Slide 1: 1H23 Results
RESULTS Rebecca James | CEO Adrian Fisk | CFO 23 February 2023 Authorised for release by the hummgroup Board of Directors humm Group Limited, ACN 122 574 583 Level 1, 121 Harrington Street, The Rocks, Sydney NSW 2000
Slide 2: Core Strength – In Two Businesses
1H23 RESULTS // FEBRUARY 2023 CORE STRENGTH – IN TWO BUSINESSES BIGGER TICKET ROBUST CREDIT COST STRONG BALANCE PROFITABLE FINANCIER PERFORMANCE REDUCTION SHEET POSITION GROWTH $103m $38.5m $3.8b of unrestricted cash Normalised Cash Profit 1.95% $14.9m (after tax) in 1H23 +2% on pcp in receivables +
Slide 3: Agenda
1H23 RESULTS // FEBRUARY 2023 01 | COMMERCIAL UPDATE AGENDA 02 | CONSUMER FINANCE 03 | GROUP FINANCIALS 04 | SUMMARY 3
Slide 4: To Be the Favoured Way to Pay for Bigger Purchases
1H23 RESULTS // FEBRUARY 2023 TO BE THE FAVOURED WAY TO PAY FOR BIGGER PURCHASES CONSUMER FINANCE #1 POS financer for ANZ leading provider POSITIONING transactions over $500 of specialist asset finance CORE EXPERTISE RECEIVABLES $1.84bn $1.94bn >> Instant credit decisioning VERTICALS/ Health // Car
Slide 5: Performance Drivers
1H23 RESULTS // FEBRUARY 2023 PERFORMANCE DRIVERS CLOSURE OF COST OUT MARGIN VOLUME NON-CORE PRODUCTS INITATIVES PRESSURE GROWTH Products run-down by $14.9m in costs removed Commercial Front book NIM Volume growth 30 June 2023 between 1H23 and 1H22 higher than prior 12-month period across all produc
Slide 6: Normalised Cash Profit to Cash NPAT Walk
1H23 RESULTS // FEBRUARY 2023 NORMALISED CASH PROFIT TO CASH NPAT WALK 1 Ireland and 45.0 8.2 Canada Closed bundll NZ and hummpro. Paused 40.0 38.5 origination on bundll (4.0) AU to consolidate with 12.5 (0.2) 35.0 humm AU. humm NZ closure executed (4.4) 30.0 in 1Q23 19.2 Consumer 25.0 Companion pro
Slide 7: Commercial Update
O01 COMMERCIAL UPDATE —
Slide 8: Non-Bank Lender Tipping Point
1H23 RESULTS // FEBRUARY 2023 NON-BANK LENDER TIPPING POINT MORE SMEs CHOOSE NON-BANKS BROKER CHANNEL DIFFERENTIATED APPROACH TIPPING POINT REACHED WHY DO SMEs USE BROKERS? BROKER ONLY >> Total addressable market for equipment >> Convenience >> Best service provider to brokers finance $45b1 in AU an
Slide 9: Invest & Grow Broker Channel
1H23 RESULTS // FEBRUARY 2023 INVEST & GROW BROKER CHANNEL >> ANZ’s leading provider of specialist asset finance with over $1.94b in receivables1 >> Primarily offers equipment finance to growing SMEs to fund the purchase of revenue-generating assets. >600k SMEs within the target customer segment >>
Slide 10: Growth and Margin
1H23 RESULTS // FEBRUARY 2023 GROWTH AND MARGIN QUARTERLY VOLUMES: AU AND NZ COMMERCIAL EXCELLENT GROWTH MOMENTUM >> Onboarded 120 new brokers and increased receivables to $1.94b >> Automation driving efficiencies and operational leverage >> Seasonal peak of 4Q22 due to end of financial year tax inc
Slide 11: Strong Credit Performance
1H23 RESULTS // FEBRUARY 2023 STRONG CREDIT PERFORMANCE SECTOR CONCENTRATION BROAD BASED SECTOR EXPOSURE >> Industry priorities in logistics, civil engineering and agriculture >> Focus on assets with strong retained value and strong demand on the re-sale market >> Low concentration risks >> Average
Slide 12: Significant Opportunity in NZ
1H23 RESULTS // FEBRUARY 2023 SIGNIFICANT OPPORTUNITY IN NZ QUARTERLY VOLUMES (NZ$M): NZ BROKER LED STRATEGY GAINING MOMENTUM >> Acceleration of the adoption of the broker led equipment finance model while maintaining existing profitable channels >> Mirroring the success of the Australian model with
Slide 13: Consumer Finance
02 CONSUMER FINANCE
Slide 14: Consumer Finance Sector Dynamics
