Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — FY2024 Earnings Presentation
72 slides from Bank Of Queensland's earnings presentation, Oct 16, 2024
Slide 1: FY24 Investor Materials
16 OCTOBER 2024 FY24 INVESTOR MATERIALS Full year ended 31 August 2024
Slide 2: Important information and disclaimer
2024 FULL YEAR RESULTS PRESENTATION Important information and disclaimer This is a presentation of general background information about Bank of Queensland ABN 32 009 656 740 and its consolidated entities (BOQ’s) activities at the date of this document. It is in summary form, does not purport to be c
Slide 3: Contents
2024 FULL YEAR RESULTS PRESENTATION Contents FY24 Results Presentation 4 About BOQ Group 36 Transformation Detail 43 Divisional Results 46 Net Interest Margin 52 Portfolio Quality 56 Funding & Liquidity 64 Economic Assumptions 68 Abbreviations 71 3
Slide 4: FY24 Results Presentation
FY24 RESULTS PRESENTATION 16 OCTOBER 2024 Full year ended 31 August 2024
Slide 5: Acknowledgement of Traditional Custodians
BOQ Group acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of the land where we live and work. We pay our respects to Elders past and present. This artwork was commissioned through Merinda Watters, a proud Kamileroi woman. Titled Burrul gi-gi maguia (Growing T
Slide 6: Agenda
2024 FULL YEAR RESULTS PRESENTATION Agenda Introduction Outlook & summary Jessica Smith, General Manager Investor Relations & Patrick Allaway, Managing Director & Chief Executive Officer Corporate Affairs Q&A Results overview Patrick Allaway, Managing Director & Chief Executive Officer Patrick Allaw
Slide 7: Results Overview
RESULTS OVERVIEW Patrick Allaway Managing Director & Chief Executive Officer
Slide 8: Key messages
2024 FULL YEAR RESULTS PRESENTATION Key messages Strong progress in transforming BOQ to a simpler, specialist bank 1. Delivered $343m after tax cash earnings and $285m statutory net profit after tax 2. Stronger second half trends with growth in business lending, NIM stabilisation and disciplined exp
Slide 9: FY24 results
2024 FULL YEAR RESULTS PRESENTATION FY24 results Cash earnings reflects home lending and margin contraction in a highly competitive market, cost inflation and transformation investment Key financial results ($m) FY24 FY24 v FY23 Total income 1,600 (8%) Operating expenses (1,069) 6% Underlying profit
Slide 10: Retail banking overview
2024 FULL YEAR RESULTS PRESENTATION Retail banking overview Conscious interim decision to recycle lower returning home lending capital while returns are uneconomic and as we deliver our scalable low cost to serve digital banking platform Summary Home lending growth ($m) › Contracted lower returning
Slide 11: Business banking overview
2024 FULL YEAR RESULTS PRESENTATION Business banking overview Returned to growth in 2H24 reflecting a focus on targeted specialist segments and an investment into frontline bankers Summary Lending growth ($m) › Strategic shift to recycle capital to accelerate growth in higher 623 returning segments,
Slide 12: BOQ Finance overview
2024 FULL YEAR RESULTS PRESENTATION BOQ Finance overview A strategic asset for the Group, delivering diversified asset-based lending to individual and business customers with a quality credit profile and capacity for further growth Summary Asset finance lending growth ($m) › A $6.9bn specialist busi
Slide 13: Living our purpose and values
2024 FULL YEAR RESULTS PRESENTATION Living our purpose and values Building social capital through banking, supporting our customers and communities Customers and communities Environment and climate change2 150-year Queensland heritage Joined the Net Zero Banking Alliance › Supporting local businesse
Slide 14: Cultural transformation
2024 FULL YEAR RESULTS PRESENTATION Cultural transformation Defined our target state culture, guiding our behaviours to change the way we operate Customer first Disciplined performance excellence Leveraging our size as a strength Focused on our target customers Delivering sustainable outcomes Workin
Slide 15: Our transformation
