Slide 1: Investor Presentation Full Year FY2018
17 August 2018 INVESTOR PRESENTATION FULL YEAR FY2018
Slide 2: Agenda
AGENDA FY18 INVESTOR PRESENTATION 1. Highlights & strategy Melos Sulicich Managing Director & CEO 2. Financial results David Harradine Chief Financial Officer 3. Strategy & outlook Melos Sulicich Managing Director & CEO FY18 FULL YEAR INVESTOR PRESENTATION | 2
Slide 3: Highlights & Strategy
HIGHLIGHTS & Key highlights STRATEGY Results MELOS SULICICH FY18 FULL YEAR INVESTOR PRESENTATION | 3
Slide 4: Key Highlights
KEY HIGHLIGHTS Growth across key financial metrics and underlying performance drivers Growing contribution from digital channels with increased customer adoption and advocacy Continued momentum in bank balance sheet and FUM growth and soundly capitalised for future growth High customer advocac
Slide 5: Key Metrics and Performance Drivers
KEY METRICS AND PERFORMANCE DRIVERS Change on FY17 results except where otherwise stated Total income: Net interest income: $126.3m +1.4% $90.8m +3.1% Solid performance and growth across all Net profit after tax: Earnings per share: key metrics $31.5m +4.6% 34.97 cps +0.93cps Fully franked dividend:
Slide 6: Financial Results
FINANCIAL Results summary Credit profile Tasmanian economy RESULTS Performance Funding Shareholder returns Loan book Wealth DAVID HARRADINE FY18 FULL YEAR INVESTOR PRESENTATION | 6
Slide 7: Improving Operating Leverage Delivering Growth
IMPROVING OPERATING LEVERAGE DELIVERING GROWTH Change FY18 FY17 (v FY17) Revenue growth Total operating income ($m) 126.3 124.6 +1.4% and cost Operating expenses (excl. BDD) ($m) 80.9 82.2 -1.5% containment delivered positive Net Profit after tax ($m) 31.5 30.1 +4.6% jaws and a lower cost to i
Slide 8: Margin Compression in Competitive Environment
MARGIN COMPRESSION IN COMPETITIVE ENVIRONMENT BBSW Significant increase in BBSW during 2.20 2H18 impacted funding costs 2.10 2.00 Net interest margin down -4bp on pcp BBSW (%) 1.90 1.80 Lending market remains highly 1.70 competitive 1.60 1.50 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 201
Slide 9: Continued Disciplined Cost Management
CONTINUED DISCIPLINED COST MANAGEMENT Operating costs declined -1.5% below pcp Continued focus on re-shaping the cost base to enable investment in customer acquisition, marketing and digital capability Administration costs managed well below pcp Depreciation and amortisation increased on pcp
Slide 10: NPAT Underpinned by NII Growth and Wealth
NPAT UNDERPINNED BY NII GROWTH AND WEALTH Net profit before tax growth of 6.5% and NPAT growth of 4.6% Strong NII growth despite continued competition in lower risk, lower LVR lending Wealth growth across all business lines Operating expenditure managed below prior year; one-off benefits als
Slide 11: Strong 2H Lending Growth
STRONG 2H LENDING GROWTH Loan book grew +2x system during 2HFY18 Home loan book – applications and settlements $2.0 1.79 1.68 Margin management remains key focus $1.8 $ Billion $1.6 1.42 $1.4 1.19 1.11 Emphasis on maintaining quality lending $1.2 $1.0 0.88 0.79 1.00 growth amidst vigorous comp
Slide 12: Continued High Credit Quality
CONTINUED HIGH CREDIT QUALITY 30+ Days S & P Arrears Data Impairments remain at historic lows (Majors and Regionals one month behind) 3.00% 30 and 90 day arrears well below peers and stable 2.50% 2.00% AASB 9 to be implemented July 2018 with 1.50% expected increases in provisioning 1.00% 0.50%
Slide 13: Improved Funding Mix
IMPROVED FUNDING MIX Customer deposits ($m) Stable funding mix enhanced by growth +10% $2,988 +9% $3,267 $2,715 in customer deposits 1,717 1,527 Customer deposit growth supported by 1,397 introduction of eSaver and Everyday 1,550 transaction accounts 1,318 1,461 Programmatic RMBS issuance cont
Slide 14: Well Capitalised to Support Growth
WELL CAPITALISED TO SUPPORT GROWTH Robust capital position supported by organic capital generation Capital base underpinning growth and investment in digital Well positioned to meet regulatory changes Total capital movements 1.74% 1.51% 13.29% 0.13% 1.39% 1.46% 0.08% 13.47% 0.02% 2.01% 1.96% T
Slide 15: Growth in Wealth Business
GROWTH IN WEALTH BUSINESS Funds under management and funds under advice ($m) Wealth revenue growth +10.6% on pcp with 778 809 solid performance across all business lines 740 Trustee revenue +25% on pcp benefiting from +6% sustained focus on will writing 1,008 1,089 1,153 FUM growth of $64m +5.
Slide 16: Momentum in the Tasmanian Economy
MOMENTUM IN THE TASMANIAN ECONOMY Tasmanian economy experienced positive start to the year, with majority of indicators supporting economic growth. State Final Demand reached an all-time high of $8.2bn in the March 2018 quarter, underpinned by a year of consistent growth in household consumption
Slide 17: Consistent Returns to Shareholders
CONSISTENT RETURNS TO SHAREHOLDERS Dividends (cps) Consistent dividend returns to investors 100th percentile TSR compared to ASX300 Banks in FY13, 14, 15 and 16. 90th percentile in FY17. High yielding fully franked dividend TSR comparison 100.0% 90.0% 80.0% 70.0% Percentile (%) 60.0% 50.0% Div
Slide 18: Strategy & Outlook
STRATEGY & Sector overview Achievements OUTLOOK Strategic overview Platform for continued growth MELOS SULICICH FY18 FULL YEAR INVESTOR PRESENTATION | 18
Slide 19: Sector Overview
SECTOR OVERVIEW System credit growth still slowing Housing market cooling nationally $ Industry Lending market continues to be highly competitive dynamics Funding costs remain elevated Royal Commission Productivity Commission Review Competitive landscape still unbalanced: 1. Funding co
Slide 20: Delivering on Our Strategic Priorities
DELIVERING ON OUR STRATEGIC PRIORITIES Our PURPOSE To help people achieve their dreams Our GOALS are to be Our MISSION Simpler, more relevant, accessible for our customers and easier to “use” To make financial services simple and trustworthy Our VISION Evermore digitally enabled so that we can attra
Slide 21: Building a Digital, Scalable Business
BUILDING A DIGITAL, SCALABLE BUSINESS * * All statistics compare FY18 with FY17 unless otherwise stated FY18 FULL YEAR INVESTOR PRESENTATION | 21
Slide 22: Platform for Continued Growth
PLATFORM FOR CONTINUED GROWTH What we’ve achieved Deposit and loan Costs Digital Robust capital book growth transformation position • Continued growth above • Targeted branch closures • Increase in customer NPS to +27 • Moody’s Baa1/P2 system • Productivity benefits • Introduced eSaver and Everyday
Slide 23: Glossary
GLOSSARY 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:
Slide 24: Disclaimer
DISCLAIMER Summary Information Future Performance This Presentation contains summary information about MyState and its activities current as at This Presentation may contain “forward-looking” statements including statements the date of this Presentation. The information is subject to change without