Bank of Queensland Limited · ASX:BOQ
Bank of Queensland — FY2001 Earnings Presentation
60 slides from Bank of Queensland's earnings presentation, Oct 31, 2001
Slide 1: Financial Results for the year ended 31 August 2001
FINANCIAL RESULTS for the year ended 31 August 2001 Presentation to Analysts and Investors
Slide 2: Financial Summary: 2001
Financial Summary : 2001
Slide 3: Financial Performance Summary: Net Profit After Tax
Financial Performance Summary O Net Profit After Tax $24.1m O Up 8.2% y.o.y. O $27.5m before significant item (up 24% y.o.y.) 30 25 20 $ Millions 15 22.2 24.1 10 19.3 14.5 16.1 5 0 1997 1998 1999 2000 2001 31/10/2001 2:43 PM Profit (AT) Significant Item Adjustment 2001 Accounts
Slide 4: Financial Performance Summary: Assets under management
Financial Performance Summary O Assets under management of $5.2 billion - 19% growth y.o.y. 6 5 4 $ Billions 3 5.2 2 4.4 3.5 3.0 2.5 1 0 31/10/2001 2:43 PM 1997 1998 1999 2000 2001 2001 Accounts
Slide 5: Financial Performance Summary: Diversified Funding Base
Financial Performance Summary O Diversified Funding Base 5 1.0 4 0.7 1.3 $ Billions 3 0.5 0.2 1.2 0.8 0.9 2 0.5 2.2 2.6 1 1.9 1.9 1.6 0 1997 1998 1999 2000 2001 31/10/2001 2:43 PM Retail Wholesale Off Bal Sheet 2001 Accounts
Slide 6: Financial Performance Summary: Sales
Financial Performance Summary O Sales: O Total lending sales growth - 28.8% O Retail Liability growth - 19.4% O Growth in housing assets under management- 29.8% 31/10/2001 2:43 PM 2001 Accounts
Slide 7: Financial Performance Summary: Capital Management
Financial Performance Summary O Capital Management O Introduction of hybrid capital through issue of $40m RePS O Completed $25 m off-market ordinary share buy-back O Repurchased capital inefficient Convertible Notes of $31m 31/10/2001 2:43 PM 2001 Accounts
Slide 8: Detailed Profit & Loss: 2001
Detailed Profit & Loss : 2001
Slide 9: Profitability Summary ($m)
Profitability Summary ($m) 2001 2000 Net Operating Income 163.2 144.6 Ongoing Op Expenses 118.9 101.1 Underlying Profit 44.3 43.5 Less Significant Items 5.2 0.0 Bad Debts 7.8 7.4 Tax 7.2 13.9 Operating Profit After Tax 24.1 22.2 31/10/2001 2:43 PM 2001 Accounts
Slide 10: Net Interest Income
Net Interest Income O Net Interest Income $107m O Up 11% O Interest Margin down by 0.25% y.o.y. to 2.74% due to 125bp cut in official rates in second half O Mix of business remains primarily housing and new business at low start rates 31/10/2001 2:43 PM 2001 Accounts
Slide 11: Non Interest Income
Non Interest Income O Non Interest income $57m O up 16% O 35% of total income O primarily banking related O Non banking fee income expansion plans O wealth management O insurance 31/10/2001 2:43 PM 2001 Accounts
Slide 12: Operating Expenses
Operating Expenses O Operating Expenses (pre significant item) $119m O up 18% - adversely affected by impact of GST (approx $5m) O Cost to Income of 73% to be addressed by PEP O Total Operating Costs $124m up 23% 31/10/2001 2:43 PM 2001 Accounts
Slide 13: Significant Item
Significant Item O Significant Item $5.2m O relates to the reassessment of development costs for new core banking system O reassessment took into account new direction of sourcing and ability of Solace to be an effective partner 31/10/2001 2:43 PM 2001 Accounts
Slide 14: Cost to Income Ratio
Cost to Income Ratio O Recognition that the current cost to income ratio is unacceptably high and unsustainable at 73% O Embarked upon a number of key cost and revenue initiatives O PEP and Sourcing O Target of 64% or better by 2004 O Flat revenue and cost / income fall of 2 points - estimated 20% e
