Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 FY2008 Earnings Presentation
41 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 18, 2008
Slide 1: Interim profit announcement
For personal use only Interim profit announcement 18 February 2008
Slide 2: Agenda
Agenda For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale
Slide 3: Current environment and merger integration
For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale busines
Slide 4: History
History For personal use only Celebrating 150 years - and 10 years of Community Bank® Consistent and focused strategies Reliable improvement in shareholder returns and shareholder value Two different business strategies (wholesale and retail), but both using partners to improve effectiveness Adaptab
Slide 5: Current market conditions
Current market conditions For personal use only Confidence levels have been severely impacted Non-retail funding – harder to access and costs more Adequate funding is available, and when managed properly we can: Improve profitability Enhance relationships and prospects Leverage capabilities and inve
Slide 6: Growth at profitable prices
Growth at profitable prices For personal use only - remains our focus Leveraging our retail strength: Strong retail deposit growth Maturing branch network Conservative retail funding mix Demonstrated commitment to price for risk and expect acceptable and sustainable returns from each business Growth
Slide 7: The merger - why it makes good sense
The merger For personal use only - why it makes good sense Increased scale and diversity Improved talent pool Synergies are realistic and achievable Immediate progress on merger integration tasks A range of partner business programs can be leveraged Early opportunities for retail banking in SA Expan
Slide 8: The result - disciplined and sustainable
The result For personal use only - disciplined and sustainable Cash EPS up 10.3% Disciplined approach to grow profit Excellent credit quality Improved dividend Excellent retail deposit growth Strong capital position (including under Basel II) Reintroduction of DRP discount and share top-up Reaffirm
Slide 9: Financial result
For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale busines
Slide 10: Consistent, reliable earnings growth
Consistent, reliable earnings growth For personal use only Profit (A$m) Dec-06 Dec-07 Change Underlying earnings - $ million 90.9 115.0 26.5% Dividend (interim) - cents per share 24.0 28.0 16.7% Cash basis earnings - cents per share 55.4 70.7 27.6% Cash earnings - cents per share 39.0 43.0 10.3%
Slide 11: Profit analysis – cash based earnings
Profit analysis – cash based earnings For personal use only
Slide 12: Quality earnings - growth at profitable prices
Quality earnings For personal use only - growth at profitable prices Analysis of net interest margin* Cash to Bills Repricing and Retail/W holesale spread product mix Mix (0.01% ) changes (0.01% ) (0.10% ) 1.67% 1.55% *Prepared on the basis of Adelaide Bank and Bendigo Bank being merged since 1 July
Slide 13: Growing shareholder returns - earnings and dividends
Growing shareholder returns For personal use only - earnings and dividends Cents 50 45 40 43.0 35 39.0 30 34.7 25 28.0 20 24.0 15 22.0 10 5 0 Dec-05 Dec-06 Dec-07 Cash earnings per share Dividend
Slide 14: Investing in future growth - operating expenses
For personal use only 94.7 Salaries & staff related costs 104.5 15.2 Occupancy 18.4 17.4 Information technology costs 20.6 10.4 2006 Management fees & expenses 9.9 2007 - operating expenses 5.2 Depreciation/amortisation 5.6 Investing in future growth 2.7 Intangibles amortisation 3.1 41.8 Other opera
Slide 15: Investing in future growth - efficiency ratio
Investing in future growth For personal use only - efficiency ratio: expenses/income 67.9% 66.5% 63.7% Dec 2005 Dec 2006 Dec 2007
Slide 16: Loan portfolio
Loan portfolio For personal use only By purpose By security 12% 13% 20% 12% 2% 68% 73% Residential Margin Lending Non-residential Residential Commercial Margin Lending Unsecured
Slide 17: Excellent credit quality - gross impaired loans
Excellent credit quality For personal use only - gross impaired loans/total assets % 0.08 0.08 0.08 0.07 0.06 0.04 0.02 0.00 Dec-05 Dec-06 Dec-07
Slide 18: Excellent credit quality - loan loss provision and reserves
Excellent credit quality For personal use only - loan loss provision and reserves 18.0 32.5 A$ Millions 10.3 9.3 7.7 8.8 8.9 9.8 10.2 22.2 22.7 8 80.8 38.8 42.4 45.0 35.6 35.8 Dec 2005 Dec 2006 Dec 2007 Dec 2006 Dec 2007 Dec 2007 Bendigo Bendigo Bendigo Adelaide Adelaide Group General Collective Spe
Slide 19: Funding and capital
Agenda For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale
Slide 20: Change in Tier ratio in December (effect of merger)
For personal use only Change in Tier 1 ratio in December (effect of merger) 8.60% 8.40% 8.20% 0.38% 0.61% 8.00% 0.27% 7.80% 7.60% 7.40% 7.78% 7.73% 7.20% 7.00% 6.80% Pre merger ADB share capital and ADB capitalised Other 31-Dec-07 reserves (ex goodwill) expenses
Slide 21: Change in Tier ratio in January (effect of Basel II)
Change in Tier 1 ratio in January For personal use only (effect of Basel II) 8.60% 8.40% 8.20% 8.00% 0.28% 0.32% 7.80% 7.60% 0.36% 7.40% 0.01% 7.20% 7.73% 7.00% 7.32% 6.80% 6.60% 31-Dec-07 RW A adjustment Lost transitional relief Investments Other Going forward
Slide 22: Funding structure
