Mystate Limited · ASX:MYS
Mystate — FY2014 Earnings Presentation
27 slides from Mystate's earnings presentation, Aug 22, 2014
Slide 1: Investor Presentation August 2014
ASX Code: MYS For personal use only Company Profile Profile Company Company Profile MyState Limited (MYS), a non-operating MyState holding Limited (MYS), Company, is holding a non-operating a diversified financial Company, is aservices group diversified listedservices group listed financial on the A
Slide 2: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, business plans and objectives of management. All such forward-looking statements involve known and unknown risks, significant uncertainties, assumptions, contingen
Slide 3: Agenda
Agenda 1 Overview Melos Sulicich, For personal use only Managing Director and Chief Executive Officer 2 Financial Results Tom Taylor, Chief Financial Officer 3 Outlook Melos Sulicich, Managing Director and Chief Executive Officer MyState Student Film Festival. MyState Limited Investor Presentation
Slide 4: This year's highlights: a sound result providing a platform for growth
This year’s 1. 3.9 % increase in NPAT. Final dividend increased by 3.6% to For personal use only highlights... 14.5 cps, bringing full year dividend to 28.5 cps, up 1.8%. A sound result 2. Loan portfolio growth soft at 0.4%, but improving – providing a especially 2nd half. platform for 3. Further re
Slide 5: Earnings lift to $29.6m through strong cost and margin management
Earnings lift FY2014 FY2013 Change (%) For personal use only to $29.6m Revenue ($m) 119.3 122.3 -2.5% through Net profit after tax ($m) 29.6 28.5 3.9% strong cost Earnings per share (cps) 33.91 32.68 3.8% and margin Final dividend – fully franked (cents) 14.5 14.0 3.6% management Total divid
Slide 6: Economic improvement
Economic Following a period of prolonged weakness, the Tasmanian economy shows promising signs of improvement: For personal use only improvement ●● Dwelling approvals moved higher over the 2014 year, supported by record low interest rates and state government incentives. ●● Tasmanian population grow
Slide 7: Increased NPAT generation: 2013 vs 2014
Increased NPAT Generation: 2013 vs 2014 For personal use only NPAT $32.00 $ Millions generated from $30.00 28.5 0.96 1.53 0.90 0.04 0.78 0.06 29.6 strong cost 2.83 $28.00 1.64 and margin $26.00 0.07 0.42 management $24.00 $22.00 $20.00 e ts s s ts ls x AT AT I io d m t NI st st Ta om co n tfu os os
Slide 8: Segment contributions
Segment Revenue falls slightly due to lower average portfolio Increased profit contribution from the Wealth Management business For personal use only contributions Wealth Banking Wealth Banking 140.0 35.0 Revenue $ Millions NPAT $ Millions 120.0 30.0 100.0 25.0 80.0 20.0 60.0 15.0 40.0 10.0 20.0 5.0
Slide 9: Agenda
Agenda 1 Overview Melos Sulicich, For personal use only Managing Director and Chief Executive Officer 2 Financial Results Tom Taylor, Chief Financial Officer 3 Outlook Melos Sulicich, Managing Director and Chief Executive Officer The Rock proudly supporting the CQ NRL bid. MyState Limited Investor
Slide 10: Strong balance sheet, sound capital base, and capacity to grow
Strong balance FY2014 FY2013 Change (%) For personal use only sheet, sound Total assets ($m) 3,558.8 3,629.7 (2.0) capital base, Total liabilities ($m) 3,270.1 3,350.0 (2.4) and capacity Net assets ($m) 285.6 279.7 2.1 to grow Capital base 187.3 185.6 0.9 Risk weighted assets ($m) 1,356.0 1,
Slide 11: Banking business hampered by poor first half loan growth
Banking ●● Portfolio ground lost during the Banking Business NPAT first half has impeded the second For personal use only business half earnings. hampered by ●● 30 $ Millions Significant improvement in fourth poor first half quarter settlements has recovered the 25 24.4 25.2 25.0 loan growth… lost g
Slide 12: Re-engagement with broker channel driving uplift in new settlements
Re-engagement 44% growth in fourth quarter settlements Total settlements by quarter – actual Upward trajectory in monthly settlements For personal use only with broker Broker Retail Broker Retail channel driving 250 80 $ Millions $ Millions Substantial final quarter lift uplift in new 44% 70 45 42 s
Slide 13: Portfolio growth remains challenging
Portfolio Loan portfolio remains flat Portfolio losses of first half regained in second half For personal use only growth remains challenging… 3.100 3.100 $ Billions $ Billions 3.080 0.4% 3.080 1.8% 0.5% … although 1.8% 3.060 3.049 3.060 3.047 3.047 1.3% improvement 3.040 3.034 3.040 3.034 in sec
Slide 14: Broker channel delivers the FY14 portfolio improvement
Broker channel Investment in broker channel Channel portfolio balances: this year vs last year For personal use only delivers the ●● BDMs deployed in both Sydney and Melbourne markets. FY14 portfolio 1.600 $ Billions 1.576 1.573 improvement ●● Implemented NextGen front end 1.550 technology. 1.500 ●●
