Mystate Limited · ASX:MYS
Mystate — FY2021 Earnings Presentation
33 slides from Mystate's earnings presentation, Aug 20, 2021
Slide 1: Investor Presentation Full Year 2021
Investor Presentation Full Year 2021 The human way to bank
Slide 2: Presenters and agenda
01 Melos Sulicich Managing Director & CEO 02 Gary Dickson Chief Financial Officer 03 Melos Sulicich Managing Director & CEO 04
Slide 3: Overview and highlights
Slide 4: MyState has evolved into a digital bank
MyState has evolved into a digital bank 2016 Our journey 2021 Branch based “credit union” • Geographically concentrated customer base • Legacy technology platforms Digital Bank • Inward-focused processes • Increasingly geographically diverse Customer-centred customer base • Disparate systems and pro
Slide 5: MyState positioned for accelerated growth
MyState positioned for accelerated growth MyState at a glance 2025 strategy, capital raise and use of funds • 2025 strategy builds on MyState's solid financial position, • Diverse financial services business across banking and demonstrated execution capability and leading customer wealth management
Slide 6: Key highlights
Key highlights Financial performance Strategic initiatives delivered Customer deposit growth of 13.2% over prior year +20.9% +19.2% Grow Bank balance sheet growth of 6%, including 5% HL growth in Tasmania Net profit after tax Earnings per share Wealth distribution capability and capacity enhan
Slide 7: Key metrics and performance drivers
Key metrics and performance drivers Financial performance • Solid NPAT and EPS growth with significant Pre-provision operating profit1: $53.6m +11.9% business investment Net profit after tax: $36.3m • Excellent top line momentum with NIM +20.9% (statutory) continuing to benefit from lower funding co
Slide 8: Financial results
Slide 9: Positive trend in all key metrics
Positive trend in all key metrics Change 2H v 1H FY21 FY20 1H21 2H21 (v FY20) Change • Solid NPAT and Total operating income ($m) 138.5 128.9 +7.5% ▲ 68.6 69.9 +1.8% EPS growth Pre-provision operating profit ($m) 1 53.6 47.9 +11.9% ▲ 26.4 27.2 +2.9% • Top line momentum with Statutory net profit afte
Slide 10: NPAT underpinned by NII growth
NPAT underpinned by NII growth • Statutory NPAT increase of 20.9% • Net interest income up 12.5% on pcp benefiting from a higher average balance sheet, lower funding costs and focused margin management • Disciplined management of costs with ongoing investment in marketing and digital • Net bad and d
Slide 11: Operating costs reflect investment in digitisation and marketing
Operating costs reflect investment in digitisation and marketing Operating expenditure 88 • Operating costs (before restructure 86 2.6 1.4 0.8 costs) increased by 4.9% led by 84 1.1 increased investment in capability, $ Millions digitisation and marketing 82 2.2 87.5 80 84.9 • Increased investment i
Slide 12: Solid growth, low risk loan book
Solid growth, low risk loan book Home loan book – applications and settlements • Loan book grew well above system during FY21 led by home ($b) lending (1.3x system; +6.8% on pcp) with uplift in 2H Applications – 5yr CAGR 12.6% 2.6 applications and settlements Settlements – 5 yr CAGR 12.1% 2.3 2.0 •
Slide 13: Continued high credit quality
Continued high credit quality MSB 30+ days S&P arrears data SPIN Majors • Continued credit quality underpins balance sheet SPIN Regionals strength 2.40% • Focus on low-risk, owner occupied lending with LVR 2.00% of less than 80% 1.60% 1.20% • Growth in >90% LVR loans reflects support of Federal Gove
Slide 14: Improved customer funding driven by online acquisition
Improved customer funding driven by online acquisition Funding mix (%) • Funding mix continues to be enhanced by growth in lower cost 'At call' customer deposits (+49% on pcp) 19.0% 21.2% 23.8% 24.5% 17.6% • Customer deposits grew above system (+13% on pcp) 25.8% 9.0% and now represent 73% of the fu
Slide 15: MSB sees funding costs decrease
MSB sees funding costs decrease BBSW 0.12 RBA cash rate reduction • Rapid fall in BBSW and significant decrease in funding costs during FY21 0.10 BBSW 1M • Net interest margin up 10bps on pcp 0.08 0.06 • Lending market remains highly competitive 0.04 • Lending book growth a result of continued diver
Slide 16: Capitalised for rapid growth
Capitalised for rapid growth • Effective capital strategy underpinning growth and investment in digital capability • Capital raise proceeds of $55.5m to be deployed to rapidly accelerate the execution of MyState's growth strategies • Capacity for Additional Tier 1 and Tier 2 capital and securitisati
Slide 17: TPT Wealth positioned for growth
TPT Wealth positioned for growth • Distribution capability enhanced to drive Funds under management ($m) growth on the eastern seaboard, to +3.4% complement the team in the heartland market of Tasmania • FUM increased 3.4% on PCP to $1.105b driven by income fund growth 1,153 1,170 1,069 1,105 • 30%