2024 FULL YEAR RESULTS PRESENTATION Our transformation Building a simpler, specialist bank Delivering through our strategic pillars STRENGTHEN Improved risk culture, with strong financial and operational resilience SIMPLIFY Simplified bank, with improved productivity and efficiency DIGITISE Scalable
Slide 16: Strengthening BOQ
2024 FULL YEAR RESULTS PRESENTATION Strengthening BOQ Delivery of FY24 programs, validated by the Independent Reviewers. Provision increase of $11m1 following further evaluation of work streams required to complete Key Achievements Progress Program rQ DESIGN IMPLEMENT EMBED Strengthen risk culture,
Slide 17: Simplifying BOQ
2024 FULL YEAR RESULTS PRESENTATION Simplifying BOQ Pathway to deliver upgraded $250m productivity target FY26 $250m productivity target1 Focus areas 250 1 Operating Model › Consolidation of shared service activities › Simplifying distribution channels › Reducing spans, layers and FTE › Further prod
Slide 18: Digitising BOQ | Lending
2024 FULL YEAR RESULTS PRESENTATION Digitising BOQ | Lending An omni-channel offering with digitised processing, seamless customer origination and servicing experience Improved analytics Simplified product offering & reporting (>100 down to 2) Our Digital Home Lending Solution 2 hand off points to o
Slide 19: Digitising BOQ | Deposits
2024 FULL YEAR RESULTS PRESENTATION Digitising BOQ | Deposits We are progressively scaling our digital platforms, improving our customer experience and enabling migration to our target state Growing our digital platforms… …delivering financial and customer outcomes SCALING CUSTOMER ENHANCED DIGITAL
Slide 20: Optimising BOQ
2024 FULL YEAR RESULTS PRESENTATION Optimising BOQ Elevated focus on improving shareholder returns to achieve revised FY26 8% ROE & 56% CTI targets as an interim step to delivering sustainable returns above our cost of capital Pathway to FY26 targets 1 $250m productivity initiative offsetting inflat
Slide 21: Financial Detail
FINANCIAL DETAIL Racheal Kellaway Chief Financial Officer
Slide 22: Financial performance
2024 FULL YEAR RESULTS PRESENTATION Financial performance Full year earnings impacted by ongoing competition and investment, second half trends improving Key financial results ($m) FY24 FY23 FY24 v FY23 2H24 1H24 2H24 v 1H24 Net interest income 1,463 1,600 (9%) 738 725 2% Non-interest income 137 142
Slide 23: Non-cash items
2024 FULL YEAR RESULTS PRESENTATION Non-cash items Statutory adjustments in line with strategic objective to simplify the business Reconciliation of cash earnings to statutory net profit after tax ($m) FY24 FY23 2H24 1H24 Cash earnings after tax 343 450 171 172 Restructuring costs1 (33) (35) (33) -
Slide 24: Key elements
2024 FULL YEAR RESULTS PRESENTATION Key elements Stronger second half trends with higher total income, margin stabilisation, growth in business lending and increased customer deposit balances Total income ($m) Net interest margin (%) 902 1.79 840 1.58 795 805 1.55 1.57 1H23 2H23 1H24 2H24 1H23 2H23
Slide 25: Net interest margin
2024 FULL YEAR RESULTS PRESENTATION Net interest margin Margin stabilisation driven by fixed to variable housing mix shift and replicating portfolio benefits Summary 1H25 considerations › Tailwind from portfolio mix as fixed rate loans moved into variable › Expect margin to be broadly flat in a stab
Slide 26: Operating expenses
2024 FULL YEAR RESULTS PRESENTATION Operating expenses Inflation and investment in transformation, technology, risk and compliance partially offset by simplification Operating expenses ($m) FY25 considerations (7) › Targeting broadly flat total costs 2.9% BAU expense growth 37 › Persistent, but mode
Slide 27: Transformation investment
2024 FULL YEAR RESULTS PRESENTATION Transformation investment Foundational digital bank build largely complete, investment spend has peaked Investment spend ($m) Summary 167 › Investment spend has peaked as the foundational digital bank build is largely complete 159 › Lower ongoing investment requir
Slide 28: Multi-year transformation investment
