Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 FY2021 Earnings Presentation
63 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 15, 2021
Slide 1: Results Presentation
rsonal use only Results Presentation For the half year ended 31 December 2020 Presenter Name
Slide 2: Agenda
Agenda rsonal use only Overview Marnie Baker 1H21 financials Travis Crouch Questions Presenter Name Marnie Baker, Travis Crouch, Taso Corolis 22
Slide 3: Overview
rsonal use only Overview Marnie Baker Managing Director 3
Slide 4: 1H21 Overview
1H21 Overview Strong and resilient business performance 1 • Total lending growth of 9.2% against 0.1% system growth Delivery rsonal use only 1 • Total deposit growth of 16.9%, 2.2x system • of strategy Cost transformation program contributing towards the 3.1% reduction in operating expenses • Contin
Slide 5: Key measures
Key measures Continued strong growth with heightened cost focus 32.0 29.0 24.6 Customer 1.96m Net promoter rsonal use only 1.88m 3 2.2 numbers 1.79m score -0.7 -1.0 Dec-19 Jun-20 Dec-20 Dec-19 Jun-20 Dec-20 75.44% 75.08% 74.92% 48.0 47.3 Market MFI business 46.1 1 2.34% 4 share 2.18% 2.24% NPS -18.4
Slide 6: 1H21 financial result
1H21 financial result Comparison to previous halves 1H21 1H21 vs 1H21 vs ($m) 2H20 1H20 2H20 Statutory net rsonal use only 1 profit impacted by Statutory net profit1 $243.9 419% 67% • COVID-19 collective provision overlay of $127.7m Cash earnings $219.7 156% 2% • Software impairment of $34.8m Total
Slide 7: 1H21 divisional results
1H21 divisional results Cash earnings up across all divisions Cash earnings ($m) Business division rsonal use only • Income up 7.3% • Opex down 12.9% • Cash earnings up 39.7% Consumer division • Income up 3.6% • Opex down 1.2% • Cash earnings up 12.0% Agribusiness division • Income up 12.6% • Opex d
Slide 8: Supporting our customers through COVID-19
Supporting our customers through COVID-19 Value of loans on deferral continues to reduce COVID-19 support packages rsonal use only $6.9b $2.0b $397.3m 1.6% of gross loans 0.98% of gross loans $4.5b 84.2% reduction since peak in 90.5% reduction since peak in $3.5b June June $1.8b Residential – 1.5% R
Slide 9: Balance sheet and dividends
Balance sheet and dividends Strength in balance sheet and earnings Well positioned balance sheet FY20 final dividend declared rsonal use only • Strong customer deposit funding at 77.3% of total 4.5c (fully franked) deposits backed by wholesale funding programs • Payout ratio of 49.5% of 2H20 statuto
Slide 10: Growth and transformation strategy
Growth and transformation strategy Significant progress in 1H21 Objectives Outcomes rsonal use only 1 • Integration of Community Sector Banking , reducing • Accelerated our cloud journey, successfully moving 1 brand complexity, and cost and process duplication • Procurement services savings of $7.3m
Slide 11: Delivering on transformation for stakeholders
Delivering on transformation for stakeholders Structural and sustainable change rsonal use only ‘learning through programs, through people and through practice’ • Use of Cloud and API capability to increase scalability, security, agility and ability to adapt to changing customer needs • Launch BEN U
Slide 12: Balancing stakeholder needs
Balancing stakeholder needs • People 7,062 employees Our purpose is to feed into prosperity, not off it. Simply, this means what • 74% employee engagement2 • 60% women employed matters to our stakeholders matters to us – their success supports ours. • 44% women in management roles We take a holistic
Slide 13: Economic environment
Economic environment Improving domestic outlook amongst global uncertainty Expected Uncertain rsonal use only • Low interest rate • The economy post environment to continue Government support • Housing market • Global and local continuing to improve impacts of the • Improving jobs market pandemic •
Slide 14: 1H21 Financials
rsonal use only 1H21 Financials Travis Crouch Chief Financial Officer 14
Slide 15: Financial performance
Financial performance 1H21 2H20 1H20 1H21 1H21 ($m) ($m) ($m) v 2H20 v 1H20 rsonal use only Net interest income $711.4 $670.0 $676.4 6.2% 5.2% Other income $129.9 $129.5 $138.3 0.3% (6.1%) 1 Homesafe $7.7 $8.6 $7.1 (10.5%) 8.5% Operating expenses $517.4 $534.1 $487.4 (3.1%) 6.2% Credit $19.5 $145.3
