Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — FY2021 Earnings Presentation
57 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 16, 2021
Slide 1: Results Presentation
rsonal use only Presenter Name Results Presentation For the full year ended 30 June 2021
Slide 2: Agenda
Agenda rsonal use only Overview Marnie Baker FY21 financials Travis Crouch Questions Presenter Name Marnie Baker, Travis Crouch, Taso Corolis 2
Slide 3: Overview
rsonal use only Overview Marnie Baker Managing Director 3
Slide 4: Delivering with resolute focus
Delivering with resolute focus FY21 overview • Total lending growth of 10.6%, 3.8x system1 rsonal use only Strategy • Total deposit growth of 12.5%, 1.7x system1 • Total income on a cash basis up 4.5% driving • Operating expenses up 0.6%, down 2.5% excluding growth value and transformation costs of
Slide 5: Delivering on all measures
Delivering on all measures Key measures 28.5 27.3 24.8 Customer 2.06m Net promoter rsonal use only 1.88m 3 numbers 1.72m score (NPS) 1.6 -3.1 -1.2 Jun-19 Jun-20 Jun-21 Jun-19 Jun-20 Jun-21 76.18% 75.08% 74.51% 48 48 44 Market MFI business 1 2.24% 2.41% 4 share 2.18% NPS -22 -16 -13 Jun-19 Jun-20 Jun
Slide 6: Strategy driving results
Strategy driving results FY21 financial result FY21 FY20 FY21 vs FY20 rsonal use only ($m) ($m) Statutory net profit $524.0 $192.8 171.8% Cash earnings $457.2 $301.7 51.5% Total income1 $1,702.5 $1,629.9 4.5% Cost to income 60.3% 62.7% (240bps) Return on tangible equity 10.17% 7.42% +275bps CET1 9.5
Slide 7: Strong performance across all customer divisions
Strong performance across all customer divisions Divisional snapshot Cash earnings ($m) Business division rsonal use only • Income up 7.0% • Opex down 10.7% • Cash earnings up 29.0% 175.0 Consumer division • Income up 3.3% 90.6 Agribusiness • Opex down 2.5% • Cash earnings up 9.0% 454.9 division • I
Slide 8: Shaping the future of banking
Shaping the future of banking Our strategy VISION Australia’s bank of choice for customers, employees, rsonal use only partners and shareholders PURPOSE To feed into prosperity, not off it IMPERATIVES Reduce Invest in Tell our Strengths complexity capability story Genuine and authentic human connect
Slide 9: Tracking to plan
Tracking to plan FY21 progress against strategic imperatives Reduce complexity Invest in capability Tell our story rsonal use only 1 • 6% reduction in FTE • Ferocia acquisition to accelerate digital strategy • Top 20 Most Trusted Brand in Australia • 24% reduction in suppliers • 27% increase in Mobi
Slide 10: Driving sustainable outcomes
Driving sustainable outcomes Environmental, Social and Governance measures FY21 outcomes Targets rsonal use only • Development of first stand-alone sustainability report to align with global sustainability reporting guidelines (released date September 2021) • Purchase 100% renewable • Delivered ~$27
Slide 11: Stepping up on our digital strategy
ping the ante on our digital strategy Internalising market leading technology capability and consolidating ownership of Australia’s highest rated banking app Ferocia is a financial technology company based in Melbourne: a close-knit team of talented developers, designers and innovators driven by dis
Slide 12: Australia's leading digital bank
Australia’s leading digital bank Built together with Ferocia through a design and technology-led banking approach Australia’s leading digital bank “Best Partnership rsonal use only Australia’s first and largest mobile only bank platform Highest rated Banking app in Australia of the Year • 1st mobile
Slide 13: Securing a leading market position with a new generation
Securing a leading market position with a new generation Helping young Australians improve their financial wellbeing and reconnect with their finances, taking them from a place where money is a cause of stress and anxiety to a happier place where they feel empowered and in control of their money rso
Slide 14: Ferocia acquisition to accelerate future growth
Ferocia acquisition to accelerate future growth With expertise, expedited by familiarity and proven success rsonal use only Enhancing our technology Best in class digital bank Activating our Up Ecosystem capability by internalising Ferocia • Already fully integrated in our core systems • Same people
Slide 15: FY21 Financials
