Bank of Queensland Limited · ASX:BOQ
Bank of Queensland — FY2005 Earnings Presentation
43 slides from Bank of Queensland's earnings presentation, Aug 31, 2005
Slide 1: Bank of Queensland Full Year Results
Bank of Queensland Full Year Results 31 August 2005
Slide 2: Agenda
Agenda Result Highlights Profitability Growth Quality Shareholders Vision, Strategy & Execution Outlook 2
Slide 3: Result Highlights
Result Highlights 2005 2004 % Net Profit (Headline) $91.7m $64.5m Ï42% Net Profit (excl significant items) $76.2m $61.7m Ï24% Loan Approvals $7.5b $7.8b Ð 4% Loan Approvals (excl mortgage brokers) $7.5b $6.8b Ï10% Assets Under Management $14.3b $12.5b Ï14% Retail Deposits $5.8b $4.9b Ï20% Dividend 6
Slide 4: Profitability
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Slide 5: Summary of Results
Summary of Results 2005 2004 % Chan ge $m $m vs P CP N et Interest Incom e 2 1 6 .7 183.3 18% N on Interest Incom e 1 4 0 .0 108.6 29% Total Incom e 3 5 6 .7 291.9 22% Total Ex penses 2 1 3 .2 185.0 15% Underly ing Profit 1 4 3 .5 106.9 34% Bad Debts 1 3 .4 11.9 13% Profit Before Tax 1 3 0 .1 95.0 3
Slide 6: Income Growth
Income Growth 18% growth in net interest 29% increase in non-interest income. income, (13% excl significant items). $140m Significant items $24m Net Interest Income Non Interest Income $109m $6m $217m $183m $116m $103m $133m $82m $107m $109m $65m $57m 2001 2002 2003 2004 2005 2001 2002 2003 2004 200
Slide 7: Increased Margin
Increased Margin Liability Capital Interest Margin Mix 0.02% 2.53% 2.55% 0.03% 2.36% 2.30% 2.25% 2.30% 2.31% 2.25% 2.09% 2.02% 2002 2003 2004 2005 04 05 20 20 Interest Margin Net Margin after 3rd party payments 7
Slide 8: Operating Expenses
Operating Expenses 15% $213m Admin $185m 33% Operating $139m $124m $124m Computer Occupancy Employee 2001 2002 2003 2004 2005 8
Slide 9: Cost to Income Ratio
Cost to Income Ratio 72.9% 69.9% 65.1% 64.7% 64.7% 64.1% 63.3% 63.9% 1H02 2H02 1H03 2H03 1H04 2H04 1H05 2H05 Excludes impact of significant items 9
Slide 10: Cash EPS Growth
Cash EPS Growth EPS EPS growth growth of of 14% 14% (excl (excl significant significant items) items) 70.2c 61.5c 55.2c 46.0c 38.5c 2001 2002 2003 2004 2005 Cash Diluted EPS (excl significant items) 10
Slide 11: AIFRS
AIFRS The Bank has implemented system and process changes to comply with AIFRS. AIFRS adjustments to 31 August 2005 of: $1m reduction to 31 August 2005 Group NPAT. $5m reduction to 31 August 2005 Group net assets. AIFRS adjustments from 1 September 2005 of: Estimate interest margin before payments t
Slide 12: Growth
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Slide 13: Lending Growth v System
Lending Growth v System Housing Commercial Total 16% 17% 14.0% 13.5% 15% 14% 13% 11% 11% 10% System System BOQ BOQ System System System BOQ BOQ BOQ 1H05 2H05 1H05 2H05 Total Annual Growth 13
Slide 14: Housing Growth
Housing Growth $7b Annualised growth 23% at February $6b Direct Portfolio Annual growth 27% $5b $4b Total annual growth 14% $3b $2b Broker Originated Portfolio Annual run-off 24% $1b $0b Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Direct portfolio = Originated from corporate branches, OMBs & bu
Slide 15: Sales (Loan Approvals)
Sales (Loan Approvals) $7.8b $1.0b $5.7b $0.9b $3.7b $2.8b $7.5b $0.7b $6.8b $0.5b $4.8b $3.0b $2.3b 2001 2002 2003 2004 2005 Retail/Commercial Mortgage Brokers 15
Slide 16: Assets Under Management
Assets Under Management $14.3b $12.5b $2.2b $1.9b $1.7b 12% leasing $8.7b $1.5b $2.3b 16% business $6.6b $1.6b $2.0b $5.2b $1.0b $1.6b $0.8b $1.2b 56% $8.1b housing $1.0b $7.1b $5.2b $4.2b $3.3b 2001 2002 2003 2004 2005 Housing Commercial Leasing Treasury & Other 16
