Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 2004 Earnings Presentation
47 slides from Bank Of Queensland's earnings presentation, Apr 7, 2004
Slide 1: CU aE EEE TIPE BI MER UREN ORG) EI EEE STE Bene LL Leis
CU aE EEE TIPE BI MER UREN ORG) EI EEE STE Bene LL Leis La) i ee We Lae Le is | | ye y Bae Ey ay Le Lee eee Le iG ey Be Cee, Ge De 7 LO eg j Eo ; ae yy Co yy Le Lo L oo Le j 4 y Ly ye yy Le De De ay Z _ We PEE y Ly Le y Lo i _ 7 Y ey oo a oe Ly Z Bg . — ee < a. = ee a oe - _ 7 = <= = y Se SE Se eS S
Slide 2: Result highlights
: Retail deposits | Net interest income | Cost to income ratio ARB 1%pcp m55%pcp A35%pcp R42%pcp A23%PCp 65.1%pcp
Slide 3: Full Year Goal
Full Year Goal ROE 14% EPS Growth 10%-12% Cost to Income ratio 64% Branch Expansion Asset Growth Asset Diversification At 29 Feb 04 14.2% 11% 63.3% 12 new branches 55% increase in assets under management UFJ acquisition & business banking expansion ANNA
Slide 4: Underlying profit
| Underlying profit Cash EPS (Diluted) Interim dividend Impaired assets Branches $50m A 42%pcp 30¢ A 11%pcp 21¢ A 24%pcp 0.10% pcp 0.10% (of avg assets) 132 A 12 branches (since 31 Aug 03) A 24 branches (since 28 Feb 03)
Slide 5: Summary of Results
, Summary of Res % Change fi = tm verce Net Interest Income 62.2 88.2 42% Non Interest Income 38.9 47.9 23% Total Income 101.1 136.1 35% Total Expenses 65.8 86.1 31% Underlying Profit 35.3 50.0 42% Bad Debts 4.6 8.6 87% Profit Before Tax 30.7 41.4 35% Goodwill - 0.9 -% Income Tax 9.4 12.4 32% Net Pr
Slide 6: Profit Contributions
Profit Contributions $60m $50m $40m $30m ~- $20m $10m ~ 28 Feb Net Non Expenses Bad & Goodwill Income 2003 Interest Interest Doubtful Expense Tax Income Income Debts 6 New ideas in banking
Slide 7: Continued Growth in NPAT
Continued Growth in NPAT NPAT up 32% on pep and 20% on LH $10m $5m + 1H02 2H02 1H03 2H03 1H04 ew ideas in banking
Slide 8: Particularly strong growth in 1H04
Particularly strong growth in 1H04 42% up on pep and 25% up on 2H03 $50m $40m $30m $20m $10m $0m - 1H02 2H02 1H03 2H03 1H04 Underlying profit = Profit before bad debts expense, goodwill expense and income tax 8 ew ideas in banking
Slide 9: First-Half Highlights
First-Half Highlight Integrated acquisitions and synergies realised: ~ UFJ Finance ~ ATM Solutions. » Opened a further 12 branches. » Granted Australian Financial Services license (FSRA). » Core banking system ready for deployment. » US$250m EMTN funding from European & Asian markets. » Successful c
Slide 10: MY GY ATS AD SONS I SEIU
MY GY ATS AD SONS I SEIU yy fy My MI: _ HY yee yy Vy 7 ee _ . ye), ey, Uae Yee iy Zs ye i Uys Ia DO ee, Li Ly Lie Gye WS aay ae yy Pe) ; Vy a yay Ly Yip WY ee is Mey ys 7 ; VG ye yy Ms We ey Wee We Bee Q ie Woe = oy = = ee i Z Les LG y 4 i a Q a yy ; Le So Ss Se SESS < Se < a fy SS < oS ee yy i ee Z
Slide 11: Total Shareholder Return