rsonal use only FY21 Financials Travis Crouch Chief Financial Officer 15
Slide 16: Financial performance
Financial performance FY21 FY20 FY21 ($m) ($m) v FY20 rsonal use only Net interest income $1,431.2 $1,346.4 6.3% Other income $253.3 $267.8 (5.4%) 1 Homesafe $18.0 $15.7 14.6% Operating expenses $1,027.4 $1,021.5 0.6% Credit $18.0 $168.5 (89.3%) Cash earnings (after tax) $457.2 $301.7 51.5% Statutor
Slide 17: Lending growth profile
1 Lending growth profile Total lending Residential lending Business lending2 2.8x system FY21 rsonal use only 3.8x system 14.8% 1 10.6% 2.2% 0.6x system 5.3% 2.8% 0.5% 0.8% Total Lending Total Housing -0.7% 2.2x system 2.0x system 1 (annualised) 2H21 14.6% 14.3% 11.4% 1.1x system 6.6% 5.6% 5.4% 5.0%
Slide 18: Residential lending activity
Residential lending activity Retail - settlements breakdown Third Party Banking – settlements breakdown ($m)1 ($m)1 rsonal use only $5,000m $5,000m 2H21 splits: 2H21 splits: Variable - 43% Variable - 43% $4,000m Fixed – 57% $4,000m Fixed – 57% P&I – 89% P&I – 85% IO - 11% IO - 15% $3,000m $3,000m $2
Slide 19: Net interest margin
Net interest margin • Lending portfolio rate lower due to significant growth in fixed lending and competitive new business rates Historical NIM (%) 2.37 2.29 2.30 2.33 2.23 2.26 • Funding mix and deposit repricing benefits provided a tailwind rsonal use only 0.38 0.36 0.33 0.31 0.37 0.32 through FY2
Slide 20: Total income
Total income • Net Interest Income increased $84.8m or 6.3% on FY20 • Fee income was higher on lending products, partially with growth in the loan portfolio the significant driver, up offset by lower transaction and ATM fees rsonal use only $6.9b across the Group • Foreign exchange income continues
Slide 21: Operating expenses
Operating expenses • Operating expenses of $1,027.4m, up only $5.9m (0.6%), • Delivered sustainable changes to the cost base of: including impact of decision to accelerate technology and • $11.9m reduction in staff costs, enabled through a transformation spend rsonal use only 6.1% reduction in FTE •
Slide 22: Growth and transformation spend
Growth and transformation spend Investment spend ($m) Investment classification ($m) 165.0 91.2 165.0 rsonal use only 77.8 21% 24% 5% 10% 91.2 34.3 44% 31% 87.2 56.9 35% 30% FY20 FY21 FY20 FY21 Growth and productivity Risk and compliance Expensed Capitalised Asset lifecycle management Foundation tec
Slide 23: Consumer division performance
Consumer division performance • Net interest income increase driven by continued strong • Reduction in operating expenses reflects benefits of growth in both Retail and Third Party Banking channels and transformation program in the corporate branch network effective margin management and cost manage
Slide 24: Business division performance Agribusiness division performance
Business division performance Agribusiness division performance • Higher net interest income reflects an increase in the lending • Stronger net interest income driven by effective margin portfolio, strong deposit growth and effective margin management, partially offset by lower loan limit utilisatio
Slide 25: Homesafe investment property portfolio
Homesafe investment property portfolio • Proceeds on contracts completed during FY21 exceeded carrying Homesafe portfolio & funding balance ($m) value by $5.2m 1 901.7 Jun-21 split: • rsonal use only 779.8 Average annual return on completed contracts since inception is Melbourne – 62% 9.7% p.a, pre
Slide 26: Bad and doubtful debts
Bad and doubtful debts 2H21 1H21 2H20 1H20 • FY21 credit expense represents 2bps of total gross loans, ex ($m) ($m) ($m) ($m) provision release represents 5bps of total gross loans Consumer division $5.9 $2.4 ($3.5) ($0.4) rsonal use only • Net release of collective provision (as announced on 5 Augu
Slide 27: Arrears
Arrears Residential loan arrears Business loan arrears1 1.6% 6.0% rsonal use only 5.0% 1.2% 4.0% 0.8% 3.0% 2.0% 0.4% 1.0% 0.0% 0.0% Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Res 90d+ (inc. arrangements) Bus 90d+ (inc. arrangements) 2 Consumer loan arrears Agribusiness loa
Slide 28: Supporting our customers through COVID-19
Supporting our customers through COVID-19 • Support packages were reinstated from June 2021 for Support packages as at 31 July 2021 – by state ($) residential, consumer and commercial customers across Australia rsonal use only 3% 3% • New deferrals to 31 July 2021, 274 accounts totalling $87.0m 3% h