Slide 15: Bad Debts & Taxation
Bad Debts & Taxation O Bad & Doubtful Debts $7.8m O Up $0.4m or 5% compared with on balance sheet loan growth of 17% O Tax Expense $7.2m O Down 48% - Effective tax rate of 23% O Advantageous tax treatment on repurchase of Convertible Notes from Bank of Hawaii 31/10/2001 2:43 PM 2001 Accounts
Slide 16: Detailed Balance Sheet: 2001
Detailed Balance Sheet : 2001
Slide 17: Balance Sheet: Assets
Balance Sheet : Assets O Assets under management $5.2b O Growth of 19% O Balance Sheet Assets $4.2 billion Balance Sheet Assets Assets Under Management 16% 13% Housing 3% 4% Business Consumer 21% 54% Other 26% 63% 31/10/2001 2:43 PM 2001 Accounts
Slide 18: Balance Sheet: Assets – Credit Quality
Balance Sheet : Assets Credit Quality 2001 2000 O Total Non Accrual Loans to 0.16% 0.22% Total Average Assets Total Impaired Assets to 3.00% 4.12% O Shareholders Equity O Loans 90 days past due 0.35% 0.42% 31/10/2001 2:43 PM 2001 Accounts
Slide 19: Balance Sheet: Provision for Bad & Doubtful Debts
Balance Sheet : Provision for Bad & Doubtful Debts O Total Bad Debt Provisions $24.4m O General Provision 0.52% of RWA O Specific Provision 52.3% of Non accrual loans O Total Provisions to total non accrual loans stands at 382% 31/10/2001 2:43 PM 2001 Accounts
Slide 20: Balance Sheet: Provisions – Peer Group Comparison
Balance Sheet : Provisions Peer Group Comparison of General Provision 0.70% Percent of RWA 0.60% 0.50% 0.40% 0.30% 0.20% BOQ BWA SML STG BEN ADB 1999 2000 2001 31/10/2001 2:43 PM Source : KPMG 2001 Accounts
Slide 21: Balance Sheet: Liabilities
Balance Sheet : Liabilities O Funding Strengths O Retail growth of 19% O Fine margins for A2 / BBB rating O Diversified, flexible wholesale funding programs O Securitisation Programs 31/10/2001 2:43 PM 2001 Accounts
Slide 22: Balance Sheet: Contingent Liabilities
Balance Sheet : Contingent Liabilities Current Litigation O Global Technologies (Australasia) Ltd: O regarding the replacement core banking system O JVCO: O regarding web enable ATMs O ambit claim without foundation 31/10/2001 2:43 PM 2001 Accounts
Slide 23: Balance Sheet: Capital
Balance Sheet : Capital O Capital Management O RePS O Off-market ordinary share buy-back O Tier 2 Convertible Notes repurchased O TSD issue O DRP & securitisation continued O Flexible, diverse capital programs 31/10/2001 2:43 PM 2001 Accounts
Slide 24: Balance Sheet: Capital – Substantial Shareholders
Balance Sheet : Capital O Substantial Shareholders O CBA 13.4% O Fox Group Holdings 10.1% O Milton 7.4% O Significant number of shareholders with less than 1000 shares 31/10/2001 2:43 PM 2001 Accounts
Slide 25: Vision and Strategies
Vision and Strategies
Slide 26: Our Vision
Our Vision O To be a great Queensland Company and Queensland’s best Regional Bank. O To be the bank that: O Looks after our staff O Values and serves our customers O Rewards our shareholders, and O Partners with our community 31/10/2001 2:43 PM 2001 Accounts
Slide 27: Burning Platform
Burning Platform O Weak Market Share O High cost / income O Poor channel management O Lack of electronic distribution O Inefficient IT & business processes O High revenue leakage O Weak business banking platform O Inefficient / ineffective alliances 31/10/2001 2:43 PM 2001 Accounts
Slide 28: Skills Required to Succeed
