Bnk Banking Corporation Limited · ASX:BBC
Bnk Banking — FY2021 Earnings Presentation
39 slides from Bnk Banking's earnings presentation, Aug 27, 2021
Slide 1: FY2021 Full Year Results
BNK Banking Corporation Limited ASX:BBC FY2021 Full Year Results August 2021 1
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, business plans and objectives of management. All such forward‐looking statements involve known and unknown risks, significant uncertainties, assumptions, contingen
Slide 3: Agenda
Agenda Investor Presentation FY21 01 02 Highlights & Strategy Financial Results Brett Morgan Andrew Kitchen CEO – Banking & Wholesale Group CFO 03 04 Aggregation Results & Outlook Bank Results & Outlook John Kolenda Brett Morgan CEO - Finsure CEO – Banking & Wholesale 05 06 Group Summary Appendices
Slide 4: Highlights & Strategy
Highlights & Strategy Brett Morgan Chief Executive Officer 4
Slide 5: Solid result across all key metrics
Solid result across all key metrics Underlying NPAT slightly ahead of guidance YoY change Underlying NPAT $7.1m ↑ 44.1% Cash NPAT $2.1m ↑ 46.8% Statutory NPAT $5.7m ↑ 48.0% Underlying EPS 7.4c ↑ 29.1% Net Income $38.5m ↑ 21.5% Net Interest Margin 167bps ↑ 27bps Cost to Income ratio 72.1% ↓ 6.1% Capi
Slide 6: BNK is positioned for growth
BNK is positioned for growth Key strategic initiatives in FY21 have created platform to drive growth Balance sheet bolstered with successful Bank market position continues to $13m equity raising and $10m Tier 2 strengthen with BNK-funded loan book subordinated note issue growth of 75.3% in FY21 to $
Slide 7: Strategy & Outlook
Strategy & Outlook Foundations in place for success Lending • Full lending model transformation in FY22 across prime and specialist programs transformation • First securitisation late FY22 accelerating • On Balance Sheet loan book growth of 50% in FY22 One of Australia’s • Broker numbers to surpass
Slide 8: FY2021 Full Year Results
FY2021 Full Year Results Andrew Kitchen Chief Financial Officer 8
Slide 9: Merger delivering underlying NPAT momentum
Merger delivering underlying NPAT momentum BNK's integration with Finsure is yielding strong results Underlying NPAT ($m) 7.1 Merger 4.9 3.6 -0.4 -1.0 FY17 FY18 FY19 FY20 FY21 9
Slide 10: NPAT Bridge ($m)
NPAT Bridge ($m) Excluding the impact of ATM losses, underlying NPAT up 58% YoY 10
Slide 11: Segment Performance
Segment Performance Aggregation Cash NPAT increased 60% YoY Bank’s Cash NPAT improved by 30% in 2H21 Underlying NPAT ($m) Cash NPAT ($m) 9.57 4.78 6.71 2.98 FY20 FY21 FY20 FY21 Underlying NPAT ($m) Cash NPAT ($m) FY20 FY21 FY20 FY21 -1.54 -1.77 -1.75 -1.96 -0.7 -0.7 -2.45 -2.66 NPAT exl. ATM ATM Cas
Slide 12: Aggregation Revenue
Aggregation Revenue Continued strong cash revenue momentum in Finsure Finsure YoY Revenue Excl. NPV ($m) 17.9 10.9 14.8 8.3 12.8 7.6 10.8 5.1 6.9 6.5 5.7 5.3 FY18 FY19 FY20 FY21 Commissions Fee Income 12
Slide 13: Impact of NPV Accounting
Impact of NPV Accounting Finsure and Bank White Label portfolios - Assumptions driving NPV valuations for Finsure and Bank Net Income FY20 FY21 Net Present Value (NPV) of contractual assets (000’s) 5,297 8,081 Finsure NPV 5,888 7,930 Bank NPV -592 151 Portfolio FY20 FY21 Finsure $45.4b $56.6b Bank*
Slide 14: Bank Net Interest Margin
Bank Net Interest Margin Growing NIM - Up 27bps YoY 14
Slide 15: Loan Book, Deposits & Net Interest Income
Loan Book, Deposits & Net Interest Income Net Interest Income growth of 53% Loan Book ($m) Deposit Book ($m) Net Interest Income ($m) 636 7.8 499 5.1 346 285 FY20 FY21 FY20 FY21 FY20 FY21 15
