17  Will achieve unquestionably strong through organic capital generation and DRP participation  S&P capital comparisons are insightful 1 2 1. Unrealised

  22. Slide 22: Bad and doubtful debts

    Bad and doubtful debts  BDD charge 12 basis points of gross loans, 8 basis points excluding Great Southern For personal use only  Lower BDD charge in 2H17 driven by Great Southern and business banking improved credit outcome  Impaired assets reduced by 19% year on year  Specific provision lower

  23. Slide 23: Great Southern paying down as expected

    Great Southern paying down as expected  Past due 90 days $79m at June 2017, a 50% reduction from June 2016  Specific and collective provisions at June 2017 were For personal use only $11.9m and $16.5m respectively  Material recoveries post bankruptcy being achieved, with greater than $20m recover

  24. Slide 24: Arrears remain benign

    Arrears remain benign For personal use only 1 Note - Data excludes commercial arrangement loans 1. Keystart included from Jun-17 24

  25. Slide 25: Mike Hirst, Group Managing Director

    For personal use only Mike Hirst Group Managing Director 25

  26. Slide 26: Delivering on strategy

    Delivering on strategy For personal use only 1. Broaden mobile face-to-face 1. End to end operational 1. Targeting growth markets aligned distribution excellence with our specialisation and experience 2. Deepen penetration into 2. Wealth cost to income 2. Aligned systems, processes, small business c

  27. Slide 27: Summary and outlook

    Summary and outlook For personal use only 1 Customers are our greatest advocate 2 Partner of choice 3 Continued investment in community 4 Building resilience with our people 5 Sustainable returns and a strong balance sheet 6 Positive operating environment 27

  28. Slide 28: Questions

    For personal use only Questions 28

  29. Slide 29: Appendices

    For personal use only Appendices 29

  30. Slide 30: Our vision, strategy and purpose

    Our vision, strategy For personal use only and purpose Our vision is to be We do this by: Australia’s most • Taking a 100 year view customer connected bank • Listening responding and Our strategy is to focus • Respecting every customer’s choice, on the success of our needs and objectives customers,

  31. Slide 31: Measures of success

    Measures of success For personal use only • New to lost customers • Diversity • Partner advocacy • Average products per • Staff engagement • Partner performance customer • Productivity • Customer advocacy • Credit loss % risk • Cash EPS weighted assets • ROTE • Liquidity & Funding • ROA • RAROC 31

  32. Slide 32: Our digital platform

    Our digital platform For personal use only Connected Connected Customers Mobile Platform miVoice Communities Protect + Pay Lendfast Lending Workflow Card Integrated Partners Platform management Digital wallet management Driven by Right-time Event based LINX CRM Customer Customer Insights insights cu

  33. Slide 33: A complete portfolio of businesses

    A complete portfolio of businesses For personal use only Brand Segment Business Provides a full range of consumer and business banking Local Connection products and solutions Partner Connection Third party banking, wealth and protection solutions Agribusiness Solutions for agricultural farm business

  34. Slide 34: Diverse geographic footprint

    Diverse geographic footprint For personal use only 544 branches 1 4 182 316 Community Bank® 44 52 14 4 43 1 11 1 2 24 14 21 16 51 8 16 4 84 140 11 3 9 12 34

  35. Slide 35: The Community Bank model

    The Community Bank® model 19 years old For personal use only  Over $165m in community grants1 since inception – delivering tangible benefits for these communities and our business  316 Community Bank branches with more than 90 in communities where there is no alternative provider  Proven, reliabl

  36. Slide 36: Alliance Bank loan & deposit growth

    Alliance Bank loan & deposit growth  30% growth in loan portfolio and 16% growth in deposit portfolio since March 2015 For personal use only  Two new entrants due for completion in FY18  Confidentiality agreements signed with two other credit unions  150 employees  35,000 customers  Innovative

  37. Slide 37: Homesafe investment property portfolio (based on statutory earnings)

    Homesafe investment property portfolio (based on statutory earnings) For personal use only FY14 FY15 FY16 FY17 ($m) ($m) ($m) ($m) Profit on sale $0.5 $1.0 -$0.1 $1.7 Discount $12.6 $15.6 $16.7 $18.4 Property valuations $42.2 $51.8 $76.7 $74.9 Portfolio overlay -$5.0 -$5.0 -$13.6 -$4.6 Total income

  38. Slide 38: Residential loan approvals

    Residential loan approvals 2 For personal use only  13% growth in Offset portfolio since June 2016  45% of home loan customers are ahead of minimum repayments, with 29% of customers three or more repayments ahead1 1. Excludes amounts held in Offset facilities 2. Data excludes Rural Bank, Rural Fin

  39. Slide 39: Specific provisions

    Specific provisions For personal use only Represented by Provision as % Partner of each Retail Business Delphi Great Rural Rural Alliance Consumer Connection BEN total portfolio’s Mortgages Lending Bank Southern Bank Finance Partners (ex GS) gross loans June 2017 0.02% 0.58% 0.49% 0.06% 0.22% 9.42%

  40. Slide 40: Funding

    Funding For personal use only Jun 2017 1. Company data 40

  41. Slide 41: Key capital ratios & residential LVR breakdown

    Key capital ratios & residential LVR breakdown For personal use only Jun-17 1H16 2H16 1H17 2H17 Common equity tier 1 8.24 8.09 7.97 8.27 Additional tier 1 2.44 2.31 2.20 2.22 Tier 1 Capital 10.68 10.40 10.17 10.49 Tier 2 1.98 1.81 2.03 1.97 Total regulatory capital 12.66 12.21 12.20 12.46 Risk weigh

  42. Slide 42: Secure and low risk loan portfolios

    Secure and low risk loan portfolios For personal use only Residential Mortgages2,3 Jun-17 Dec-16 Residential Mortgages2,3 Jun-17 Dec-16  98.4% secured Retail mortgages 57% 56% Mortgages with LMI 27% 28%  97.9% secured by mortgages and Third Party mortgages 43% 44% Average LVR 61% 61% listed securi

  43. Slide 43: Agribusiness

    For personal use only Agribusiness 43

  44. Slide 44: Contact

    Contact For personal use only Analysts Media Nicole Rooke Silvana Arena Head of Investor Relations Head of Public Relations Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 3 5485 6286 Tel: +61 8 8220 7784 Mob: +61 431 442 808 Mob: +61 402 110 445 Email: nicole.rooke@bend

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