older Return State Govt divested its shareholding _ commenced _ Total Cumulative Shareholder Return on $1,000 invested on 1 September 1998 Interstate expansion —_ announced © 41HO3 profit released expansion. pe 1 Ni \ - Mey ey Ss we F&F SF & N ay ny ey x % ¥ % v % — BOQ $2,619 $2,500 $2,300 $2,100 $
Slide 12: Cash EPS Performance
Cash EPS Performance | Cash EPS growth of 11% on pep i iu 20c i t 15c 10c -- 5c i Oc 1H02 2H02 1H03 2H03 1H04 Cash EPS = Diluted EPS before the impact of goodwill expense 12 ew ideas in banking
Slide 13: Return On Equity
aon Return On Equity 1H02 2H02 1H03 2H03 1H04 Cash ROE = ROE before the impact of goodwill expense 13 ideas in banking
Slide 14: YY Ger
LF Le Ll Le 7 YY Ger oo Ye MEY) Ee Up: Zh ee ee oe oo De ee. Ce Ta We So ey Be. We a yy, ee Ge is YEE Ly yy LO ey es Hh ee i ey: BU yay Le |. we ee yy, ay LD Yi ey Lege Cpe Gee es Vie Le ay Lye = iL. Ly Ee _ Lie cS SRE RSENS SS aS Se < | — = SNR SS oo SS y y : y y 7 i a y i Wy i iy q y y 7 y y xy ye
Slide 15: Sales (Loan Approvals)
Sales (Loan Approvals) Sales up 81% on pep and 24% on LH Exceeded total annual sales for FY02 $0b - 1H02 2H02 1H03 2H03 1H04
Slide 16: Assets Under Management Growing Strongly
Assets Under Management Growing Strongly $6.6b $5.8b L + 5% 1HO2 2HO2 1H0O3 2H0O3 1H04
Slide 17: Asset mix
60% 40% 9 ob SA Ab £4 7h en 5 se 5b 58% 20% 0% ~ 1H02 2HO2 1H03 2H03 1H04 @ Housing & Consumer # Business lf Treasury/Other Assets
Slide 18: Lending Growth
Lending Growth Housing Growth ~ 40% Business Growth ~ 45%, 38% i i | 35% (excluding impact of UFJ) 40% 40% * 0, - 30% 35% ~ 30% ~ 25% 2 = 7 023% - 25% r -* re 20% 7” fr 20% * be 0, eo 15% - 15% - 10% - 10% = = 8% - 5% eget - 5% f ¥ ’ ss 0% f * 7 7 0% 2001 2002 2003 2004 2001 2002 2003 2004 ——BOQ = @
Slide 19: Significant growth without compromising asset quality
Significant growth without compromising asset quality: -~ strong credit standards; -~ well secured SME lending and strength of other security positions; and ~— mortgage insurance. Minimal levels of low doc loans ~ $45m portfolio of low doc loans, < 1% of housing LUM. Impaired assets low at 0.10% of
Slide 20: Impaired assets
1HO02 2HO02 1HO3 2H03 1H04 0.15% ~ 0.13% 0.10% 0.05% 0.00% 1HO02 2H02 1H03 2H03 1H04 20 New ideas fy banking
Slide 21: Total Provisions increased by $14.8m in the half
Total Provisions increased by $14.8m in the half, largely due to maintaining the General Provision at approx 0.72% of RWA (0.5% of RWA when tax effected) ~ Specific Provision if $1.8m, General Provision tf $13m Healthy Provision Coverage $60m 5 1 t $50m $40m - T $30m 7 4x $20m 5 Times Coverage $10m
Slide 22: Bad debts expense $8.6m
$6m $4m $2m =~ $0m Expense $8.6m_ oh 1H02 1H02 1H03 2H03 1H04 » Underlying bad debts @ Increases in general provision 22 New ideas fy banking
Slide 23: Funding mix
100% 75% - 50% - 25% en $3.0b - 0 eh ee 41% 0% - 1H02 2H02 1H03 2H03 4H04 @ Retail = Wholesale & Other | Securitisation ~ Capital | 23 New ideas fy banking
Slide 24: Retail Deposits
Retail Deposits 19% growth in retail deposits on LH $2b - 14% T% $1b - $0b - HO2 _2H02 24 THOS, 13% _ 2H03 1H04