Funding structure For personal use only $millions Balance at 31/1/08 Wealth/HNW/Corporate 8,135.6 Branches 15,183.3 Total Retail 23,318.9 Short term domestic 4,945.1 ECP 1,377.6 Domestic MTN 1,449.7 Euro MTN 757.7 Total Wholesale 8,530.1 Securitisation & clean sales 14,840.1
Slide 23: Funding mix
Funding mix For personal use only 100% 100% Term Wholesale 50% Retail 50% Warehouse Sales 0% 0% 2005 2006 2007 2005 2006 2007 On Balance Sheet Securitisation
Slide 24: Retail banking – first half highlights
Retail banking For personal use only – first half highlights Added 33 branches and pipeline remains strong Integrated ADB network into retail management Continue to move staff from transactional to relationship positions Grew customer numbers by 35,000 – to 1.18 million Maintained leadership positio
Slide 25: Community Bank growth
Community Bank® growth For personal use only Deposits per Community Bank® branch CAGR 20.3% 37.2 38.3 32.9 34.0 29.5 23.8 17.9 5.3 10.5 <1 1 2 3 4 5 6 7 8 Age of branch in years Loans per Community Bank® branch CAGR 25.6% 30.3 31.2 26.2 25.9 21.3 6.3 17.3 3.2 12.0 <1 1 2 3 4 5 6 7 8 Age of branch in
Slide 26: Group risk
For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale busines
Slide 27: Group risk
Group risk For personal use only Measure and monitor credit and operational risks against a Board-determined framework Unique opportunity to leverage existing skills from both businesses Larger dedicated resource available due to scale provided by merger
Slide 28: Wholesale Bank - a diverse portfolio of businesses
Wholesale Bank For personal use only - a diverse portfolio of businesses Wholesale Mortgages Business Partners Margin Lending Funds Management
Slide 29: Wholesale Mortgages - a challenging environment
Wholesale Mortgages - a challenging environment For personal use only A commitment to write business with an appropriate economic return (no market share target) Repriced portfolio 0.55% for Lo-Doc 0.25% variable rate Growth in assets being actively managed
Slide 30: Wholesale Mortgages - a challenging environment
Wholesale Mortgages - a challenging environment For personal use only More than $1b of loans coming off fixed rates in next 6 months – a re-pricing opportunity Continued credit quality focus Variable cost base has allowed downwards management of costs Working on the assumption that securitisation ma
Slide 31: Business Partners - specialised lending
For personal use only Business Partners - specialised lending Integration of ADB and BEN business banking structures currently under way Meaningful synergies available Excellent credit quality
Slide 32: Business Partners - portfolio funding active partners
For personal use only Business Partners - portfolio funding 25 active partners Strong pipeline of active discussions and approved mandates Excellent credit quality No write-offs for any program with subordination structures Write-offs and arrears below forecasts for on-balance sheet portfolios Margi
Slide 33: Margin Lending
Margin Lending For personal use only Integrity of business model tested and proven All margin calls made, all settlements met Anticipate future portfolio growth through: Improved equity market sentiment Further opportunities in financial planning sector (white label agreement with Aviva, February 20
Slide 34: Wealth Solutions - funds management
For personal use only Wealth Solutions - funds management Sandhurst Trustees Select Mortgage Fund Cash Common Fund Adelaide Managed Funds CMT AMF Yield Fund Funds continue to perform well Growth sector Opportunity for product innovation and business growth
Slide 35: The future
For personal use only Rob Hunt Current environment Managing Director Merger Integration David Hughes Financial result Chief Financial Officer Mike Hirst Funding and capital Chief Executive – Retail Bank Retail business update Jamie McPhee Group risk Chief Executive – Wholesale Bank Wholesale busines
Slide 36: The future - continued sustained performance
The future For personal use only - continued sustained performance Expect continued improvement in shareholder outcomes Retail bank will continue to expand and progressively mature Partnering will continue to play an important role Wholesale and business partner divisions remain key businesses Broad
Slide 37: The future
The future For personal use only We expect to improve shareholder returns by continuing to be relevant, connected and valued by our customers, communities and partners We will be disciplined in the application of capital and funding to provide the best economic outcome
Slide 38: Questions
For personal use only Questions
Slide 39: Appendix
For personal use only Appendix
Slide 40: Investing in future growth - operating expenses
Investing in future growth For personal use only - operating expenses 9% 10% 5% 3% 1% 23% 49% Salaries & staff related costs $104.5m Occupancy $18.4m Information technology costs $20.6m Management fees & expenses $9.9m Depreciation/amortisation $5.6m Intangibles amortistion $3.1m Other operating exp
Slide 41: Commercial loans - diversity of loans
Commercial loans For personal use only - diversity of loans 0% 12% 3% 0% 2% 31% 2% 3% 9% 4% 5% 4% 7% 1% 17% Property & business services - 1646.8 Construction - 277.6 Health & community service - 386.3 Cultural & recreational services - 38.9 Agriculture & associated industries - 937.6 Accom, cafes &
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