Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — Merger or Acquisition (September 2007)
39 slides from Bendigo & Adelaide Bank's merger presentation, Sep 19, 2007
Slide 1: Merger of Adelaide Bank & Bendigo Bank – Asia Roadshow September 2007
For personal use only Merger of Adelaide Bank & Bendigo Bank Asia Roadshow – September 2007 1
Slide 2: Contents
Contents For personal use only 1. Adelaide Bank overview 2. Bendigo Bank overview 3. Merged group 4. Transaction update 5. Summary 6. Appendix 2
Slide 3: 1. Adelaide Bank
For personal use only 1. Adelaide Bank • Overview • Structure • Financial performance • Asset quality • Funding 3
Slide 4: Adelaide Bank overview
Adelaide Bank overview For personal use only Adelaide Bank 108 million shares Listed on the ASX A$1.7bn market cap1 107-year old company History Co-op building society origins Granted banking authority in 1994 Retail Banking Wholesale Mortgages Business units Business Lending Wealt
Slide 5: Adelaide Bank structure
Adelaide Bank structure For personal use only Adelaide Bank Retail Wholesale Business Wealth Banking Mortgages Lending Management •Branch •Product •Portfolio •Margin network manufacture funding Lending •Business •Third-party •Specialised •Adelaide Banking (SA) mortgage lending Managed distribution F
Slide 6: Adelaide Bank financial performance
Adelaide Bank financial performance For personal use only Annual profit EPS Dividend Asset growth 6
Slide 7: Adelaide Bank asset quality
Adelaide Bank asset quality For personal use only Impaired loans Loans in arrears Remain at predominantly low levels Loans in arrears at lowest level since Dec 05 Lift in impairment isolated to residential mortgages Arrears continue to decline Primary causes are valuation fraud No credit
Slide 8: Adelaide Bank funding
Adelaide Bank funding For personal use only Diversified funding mix Commitment from securitisation partners Post-merger commitments from funding partners Continued strong liquidity position 8
Slide 9: Adelaide Bank credit & liquidity
Adelaide Bank credit & liquidity For personal use only Credit quality Liquidity and funding 1. Housing loans in arrears at 1. Operating with substantial lowest levels since surplus liquidity December 2005 – and 2. Liquidity levels currently continuing to fall circa 2x statutory 2. High proportion of
Slide 10: 2. Bendigo Bank
For personal use only 2. Bendigo Bank • Overview • Structure • Financial performance • Asset quality • Funding 10
Slide 11: Bendigo Bank overview
Bendigo Bank overview For personal use only Bendigo Bank 144 million shares Listed on the ASX Market cap $2.1 billion1 149-year-old company History Building society origins Obtained banking authority in 1995 Retail Bank (incorporating Community Bank®) Business units Wealth Solutions (i
Slide 12: Bendigo Bank structure
Bendigo Bank structure For personal use only Bendigo Bank Retail Bank Wealth Solutions Joint Ventures Company branches Managed ERB Community funds Bank® TBS Common Business CSB funds banking SPS Financial Planning 12
Slide 13: Bendigo Bank financial performance
Bendigo Bank financial performance For personal use only Annual profit EPS Dividend Asset growth 13
Slide 14: Bendigo Bank asset quality
Bendigo Bank asset quality For personal use only Impaired loans Loans in arrears Exceptional and stable credit quality Loans in arrears throughout the portfolio continue to decline as a percentage of portfolio Strong fraud detection and prevention capabilities 14
Slide 15: Bendigo Bank funding
Bendigo Bank funding For personal use only Funding mix Exceptional retail deposit base Immature branch network, and network expansion will provide further deposit growth Wholesale funding includes securitisation 15
Slide 16: 3. Merged group
For personal use only 3. Merged group • Details of merger • Strategic rationale • Financial rationale • Business structure • Integration and synergies 16
Slide 17: Details of merger
Details of merger For personal use only Both Boards unanimously recommend the merger Proposal Merger of Adelaide Bank Ltd (Adelaide) and Bendigo Bank Ltd (Bendigo) Scrip for scrip merger via Adelaide scheme of arrangement - subject to Adelaide shareholder approval Exchange Ratio 1.075 Bendigo
Slide 18: Strategic rationale
Strategic rationale For personal use only n Bendigo and Adelaide are the right partners f Merger combines two successful companies to create a unique customer and partner focused financial services organisation f Strong cultural alignment o Combination of two distinctive but complementary businesses
Slide 19: Strategic rationale
Strategic rationale For personal use only q Merged group is financially stronger and better positioned to grow and innovate f Expanded national presence in every State and Territory in Australia f Improved scale/operating efficiency f Enlarged balance sheet f Diversified business mix f Increased fun
Slide 20: Financial rationale
Financial rationale For personal use only Bendigo Adelaide Merged Group Market Cap ($bn) 2.1 1.7 3.8 before synergies1 ASX 200 position (#)2 94 102 Top 70 Shareholders (#) 53,500 28,500 82,000 180,000 plus customers of Customers (#) 1,126,000 1,306,000 - plus wholesale partners Branches (#) 357 25 3
Slide 21: Financial rationale – enlarged balance sheet
Financial rationale – enlarged balance sheet For personal use only Loan Mix ($bn) Funding Mix ($bn) 45.4 43.2 5.0 13.2 3.2 4.9 29.8 27.4 8.7 5.0 12.9 0.2 2.4 15.8 15.5 30.2 0.3 2.9 3.0 5.7 2.5 23.5 19.7 10.4 12.2 11.3 Bendigo Adelaide Combined Bendigo Adelaide Combined Residential Loans Business Loa