Slide 17: Balance Sheet Lending Mix
Balance Sheet Lending Mix $9.1b $8.3b 22% $2.2b business $1.9b $5.8b 11% $1.0b leasing $1.0b $0.4b $4.4b $1.6b $0.4b $3.6b $1.2b $1.0b 60% $5.0b $5.5b housing $3.7b $2.3b $2.9b 2001 2002 2003 2004 2005 Housing Consumer Leasing Business 17
Slide 18: Retail Deposits
Retail Deposits $5.8b Retail deposits $4.9b $3.8b $3.0b $2.6b 2001 2002 2003 2004 2005 27% Retail deposit growth 29% 20% 20% 15% BOQ 12% 10% 7% 9% 9% System 2001 2002 2003 2004 2005 18
Slide 19: Balanced Funding Mix
Balanced Funding Mix $14.3b 17% $12.5b $2.3b $1.7b 13% $3.3b 23% $8.7b $2.5b 20% $1.1b $6.6b 27% $2.9b 20% $1.5b $3.4b $5.2b $0.8b $0.5b $1.3b $2.3b $1.0b $1.5b $5.8b $1.1b 40% 39% $4.9b $3.8b $2.6b $3.0b 2001 2002 2003 2004 2005 R etail Wh oles ale & Oth er Sec u r itis ation Oth er 19
Slide 20: Quality
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Slide 21: Credit Quality
Credit Quality Impaired Assets to Average Assets Provisions provide 10x 0.16% coverage of impaired 0.13% assets. 0.07% 0.08% 0.05% 2001 2002 2003 2004 2005 Underlying Bad Debts to Balance Sheet Loans Impaired Assets 0.21% $6.4m $6.3m $6.4m $5.6m $4.3m 0.10% 0.11% 0.06% 0.06% 2001 2002 2003 2004 2005
Slide 22: Shareholders
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Slide 23: Growing Shareholder Value
Growing Shareholder Value Total Shareholder Return TSR of 22%pa $2,100 BOQ All Ords (accum index) $1,700 $1,300 $900 1 2 3 4 5 u g -0 u g -0 u g -0 u g-0 u g-0 3 1-A 3 1-A 3 1-A 3 1-A 3 1-A 15c Market Value Added© $547m Annual Dividend $377m $323m $252m 48c $201m 43c 37c 28c 29c 2001 2002 2003 2004
Slide 24: Return on Equity/Assets
Return on Equity/Assets 15.9% Return on Equity 0.4% 2.9% 15.4% 12.2% 13.3% 14.1% 13.0% 2001 2002 2003 2004 2005 0.87% Pre Significant Items Significant items 0.14% Return on Assets 0.72% 0.72% 0.73% 0.61% 0.60% 2001 2002 2003 2004 2005 24
Slide 25: Capital Levels
Capital Levels Capital Adequacy Ratio 12.4% 11.9% 11.3% 11.6% 10.4% Tier 2 Tier 2 ratio 3.6% Hybrid Tier 1 Tier 1 Tier 1 ratio 8.8% 2001 2002 2003 2004 2005 25
Slide 26: Vision, Strategy & Execution
Vision, Strategy & Execution
Slide 27: Our Strategic Focus
Our Strategic Focus We are differentiating through our service and distribution focus. Expanded distribution capability: Franchised branch banking (OMB) interstate / Queensland Business banking – SME Electronic channels Wealth management Aggregation Progressively outsource non-scale businesses/produ
Slide 28: Interstate Expansion
Interstate Expansion Interstate rollout slightly slower than initially projected: Slower process to open interstate, Focused more on metropolitan areas. Will expand into other States beyond NSW & Victoria after success of branches already opened. Continuing strong interest from high quality potentia
Slide 29: Our Interstate Branch Expansion
Our Interstate Branch Expansion Forecast 250 250 215 OMB - 200 177 110 Interstate 75 142 38 150 120 5 95 98 OMBs - Qld 100 79 82 85 90 62 37 40 50 Corporate 58 58 58 58 57 55 50 0 Aug 01 Aug 02 Aug 03 Aug 04 13 Oct Aug 06 Aug 07 05 29
Slide 30: Success of Interstate Branches
Success of Interstate Branches First 5 interstate branches opened in July/August '04: Byron Bay Growth: Growth: Kingscliff $205mininlending $205m lending North Parramatta $57minindeposits $57m deposits Frankston $262mininfootings $262m footings 455 Bourke St, Melbourne Average footings of $52m (at 1
Slide 31: Why Franchise?
