Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — JP Morgan Investor Conference 2008
26 slides from Bank Of Queensland's conference presentation, September 2008
Slide 1: Bank of Queensland – JP Morgan Investor Conference
Bank of Queensland JP Morgan Investor Conference New York, USA September 2008 JP Morgan Conference 2008 1
Slide 2: Bank of Queensland
Bank of Queensland BOQ is a regional retail bank headquartered in Queensland Market capitalisation approximately $2.3b – assets under management more than $26b We currently have 283 retail sites in every state and territory in Australia, complemented by 16 business banking centres and 2,600 branded
Slide 3: A growth story….
A growth story…. Loans Under Cash EPS Growth Management 2005/06/07: AIFRS 76c 93c $15b 68c 62c $12b 55c $11b $7b 46c $6b $5b 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 NPAT Dividends 2005/06/07: AIFRS 69c $102m 57c $82m 43c 48c $68m $61m 37c $45m $29m 29c 2002 2003 2004 2005 2006 20
Slide 4: Differentiated banking model
Differentiated banking model Expansion strategy based on rolling-out the Bank’s Owner Managed Branch (OMB) operating franchise model. This is a unique empowered distribution model that provides us with a sustainable competitive advantage. We are differentiating through our service and distribution f
Slide 5: Our model…. lower risk, less capital intensive and growth driven
Our model …. lower risk, less capital intensive and growth driven Structured Vehicles Retail Customers SME Customers Unsecured/Structured/High Risk Australian Banking Business Banking OMB Lending Mix* ~$19.0 B ~$4.2B ~$3.0B ~$1.7B Large Corporate Equipment Finance Business Lending Large Exposures La
Slide 6: Evolution of the OMB Model
Evolution of the OMB Model To our customers and the public an Owner Managed Branch has the same appearance as a corporate branch, but offering an enhanced sales and service offering. The Bank has operated this model for over 30 years, initially called Private Agencies. Originally the agent was paid
Slide 7: Building a National Branch Network
Building a National Branch Network The OMB model is a unique empowered distribution model that provides us with a sustainable competitive advantage. From the Bank’s perspective it is a low cost expansion strategy. It is a variable model that rewards performance. Since 2001, the Bank has expanded fro
Slide 8: Uniquely productive Retail banking network
Uniquely productive Retail banking network We have now converted 22 corporate branches to OMBs Average monthly settlements have increased 62% post conversion BoQ has a unique synergy when acquiring any retail branch network ….creates higher affordability and higher accretion Annualised growth before
Slide 9: Growth Acceleration opportunities...
Growth Acceleration opportunities... With the Home acquisition, 69 branches are potential candidates for conversion to OMB model Model will require some Corporate sites to be retained 26 Non Qld Corporate 85 89 Sites 75 OMBs Interstate 34 165 168 5 137 139 140 Qld sites 79 82 86 100 107 OMBs OMBs OM
Slide 10: How does the OMB model work?