Skills Required to Succeed O Recognise need for dramatic change O Sharpen the focus of the company O Improve skills in execution O Build and maintain an innovative engine O Become totally customer centric O Improve speed of the organisation O Recognise people as a competitive advantage 31/10/2001 2:
Slide 29: Key Objectives
Key Objectives O Shareholder O Improve revenues O Manage down costs - both operational and overhead O Customer O More convenience O Choice O Improve service experience 31/10/2001 2:43 PM 2001 Accounts
Slide 30: Key Objectives
Key Objectives O Staff O Make BoQ a great place to work O Community O Trusted partner 31/10/2001 2:43 PM 2001 Accounts
Slide 31: Opportunities to better our position
Opportunities to better our position BOQ has a great opportunity to capitalise on its strengths: O We are a local Queenslander in a growing and dynamic State O We have a great brand with untapped potential O We are known for good service - convenience and caring staff O We have a will to win 31/10/2
Slide 32: Our strategic intent
Our strategic intent O Focus on Queensland communities O Grow reach and scale O Broader business mix O Differentiate our service - customer choice, convenience and community O Lower our costs O e-Enable our organisation O Build a high performance culture 31/10/2001 2:43 PM 2001 Accounts
Slide 33: Winning is all about narrowing the gap between strategy and execution
Winning is all about narrowing the gap between strategy and execution
Slide 34: 5 Point Plan
5 Point Plan O Organise around where we create value O Business O Retail O Alliances O Electronic Banking 31/10/2001 2:43 PM 2001 Accounts
Slide 35: 5 Point Plan
5 Point Plan O Being more efficient O Revenue enhancement O Expense management O Outsourcing O Alliances O Performance Enhancement Program 31/10/2001 2:43 PM 2001 Accounts
Slide 36: 5 Point Plan
5 Point Plan O Finding new opportunities O Wider reach O Increase business scope O Reconfigure business networks O Broader distribution scope 31/10/2001 2:43 PM 2001 Accounts
Slide 37: 5 Point Plan
5 Point Plan O Deepen and broaden customer relationships O No fancy CRM solutions O Build the capabilities and culture to succeed O Right people / skills O Right training O Better execution 31/10/2001 2:43 PM 2001 Accounts
Slide 38: In a nutshell...
In a nutshell... O Our basic philosophy is to : Retain Attract Grow 31/10/2001 2:43 PM 2001 Accounts
Slide 39: Retain, Attract, and Grow our Customer Base
Retain, Attract, and Grow our Customer Base Retail Funding $0.9m Ratio improves by 1% additional after tax income Borrowers $1.1m Retention additional increased by 1% after tax income 31/10/2001 2:43 PM 2001 Accounts
Slide 40: Business Strategies
Business Strategies O Business Banking O Increased Resources O Improve new business performance / productivity O Portfolio segmentation O Attract quality business based on service quality differentiation 31/10/2001 2:43 PM 2001 Accounts
Slide 41: Business Strategies
Business Strategies O Retail O Expand network O Improve productivity O Focus on training O Improved product range O Restructure incentives 31/10/2001 2:43 PM 2001 Accounts
Slide 42: Business Strategies
Business Strategies O Sales - Priority Direct/Alliances O Focus on Queensland based business O Vehicle for acquisition, not relationship O New alliances - 5 Corporate partners O Re-price current alliance packages 31/10/2001 2:43 PM 2001 Accounts
Slide 43: Business Strategies
Business Strategies O Insurance and wealth creation O Alliance Partners chosen O Will be in place in November 2001 31/10/2001 2:43 PM 2001 Accounts
Slide 44: Business Strategies - Distribution