1H23 RESULTS // FEBRUARY 2023 CONSUMER FINANCE SECTOR DYNAMICS COMPETITIVE LANDSCAPE TREASURY REVIEW – RESPONSIBLE LENDING Merchants and customers still in love with interest free hummgroup overall supports the intent of the Options Paper instalment payments. in increasing consumer protection and wa
Slide 15: Our Consumer Finance Business
1H23 RESULTS // FEBRUARY 2023 OUR CONSUMER FINANCE BUSINESS 2% $1.84B RECEIVABLES $44m 'Big things' 'Little things' POSITIONING • Small ticket ‘Pay in 5’ Point of sale interest free instalments • Average ticket $4,500 • Reduced competition • Average ticket $250 • Highly competitive MARKET • Leading
Slide 16: NZ Cards: Receivables Returning to Growth
1H23 RESULTS // FEBRUARY 2023 NZ CARDS: RECEIVABLES RETURNING TO GROWTH 1H23 • $381m volume up 6% on PCP, with customer NZ MARKET PAYDOWNS – BALANCES >90 DAYS PERFORMANCE spending habits normalising after the pandemic 80 70 • A 10bps improvement in net loss with improved 60 customer arrears 50 40 •
Slide 17: AU Cards: Ready for the Travel Rebound
1H23 RESULTS // FEBRUARY 2023 AU CARDS: READY FOR THE TRAVEL REBOUND 1H23 • Volume growth of 19% on pcp as customer spending AU CARDS VOLUME (A$M) PERFORMANCE behaviours begin to normalise following the THE RETURN OF TRAVEL pandemic – however still below pre-COVID-19 levels 416 • Receivables growing
Slide 18: POS Payment Plans: Focus on Profitable 'Big Ticket'
1H23 RESULTS // FEBRUARY 2023 POS PAYMENT PLANS: FOCUS ON PROFITABLE ‘BIG TICKET’ 1H23 • Volume increase reflects the ‘Big things’ growth focus PosPP VOLUME (A$M) PERFORMANCE supported by companion small ticket e-commerce purchases HUMM AU BT VOLUME AND FRONT BOOK YIELD • humm AU ‘Big things’ volume
Slide 19: Group Financials
03 GROUP FINANCIALS
Slide 20: Hummgroup Financial Performance
1H23 RESULTS // FEBRUARY 2023 HUMMGROUP FINANCIAL PERFORMANCE WE HAVE CHANGED THE WAY WE COMMUNICATE OUR RESULTS NORMALISED CASH PROFIT AFTER TAX GIVEN THE SIGNIFICANT MOVEMENTS OVER THE PERIOD Normalised cash profit represents statutory net profit after tax, adjusted for: • Material infrequent item
Slide 21: Hummgroup Financial Performance
1H23 RESULTS // FEBRUARY 2023 HUMMGROUP FINANCIAL PERFORMANCE NORMALISED CASH PROFIT (AFTER TAX) UP 2% TO $38.5M CASH NPAT • Gross income of $243.7m a 10% increase on pcp HUMMGROUP ($M)1 1H23 1H22 MVMT • Net operating income down 8.9% due to margin compression, competitive pricing and Gross income 2
Slide 22: Committed to Cost Transformation
1H23 RESULTS // FEBRUARY 2023 COMMITTED TO COST TRANSFORMATION HUMMGROUP OPERATING EXPENDITURE STRONG PROGRESS ON COST REDUCTIONS 110.0 108.2 • Marketing reductions of $6.9m from the closure of suspended products, humm UK and lower spend on ‘Little things’ and the focus on big ticket PosPP 105.0 $14
Slide 23: Cost to Income: Committed to Cost Transformation
1H23 RESULTS // FEBRUARY 2023 COST TO INCOME: COMMITTED TO COST TRANSFORMATION COST TO INCOME RATIO1 COST TO INCOME RATIO IMPACTED BY LOWER NOI • Cost to income ratio is calculated as Operating Costs (Employment Costs, Marketing, Depreciation and Other Operating Costs) as a percentage of Net Group C
Slide 24: Credit Risk Management
1H23 RESULTS // FEBRUARY 2023 CREDIT RISK MANAGEMENT DATA AND TECHNOLOGY DRIVING SUSTAINABLE IMPROVEMENTS GROUP • Net loss/ANR of 1.95% down 85bps reflecting our strength in credit decisioning and PRODUCT 1 DENOMINATOR 1H23 1H22 MVMT management practices. This is a historical low for net loss across
Slide 25: AASB9 Provisioning Movements
1H23 RESULTS // FEBRUARY 2023 AASB9 PROVISIONING MOVEMENTS $M 1H23 1H22 MVMT NET LOSS REDUCTION OF $6.3M ON PCP 1 Net loss 34.4 40.7 (6.3) • Net loss of $34.4m decreased by $6.3m on pcp demonstrating improved quality Macro provision 1.1 (6.0) 7.1 of receivables book Provision movement 4.0 (11.1) 15.