Slide 25: Ci tee Weel eeaee CSCS a RA ESAS a Sona ey Ae
Ci tee Weel eeaee CSCS a RA ESAS a Sona ey Ae yy ye Le zy yy LIU Le Le ae yy oy . ey Ve We A Ly gs ee 7 Lee. Ly Le De Liye a) Le MYEPI yyy Poy ye ey iy, Ye oy Ly Be Woe iy te yy ey Li yy 7 Yes ip oY Tae iy ys Y Wye i iy ] E a 2 We Tes oy eee ie i yy ae Wy Hy j Le ) yy 7 La oy Vi Gis Ca y — eS = | _
Slide 26: Net and non interest income
65% 1H02 2H02 1H03 2H03 1H04 @ Net Int Income = Non Int Income 26 New ideas fy banking
Slide 27: Net Interest Margin
Net interest Margin 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 1H02 2H02 1H03 2H03 1H04 27 ideas in banking
Slide 28: Margin pressure from timing issues
» Margin pressure from timing issues : 5.75% 5.50% §.25% §.00% 4.75% 4.50% -~ Lag in deposit growth ~ Negative cash/bill spread $8b ~» $7b ~ $6b $5b $4b $3b - v v it 7 $2b Ps1ap eo a Feb- Apr- Jun- Aug- Oct- Dec- Feb- 03 03) «03:03 03304 -@ On balance sheet loans “=~ Retail depos —& Cash == 30 Day B
Slide 29: Operating expenses
This half $86m 5% Operating Staff 29% 37% Last Half ; $73m “6%, Computer ccupancy Operating 21% 8% PCP Admin $66m 6% Staff Operating 34% Computer : Occupancy 23% 7% Computer 20% 29 New ideas fn banking
Slide 30: Cost to Income Ratio
Cost to Income Ratio 74% 72% 70% 68% -- 66% ~- 64% + 62% + 60% - 1H02 2H02 1H03 mag Expense Growth (RHS) # Income Growth (RHS) —# Cost to Income (LHS) ,. 2H03 1H04 ~ 25% - 20% 15% - 10% + 5% - 0% no ® ao c ® 2. x wi 8 ® £ 3 rr) £ £ 3 2 o
Slide 31: ye AI SMSO UI BED OIE ASE SMU GEL UA MEU NO
ye AI SMSO UI BED OIE ASE SMU GEL UA MEU NO GI eos a Le ye Ee yy ay Le, y LL iy) ee ye ee Ly ay ey Vo iy y 7 yy Le L | g ve y TE ls Ly LD 7 lo LD se Ce ee aoe 7 7 lL Loy ee hhh LF Le 2) Le HE: Vey ee igs WA EE Ley 7 LC ii Lee Li LU 7 ye y iy Loe . So Ss uy. yoy oo, aye. — a _ sy By ye yoy _ oe ee Ay
Slide 32: Solid Capital Position
Solid Capital Positio arm 4.2% $600m $400m $200m $0m 1H02 2H02 1H03 2H03 1H04 @ Core T1 Hybrid T1 &Tier 2 32 New ideas fy banking
Slide 33: Capital requirements and raisings
Ongoing capital required for regulatory requirements, target range of 10%-11% of RWA (Tier 1 of 7%-8%). Recent capital raising of $90m ($50m ord, $40m hybrid). Recent successful securitisation of leasing assets and established a securitisation warehouse. Active capital management through: ~ Securiti
Slide 34: Yo ey
Yo ey Le yy ee oo ay ee Lo ey, ay Lee, ee yy Ley Le DID ye ye i ee ee . i y YOY ee I Fees Le ye Le ei Le Me y y y Dg a y EG Be y Ve ye Tey Laos ee Lee LE PME ey ey Te, i ee Ee Me Le j Hey ey, LE ME Ly) Ba ye _. y Rie We Go yy < SS Se = = aC < ay _ y To <= x ee <a = = — = So ~ se) Ze Se Se SS a SS Se
Slide 35: Stabilise IT environment and performance management
Stabilice IT » Performance Management environment -~ EDS performance is monitored against 47 critical service levels. Outsourcing is delivering to our expectations. Access to scale Transform IT systems 35 New
Slide 36: Core Banking System
