Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — Corporate Update (April 2009)
22 slides from Bendigo & Adelaide Bank's corporate update, Apr 6, 2009
Slide 1: Market update – third quarter FY09
Market update For personal use only – third quarter FY09 April 2009
Slide 2: Disclaimer
Disclaimer: 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 does not purport to be For personal use only complete. It is to be read in conjunction with the Banks results fi
Slide 3: Positioning for the future
Positioning for the future For personal use only Market conditions changed quickly and dramatically in late 2008 Access to funding was a key risk for every bank globally We responded decisively to secure reliable (retail) funding That has been achieved, but at a short-term cost to F09 earnings Revis
Slide 4: Market conditions
Market conditions For personal use only Surge of funding back to bank balance sheets Increased competition for deposits Slowing economy/global recession Unprecedented drop in official cash rate (size and speed) Reduced term wholesale funding options to government guaranteed debt Required a conservat
Slide 5: Our response has been decisive and significant
Our response has been decisive and significant We have fundamentally restructured our balance sheet For personal use only Generated strong retail deposit growth that continues today We have not used the government wholesale funding guarantee Ensured our capital base remains solid Channelled availabl
Slide 6: We continue to leverage our investment in retail distribution capability
We continue to leverage our investment in retail distribution capability We have taken the hard decisions to re-shape the balance sheet to: > Reduce reliance on wholesale funding For personal use only > Increase opportunities with retail customers 140 Retail deposits (month by month growth) 130 120
Slide 7: Our balance sheet contains low levels of funding risk
Our balance sheet contains low levels of funding risk For personal use only 100% 90% Funding mix (on balance sheet) retail wholesale 80% 70% 60% 50% 40% 30% 20% 10% 0% Nov 07 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Funding 7
Slide 8: TD rates are falling, from high levels
TD rates are falling, from high levels For personal use only Volume continues to grow More than 95% retained in bank at maturity ($ value) ($bn) 8.50% 25 Average Term Deposit interest rate (LHS axis) 8.00% Retail term funding (RHS axis) 7.50% 7.00% 20 6.50% 6.00% 5.50% 15 5.00% 4.50% 4.00% 10 Mar 08
Slide 9: Securitisation costs have increased
Securitisation costs have increased Volumes have fallen due to reduction in Third Party mortgages and Margin Lending businesses For personal use only ($mm) 13,000.00 1.00 Total Sec’n (LHS axis) Margin average cost* (RHS axis) 12,000.00 0.90 11,000.00 10,000.00 0.80 9,000.00 0.70 8,000.00 7,000.00 0.
Slide 10: Loans skewed towards residential mortgages
Loans skewed towards residential mortgages Less scope relative to major banks to recover margin in commercial and business lending portfolios For personal use only Liquidity levels have been 50% higher throughout this period Loan mix (Feb 09) Margin Lending^ 9% Movement since June-08 (% of total loa
Slide 11: Residential lending interest rates
12.00% Cash rate vs mortgage rate For personal use only 10.00% BEN-SVR Cash rate 8.00% 6.00% 4.00% 2.00% 0.00% Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Residential lending interest rates 11
Slide 12: Margin pressure
Net interest income affected by: Net interest margin affected by: > Reduced demand for credit > TD’s repricing lag in easing cash > Decline in margin lending rate environment For personal use only portfolio > Increasing costs of deposits > Increasing cost of securitisation 160 140 Net interest margi
Slide 13: Credit quality remains sound
Credit quality remains sound Previously identified business lending as a key focus For personal use only Residential lending, margin lending and unsecured credit continues to perform well Forecast credit losses remain historically low 20,000 Credit loss expenses ($000’s) 15,000 10,000 5,000 0 Foreca
Slide 14: Mortgages
Mortgages Standard loan arrears steady Lo-Doc loans have stricter lending standards, results in very low losses despite arrears For personal use only LoDoc portfolio size $2.9bn Standard variable portfolio size $22.9bn 5.00% 4.50% 4.00% Standard V LoDoc 90d+ % $ 3.50% LoDoc Standard 3.00% 2.50% 2.00
Slide 15: Business Lending
Business Lending Increase in arrears mainly due to construction loans (total construction portfolio circa $350m) For personal use only Business lending portfolio size $7.9bn 2.50% Business Lending 90d+ 2.00% 1.50% 1.00% 0.50% 0.00% Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 0
Slide 16: Other
Other No additional losses or provisions in margin lending (Margin Lending portfolio size $3.3bn) For personal use only Consumer portfolio arrears below levels of the major banks Consumer portfolio size $1.4bn 1.80% Consumer (Personal Loans & Cards) 90d+ % ($) 1.60% Cards Personal Loans 1.40% 1.20%
Slide 17: High quality capital base
Total group capital (%) High quality capital base 10.78 10.75 Current levels extremely conservative 2.79 Tier 2 2.63 For personal use only for the low risks in our balance sheet Low risk confirmed by risk weightings adopted by major banks 7.99 Tier 1 8.12 Risk weighting of Australian 31 December 200
Slide 18: Ordinary shares
Weighted average number of shares increased from 215m to an estimated 291m FY09 Tier 2 capital replaced with equity For personal use only (mm) 310 300 Number of shares on issue 290 280 270 260 250 240 230 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb
Slide 19: Underlying costs tracking down 5%
Underlying costs tracking down 5% Continued merger synergies will be captured For personal use only Market conditions will dictate tougher cost control Expenses summary (excluding credit loss expenses) Proforma FY08 (assuming merger on 1 July 07) Total operating expenses $606.3m Estimated FY09 (afte
Slide 20: Dividends and guidance
Board policy remains - 60-70% payout ratio against cash EPS For personal use only Cash earnings will remain robust Revised cash EPS guidance 70-75 cents Key issues Indicative effect on EPS (cents) Additional equity issued (replacing Tier 2) 2.0 Employee shares issued 2.1 Margin lending volume/margin
Slide 21: Summary
Current market conditions are challenging: > Continued challenges for parts of our business For personal use only > Significant uncertainty and volatility remains But our prospects remain positive: We have taken to opportunity to re-shape our balance sheet structure Our strategy and business model r
Slide 22: Contact details
Will Rayner Head of Investor Relations For personal use only Bendigo and Adelaide Bank Limited Level 5 169 Pirie Street Adelaide South Australia 5000 Tel: +61 8 8220 7764 Mob: +61 437 794 366 Fax: +61 8 8300 6839 Email: wrayner@adelaidebank.com.au Contact details 22
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