Slide 26: Strong Balance Sheet to Fund Growth
1H23 RESULTS // FEBRUARY 2023 STRONG BALANCE SHEET TO FUND GROWTH WHOLESALE FUNDING FACILITIES WHOLESALE FUNDING FACILITIES • Well established funding platform a strategic differentiator against peers with increased capacity to support growth 1,115 • 2 new warehouse facilities executed in the period
Slide 27: NIM Impacted by Increased Cost of Funds and Pricing Pressures
1H23 RESULTS // FEBRUARY 2023 NIM IMPACTED BY INCREASED COST OF FUNDS AND PRICING PRESSURES PRICING AND CAPITAL INITIATIVES TO ADDRESS ENVIRONMENT MARGIN PRESSURE • Unprecedented pace of rises to base interest rates beginning in 3Q22 .0% – +300bps in Australia – +400bps in New Zealand .0% • Highly c
Slide 28: Commercial
1H23 RESULTS // FEBRUARY 2023 COMMERCIAL COMMERCIAL STRONG MOMENTUM IN COMMERCIAL SEGMENT $M 1H23 1H22 V PCP • Normalised Cash Profit (after tax) of $19.3m up 12% on pcp • 51% increase in Gross Income to $86.1m from strong volume with improvement Gross income 86.1 57.1 51% in yield in the first half
Slide 29: Flexicommercial
1H23 RESULTS // FEBRUARY 2023 FLEXICOMMERCIAL FLEXICOMMERCIAL FLEXICOMMERCIAL 1H23 2H22 1H22 1H23 2H22 1H22 AUSTRALIA NEW ZEALAND Volume (A$m) 638.7 589.1 393.9 Volume (A$m) 106.1 74.4 38.9 Number of transactions 5,664 5,341 4,322 Number of transactions 1,814 1,827 1,618 Product yield (%) 9.8 9.2 10
Slide 30: Consumer Finance
1H23 RESULTS // FEBRUARY 2023 CONSUMER FINANCE CONSUMER FINANCE REDUCED EARNINGS IN A CHALLENGING OPERATING ENVIRONMENT Normalised CPAT of $19.2m; down 7.0% (1H22: $20.7) a result of: $M 1H23 1H22 V PCP • Margin compression as pricing increases have lagged cost of funds increases Gross income 157.6
Slide 31: Consumer Finance: humm Australia
1H23 RESULTS // FEBRUARY 2023 CONSUMER FINANCE: HUMM AUSTRALIA HUMM AUSTRALIA (‘BIG THINGS’) 1H23 2H22 1H22 HUMM AUSTRALIA (‘LITTLE THINGS’) 1H23 2H22 1H22 Volume (A$m) 297.4 237.8 275.7 Volume (A$m) 137.1 152.6 149.2 Receivables (A$m) 620.8 601.0 614.6 Receivables (A$m) 43.9 49.2 42.9 Product yield
Slide 32: Consumer Finance: Cards
1H23 RESULTS // FEBRUARY 2023 CONSUMER FINANCE: CARDS NEW ZEALAND CARDS 1H23 2H22 1H22 AUSTRALIA CARDS: HUMM90 1H23 2H22 1H22 Volume (A$m) 381.1 334.6 359.2 Volume (A$m) 266.0 254.4 223.9 Receivables (A$m) 606.6 572.4 628.9 Receivables (A$m) 437.8 435.2 428.0 Interest bearing balances (%) 60.3 59.5
Slide 33: Summary
04 ~SUMMARY
Slide 34: Outlook
1H23 RESULTS // FEBRUARY 2023 OUTLOOK PROFITABLE STRONG POSITIVE EXECUTION RISING COST GROWTH CAPITAL AND CREDIT OF COST OF FUNDS BALANCE OUTLOOK SAVINGS SHEET POSITION 34
Slide 35: Disclaimer
1H23 RESULTS // FEBRUARY 2023 DISCLAIMER No recommendation, offer, invitation or advice and its related bodies corporate, directors, officers, employees, advisers and agents disclaim all This presentation is not a financial product or investment advice or recommendation, offer or liability and respo
Slide 36: Thank You
THANK YOU