Slide 16: Lending growth profile
Lending growth profile – 1H21 annualised1 Total lending Residential lending Business lending2 rsonal use only Reflects seasonality 14.0% -1.1% 9.2% -3.4% -4.3% 3.9% -9.2% 0.1% 1 APRA Monthly Banking Statistics December 2020. Data is an annualised growth rate based on a 6-month period (30/06/20 – 31/
Slide 17: Residential lending activity
Residential lending activity Retail - settlements breakdown Third Party Banking - settlements breakdown 1 1 ($m) ($m) rsonal use only $5,000m $5,000m 1H21 splits: 1H21 splits: $4,000m Variable – 61% $4,000m Variable – 48% Fixed – 39% Fixed – 52% P&I – 85% P&I – 84% $3,000m IO – 15% $3,000m IO – 16%
Slide 18: Net interest margin
Net interest margin • 1H21 NIM increased 1bp to 2.30% Historical NIM (%) • Funding mix and deposit repricing benefits of 11bps in total, primarily driven by 2.37 2.35 2.37 2.37 2.29 2.30 higher at-call deposit growth, repricing of term deposits and drawdown of the 0.39 0.40 0.40 0.38 0.33 0.36 rsona
Slide 19: Total income
Total income • Net Interest Income up $41.4m or 6.2% on 2H20. Continued • Flat fee income reflects higher lending and merchant fees strong loan growth has contributed $26.9m of this uplift largely offset by lower card and transactional fees. rsonal use only through higher average interest earning as
Slide 20: Operating expenses
Operating expenses • HoH (1H21 v 2H20) reduction in operating expenses of 3.1% • Reduction in staff costs achieved after: driven by strong focus on achieving sustainable cost reductions • Continued investment enabling revenue growth and across the business. PCP (1H21 v 1H20) increased by 2.7% enhanc
Slide 21: Consumer division performance
Consumer division performance • Net interest income driven by strong growth in both the • Reduction in operating expenses reflects benefits of Retail and Third Party Banking channels transformation program in the corporate branch network • • rsonal use only $4.3b growth in call deposits, allowing ac
Slide 22: Business and Agribusiness division performance
Business division performance Agribusiness division performance • Higher NII reflects an increase in the lending portfolio (versus • Stronger NII reflects higher average balances for the half negative system growth), strong deposit growth and effective and effective margin management margin manageme
Slide 23: Homesafe investment property portfolio
Homesafe investment property portfolio • Proceeds on contracts completed during 2H20 exceeded carrying value by $1.7m Homesafe portfolio & funding balance ($m) • Average annual return on completed contracts since inception is Dec-20 split:1 835.5 rsonal use only 9.7% p.a, pre funding costs Melbourne
Slide 24: Bad and doubtful debts
Bad and doubtful debts 1H21 2H20 1H20 2H19 ($m) ($m) ($m) ($m) • 1H21 BDD charge represents 6bps of total gross loans, assisted by government stimulus during the half Consumer division $2.4 ($3.5) ($0.4) $13.0 rsonal use only • COVID-19 collective provision reviewed at Business division $3.5 $16.3 $
Slide 25: Collective provision movements
Collective provision movements Total collective provisions and GRCL ($m) Total collective provision movements ($m) rsonal use only 360.4 349.8 17.4 14.1 266.1 20.6 67.5 263.2 11.2 252.0 252.0 124.5 127.7 221.4 48.5 195.7 74.2 76.9 66.0 147.2 147.2 147.2 135.5 141.6 Dec-19 Jun-20 Dec-20 Dec-19 Econom
Slide 26: Arrears
Arrears Residential loan arrears Business loan arrears1 1.6% 6.0% rsonal use only 1.2% 4.0% 0.8% 2.0% 0.4% 0.0% 0.0% Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Res 90d+ (inc. arrangements) Bus 90d+ (inc. arrangements) 2 Consumer loan arrears Agribusiness loan
Slide 27: Funding mix
Funding mix • Funding mix continues to be a strength, allowing flexibility Funding profile (%) to fund above system asset growth and manage margin 5.9% 5.2% 4.2% rsonal use only 19.7% 19.6% 18.5% • While RBA cash rate changes reduced deposit rates, call deposit growth continued in 1H21, with call de
Slide 28: Capital
Capital • Balance Sheet Strength • 36bps increase in CET1 since December 2019 to 9.36%, 11bps Total capital & CET1 - historical (%) increase since June 2020 rsonal use only 14.45% • Target CET1 range of 9.0% – 9.5% remains and will be reviewed after 13.14% 13.21% 13.61% APRA finalises its review of