Slide 18: Strategy and outlook
Slide 19: Operating environment creating opportunities
Operating environment creating opportunities • In a world still feeling the effects of COVID-19, business is adapting to a more volatile environment; regulation, capital requirements, record low interest rates, intense competition and shifting buying patterns are all affecting profitability. • In th
Slide 20: 2025 strategy
2025 strategy Our ambition is to grow our share in deposits, lending and FUM. Our growth strategy is focused and bold. It builds on our strong financial position and high customer NPS to access specific growth opportunities in eastern seaboard markets, via a strong digital and AI enabled offering. C
Slide 21: Closing remarks
Closing remarks Objectives 1 Closing remarks • Rapidly accelerate balance sheet growth over the • Demonstrated capability on strategic execution medium term, while maintaining asset quality • Trusted and respected challenger brand with leading customer • Improved operating leverage (cost to income r
Slide 22: 22
22
Slide 23: Digital transformation driving growth
Digital transformation driving growth April June Dec Feb Feb 2017 2017 2019 2020 2021 CRM Contact Online Online Trustees Centre mortgage managed fund services May system Feb origination platform Aug platform July 1HCY 2017 replacement 2018 2020 upgrade 2021 2022 Single Core banking New Payments AI-d
Slide 24: A trusted and respected brand
A trusted and respected brand… MyState is a unique provider of banking, trustee and wealth management services to more than 150,000 customers across Australia through its retail brands – MyState Bank and TPT Wealth. MyState listed on the ASX in 2009. MyState currently has a market capitalisation of
Slide 25: A long and proud history
…with a long and proud history… 1887 1958 1998 2007 2011 2014 2018 2019 The Perpetual Trustees, 1970 2001 2009 2016 MyState single bank Executors and brand Agency Tasmanian Company of Island State Credit Union Perpetual Trustees MyState Financial + The Rock + Perpetual Tasmania commenced business as
Slide 26: Built solid relationships
…that has built solid relationships… Net Trust Score - MyState brand tracking research (Tasmania) July 2021 • MyState Bank has built 32% 37% 33% 36% on an already excellent 41% 35% position of trust, with 55% 64% its net trust score rising to 86% against a backdrop of falling net trust in banks more
Slide 27: Organisational culture and capability
…underpinned by a vibrant organisational culture and capability. FY21 outcomes delivered Linking tangible and intangible people assets to organisational value Significantly increased investment in training and development New leadership development Significant expansion of learning program Leadershi
Slide 28: Digital transformation driving growth
Digital transformation driving growth Digital transactions (#m)1 Branch transactions (#m)1 Migration to digital 3.54 0.32 0.31 continues 3.34 0.29 0.29 • Customer uptake of internet 2.87 2.90 2.52 0.23 0.22 and mobile banking 2.46 2.27 increasing. 0.16 • Digitisation of back office processes increas
Slide 29: Mortgage assistance
Mortgage assistance Total loans with assistance Total loans with assistance Financial assistance1 (facilities, no.) (balances, $m) $574m • At 30 June a very small number of 1,739 209 71 accounts remained in deferral (35 customers; 34 home loans and 1 301 $126m $11m $36m personal loan) 1,530 35 78 50
Slide 30: MyState in the community
MyState in the community MyState JackJumpers Football MyState MyState More Bank Arena NBL team Tasmania Bank Student Foundation support 3 year naming Joined forces with Naming rights sponsor Film Festival Celebrating 20 years of Support for rights sponsorship the JackJumpers to of the Women’s Super
Slide 31: Recovering economic environments
Recovering economic environments Tasmanian economic recovery Australian economy also well advanced recovering State final demand GDP TAS economic growth +2.9% Positive economic growth despite continued easing of COVID-19 +1.1% strongest of all the states YoY restrictions YoY Unemployment Rate 4.5% U
Slide 32: Definitions
1H: First half of financial year IO: Interest only 2H: Second half of financial year IRB: Internal ratings-based ADI: Authorised deposit-taking institution JAWS: relationship between income and expense growth APRA: Australian Prudential Regulation Authority LVR: Loan to valuation ratio Avg: Average
Slide 33: Summary Information
Summary Information Future Performance This Presentation contains summary information about MyState Limited (ABN This Presentation may contain “forward-looking” statements including 26 133 623 962) and its activities current as at the date of this Presentation. The statements regarding MyState’s int