Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 2017 Earnings Presentation
44 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 13, 2017
Slide 1: Results Presentation for the half year ended 31 December 2016
FOr personal use only 2. { <<" -zs aw 72 . wt il ai Results Presentation For the half year ended 31 December 2016 | Bendigoand > AdelaideBank Mike Hirst Richard Fennell Managing Director lief Financial Of
Slide 2: For personal use only
For personal use only 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 informati
Slide 3: Overview, Financial performance, Summary and outlook, Appendices
For personal use only Overview Financial performance Summary and outlook Appendices 3
Slide 4: Mike Hirst, Group Managing Director
For personal use only Mike Hirst Group Managing Director 4
Slide 5: Our 1H17 result
Our 1H17 result For personal use only Financial performance Statutory profit after tax $209.0m Net interest margin down 6bps to 2.10%2,3 Cash earnings of $224.7m Cost to income down to 54.3% Cash earnings per share 48.0¢ Total operating expenses down 0.4%2 Interim dividend of 34¢, full
Slide 6: Results drivers
Results drivers For personal use only Investments delivering Ave Margin efficiencies 2.10% 8.9% Exit Margin Non-staff cash operating deposit FTE down 165 2.14% expenses growth Down ‘Most recommended’ $4.6m bank by its customers Housing loan growth 2.1x system growth Cost To Income 54.3% Organic hous
Slide 7: Most customer connected bank
Most customer connected bank For personal use only #1 Branch banking Top rated #1 in satisfaction1 Australian Forrester’s financial Australian institution on Customer #2 the Corporate Experience Mobile Reputation Index5 banking Awarded best index4 satisfaction1 fixed interest property investment loa
Slide 8: Macro trends in Australian Banking
Macro trends in Australian Banking For personal use only Outside our Control Economic growth Parliamentary inquiry Macro Employment economic Regulation Basel IV Interest rates conditions Better Banking initiative Some Control Advocacy NPP Hyper connected, real time Customer Disruption Adjacent marke
Slide 9: Richard Fennell, Chief Financial Officer
For personal use only Richard Fennell Chief Financial Officer 9
Slide 10: Financial performance - at a glance
Financial performance - at a glance Change Change For personal use only 1H17 2H16 1H16 1H17 – 2H16 1H17 - 1H16 Cash earnings $224.7m $215.6m $223.7m 4.2% 0.4% Statutory NPAT $209.0m $206.9m $208.7m 1.0% 0.1% Cash EPS 48.0¢ 46.7¢ 48.9¢ 1.3¢ -0.9¢ Net interest margin 2.10% 2.16% 2.16% (6 bps) (6 bps)
Slide 11: 1H17 growth outcome
1H17 growth outcome For personal use only Source: APRA statistics December 2016 Note - Data is based on 6 month growth (annualised) and BEN includes Rural Bank 11
Slide 12: Housing lending growth
Housing lending growth 1 For personal use only Strong growth across Retail and Broker channels Front book competition remains intense Bendigo “Connect Package” continuing to resonate Net growth in Mortgage Manager business Source: Company data, APRA statistics December 2016 1.Growth is shown
Slide 13: Cash earnings growth
Cash earnings growth For personal use only Strong lending growth in 1H17 Margin pressure following cash rate reductions Efficiency focus delivering flat costs Increased credit costs from Great Southern and Business Banking Continued strong contribution from trading book 1 1 1. After tax 13
Slide 14: Net interest margin
Net interest margin NIM pressure in 1Q17 reflected full impact of May and For personal use only August cash rate decrease and additional liquidity for Keystart portfolio acquisition Asset pricing favourable following market repricing in August and December Limited ability to reprice deposits f
Slide 15: Focus on efficiency
Focus on efficiency For personal use only • 107 FTE lower in 1H17 , 165 FTE lower PCP • Staff costs include redundancy costs of $3.0m (up $1.2m on PCP) • Project Reset material contribution to efficiency gains 15
Slide 16: Business segment performance (cash earnings)
Business segment performance (cash earnings) Solid growth in business and housing lending For personal use only Community Bank balance sheet growth 9%2 Alliance Bank growth of 13%2 Banking fee income reducing Managed funds up 13%2 Increased credit expense but remained historically low
Slide 17: Industry leading funding position
Industry leading funding position For personal use only Funding strength provides flexibility for organic and inorganic asset growth Solid growth in both call and term deposits LCR of 117% Indicative NSFR 113% Note - Reclassification of some middle market deposits from Retail to Wholesale ha
Slide 18: Lower capital position following strong growth in lending assets
Lower capital position following strong growth in lending assets For personal use only 1 2 1. Unrealised Homesafe revaluation revenue excluded from increases in retained earnings was 6bps 2. Other includes movement in capitalised expenses, deferred tax assets and reserves 3. S&P RAC ratio, Major 1,2
Slide 19: Bad and doubtful debts
Bad and doubtful debts Impaired assets reduced by 14%2 For personal use only Increasing Great Southern write offs as collection process continues Specific provision lower following settlement of Agri and Great Southern exposures Reduction in collective provision due to reduced Great Southern