» Expected investment will be $40m and will go live in May 2004. Costs of $33m at 1H04. « Will be the cornerstone of the PEP II initiative. Core Banking System Benefi
Slide 37: Information Technology & Infrastructure Investment
Information Technology & Infrastructure Investment _ Asset carrying values: 1H03 2H03 1H04 $m $m $m IT Hardware / 41 39 48 Software Infrastructure 17 22 25 Investment Core Banking System 11 21 33 69 82 106 Profit & Loss Impact: Depreciation 7 8 37 New
Slide 38: LENE UE He Uponay esa
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Slide 39: Acquisitions: UFJ Finance
Acquisitions UFJ Finance — » UFJ Finance acquired for a premium of $7m over net assets, total goodwill of $12.3m. » Renamed BOQ Equipment Finance. » BOQ now has $1.3b in equipment finance receivables under management. » Integration completed, successful in driving: ~ cost saving synergies - Increase
Slide 40: ATM Solutions acquisition
ATM Solutions acquisition completed in September 2003. Total goodwill of $18.1m. ATM Solutions currently have approx 1,400 ATMs deployed nationally, positioning them as the 2nd largest third party deployer. This enables BOQ to directly service all our customers around Australia. BOQ branding current
Slide 41: ee Lh WEE BEN ae SSBC SNOM Lo Lh a
ee Lh WEE BEN ae SSBC SNOM 0 Lo Lh a Gy Ree LAGE ORI AGL IRIEL y - . Lo Uy ie yy LES i Le yee , Lay a e ey) y ie Ly oe oo Le a) ee de Voy Le a YS pe EL IE a ye ye Ve LE EEG a Ly _ Wg Le Le 7, — SSS So Ss uy. Le yy a 4 Ue yy oo, Lo y Le , fae Ge i a Gi oe Bip L i a SS Uy ey a yee Va Mus < — es ss ay
Slide 42: Differentiating through distribution focus
We are differentiating through our distribution focus. We will build on our Qld franchise and expand interstate with the OMB model. The OMB model drives shareholder value through: -— empowerment, and ~ rewarding a customer service focus PEP Il will commence after implementation of the new core banki
Slide 43: Perceived Risk Mitigation
Perceived Risk Mitigation « Insufficient organic capital + Growth well above system generation + Strong shareholder value creation » Execution risk in expanding + 40 branches deployed in Qld interstate + People/Service led strategy » Exposure to a housing + Acquisition of UFJ downturn + Expansion of
Slide 44: Branches
Branches 1H02 2H02 1H03 @ Corporate Branches + Owner Managed Branches 44 2H03 1H04
Slide 45: Interstate branch expansion
Targeting 100 branches interstate by 31 August 2006. Will commence rollout by 31 August 2004. Strong interest from potential owner managers. Targeting consumer and SME market segments. Business banking presence will closely follow. 45 New
Slide 46: Financial goals for 2004
. Financial goals for 2004: -- Strong asset growth whilst maintaining credit quality. - Drive further cost & revenue synergies from acquisitions ~ EPS growth of 10%-12% on a cash basis. -~ Target cost to income ratio of 64%. ~ ROE target of >14%. » Market Share Targets: -~ Maintain double digit home
Slide 47: WOOT Yee
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