Slide 16: Credit Quality & Loss Provisions
Credit Quality & Loss Provisions Estimated Credit Losses (ECL) reduced by 4bps to 21bps Historical Credit Charges (% of loan book) Portfolio Hardship Rate (% of customers) 6.0% 0.06% 5.0% 0.04% 4.0% 0.02% 3.0% 0.00% 2.0% 2017 2018 2019 2020 2021 1.0% 0.0% Jul-20 Jan-20 Sep-20 Oct-20 Dec-20 Jan-21 Ap
Slide 17: Expenses ($m)
Expenses ($m) Cost to income ratio improved by 6% to 72% through prudent expense management 17
Slide 18: Well Capitalised
Well Capitalised $23 million raised in FY21 to support lending growth *Despite positive cash earnings in the year organic capital generation was negative. This is primarily due to investment in the securitization program and growth in 18 the loan book, both of which create capital deductions.
Slide 19: Aggregation Results & Outlook
Aggregation Results & Outlook John Kolenda Finsure CEO 19
Slide 20: Finsure Highlights
Finsure Highlights Market Leading Aggregation Platform Top 4 Mortgage Aggregator in Australia One of Australia’s fastest growing aggregators Settlements ($b) Featured in BRW fastest growing companies over 5 years 18.1 12.6 13.3 12.2 11.4 $56+ billion 9.3 Home loan portfolio servicing over 100,000 cu
Slide 21: Aggregation demonstrating strong profit and settlement growth
Aggregation demonstrating strong profit and settlement growth Broker Numbers (#) NPAT* ($m) 2,005 9.6 1,910 • NPAT of $9.6m FY21 1,667 up 43% YoY 1,583 1,328 6.7 • 2,005 brokers, 15.2% 1,082 increase YoY • 6-month settlements of $12.2b, up 48% YoY • Large investments in CY16 CY17 CY18 CY19 CY20 YTD
Slide 22: Drivers of Finsure growth
Drivers of Finsure growth Finsure has an industry-leading business services model offering comprehensive solutions that attract a wide range of brokers Industry leading service proposition – Driving a broad revenue base Flexible commissions Structure flexible based on the brokers’ needs • Transactio
Slide 23: Finsure Group product & services strategy
Finsure Group product & services strategy Full broker support model providing additional revenue Marketing Lead Generation 3rd Party services / App Broker Platform Packages Store Services Services Loan • SEO • Websites Software / Compliance / Processing • SEM • CoreLogic • Social media Training / Sa
Slide 24: Strategic Outlook
Strategic Outlook Building on our success Growth Finsure will continue to grow earnings through diversification strategy while focusing on continued organic and inorganic growth initiatives. Following similar trends as demonstrated over a 10-year track record Development • Apply AI to develop custom
Slide 25: Bank Results & Outlook
Bank Results & Outlook Brett Morgan Chief Executive Officer 25
Slide 26: The BNK funded loan book has grown by 64% over the last 6 months
The BNK funded loan book has grown by 64% over the last 6 months and 75% in FY21. The deposit book grew by 84% in FY21 BNK On Balance Sheet portfolio ($M) BNK Deposits ($M) 636 479 238 499.2 392 346 324 169 391.0 137 284.8 280.2 305.0 155 224 398 310 255 122 169 Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY
Slide 27: We continue to diversify the BNK-funded lending portfolio
We continue to diversify the BNK-funded lending portfolio Improved geographic mix and lending to owner occupiers On Balance Sheet Loans Portfolio By Loan Type Portfolio Mix By Loan Portfolio Mix By LVR Category FY21 FY21 FY21 80.01%- 90% FY21 Above 90% Other LVR LVR Commercial Consumer 5.4% 8.9% 2.9
