Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 FY2007 Earnings Presentation
36 slides from Bank Of Queensland's earnings presentation, Apr 4, 2007
Slide 1: Half-Year Result 28 February 2007
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Slide 2: Agenda
# Result highlights David Liddy Managing Director a Financial result in detail Robert Hines Chief Financial Officer « Strategy and outlook David Liddy Managing Director
Slide 3: Result highlights
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Slide 4: Record NPAT up 21%
Re » Record NPAT up 21% : » Sector leading growth in lending and deposits » Improving shareholder returns Stable margin » Continuing double digit EPS growth » Sound credit quality FYO7 Hale Year Resulls | a
Slide 5: Net profit after tax and key metrics
Net profit after tax $40.0m $48.4m Cash distributable earnings $37.6m $45.9m Cash EPS (aituted, cistributable earings) 35.5¢ 40.8¢ Ordinary dividend 27¢ 32¢ Loan approvals $4.5b $5.6b Loan growth ° 19% 26% Retail deposit growth ° 18% 30% Net interest margin 1.83% 1.85% Cost to income ratio (casn bas
Slide 6: Strong growth in all areas, overall 1.7x system growth
» Strong growth in all areas * » Overall 1.7x system growth * System Housing Commercial Consumer Overall lending growth 7 NCluGes grounh overall growiwas 23" Source: REA Poll FYO7 Hal-Yea
Slide 7: Lending growth exceeding system
Lending growth exceeding system* 25% ~ BOQ 22% ~ 19% 16% - System 13% © 10% ~ 1HO5 1HO6 1HO7 & se Source: RBA
Slide 8: Retail deposit growth versus system
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Slide 9: 24% average annual total shareholder return
24% average 5 year annual total shareholder return $2,900 $2,700 $2,500 » $2,300 ¢ $2,100 » $4,900 $4,700 + $4,500 $2,200 » $4400 $900 30¢ 25¢ 2006 2007 4st half i 2nd half
Slide 10: The result in detail
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Slide 11: Income statement summary
Total operating income Total expenses Underlying profit Impairment on loans and advances Profit before tax Income tax Net profit after tax Movement in GRCL * Distributable earnings Add: Amortisation of customer contracts * Cash distributable earnings Cash dliuted EPS (distributable) _Toxcticcied 7 7
Slide 12: FY07 Half-Year Results
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Slide 13: Strong growth flowing through to total income, up 24%
Strong growth flowing through to total income, up 24% Net interest income Non interest income 1H06 1HO7 1HO6 4HO7
Slide 14: Expenses and cost to income ratio
Expenses Cost to income ratio Admin Operating Computer 64.5% Occupancy $53m Employee $41m 14H06 4HO7 Reported Amortisation Pioneer Adjusted cost to ofcustomer integration cost to income contracts cosis income
Slide 15: Expense growth impacted by growth and volume of new business
» Expense growth impacted by growth and volume of new business: Employee costs IT Processing Processing OMB Commissions $45m THOG 4HO7 4HOS 4HO7 4HO6 41HO7 1HO6 1HO7
Slide 16: Focus remains on well secured housing and SME lending
Focus remains on well secured : Impaired assets to housing and SME lending non-securitised lending Minimal levels of low doc loans: $0.4b of low doc loans, 3.6% of housing LUM Underlying bad debts $8.6m $7.9m 1HO6 2H06 1H07 1HO05 2HO5 1HO6 2H06 1HO7
Slide 17: Cash EPS growth
Cash EPS growth* “" ns 1HO06 1H07 1H06 1H07 * Dilvice EPS eel deiouere con 7) Cash distibulabiy caring. weighted ava FYO7 Holl-Year Beaulls
Slide 18: Business and leasing lending growth
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Slide 19: Deposit growth exceeding system
1H05 Sy: : FyYO7 Deposit growth exceeding system 22% 4 BOoQ* 19% 16% 13% 10% ~ T% %
Slide 20: Capital: innovative capital limit and tier 1 ratio
» Projected to be under the 15% innovative capital limit by 1 January 2008 » Remaining limit of 10% is available for the issue of non-innovative capital 12.1% 12.4% 12.5% 2 > Tier 4 ratio 8.4% BB Core tier 4 _ Hybrid tier 1 Tier 2 / 31 Aug 05 31 Aug 06 28 Feb 07
