Bnk Banking Corporation Limited · ASX:BBC
Bnk Banking — FY2022 Earnings Presentation
36 slides from Bnk Banking's earnings presentation, Aug 26, 2022
Slide 1: Investor Presentation: FY22 Results, FY23-FY26 Strategy
ASX:BBC INVESTOR PRESENTATION FY22 Results FY23–FY26 Strategy August 2022 1
Slide 2: Disclaimer
Disclaimer ASX:BBC 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, c
Slide 3: Agenda
Agenda ASX:BBC FY23 – FY26 Strategy and Highlights Allan Savins Chief Executive Officer FY22 Financial Results Andrew Kitchen Group CFO 3
Slide 4: FY23 – FY26 Strategy & Highlights
FY23 – FY26 Strategy & Highlights ASX:BBC Allan Savins Chief Executive Officer 4
Slide 5: Allan Savins - CEO
ASX:BBC “ Following a strategic review of the BNK business, we are pleased to announce a shift in strategic direction to pivot the Company into higher margin SME lending, thereby driving the next stage of expansion for the Company. With excellent growth across the loan book, deposit book and net int
Slide 6: Loan Book, Deposits & Net Interest Income
Loan Book, Deposits & Net Interest Income Excellent growth achieved across lending and deposits, demonstrated ASX:BBC over a two year period Loan Book ($m) Deposit Book ($m) Net Interest Income ($m) 12.8 984 965 636 7.2 537 5.1 346 285 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 6
Slide 7: Investment Highlights
Investment Highlights Key strategic initiatives in FY22 have created platform for ASX:BBC continued growth Shift in Strategic Direction To focus on high margin SME lending & low cost SME transaction deposits with clearly Commercial Lending Forecast for Profitable defined key metrics Growth BNK’s com
Slide 8: A Strategic Shift in Direction
A Strategic Shift in Direction BNK will shift its focus to higher margin SME lending with the aim ASX:BBC of achieving the following key metrics: $3b Balance Sheet Loan Book Targeting an increase to over $3 billion FY24 Cash Net Profit After Tax (NPAT) Achieve positive Cash NPAT in FY24 10% Return o
Slide 9: The SME opportunity
The SME opportunity High value customers ASX:BBC There are over 2.4 million SMEs in Australia, employing close to 5 million Australians. Since emerging from COVID-19 restrictions, the SME lending market has been a growth sector: • In the 3 months to August 2021, there was a 26% jump to $10 billion i
Slide 10: Deposit Strategy
Deposit Strategy ASX:BBC Pivoting from competitive market rates and broker originated to a direct SME focused, relationship driven bank. Service Oriented SME Bank Target growth markets Relationship driven Banking for Small to Medium sized Competitive Market Launch BNK Brand businesses. Offering full
Slide 11: High Margin SME Lending Initial Offering
High Margin SME Lending Initial Offering A pivot away from 100% focus on loan growth via residential ASX:BBC mortgages to increase returns BNK High Margin Product Range • Term Loan (Full Doc) • Term Loan (Alt Doc) • Commercial SMSF • Lease Doc • Broker Trail book loan Capital Proceeds from the Finsu
Slide 12: Our Transformation
Our Transformation With clearly defined milestones ASX:BBC FY 2021 FY 2022 FY 2023 Oct 20 – Appointment of Andrew Kitchen Aug 21 – Formalisation of alliance with Jul 22 –Initial $40m in dividends distributed as CFO, an experienced financial services Goldman Sachs for a $500m Securitisation to shareh
Slide 13: Our Global Accolades
Our Global Accolades Award winning services across all businesses ASX:BBC 2021 Australian Mortgage Awards Loan Services Team of the Year (Better Choice) 2013 2021 Your Mortgage 5 Star Awards 2014 Mortgage Lender of the Year (Better Choice) 201 201 201 2020 & 2021 Mozo Experts Choice Awards 5 6 7 Bes
Slide 14: Finsure Sale & Capital Return
Finsure Sale & Capital Return Value returned back to our shareholders ASX:BBC The sale of Finsure to MA Financial Group Limited was completed on 7 February 2022 with the Group receiving $152.2 million in consideration. The sale was an outstanding result. February 2022 July 2022 The gain on sale was
Slide 15: Highly Experienced Board
Highly Experienced Board Driving the next stage of growth ASX:BBC Don Koch - Chairman of the Board Jon Denovan - Non-Executive Director • 30+ years’ experience in the global financial services sector. • Leading mortgage industry authority on regulation and compliance. • Former CEO of ING Bank in Aus
Slide 16: Management with a Proven Track Record
Management with a Proven Track Record In implementing and executing expansion strategies ASX:BBC Allan Savins – Chief Executive Officer Andrew Kitchen – Chief Financial Officer • Over 35 years’ experience within the financial services industry. • Values driven, personable CFO with extensive experien
Slide 17: FY22 Financial Results
FY22 Financial Results ASX:BBC Andrew Kitchen Chief Financial Officer 17
Slide 18: Key Metrics - Snapshot