Slide 29: Funding mix
Funding mix • Funding mix remains a key strength, allowing flexibility to fund Funding profile ($b) above system asset growth 3.6 rsonal use only 3.0 3.5 • Reducing term deposit rates are seeing stronger flows to low 13.6 16.4 13.5 cost, at-call deposits products, increasing $3.5b for the half and 2
Slide 30: Capital
Capital Total capital & CET1 - historical (%) • Balance sheet strength continues, with CET1 increasing 32bps on June 2020, and an increase of 21bps on December 2020 rsonal use only • Fully franked final dividend of 26.5c with a DRP discount of 1.5% 13.61% 13.81% 13.14% • Full year FY21 dividend payo
Slide 31: FY22 financial outlook
rsonal use only FY22 financial outlook Loan growth • Continued strong above system lending growth expected with residential lending the key driver • Headwinds from front book lending rate competition, higher liquids and increased portfolio of fixed Net Interest Margin rate loans with some benefit ex
Slide 32: Summary
rsonal use only Summary Marnie Baker Managing Director 32
Slide 33: Economic resilience amid ongoing challenges
Economic resilience amid ongoing challenges Economic outlook Expected rsonal use only • Wages growth a key input to monetary policy • Housing market experiencing strong demand in all states • Continuing strength in jobs market through 2022 • Growth in regional Australia • Bullish Agribusiness Sector
Slide 34: Realising our opportunity
Realising our opportunity Closing comments rsonal use only • Clear strategy delivering for all stakeholders • Strong financial performance across all divisions • Customer proposition driving sustainable and above system growth • Ferocia acquisition to accelerate digital strategy • Shaping the future
Slide 35: Questions
rsonal use only Questions Marnie Baker – Managing Director Travis Crouch – Chief Financial Officer Taso Corolis – Chief Risk Officer 35
Slide 36: Appendix
ersonal use only Appendix > | Bendigoand AdelaideBank
Slide 37: Successfully telling our story
rsonal use only Successfully telling our story 37
Slide 38: Physical locations
rsonal use only Physical locations 38
Slide 39: The Community Bank model
The Community Bank model ‘Profit with purpose’ model Supporting communities through COVID-19 • ~$270m in community contributions1 since inception, rsonal use only • Sourcing, purchasing and delivering in demand PPE (Personal Protective enabling tangible economic and social benefits for the Equipment
Slide 40: Leading Australia's growth in digital home loans
Leading Australia’s growth in digital home loans Tic:Toc provides Bendigo and Adelaide Bank access to the Tic:Toc – portfolio balance ($m) fastest growing lending channel, generating industry rsonal use only 1,600 leading asset quality at low operational costs 1,200 Better customer experiences • 4.9
Slide 41: Collective provision - economic outlook
Collective provision - economic outlook Economic assumptions in the base scenario at June 2021 reflect improved conditions since June 2020 Unemployment (%) House prices (%) 12.00% 25.00% rsonal use only 10.00% 15.00% 5.00% 8.00% -5.00% 6.00% -15.00% 4.00% -25.00% 2.00% -35.00% Jun-21 Mar-22 Dec-22 S
Slide 42: Collective provision
Collective provision Total collective provision movements ($m) 11.2 14.1 19.6 0.2 67.5 263.2 266.1 rsonal use only 252.0 252.0 246.5 246.5 246.7 48.5 195.7 147.2 147.2 Dec-19 Economic forecast Additional overlays 1 Jun-20 Economic forecast Additional overlays 1 Dec-20 Economic forecast Additional ov
Slide 43: Residential lending portfolio
Residential lending portfolio Retail - portfolio ($b)1 Residential balance by state rsonal use only 25.2 24.1 23.1 23.5 22.8 15% Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 8% 10% 1 Third Party Banking - portfolio ($b) 24.6 27% 22.4 19.9 18.0 16.8 38% Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 2% 1 Loan portfolio co
Slide 44: Residential lending portfolio – total exposure
Residential lending portfolio – total exposure Retail lending - purpose (%) Retail lending - payment type (%) 15.1% 14.6% 13.6% rsonal use only 17.3% 15.9% 32.8% 33.0% 32.8% 32.3% 31.6% 71.4% 73.1% 74.6% 76.1% 78.0% 67.2% 67.0% 67.2% 67.7% 68.4% 11.3% 11.0% 10.2% 9.3% 8.4% Jun-19 Dec-19 Jun-20 Dec-2