Why Franchise? The OMB model drives shareholder value through: Empowerment, and Rewarding a customer service focus. Franchising offers: The potential to “step-change” sales performance Unleashes entrepreneurial energy Talent magnet for sales management Market discipline on central functions Convenie
Slide 32: Increased Productivity from Franchising
Increased Productivity from Franchising Our first corporate branch was converted to an OMB in May this year: Ï sales quality 60 Annualised growth rates Ï customer satisfaction Deposits 50 Ï employee 40 satisfaction Footings 30 Assets % 20 10 0 -10 -20 12 months pre- 3 months pre- 4 months post- conv
Slide 33: Distribution Footprint
Distribution Footprint . a - - ATMs 89 ™= Corporate Branches 57 ~ OMBs 82 x ee Equipment Finance 4 7 Equipment Finance 1 s4 Business Banking Centres 11 ATMs 153 ves ATMs 546 7 As Tan ie war Ls ae =interstate expansion bank different®
Slide 34: Enhancing our Distribution Capability
Enhancing our Distribution Capability New products/services Currently piloting a wealth management alliance with Genesys, initial signs are promising. Also launching a non-conforming loan product. Six new products to be launched in next three months. Introduced Consumer Credit Insurance with St Andr
Slide 35: Business Banking
Business Banking Now 13 business banking centres. Overall strategy is to achieve SME dominance in chosen segments in Queensland Strong growth in equipment/debtor finance Equipment Finance – have reached more than $1bn in settlements 2003 (prior to ownership) - $500m 2004 (10 months of ownership)
Slide 36: ATMs
ATMs Over 2,000 BOQ Branded ATMs TAS NT SA QLD WA VIC NSW/ACT 36
Slide 37: Improving Efficiency
Improving Efficiency PEP II has identified $20m in benefits: Initiatives to arrest fee leakage and improve fee collection rates. Further outsourcing initiatives, such as the Bank’s document storage and archiving. Expense control including tendering large expense items. Initiatives to improve loan re
Slide 38: Strategic Objectives
Strategic Objectives Our key objectives are to: Outperform the market and deliver strong growth across all businesses. Continue the interstate branch network expansion and expanded business banking capability. Drive revenue enhancement and expense reductions through PEP. Scale through selective acqu
Slide 39: Outlook
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Slide 40: Outlook
Outlook Housing market has slowed and will continue to. More favourable business environment – growth is expected (particularly in SME sector). Very competitive market across all products. Interest rate stability looking likely. Regulation will continue, driven by globalisation and other forces. The
Slide 41: Financial Goals
Financial Goals Financial goals for 2006: Substantially above system (1.5x–2x system) asset and deposit growth. Maintain credit quality. Cash EPS growth of 10%-12%. Cost to income ratio of 63%. Medium term financial goals: Substantially outperform system growth in lending and deposits. EPS growth of
Slide 42: Growing Strongly
Growing Strongly Our growth strategy will create substantial shareholder value. We are differentiating with our distribution focus through our unique, differentiated retail franchise model. This is not a short-term strategy but a long term driver of shareholder value. 42
Slide 43: Bank of Queensland
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