2024 FULL YEAR RESULTS PRESENTATION Multi-year transformation investment Investment spend has peaked, supporting the transformation to a simpler, specialist bank Investment spend profile ($m)1, 2 Delivered › Foundational digital bank build largely complete › Deposit capabilities for all digital bran
Slide 29: Portfolio quality
2024 FULL YEAR RESULTS PRESENTATION Portfolio quality Portfolio quality remains sound, arrears impacted by higher interest rates and cost of living pressures Loan impairment expense Provisions ($m) LIE/GLA (bps) 313 332 332 316 8 9 4 1 243 271 273 264 34 37 15 5 70 61 59 52 1H23 2H23 1H24 2H24 1H23
Slide 30: Funding & liquidity
2024 FULL YEAR RESULTS PRESENTATION Funding & liquidity Strong funding and liquidity settings as TFF fully repaid, focus on growing customer deposits Liquidity strength1 Funding strength 83% 82% 84% 154% 80% 148% 143% 132% 128% 71% 71% 126% 125% 69% 122% 67% 1H23 2H23 1H24 2H24 1H23 2H23 1H24 2H24 L
Slide 31: Capital strength
2024 FULL YEAR RESULTS PRESENTATION Capital strength Strong capital position, 17c fully franked final dividend Summary › CET1 ratio remains well managed at the top end of management target range1 at 10.66% › The DRP will operate with no discount and is expected to be satisfied in full by an on-marke
Slide 32: Outlook & Summary
GROUP OUTLOOK & SUMMARY » | | @-=~ | Boge | BOQS
Slide 33: FY25 Outlook
2024 FULL YEAR RESULTS PRESENTATION FY25 Outlook › An improvement in the Australian economy is likely in the coming financial year although the strength of the improvement is uncertain › There is heightened uncertainty due to the global outlook, low productivity and increasing consumer and business
Slide 34: Summary
2024 FULL YEAR RESULTS PRESENTATION Summary › Strong progress demonstrating execution proof points › Foundational digital bank build largely complete, focus shifting to customer migration, scaling digital mortgages and decommissioning legacy systems delivering material productivity benefits › Shifti
Slide 35: Transforming to a simpler, specialist bank
2024 FULL YEAR RESULTS PRESENTATION Transforming to a simpler, specialist bank Simpler digital retail bank Specialist relationship bank Specialist Niche products segments Deep customer Integrated across relationships channels Leveraging our Queensland heritage 35
Slide 36: About BOQ Group
ABOUT BOQ GROUP » | | @-=~ | Boge | BOQS
Slide 37: BOQ Group
2024 FULL YEAR RESULTS PRESENTATION BOQ Group Supporting customers for 150 years with differentiated brands attracting niche segments Our differentiators Key statistics for FY24 › Proud 150-year Queensland heritage c. 10k BOQ Business › Highly specialised bankers serving niche industry segments c. 5
Slide 38: 2024 FULL YEAR RESULTS PRESENTATION
2024 FULL YEAR RESULTS PRESENTATION 38
Slide 39: How we create value
2024 FULL YEAR RESULTS PRESENTATION How we create value Customer Finance Personalised experiences delivered through Access to funding through customer multi-brand offering, new digital capability deposits, wholesale and capital markets to and BOQ’s relationship model support operations and execute o
Slide 40: Distribution network
2024 FULL YEAR RESULTS PRESENTATION Distribution network Summary FY24 branch numbers at 140 (incl. transaction centres)1 1 27 › BOQ is converting all Owner Managed branches to corporate branches 8 85 2,497 8 19 in FY25. Further detail has been provided in BOQ’s disclosure to the 8 1,328 2,065 ASX da
Slide 41: Distribution footprint movements
2024 FULL YEAR RESULTS PRESENTATION Distribution footprint movements1 Aug-24 QLD NSW / ACT VIC WA NT TAS SA Total Corporate branches 8 1 2 5 - 1 - 17 Owner Managed branches2 85 19 9 7 1 1 1 123 Total 93 20 11 12 1 2 1 140 Aug-23 QLD NSW / ACT VIC WA NT TAS SA Total Corporate branches 12 2 2 6 - - -
Slide 42: Balanced portfolio for growth and geographic diversity
2024 FULL YEAR RESULTS PRESENTATION Balanced portfolio for growth and geographic diversity Summary FY24 Cash profit by division1 (%) › Well diversified and balanced portfolio. 26% of profits from Retail banking and 74% from Business banking 26% › Lending portfolio diversified geographically Retail ›