Slide 45: Residential lending portfolio – key metrics
Residential lending portfolio – key metrics 1 Home Loans 90+ days past due - by state 3 Residential portfolio metrics Jun-21 Dec-20 Jun-20 3.0% rsonal use only Retail loans 51% 52% 54% 2.0% Third Party Banking loans 49% 48% 46% Lo Doc 1% 1% 1% 1.0% Owner occupied 66% 65% 64% Owner occupied P&I 93% 9
Slide 46: Business lending portfolio
Business lending portfolio Portfolio balance ($b) Business balance by state rsonal use only 9.9 9.7 9.7 9.8 9.5 8.4 8.2 8.0 8.0 7.9 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 14% Portfolio Commitment 5% 10% SME segment ($b)1 6.38 12% 6.33 6.21 6.15 56% 6.10 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 3% 1 SME is an
Slide 47: Agribusiness lending portfolio
Agribusiness lending portfolio Exposure by industry Balance by state 4.0% rsonal use only 4.3% Grain/Sheep/Beef 7.1% Sheep/Beef 34.3% Grain 7.5% Beef 12.9% Dairy Sheep Other 13.1% 16.8% Hort./Vit. 9% 19% 17% Portfolio and commitment ($b) 7.6 7.1 7.2 7.3 7.5 20% 6.0 6.1 6.2 5.8 5.8 32% Jun-19 Dec-19
Slide 48: Specific provisions and total impaired
Specific provisions and total impaired Specific provision balance ($m) Specific provisions breakdown ($m) 60.0 rsonal use only 94.3 85.4 40.0 78.4 20.0 Represented by - Jun-20 Dec-20 Jun-21 Jun-20 Dec-20 Jun-21 Jun-20 Dec-20 Jun-21 Jun-20 Dec-20 Jun-21 Jun-20 Dec-20 Jun-21 Jun-20 Dec-20 Jun-21 Consu
Slide 49: Funding – customer and wholesale
Funding – customer and wholesale Customer call deposit funding costs1 Term funding maturity profile2 $m rsonal use only 5% 5% 4,000 ≤ 0.01% 3,600 42% 41% > 0.01% - ≤ 0.25% Dec-20 Jun-21 3,200 53% 54% > 0.25% - ≤ 1.50% 2,800 2,400 2,000 Wholesale funding composition 1,600 1,200 29% 800 Jun-21 53% 3%
Slide 50: Liquidity
Liquidity Liquidity Coverage Ratio – 3 month average1,2 Net Stable Funding Ratio (NSFR) 133.4% as at 30 June 2021 rsonal use only Jun-21 Mar-21 Dec-20 Sep-20 ($b) ($b) ($b) ($b) Wholesale funding & other $12.5b High quality liquid assets 8.28 8.34 7.31 6.32 CLF / TFF 4.31 5.76 5.81 4.61 Other loans
Slide 51: Capital
Capital Credit risk weighted assets ($b)1 Jun-21 Dec-20 Jun-20 Dec-19 (%) (%) (%) (%) rsonal use only 36.4 35.3 Common Equity Tier 1 9.57% 9.36% 9.25% 9.00% 34.3 33.4 33.2 Additional Tier 1 2.04% 2.81% 2.34% 2.40% Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Total Tier 1 11.61% 12.17% 11.59% 11.40% 2 S&P RAC
Slide 52: Great Southern
Great Southern • Great Southern portfolio continues to reduce and is Great Southern portfolio1 adequately provisioned $m 1,400 rsonal use only • Portfolio represents less than 0.1% of total gross loans Millions 1,200 • As at 30 June 2021, portfolio comprised of 140 customers 100 1,000 105.0 800 71.0
Slide 53: Total income (cash)
Total income (cash) FY21 FY20 FY21 vs FY20 ($m) ($m) rsonal use only Net interest income $1,431.2 $1,346.4 6.3% Fee income $158.7 $155.5 2.1% Commissions $53.5 $56.6 (5.5%) FX income $19.1 $22.6 (15.5%) Trading book income $1.7 $11.2 (84.8%) Other $20.3 $21.9 (7.3%) Other income $253.3 $267.8 (5.4%)
Slide 54: Operating expenses (cash)
Operating expenses (cash) FY21 FY20 FY21 vs FY20 ($m) ($m) rsonal use only Staff costs $589.8 $567.1 4.0% Occupancy, property, plant and equipment $97.0 $100.7 (3.7%) IT costs $79.4 $70.9 12.0% Amortisation of software intangibles $27.9 $31.1 (10.3%) Fees and commissions $20.2 $20.3 (0.5%) Communica
Slide 55: Reconciliation
rsonal use only Reconciliation 1 Operating expenses include restructuring costs, legal costs and software accelerated amortisation costs Cash earnings after tax (subtotal) is equal to cash earnings before Homesafe net realised income 55
Slide 56: Disclaimer
Disclaimer This document is a presentation of general background information about the Group’s activities current at the date of the presentation. It is information in a summary form and no representation or warranty is made as to the accuracy, completeness or reliability of the information. It is t
Slide 57: Analysts
Analysts Karen McRae Head of Investor Relations rsonal use only T: +61 3 8414 7060 M: +61 417 186 500 E: karen.mcrae@bendigoadelaide.com.au Alex Hartley Manager Investor Relations T: +61 8 8300 6290 M: +61 478 435 218 E: alex.hartley@bendigoadelaide.com.au Media Simon Fitzgerald Head of Public Relat
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