Slide 22: Financial rationale – diversified business mix
Financial rationale – diversified business mix For personal use only Merged group Bendigo (PBT)1 Adelaide (PBT)1 (Pro Forma PBT) ERB / JV Wealth 13% Wealth Management Wholesale Wealth Management Mortgages 23% 19% Solutions 26% Retail Retail & 13% Business Community Banking 61% Community Partners Ban
Slide 23: Business structure
Business structure For personal use only Focused business units to drive growth n Customer acquisition f Through retail branches and partners o Partnering f Third party relationships f Innovative product solutions f Efficient processing and manufacturing p Support f Lean corporate structure and supp
Slide 24: Integration and synergies
Integration and synergies For personal use only Potential pre-tax cost synergies of approximately $60m - $65m Type Description Cost Synergies Functional overlap f Focus on back office overlap f Leveraging staff across business lines f Based on merit IT savings f Both run on same core banking sys
Slide 25: 4. Transaction update
For personal use only 4. Transaction update • Integration planning • Expected timing 25
Slide 26: Transaction update – Integration
Transaction update For personal use only Integration Confidence of successful integration Intention to form Integration Committee Headed by Rob Hunt, Jamie McPhee and Mike Hirst Guiding principles for merger under development Main areas of focus: f People (HR) f Organisational design f Inf
Slide 27: Transaction update – Expected timing
Transaction update For personal use only Expected timing Merger Implementation Agreement signed 9-Aug-2007 Due diligence finalised 4-Sep 2007 ACCC approval gained 10-Sept 2007 Scheme Booklet sent to Adelaide shareholders Oct-2007 Adelaide shareholder vote Nov-2007 Implementation date Nov
Slide 28: 4. Summary
For personal use only 4. Summary 28
Slide 29: Summary
Summary For personal use only Merged group will have high quality earnings and growth profile Adelaide Shareholders Bendigo Shareholders Product and channel diversification 9 9 Geographic diversification 9 9 Increased scale and efficiency 9 9 Funding flexibility 9 9 Platform for expansion/acquisitio
Slide 30: 6. Appendix
For personal use only 6. Appendix • Adelaide Bank financial performance • Bendigo Bank financial performance • Detailed strategic rationale • Business unit structures • Merged capital position 30
Slide 31: Adelaide Bank financial performance
Adelaide Bank financial performance For personal use only Results summary Drivers 2007 2006 Change Strong business growth and diversified earnings Reported 105.6 94.4 11.9% NPAT ($m) Sound and improving asset quality Cash Earnings 104.3 94.0 10.9% ($m) Cost to 48.3% 50.7% 2.4 pts Income Ratio Ca
Slide 32: Bendigo Bank financial performance
Bendigo Bank financial performance For personal use only Results Summary Drivers 2007 2006 Change Continued progress reflects consistent focus and investment Reported 121.8 116.7 4.4% NPAT ($m) Exceeded cash EPS guidance Cash Earnings Strong margin reflects brand strength 118.5 102.5 15.6% ($m
Slide 33: Detailed strategic rationale
Detailed strategic rationale For personal use only Leveraging the strengths of both companies Competitive Adelaide Advantages Bendigo Capabilities Capabilities of Merged Group Service Strong customer service Leading partner service Leading customer service culture – high customer and processin
Slide 34: Detailed strategic rationale
Detailed strategic rationale For personal use only Proposition Commitment Customers & Superior customer service supported by an Preserve and continue to invest in the Community improved product and service offering Community Bank® model and retail Access to more products, branches and ATMs bra
Slide 35: Business structure – Retail Banking
Business structure – Retail Banking For personal use only Creating a national retail distribution network, comprising: f 357 Bendigo Community Bank® and corporate branches f 25 Adelaide retail branches f Financial planning f 1.3 million retail customers f Access to additional customers through who
Slide 36: Business structure – Wealth Management
Business structure – Wealth Management For personal use only Combining Adelaide’s Margin Lending and Managed Funds business with Bendigo’s Sandhurst Trustees, equity portfolio investments and alliances f Approximately $7bn funds under management Improved customer access through expanded distribu
Slide 37: Business structure – Business Partners
Business structure – Business Partners For personal use only Combining Adelaide’s Portfolio Funding and Specialised Lending, with Bendigo’s Elders Rural Bank Joint Venture and SME offerings (including Oxford Funding) f $5.8bn1 loans under management Product portfolio enhanced for corporate custo
Slide 38: Business structure – Wholesale Mortgages
Business structure – Wholesale Mortgages For personal use only Combining Adelaide’s wholesale mortgage business and Bendigo’s NMMC operation Focus on process efficiency and margin management to drive synergies for combined group Partnership model for mortgage managers and brokers is key and wi
Slide 39: Merged capital position
Merged capital position For personal use only Standalone position (as at 30 June 2007) Capital management plan Bendigo Adelaide Intention to maintain dividend payout of 70% of cash earnings ACE 5.42% 5.50% Ongoing dividend reinvestment plan Tier 1 7.98% 6.26% Active capital management plan for
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