Business Strategies - Distribution Branches Private Agencies Business Banking In Stores Kiosks ATM’s Mobile Sales Staff 31/10/2001 2:43 PM 2001 Accounts
Slide 45: Business Strategies - Distribution
Business Strategies Distribution Current Proposed - 3 Years Branches: Own 58 63 Agencies 35 65 In-Stores Nil 32 ATMs - Branch 77 100 ATMs - Off site 2 50 Kiosks Nil 5 Total Touch Points 172 315 31/10/2001 2:43 PM 2001 Accounts
Slide 46: Performance Enhancement Program (PEP)
Performance Enhancement Program (PEP) •Revenue Enhancement •Cost Reduction
Slide 47: Target
Target O Initial target of PEP is to derive per annum benefits of $12 million by the end of year 1 O Program management in place 31/10/2001 2:43 PM 2001 Accounts
Slide 48: We're addressing some issues
We’re addressing some issues O Revenue Enhancement Program O Quick Wins Program O Distribution Expansion O Credit Scoring O Loan Grading O Re-pricing Alliance packages 31/10/2001 2:43 PM 2001 Accounts
Slide 49: Some things already achieved
Some things already achieved O New Insurance Alliance O New Wealth Management Alliance O Reward / Incentive Programs O New Advertising Agency O Product review O Fees Review O Distribution Review O Increased Business Banking resources 31/10/2001 2:43 PM 2001 Accounts
Slide 50: Sourcing
Sourcing
Slide 51: Sourcing Project
Sourcing Project O Focus on how the Bank can cost effectively source the provision of services in the IT and Business Process Operations areas O This process is facilitated by TPI O Completion due first half of 2002 31/10/2001 2:43 PM 2001 Accounts
Slide 52: Sourcing Scope
Sourcing Scope Collections ATMs Switching Internet Cheque Processing IT & T Telephone Banking Telco Loans Processing Cards Call Processing Centre 31/10/2001 2:43 PM 2001 Accounts
Slide 53: Sourcing Objectives
Sourcing Objectives O Stabilise current IT environment O Access scale & reduce costs O Increase variability of costs O Support and progress on-line business strategies O Provide continual improvement O Increase speed to market 31/10/2001 2:43 PM 2001 Accounts
Slide 54: Sourcing Impact
Sourcing Impact O Currently analysing a “sole- source” arrangement with EDS Australia Pty Ltd O Savings of at least $100m of prospective costs over 10 year term of out-sourcing contract 31/10/2001 2:43 PM 2001 Accounts
Slide 55: Senior Management Structure
Senior Management Structure O GM Retail (Donna Brown) - entire retail network O GM Business Banking (Ian Whittle) - business banking relationships O GM Sales (Mark Neumann) - sales focus, broker introduced business and alliances 31/10/2001 2:43 PM 2001 Accounts
Slide 56: Senior Management Structure
Senior Management Structure O GM IT & Operations (Jennifer Heffernan) O GM Distribution and Productivity (David Saville) - distribution channels and PEP O CFO (Robert Hines) - risk management - credit, accounting & treasury 31/10/2001 2:43 PM 2001 Accounts
Slide 57: In Conclusion
In Conclusion
Slide 58: What we did well
What we did well O Asset growth without sacrificing quality O Retail Funding Growth O Capital Management O Realignment of strategies and direction 31/10/2001 2:43 PM 2001 Accounts
Slide 59: What we need to improve on
What we need to improve on O Management of Costs O Productivity O Business Mix O Collection of fees and other non- interest income O Customer Service O Execution Capability 31/10/2001 2:43 PM 2001 Accounts
Slide 60: Financial Results for the year ended 31 August 2001
FINANCIAL RESULTS for the year ended 31 August 2001 Presentation to Analysts and Investors