Computershare Limited · ASX:CPU
Computershare — Investor Day (April 2017)
16 slides from Computershare's investor day presentation, Apr 27, 2017
Slide 1: US Mortgage Services
US Mortgage Services Execution on track for scale and anticipated returns Nick Oldfield CEO, US Mortgage Services 27 April 2017
Slide 2: Executive summary
Executive summary Execution on track for scale and anticipated returns Building competitive Compelling market Attractive industry we know differentiation through dynamics create material well that aligns with our focus on servicing quality, opportunity for CPU core strengths technology and product o
Slide 3: Key execution priorities for FY17
Key execution priorities for FY17 What we said we’d do CMC Clients and Technology Regulatory Integration opportunities compliance › Co-issue program › Two major legacy › Building our new › No major expanded and MSR acquisitions loss mitigation developments delivering OVER closed system – has been ›
Slide 4: Mortgage Servicing expertise
Mortgage Servicing expertise Computershare offers a full range of services across the mortgage value chain Trade, Co-issue, Capital Market Services, Recapture Trading Enable a nationwide network of mortgage bankers to leverage their collective power to receive better Recapture Fulfil product, servic
Slide 5: Building our platform for growth
Building our platform for growth Diversified business maximises overall returns High Non- performing owned MSR Performing owned MSR CAPITAL INTENSITY Non- Performing sub- servicing Mortgage Capital Solutions Markets Services Execution Performing -only Loan sub- Trading Fulfilment & servicing Low Dil
Slide 6: Financial disclosure
Financial disclosure Revenue breakdown / 1HFY17 business segment financials US Mortgage Services 1H17 revenue composition Base fees - Fees received for base servicing activities. › Fees are generally assessed in bps for owned or Other Fees structured deals, while subservicing is usually 27% paid as
Slide 7: Building our platform for growth
Building our platform for growth Three key requirements to hit scale in FY20 Grow scale Current portfolio c. USD 59bn › Targeting market share 1-1.5% (April 2017) › We see scale as UPB c. USD 100 bn Substantial market opportunity to deliver portfolio growth Get the right mix › Owned MSR and sub-serv
Slide 8: Building our platform for growth strategic pillars to deliver scale
Building our platform for growth 5 strategic pillars to deliver scale Capital light Growth in fee Optimising our Drive MSR Operational model based business portfolio growth effectiveness › Leverage MSR › Multiple service › Portfolio › CMC Co-Issue › Workflow and purchases to drive offerings expand p
Slide 9: Industry landscape
Industry landscape Market dynamics create compelling opportunity for CPU › USD 10 Trillion outstanding mortgage volume Market size › Over USD 1 Trillion in annual new origination › CPU targeting a fraction of share › Three of four major listed servicers have had or are facing major Dislocation among
Slide 10: Competitive strengths
Competitive strengths Consistent with Computershare’s compliance culture Servicing Growth Capital Scale CPU quality profile › Upgraded by › New servicing in › Do not originate › Materially › Has scale, Moodys & Fitch manageable loans - credit smaller than resources and in past year, proportions risk
Slide 11: Our business at scale
Our business at scale Re-affirming financial returns Measure What it looks like How we get there VOLUME UPB > USD 100bn › Continue to grow out CMC Co-Issue Market share 1-1.5% program › Execute on legacy opportunities in pipeline › Build up sub-servicing portfolio MIX c. 70/30 Servicing v Fee Based
Slide 12: Priorities for next twelve months
Priorities for next twelve months Where we will make progress to deliver on our plan › Improvement in operating margin through increasingly scalable platform Margin expansion › Initiatives include workflow and process automation, productivity management programs, borrower communication channels and
Slide 13: US mortgage regulatory update
US mortgage regulatory update Regulation creates barriers to entry – aligned with CPU background elsewhere › The primary federal regulatory body overseeing the US residential mortgage market is the Consumer Financial Protection Bureau (the “CFPB”), which was established by the Dodd-Frank Wall Street
Slide 14: Interest rate sensitivities
Interest rate sensitivities Sweet spot is modestly rising rate curve › New origination volume slows, negatively impacting co-issue and fulfilment businesses (re-financing volume slows while purchase volume stays steady or grows) › Non-conventional mortgage products become more attractive to investor
Slide 15: Management of other key risks
Management of other key risks We are comfortable with our residual risk exposure › MSR volumes drive financial › We have been able to maintain CMC New mortgage outcomes. CMC provides strong discounts to fair market whilst Sustainability of origination and visibility of performing buying increasing v
Slide 16: Growth opportunities and key priorities
Growth opportunities and key priorities We expect to make substantial progress towards our target in FY18 Expand CMC volume › Targeting USD 1bn per month in FY18 Execute on current pipeline › Sub-servicing opportunities in both performing and non-performing sectors Penetrate CMC network › Sub-servic