Slide 20: Great Southern paying down as expected
Great Southern paying down as expected Total loans net of specific provisions has reduced by 60%, since 31 December 2014 For personal use only Loans in dispute or 90 days arrears $100.4m at December 2016 Specific and collective provisions at December 2016 were $13.9m and $16.5m respectively
Slide 21: Arrears remain benign
Arrears remain benign For personal use only Note - Data excludes commercial arrangement loans 21
Slide 22: Homesafe investment property portfolio
Homesafe investment property portfolio Average annual return on completed contracts since For personal use only inception 9.5%, pre funding costs $2.5m of overlay was added in 1H17, increasing the total overlay on the value of the portfolio to $26.1m Proceeds on completed contracts exceeded po
Slide 23: Homesafe investment property portfolio
Homesafe investment property portfolio For personal use only 1. Income contribution sensitivities based on portfolio balance as at 31 Dec 16 with no new or completed contracts over the 12 months 23
Slide 24: Mike Hirst, Group Managing Director
For personal use only Mike Hirst Group Managing Director 24
Slide 25: Delivering on strategy
Delivering on strategy For personal use only 1. Broaden mobile face-to-face 1. Leverage new system and 1. Targeting growth markets aligned distribution performance measurement with our specialisation and capabilities experience 2. Deepen penetration into 2. Execute on Portfolio Funding 2. Enabling f
Slide 26: Summary and outlook
Summary and outlook For personal use only 1 Clear evidence of delivering on strategy 2 Maintaining our premium position with customers 3 Strong funding providing platform for growth 4 Efficiency gains being realised 5 Strong balance sheet position 6 Advanced Accreditation progressing 7 Outlook for c
Slide 27: Questions
For personal use only Questions 27
Slide 28: Appendices
For personal use only Appendices 28
Slide 29: Our vision, purpose and strategy
ae For personalise only Our vision is to be Australia’s most customer connected bank vision, strate J purpose —— — Our strategy is to focus on the success of our customers, people, partners and communities lili — We do this by: + Taking a 100 year view + Listening and responding + Respecting every c
Slide 30: Strategy & Purpose
For personal use only Strategy & Purpose 30
Slide 31: Measures of success
Measures of success For personal use only • New to lost customers • Diversity • Average products per • Partner advocacy • Staff engagement customer • Partner performance • Productivity • Customer advocacy • Cash EPS • Credit loss % risk • ROTE weighted assets • ROA • Liquidity & Funding • RAROC 31 3
Slide 32: Positive earnings progression
Positive earnings progression For personal use only 32
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
Slide 34: Diverse geographic footprint
Diverse geographic footprint For personal use only 525 branches 1 4 47 50 4 42 2 24 14 16 51 8 4 187 86 140 11 313 Community Bank® 9 12 14 11 34
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 313 Community Bank branches with more than 90 in communities where there is no alternative provider Proven, reliabl
Slide 36: Alliance Bank loan & deposit growth
Alliance Bank loan & deposit growth 25% growth in loan portfolio and 13% growth in deposit portfolio since March 2015 For personal use only 1 new entrant due for completion in FY17 Confidentiality agreements signed with four other credit unions 160 employees 40,000 customers Innovative s
Slide 37: Growth in residential loan approvals
Growth in residential loan approvals 2 For personal use only 9% growth in Offset portfolio since December 2015 45% of home loan customers are ahead of minimum repayments, with 29% of customers 3 or more repayments ahead1 1. Excludes amounts held in Offset facilities 2. Data excludes Rural Bank,
Slide 38: 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 Dec 2016 0.03% 0.52% 0.63% 0.04% 0.09% 9.22% 0
Slide 39: Funding
Funding For personal use only Dec 2016 1. Company data 39
Slide 40: Key capital ratios & LVR breakdown
Key capital ratios & LVR breakdown For personal use only Dec-16 2H15 1H16 2H16 1H17 Common equity tier 1 8.17 8.24 8.09 7.97 Additional tier 1 2.43 2.44 2.31 2.20 Tier 1 Capital 10.60 10.68 10.40 10.17 Tier 2 1.97 1.98 1.81 2.03 Total regulatory capital 12.57 12.66 12.21 12.20 Risk weighted assets (
Slide 41: Secure and low risk loan portfolios
Secure and low risk loan portfolios For personal use only Residential Mortgages3 Dec-16 Jun-16 Dec-15 Owner occupied 62% 62% 65% 98.4% secured Investment 38% 38% 35% 97.8% secured by mortgages and Lo Doc 2% 2% 3% Retail mortgages 56% 55% 55% listed securities Third Party mortgages 44% 45% 45%
Slide 42: Agri-business diversification
Agri-business diversification For personal use only 42
Slide 43: Technology investment
Technology investment For personal use only 1H17 additions: Integrated General Ledger and HR platform Phase 1 of new lending platform 43
Slide 44: Contact
Contact For personal use only Analysts Media Travis Crouch Silvana Arena Head of Investor Relations Head of Public Relations Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 3 5485 6261 Tel: +61 8 8220 7784 Mob: +61 418 552 922 Mob: +61 402 110 445 Email: travis.crouch@be
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