How does the OMB model work? An Owner Managed Branch is a small business; Operating under a 5 year franchise Agreement with BoQ Owner Manager (OM) pays establishment and operational costs OM shares profits directly flowing from branch business OMBs look the same as a Corporate branch, but have enhan
Slide 11: It is based on alignment of interests
It is based on alignment of interests Individual remuneration together with growing a valuable business has been the key to the success of the model The Owner Manager covers: The Owner Manager receives: Set-up and ongoing operating Share of net revenues generated costs from lending and deposits Sala
Slide 12: OMBs are empowered
OMBs are empowered This model delivers on the service excellence promise Superior experience means different things to different people: - Recognition/understanding of personal needs - Access - Price This is achieved profitably as organisational and branch revenue drivers aligned; Transforms the bra
Slide 13: Benefits of the OMB model
Benefits of the OMB model The OMB model drives shareholder value through: - Superior Sales productivity - Rewarding a customer service focus - Eliminates branch-startup capex - Variable cost structure aligned to performance Franchising offers: - The potential to “step-change” sales performance - Tal
Slide 14: Profitability of Expansion
Profitability of Expansion Our Owner Managed Branch model has proved to be successful. Generating strong lending and deposit growth from growing a strong customer base. The branches we have opened to date fall into 3 categories: - New - opened within last year - Emerging - 1 to 4 years old - Mature
Slide 15: Sustaining the growth momentum…
Sustaining the growth momentum… The exponential growth track record from green field branch openings is proven. However, existing mature Qld network continues to grow well above system, beating the expected return to system growth 22% 22% 17% 10% BoQ Mature BoQ Mature System System OMB’s OMB’s 2006
Slide 16: Track record of superior growth…
Track record of superior growth… Loan Approvals LUM Retail Deposits $13.0b $19.2b $12.7b CAGR 20% CAGR 19% CAGR 13% $5.7b $4.5b $3.7b 2002 2007 2002 2007 2002 2007 JP Morgan Conference 2008, New York 16
Slide 17: Resulting in exceptional results…
Resulting in exceptional results… Total Income NPAT $500m $102m $367m $385m $82m $292m $68m $61m $214m $45m $174m $29m 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 EPS Cost-to-Income Ratio 67.7% 65.8% 93c 64.9% 64.5% 64.0% 76c 62.6% 68c 62c 55c 46c 58.7% 2002 2003 2004 2005 2006 2007
Slide 18: Expense discipline
Expense discipline Cost disciplines introduced to offset volatile markets without compromising the long term potential of the brand or our unique distribution model Adjusting for amortisation of customer contracts, major expense categories have been flat/declining relative to income growth Employee*
Slide 19: Shareholder returns
Shareholder returns BOQ has a strong track record of maintaining share price premium even in difficult times and delivering exceptional shareholder returns P/E Ratio – BOQ v Peer Group Average BOQ Historical TSR 37¢ 25 49.5% 20 38.5% 15 Average 24% 10 5 16.5% 16.4% 18.8% Aug-03 Aug-04 Aug-05 Aug-06
Slide 20: Continuing asset quality
Continuing asset quality The exponential growth has been driven by the expansion of a highly productive network, not at the expense of asset quality… Impaired assets to non-securitised lending 9bps 8bps 7bps 7bps 6bps 2003 2004 2005 2006 2007 JP Morgan Conference 2008, New York 20
Slide 21: Portfolio quality
Portfolio quality Lead indicators on asset quality continue to flag the advantages of our predominant exposure to the Queensland and WA economies Arrears 90+ days (% of portfolio, excluding securitised loans) 1.00% 2H06 0.75% 1H07 2H07 0.50% 1H08 2H08* 0.25% 0.00% Retail Business Leasing Home BS * A
Slide 22: Evolution of our Strategy
Evolution of our Strategy High margin/ Targeting Higher low capital margin niche Plays intensity Value Accretion Acquisition of Pioneer & Geographic Home in WA- focused Scale M&A Higher growth Geo Plays Interstate Organic expansion into a National footprint & ATM Expansion fleet High Growth coupled
Slide 23: BOQ's recent journey….
BOQ’s recent journey…. Citibank credit card alliance 75 Interstate branches BOQ Investor returns Interstate expansion UFJ commenced Global Credit Established & ATM Solutions Crisis acquisitions Qld expansion commenced Orix Debtor Home Building Upgrade to Finance EDS Ceased using Society BBB+ acquisi
Slide 24: Confident outlook
Confident outlook The underlying BOQ business is in a strong position: - Established retail and commercial national distribution points - Growing strongly and profitably. Inorganic growth as consolidator of choice. - Leveraging our strong base of a healthy Queensland and Western Australian economy -
Slide 25: Summing up our value proposition
Summing up our value proposition JP Morgan Conference 2008, New York 25
Slide 26: Disclaimer
Disclaimer This presentation has been prepared by Bank of Queensland Limited (BOQ) and is supplied on the following conditions which are expressly accepted and agreed to by each interested party (Recipient). This presentation does not purport to contain all the necessary information required to eval
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