Slide 15: Improvements to funding costs help net interest margin
Improvements ●● Significant improvement in funding costs at The Rock has lifted the net interest margin for the banking business, despite a RBA rate reduction in August. For personal use only to funding costs help Small improvement in NIM% Banking Business MyState Financial The Rock net interest 2.9
Slide 16: Funding costs have improved via disciplined balance sheet management
Funding ●● Funding costs have been reduced through replacement of higher priced wholesale funding with cheaper funds from the RMBS issue in November 2013. For personal use only costs have ●● Downward repricing in term deposits, contraction in customer offset balances, improved and reduction in liqui
Slide 17: Increasing loans sourced via broker network will help portfolio diversification
Increasing loans June 30 2014 home loan portfolio distribution based on For personal use only sourced via primary security location broker network will help $8.3M portfolio 0.2% diversification $446.6M 15.7% $60.9M 2.1% $18.9M 0.7% $221.8M 7.7% 7.7% NSW 0.2% NT $158.7M 5.5% 15.7% QLD 0.7% SA 68.1% T
Slide 18: Arrears bottomed out in 2013, still below majors
Arrears 90+ day arrears S & P SPIN – Prime S & P SPIN – Regional Banks MyState Group Number of 90+ day loans has increased from For personal use only bottomed out 0.90 % average 44 in H1 to 67 in in 2013… 0.80 0.70 H2. Remains very small 0.60 percentage of 25,000 0.50 total loans, and well … althoug
Slide 19: Bad debts expense reflects conservative credit risk management
Bad debts ●● Lower write-offs are the product of 3 years’ of focus on risk. For personal use only expense ●● 2014 write-offs are at historical lows. reflects 2012 2013 2014 conservative credit risk and Bad debts written off ($M) 4.834 4.079 2.206 methodical collections Less bad debts recovered (1.14
Slide 20: Wealth management provides increased contribution
Wealth ●● Solid full year NPAT of $4.6M up $1.5M / Wealth Management NPAT 46.4 % on previous year. For personal use only management ●● Wealth management revenue provides 50 $ Millions 4.6 remains flat overall, with increased increased management fees from FUM 45 contribution negated by a decline in
Slide 21: Wealth management revenues remain flat overall
Wealth Wealth management revenues Funds management income Trustee services income Financial planning income ●● Revenue growth continues to For personal use only management 10.0 $ Millions be challenging. revenues 8.0 Opportunity remain flat 6.0 for increased penetration of overall 4.0 existing custo
Slide 22: Tight cost control in 2014 mitigated slow growth environment
Tight cost Personnel costs 45.0 Technology costs 12.0 Technology costs Software Amortisation $ Millions $ Millions For personal use only control in 2014 38.422 38.489 10.042 40.0 35.659 9.726 10.0 35.0 0.2% 8.196 mitigated the 30.0 25.0 7.4% 8.0 6.0 3.1% 15.7% effects of the 20.0 15.0 4.0 10
Slide 23: Cost-to-income ratio benefits from reductions in cost base
Cost-to-income ●● Cost-to-income ratio improved to Cost to income ratio Costs (LHS) Income (LHS) Cost to income % (RHS) 64.5% in 2014 (2013: 65.7%). For personal use only ratio benefits from reductions ●● Ratio improvement driven by $3.5m / 130.0 71.0% $ Millions 4.3% reduction in operating costs. i
Slide 24: Agenda
Agenda 1 Overview Melos Sulicich, For personal use only Managing Director and Chief Executive Officer 2 Financial Results Tom Taylor, Chief Financial Officer 3 Outlook Melos Sulicich, Managing Director and Chief Executive Officer MyState Australian Wooden Boat Festival. MyState Limited Investor Pr
Slide 25: Summary
Summary 1. A sound financial result For personal use only ●● Increased NPAT + dividend ●● Return on average equity +8 basis points 2. Tight cost control ●● Cost-to-income continues to fall to 64.5% ●● Future improvements through revenue growth 3. Firmer platform ●● Core banking system implemented in
Slide 26: Key immediate focus areas
Key immediate focus areas For personal use only Grow Simplify Strength Relationships ●● core business processes by in cost control, enhancing through sales investing in balance sheet, staff, customer and channel technology and credit risk and community management and process management engagement im
Slide 27: Outlook
Outlook 1. N ew organisational structure to provide improved sales For personal use only management with most growth to come from the Low growth broker channel. environment to continue. 2. R ecovery in Tasmanian economic fundamentals provides a strong platform for continued improvement in the Need t