Slide 43: Transformation Detail
TRANSFORMATION DETAIL DETAIL
Slide 44: Remedial Action Plans
2024 FULL YEAR RESULTS PRESENTATION Remedial Action Plans Court Enforceable Undertakings – Key Terms Remedial Action Plans finalised and submitted: › Addressing underlying weaknesses › Setting clear and measurable actions › Timeline for completion and clear accountabilities that are specific, measur
Slide 45: Digitising BOQ roadmap
2024 FULL YEAR RESULTS PRESENTATION Digitising BOQ roadmap Digital strategy improving customer experience, providing strong deposit growth and lower cost to serve FY21 - 23 FY24 - 25 Post FY25 VMA and BOQ transaction and savings launched on new cloud Digital mortgage for all brands on new cloud digi
Slide 46: Divisional Results
DIVISIONAL RESULTS » | | @-=~ | Boge | BOQS
Slide 47: Divisional performance
2024 FULL YEAR RESULTS PRESENTATION Divisional performance Retail Business FY24 FY23 FY24 v FY23 FY24 FY23 FY24 v FY23 Net interest income 791 929 (15%) 672 686 (2%) Non-interest income 88 88 0% 45 48 (6%) Total income 879 1,017 (14%) 717 734 (2%) Operating expenses (746) (706) 6% (323) (304) 6% Und
Slide 48: Home lending performance
2024 FULL YEAR RESULTS PRESENTATION Home lending performance Moderated housing growth, reflecting decision to prioritise economic return over volume growth Housing metrics Housing application volumes (# ‘000)2, 3 Portfolio FY24 Flow 20.9 20.5 18.8 LVR > 90% (%) 1.7 1.2 1.8 0.8 16.8 0.2 LVR > 80% (%)
Slide 49: Lending to households (APRA data)
2024 FULL YEAR RESULTS PRESENTATION Lending to households (APRA data) Lending to Households (APRA) Multiple (APRA) YTD (A) 3M (A) 1M YTD 3M 1M Market share Major 1 13.27% 19.04% 1.58% 2.7 3.4 4.0 5.55% International 1 8.09% 12.48% 1.01% 1.6 2.3 2.6 2.73% International 2 7.21% 12.82% 0.93% 1.5 2.3 2.
Slide 50: Business bank
2024 FULL YEAR RESULTS PRESENTATION Business bank Investing in the business to deliver a stronger platform for future growth STRENGTHEN SIMPLIFY DIGITISE OPTIMISE Delivering quality growth in Simplification delivering an Modernising our technology Accelerating additional chosen segments enhanced cus
Slide 51: Lending to business (APRA data)
2024 FULL YEAR RESULTS PRESENTATION Lending to business (APRA data) Lending to Businesses (APRA) Multiple (APRA) YTD (A) 3M (A) 1M YTD 3M 1M Market share Regional 1 20.40% 28.19% 2.61% 2.7 3.0 2.5 0.97% Major 1 11.89% 6.20% -0.66% 1.6 0.7 Neg 2.03% International 1 9.41% 15.06% 0.17% 1.3 1.6 0.2 2.12
Slide 52: Net Interest Margin
NET INTEREST MARGIN » | | @-=~ | Boge | BOQS
Slide 53: Net interest margin – FY23 to FY24
2024 FULL YEAR RESULTS PRESENTATION Net interest margin – FY23 to FY24 Tailwinds Headwinds › Portfolio mix as fixed rate loans moved into variable › Retention discounting › Replicating portfolio benefits › Deposit competition › Benefits from rising rate environment › Increased wholesale funding cost
Slide 54: Replicating portfolio
2024 FULL YEAR RESULTS PRESENTATION Replicating portfolio1 Summary Replicating portfolio 5% › Replicating portfolio has an investment term of 5 years, this remains appropriate in current market conditions 4% › In FY24 the portfolio contributed 9bps to NIM Replicating Portfolio Return 3% › For every
Slide 55: Hedging costs - basis risk
2024 FULL YEAR RESULTS PRESENTATION Hedging costs - basis risk Summary Long term basis risk avg - 16 bps › Increase in exposure to Basis Risk slowed in 2H24 due to growth in 0.60% variable rate lending products only slightly outpacing growth in at call liabilities › The impacts of hedging costs had
Slide 56: Portfolio Quality
PORTFOLIO QUALITY » | | @-=~ | Boge | BOQS
Slide 57: Collective provisioning
2024 FULL YEAR RESULTS PRESENTATION Collective provisioning Prudent provisioning reflective of a changing environment Provision model assumptions Economic forecasts (calendar year) (%)1 › Base case reflects BOQ’s forward looking economic assumptions and is Base Downside supported by RBA forecasts wh
Slide 58: Housing loan portfolio