Slide 29: 2H21 financial outlook
rsonal use only 2H21 financial outlook • Continue to target above system residential lending growth Lending • Positive growth in agribusiness and growth in line with system for target Business SME sectors • December 2020 exit NIM of 2.27% (1H21 2.30%) Net interest margin • 2H21 NIM headwinds from fr
Slide 30: Questions
rsonal use only Questions Marnie Baker – Managing Director Travis Crouch – Chief Financial Officer Taso Corolis – Chief Risk Officer 30
Slide 31: Appendix
Appendix >| Bendigoand AdelaideBank
Slide 32: Executive team
rsonal use only Executive team 32 32
Slide 33: Physical locations
rsonal use only Physical locations 33
Slide 34: The Community Bank model
The Community Bank model Community banking is based on a Community Bank footings ($b)2 ‘profit with purpose’ model rsonal use only 25.6 22.2 23.2 20.0 21.0 • Over $250m in community contributions1 since inception, enabling tangible economic and social benefits for the communities and our business 16
Slide 35: Australia's first and largest mobile-only digital bank platform
Australia’s first and largest mobile-only digital bank platform designed and delivered in partnership with Ferocia Through a design and technology-led banking approach, Up reconnects people with their finances, taking them from a place where money is a cause of stress and anxiety to a happier place
Slide 36: Australia's only end-to-end digital home loan fulfillment platform
“Australia’s only end-to-end digital home loan fulfillment platform” Tic:Toc partnership delivering: Tic:Toc – portfolio balance rsonal use only $1,200 Better customer experiences Millions • Tic:Toc has delivered a home loan contract in less than 60 $1,000 minutes of the customer beginning an applic
Slide 37: Climate Change strategy in action
Climate Change strategy in action Strategy and three-year Climate Change Action Plan commenced June 2020 We recognise climate change has far-reaching risks for the environment, the economy, society, our customers and their communities. We support the Paris Agreement objectives and the required trans
Slide 38: Modern Slavery
Modern Slavery Modern Slavery Our action: rsonal use only Bendigo and Adelaide Bank understands • Modern slavery statement lodged December 2020 slavery and human trafficking can occur in a • Anti-slavery and Human Trafficking Policy developed to number of direct and indirect ways such as address sup
Slide 39: We are well placed
We are well placed rsonal use only 39
Slide 40: Meeting customers' changing preferences
Meeting customers’ changing preferences Customer preferred card usage1 E-banking platform usage rsonal use only 100% 90% Up 4.2% through 1H21 80% 2 with 11.6% more logons 70% 60% 50% 40% Historic transactions trends 250 Millions 30% 200 20% 150 10% 100 0% 50 2016 2017 2018 2019 2020 0 Magnetic Strip
Slide 41: Collective provision - economic outlook
1 Collective provision - economic outlook Economic assumptions in the base scenario at December 2020 reflect improved conditions since June 2020 Unemployment (%) House prices (%) rsonal use only 16.00% 25.00% 15.00% 12.00% 5.00% -5.00% 8.00% -15.00% -25.00% 4.00% -35.00% Sep-20 Jun-21 Mar-22 Dec-22
Slide 42: COVID-19 scenario weightings & sector overlays
COVID-19 scenario weightings & sector overlays As at 31 December 2020 Minimal exposure to most impacted industries4 Scenario weightings reflect improved base case – COVID deferral % of GLA rsonal use only 0.01% Jun-20 5% 30% 50% 15% 0.02% Dec-20 15% 25% 50% 10% 0.04% Arts and recreation services Sig
Slide 43: COVID-19 – Residential & Consumer portfolio
COVID-19 – Residential & Consumer portfolio As at 31 December 2020 Residential and Residential lending % of total deferrals - by state Consumer packages 31 Dec 20 rsonal use only Number of accounts (May peak) 2,466 (17,249) Balances (May peak) $788m ($4.95b) 11% Residential loans / consumer loans 92
Slide 44: COVID-19 – Residential portfolio
COVID-19 – Residential portfolio As at 31 December 2020 • Approximately 94% of customers on deferral had been contacted with customer contact program progressing in line with plan (deferrals expire by 31 March 2021) rsonal use only • Customers that were or had been on deferral (and not in arrears pr
Slide 45: COVID-19 – Commercial portfolio