Key Metrics - Snapshot Well capitalised to support further growth ASX:BBC Group FY22 FY21 YoY change Group Statutory NPAT* $59.8m $5.6m ↑ 956.5% Net Interest Income $12.8m $7.2m ↑ 78.1% Bank Underlying NPAT $(6.9)m $(2.4)m ↓ 181.0% Bank Cash NPAT $(2.1)m $(2.7)m ↑ 19.3% Group Net Assets $190.4m $127
Slide 19: NPAT Bridge ($m)
NPAT Bridge ($m) Significantly improved cash NPAT with continued investment in employees and ASX:BBC software to support future growth • IT development post tax 19
Slide 20: Segment Performance
Segment Performance Cash NPAT improved by 19.3% YoY ASX:BBC Underlying NPAT ($m) Cash NPAT ($m) FY21 FY22 FY21 FY22 -1.57 -0.68 -2.55 +0.10 -2.45 -1.47 -0.68 -4.62 -2.15 -2.66 -6.88 -2.66 NPAT IT Development NPV Cash NPAT IT Development 20
Slide 21: Impact of NPV Accounting
Impact of NPV Accounting Bank White Label Portfolios – Assumptions driving NPV valuations ASX:BBC Net Income FY22 FY21 Net Present Value (NPV) of contractual assets (000’s) -6,602 151 Portfolio FY22 FY21 Bank* $1.4b $1.9b Assumptions FY22 FY21 Discount Rate to brokers 1.5% - 6.5% 1.5% - 6.5% Percent
Slide 22: Bank Net Interest Margin
Bank Net Interest Margin NIM compression caused by extremely competitive mortgage market ASX:BBC • Impact of Finsure sale • Impacted by market rate pricing 22
Slide 23: Credit Quality & Loss Protection
Credit Quality & Loss Protection Growth achieved without sacrificing credit quality ASX:BBC Historical Credit Charges (% of loan book) 6.0% Portfolio Hardship Rate (% of customers) 0.06% 5.0% 4.0% 0.04% 3.0% 0.02% 2.0% 0.00% 2017 2018 2019 2020 2021 2022 1.0% 0.0% Feb-21 Apr-21 Jul-21 Oct-21 Feb-22
Slide 24: Bank Expenses ($m)
Bank Expenses ($m) BNK has invested in its people to support growth and improve risk ASX:BBC management as the business continues to grow 24
Slide 25: Well Capitalised
Well Capitalised The sale of Finsure will allow BNK to further accelerate growth ASX:BBC 25
Slide 26: Outlook
Outlook Allan Savins Chief Executive Officer 26
Slide 27: The BNK funded loan book has grown by 33% over the last 6 months
The BNK funded loan book has grown by 33% over the last 6 months and 83% in FY22 ASX:BBC The deposit book grew by 52% in FY22 BNK On Balance Sheet portfolio ($M) BNK Deposits ($M) 984 965 833 829 833 848 274 740 636 259 659 331 279 537 238 690 502 550 574 398 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22
Slide 28: Continued diversification in the BNK-funded lending portfolio
Continued diversification in the BNK-funded lending portfolio ASX:BBC Improved Geographic mix and lending to owner occupiers On Balance Sheet Loans Portfolio By Loan Type Portfolio Mix By Portfolio Mix By LVR Loan Category FY21 FY21 FY21 80.01%- 90% FY21 Above 90% Other LVR LVR Commercial Consumer 5
Slide 29: Strong Cornerstone Portfolio
Strong Cornerstone Portfolio BNK has experienced record growth while strengthening the ASX:BBC underlying Portfolio dynamics: • BNK tightened lending controls throughout • Mortgagee in possession rates have FY22, specifically to high debt to income diminished to zero. borrowers. • No credit write-of
Slide 30: Area of Focus
Area of Focus Key priorities in FY23 and beyond ASX:BBC ✓ Rebranding to BNK across all channels ✓ Lower originated prime ROC products pivot to BEN warehouse for optimal use of capital consumption, with higher margin loans to the balance sheet ✓ Extend suite of SME banking products (initially commerc
Slide 31: Conclusion
Conclusion ASX:BBC ✓ Become a market leading SME business bank, wish to become THE bank for Enterprising Australians ✓ Residential home loans will remain the cornerstone to build upon ✓ Clear priorities will drive strategic growth within risk appetite ✓ Scale existing platform and expertise ✓ Grow a
Slide 32: Appendix
Appendix 32
Slide 33: BNK Commercial Products
BNK Commercial Products ASX:BBC Commercial Term Loan (Full doc) Commercial Lease Doc • Individuals, Partnerships, Corporate & Trust Borrowers • Individuals, Partnerships, Corporate & Trust Borrowers • Owner Occupied & Investment purpose – purchase, refinance, equity release & • Owner Occupied & Inve
Slide 34: Group Financial Snapshot
Group Financial Snapshot ASX:BBC FY22 FY21 Change Bank Underlying NPAT ($000's) (6,881) (2,449) ↓ 181.0% Bank Cash Earnings ($000's) (2,146) (2,660) ↑ 19.3% Group Statutory NPAT ($000's) 59,787 5,659 ↑ 956.5% Continuing EPS (1.2) c 7.4 c ↓ 8.6c Group Net Income 26,149 38,468 ↓32.0% Net Interest Marg
Slide 35: Underlying to Statutory NPAT Reconciliation
Underlying to Statutory NPAT Reconciliation ASX:BBC Group FY Financials - Reconciliation FY22 FY21 Data in $k's Overall Overall Underlying NPAT (6,881) 7,119 Revenue Adjustments Net Other Income 319 57 Expense Adjustments Full Year Depreciation and Amortisation - 573 Software Development Costs 1,832
Slide 36: Balance Sheet
Balance Sheet ASX:BBC Group ($m) FY22 FY21 $ Var. % Var. Assets Cash & Equivalents 140.0 47.3 92.7 196.1% NPV Asset 21.0 505.7 (484.7) (95.8%) Loans & Advances 990.1 540.0 450.1 83.4% Other Assets 290.7 228.9 61.8 27.0% Total Assets 1,441.8 1,321.8 119.9 9.1% Liabilities Deposits 964.6 635.6 328.9 5