2024 FULL YEAR RESULTS PRESENTATION Housing loan portfolio Diversified portfolio with conservative LVR lending Summary Housing portfolio by geography (%) › Housing portfolio diversified across geography and channel 7% QLD › ~98% of customers with LVR =<90%, with 2H24 flow above 90% at 10% 31% 1.2% N
Slide 59: Asset finance portfolio
2024 FULL YEAR RESULTS PRESENTATION Asset finance portfolio Portfolio remains well diversified Summary Asset finance by geography (%) › Broad industry spread reducing concentration of asset finance 10% QLD portfolio 30% 11% NSW › Asset finance portfolio diversified across geography and channel VIC 2
Slide 60: Commercial portfolio
2024 FULL YEAR RESULTS PRESENTATION Commercial portfolio Continued focus on target segments Summary Commercial by geography (%) › Commercial portfolio diversified geographically 3% 6% QLD › Property and construction industry segments are well diversified and 16% NSW & ACT performing well with no mat
Slide 61: Business Bank lending portfolio
2024 FULL YEAR RESULTS PRESENTATION Business Bank lending portfolio Well diversified and underpinned by quality security Summary › Business Bank portfolio diversified geographically with a diverse channel mix › The portfolio is well secured with less than c.12% of unsecured lending › No material ind
Slide 62: Industry and geographic split over time
2024 FULL YEAR RESULTS PRESENTATION Industry and geographic split over time1 Enhanced diversification over time Housing loans - geographic split over time (%) Summary FY24 Balance Outstanding (%) 31% 29% 23% 10% 7% › Enhanced geographic diversification, Queensland FY17 Balance Outstanding (%) 50% 21
Slide 63: Emerging risks to portfolio quality
2024 FULL YEAR RESULTS PRESENTATION Emerging risks to portfolio quality Macro economic environment › Cash rates are likely at their peak, anticipate any rate reductions to occur early in 2025 › Interest rates over the next decade are likely to be higher than they have been over the past one › There
Slide 64: Funding & Liquidity
FUNDING & LIQUIDITY » | | @-=~ | Boge | BOQS
Slide 65: Funding
2024 FULL YEAR RESULTS PRESENTATION Funding Summary Deposit to loan ratio (%) › Loan growth funded through stable funding sources, including customer deposits and long term wholesale funding 83% 82% 84% › Strategic focus on customer deposits has seen an increase to the 80% deposit to loan ratio to 8
Slide 66: Term deposits
2024 FULL YEAR RESULTS PRESENTATION Term deposits Summary › FY24 growth in term deposits moderated due to lower funding requirements › Term deposit and at-call acquisition pricing converged through FY24 as TD carded rates normalised to pre-COVID spreads to BBSW › Spreads are expected to improve with
Slide 67: Credit rating
2024 FULL YEAR RESULTS PRESENTATION Credit rating Current debt ratings1 Rating Agency Short Term Long Term Outlook S&P A-2 A- Negative Fitch F2 A- Stable Moody’s P-2 Baa1 Stable (1) The Bank monitors rating agency developments closely and is rated by Standard & Poor’s (S&P), Fitch Ratings and Moody’
Slide 68: Economic Assumptions
ECONOMIC ASSUMPTIONS » | | @-=~ | Boge | BOQS
Slide 69: Macro economic environment
2024 FULL YEAR RESULTS PRESENTATION Macro economic environment1 Economic growth has been weak with elevated inflation Macro economic › Economic growth was slow in the first half of the calendar year 2024, with a gradual weakening of the labour market › Weak growth in household disposable incomes has
Slide 70: Housing, business lending and deposit outlook
2024 FULL YEAR RESULTS PRESENTATION Housing, business lending and deposit outlook1 Economic growth has been weak with elevated inflation Housing outlook Business lending outlook Deposits outlook › A modest rise in the unemployment rate is › Growth of business order books has › Some increase in the h
Slide 71: Abbreviations
ABBREVIATIONS » | | @-=~ | Boge | BOQS
Slide 72: Abbreviations
2024 HALF YEAR RESULTS PRESENTATION Abbreviations 3LOD: Three lines of defense DPD: Days past due NPAT: Net Profit After Tax 1H: First half of financial year DTL: Deposit to Loan NPS: Net Promoter Score 2H: Second half of the financial year ECDD: Enhanced Customer Due Diligence NSFR: Net Stable Fund