Slide 21: Strategy and outlook
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Slide 22: Company history and the next phase
Established Six year tran: acquisitions Ceased Transformation commences with new team interstate UFS expansion & ATM commenced Solutions . using mortgage DLOKErS pos" 1874 1971 ASX Listing 2000 Qld Gov't Sell down Qid expansion commenced bank different Pioneer, Building Society merger. BOQ Share Pri
Slide 23: Distribution network
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Slide 24: Branch conversions and new interstate OMBs
» This half: 6 corporate branch conversions 260 4 new interstate OMBs » 11 new interstate branches in 24 OMBs half 473 Interstate Qid branches Aug 05 ches cen ner Inegrs
Slide 25: Success of interstate OMBs
Success of © Average per interstate branch, (for all 46 branches » Consolidating our presence open at least 12 months) across all States a » 79 branches outside Queensland (33 open less than 12 months) » Providing platform for sustained future growth » Overall growth levels and success of our OMBs p
Slide 26: Converted corporate branches to OMBs
» Now converted 10 corporate branches to OMBs (6 during this half) » Positive outcomes from each: Annualised growth before and after conversion * Post Conversion Deposits
Slide 27: Growing our commercial business
Growing ou » Overall strategy continues to be to achieve SME dominance in chosen segments in Queensland » Roll out of enhanced internet banking platform with additional features for SME customers » Introduction of market competitive Small Business Package » Strong growth in equipment/debtor finance
Slide 28: Retail Commercial
Retail Commercial & 3
Slide 29: Pioneer Building Society scheme of arrangement
Scheme of arrangement was approved, ownership effective from 5 December 2006 Integration commenced immediately, major milestone will be migration onto BOQ systems by end of calendar year Increase in customer numbers and business This is delivering: A strengthened footprint in central/northern Queens
Slide 30: Proposed merger terms with Bendigo Bank
Propose Scrip and cash proposal Scrip offer on exchange ratio of 0.748 BOQ shares and $6.50 in cash per BEN share (value of $18.47) Value Implied premium (based on BOG 1 month VWAP of $15.62 fo 16 Mar 07) 30% premium to BEN closing share price as at 16 March 2007 of $13.21 25% premium to BEN 1 month
Slide 31: Potential value enhancement for BOQ and BEN shareholders
Potential value enhancement to BOQ and BEN shareholders (driven by potential pre-tax synergies of $70 million p.a.) Enhanced banking proposition for regional and community banking in Australia Significantly improved distribution platform ... the merged entity will have over 575 branches (significant
Slide 32: Proposal announced March 2007 and next steps
» Proposal announced 19 March 2007 » BOQ funding in place » Bendigo Bank Board stated willingness to engage » Next steps, if the proposal proceeds, would be: a Merger Implementation Agreement due diligence » Presentation to Bendigo Bank Board and management next week FYO7 Hall- Year Recu
Slide 33: Addressing market issues
Slide 34: Attractive premium with post merger upside
Attractive premium with post merger upside Similar business cultures and strong community focus Natural progression for Australia’s two leading regional banks We have been jointly discussing the merits of merging for two years Preserve Bendigo Bank head office/Bendigo Bank brands/Bendigo Bank commun
Slide 35: Underlying BOQ business in a strong position
Underlying BOQ business in a strong position: Established retail and commercial national distribution points Growing strongly and profitably Healthy Queensland economy and expanding into other growth States Bendigo Bank merger to leverage this position Confirm financial goals for 2007 financial year
Slide 36: TT oC
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