Slide 28: Bank Transformation and Outlook
Bank Transformation and Outlook Over the last 12 months, we have made significant progress in transforming our lending business to generate higher returns FY20 FY21 FY22 FY23 White Label Lender Accelerate on balance sheet Continue prime on balance sheet Accelerate lending across lending lending bala
Slide 29: Group Summary
Group Summary 29
Slide 30: In summary…
In summary… Solid result delivered in FY21 Underlying NPAT up 44.1%, Cash NPAT up 46.8% Balance sheet strengthened $13m equity raise and $10m Tier 2 note issue Accelerating lending transformation Prime and specialist warehouse programs launched One of Australia’s fastest growing aggregators Continue
Slide 31: Appendix
Appendix 31
Slide 32: Group Financial Snapshot
Group Financial Snapshot Solid result in a challenging environment FY21 FY20 Change Group Underlying NPAT ($000's) 7,119 4,942 ↑ 44.1% Cash Earnings 2,120 1,444 ↑ 46.8% Cost to Income Ratio 72.1% 78.2% ↓ 6.1% Statutory NPAT ($000's) 5,659 3,824 ↑ 48.0% Bank Loan Spot Book Size ($000's) 499,190 284,7
Slide 33: Underlying to Statutory NPAT reconciliation
Underlying to Statutory NPAT reconciliation Group FY Financials - Reconciliation FY21 FY20 Data in $k's Overall Overall Underlying NPAT 7,119 4,942 Revenue Adjustments Net Other Income 57 4,069 Full Year Expense Adjustments Depreciation and Amortisation 573 480 Software Development Costs 1,832 2,281
Slide 34: Profit & Loss Statement
Profit & Loss Statement Underlying Group ($m) Aggregation Bank FY21 FY20 $ Var. % Var. Cost to Income (%) 78.2% Gross Revenue 72.1% Commission Income/(Exp.) 323.7 12.9 336.6 288.5 48.0 17% Interest Income/(Exp.) 0.0 11.1 11.1 10.2 1.0 10% Fees & Other Income 13.7 2.0 15.7 12.7 3.0 24% TotalGross Rev
Slide 35: Balance Sheet
Balance Sheet Group ($m) FY21 FY20 $ Var. % Var. Assets Cash & Equivalents 47.3 18.1 29.2 160.9% NPV Asset 505.7 387.2 118.5 30.6% Loans & Advances 540.0 283.6 256.4 90.4% Other Assets 228.9 145.2 83.6 57.6% Total Assets 1,321.8 834.1 487.7 58.5% Liabilities Deposits 635.6 345.8 289.9 83.8% Other Li
Slide 36: Board of Directors
Board of Directors Don Koch Chairman of the Board Mr Don Koch joined our Board of Directors as a Non-Executive Director in June 2019. Mr Koch is an accomplished senior executive with 30 years’ experience in the global financial services sector, both in board and senior management positions. He was C
Slide 37: Board of Directors
Board of Directors John Kolenda Executive Director & Finsure CEO Mr Kolenda was appointed a Director on 13 March 2018. Mr Kolenda is the Managing Director of Finsure Group and has extensive experience in the mortgage broking and aggregation sector. Finsure was ranked sixth in BRW Magazine’s Fast 100
Slide 38: Board of Directors
Board of Directors Elizabeth Aris Non-Executive Director Ms Aris was recently Group Executive, Enterprise & Government at TPG Telecom. Prior to that Ms Aris held senior executive positions at Tasmanet, Trujillo Technology Group, Alcatel-Lucent and Telstra, and consulting roles with Microsoft. Ms Ari
Slide 39: Board of Directors
Board of Directors Calvin Ng Non-Executive Director Mr Ng has significant investment banking, mergers & acquisitions and funds management experience. He is a co-founder and Managing Director of the Aura Group, a fast growing funds and wealth management firm managing and advising over A$850m in asset