COVID-19 – Commercial portfolio As at 31 December 2020 • Approximately 68.3% of customers on deferral had been Commercial packages contacted with customer contact program progressing in 31 Dec 20 line with plan (deferrals expire by 31 March 2021) rsonal use only • Customers that were or had been on
Slide 46: COVID-19 – current portfolio (commercial)
COVID-19 – current portfolio (commercial) As at 31 December 2020 Total commercial portfolio vs commercial support packages - by industry ($m) 6,076.3 rsonal use only 3,528.7 No undue industry concentration of the COVID-19 repayment deferrals 1,858.7 Exposure to most impacted industries as a % of GLA
Slide 47: Residential lending activity
Residential lending activity Residential lending applications – by month $3000m rsonal use only 1H21 up 26.3% on 2H20 Q3 Q4 Q1 Q2 Channel spilt: FY20 FY20 FY21 FY21 $2500m Retail 47% 36% 47% 52% Third Party Banking 53% 64% 53% 48% $2000m $1500m $1000m $500m $m Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 1 Lo
Slide 48: Residential lending portfolio
Residential lending portfolio Retail - portfolio ($b)1 Residential balance by state rsonal use only 24.1 23.5 23.1 22.8 22.3 22.4 21.7 21.2 15% Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 9% 10% 1 Third Party Banking - portfolio ($b) 22.4 19.9 26% 18.0 16.1 16.3 16.8 15.6 15.8 38% Jun-17
Slide 49: Residential lending portfolio – total exposure
Residential lending portfolio – total exposure Retail lending - purpose (%) Retail lending - payment type (%) 15.1% 14.6% rsonal use only 18.4% 17.3% 15.9% 32.7% 32.8% 33.0% 32.8% 32.3% 69.8% 71.4% 73.1% 74.6% 76.1% 67.3% 67.2% 67.0% 67.2% 67.7% 11.8% 11.3% 11.0% 10.2% 9.3% Dec-18 Jun-19 Dec-19 Jun-
Slide 50: Residential lending portfolio – key metrics
Residential lending portfolio – key metrics 1 Home Loans 90+ days past due - by state 3 Residential portfolio metrics Dec-20 Jun-20 3.0% rsonal use only Retail loans 52% 54% 2.0% Third Party Banking loans 48% 46% Lo Doc 1% 1% 1.0% Owner occupied 65% 64% Owner occupied P&I 92% 90% 0.0% VIC NSW/ACT QL
Slide 51: Business lending portfolio
Business lending portfolio Business lending portfolio ($b) Business balance by state $8.5b rsonal use only $8.0b 13% $7.5b 6% 10% $7.0b 13% $6.5b 56% $6.0b Dec-19 Jun-20 Dec-20 2% 51
Slide 52: Business lending and other specialist portfolios
Business lending and other specialist portfolios Total Business Banking - deposits Commercial Real Estate - portfolio $13.5b $4.5b rsonal use only $13.0b $12.5b $4.0b $12.0b $11.5b $3.5b $11.0b $10.5b $3.0b Dec-19 Jun-20 Dec-20 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 1 Asset growth Portfolio (%) $300m $0
Slide 53: Agribusiness lending portfolio
Agribusiness lending portfolio Agribusiness balance by industry Agribusiness balance by state 4.1% 4.4% Grain/Sheep/Beef rsonal use only 7.7% Sheep/Beef 32.3% Beef 7.9% Grain Dairy 13.3% Sheep Other 16.7% 13.6% Hort./Vit. 10% 18% 16% Agribusiness lending portfolio ($b) 6.0 6.1 20% 5.9 5.8 5.8 5.6 33
Slide 54: Specific provision coverage
Specific provision coverage Specific provision Specific provisions breakdown ($m) balance ($m) rsonal use only 50 85.4 Represented by 25 - Jun-20 Dec-20 Jun-20 Dec-20 Jun-20 Dec-20 Jun-20 Dec-20 Jun-20 Dec-20 Jun-20 Dec-20 Consumer - Retail Consumer - Third Business Banking Agribusiness Great Southe
Slide 55: Funding
Funding Wholesale funding composition Term funding maturity profile ($m) rsonal use only 14% 4% 2,500 Dec-20 20% 62% 2,000 ST domestic LT domestic Sub-Debt TFF 1,500 Customer call deposit funding costs1 1,000 ≤ 0.01% 8% 2% 5% > 0.01% - ≤ 0.25% 500 41% 42% Jun-20 Dec-20 > 0.25% - ≤ 1.50% 53% 49% > 1.
Slide 56: Liquidity
Liquidity Liquidity Coverage Ratio – 3 month average1,2 Net Stable Funding Ratio (NSFR) 128.1% as at 31 December 2020 rsonal use only Dec-20 Sep-20 Jun-20 Mar-20 Wholesale ($b) ($b) ($b) ($b) funding & other High quality liquid assets 7.31 6.32 5.62 6.58 CLF / TFF 5.81 4.61 4.76 2.92 Other loans Tot
Slide 57: Capital
Capital Credit risk weighted assets ($b) 1H21 2H20 1H20 2H19 (%) (%) (%) (%) 34.7 rsonal use only 33.7 Common Equity Tier 1 9.36% 9.25% 9.00% 8.92% 33.1 33.0 32.9 Additional Tier 1 2.81% 2.34% 2.40% 2.39% Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Total Tier 1 12.17% 11.59% 11.40% 11.31% S&P RAC Ratio1 Tier
Slide 58: Great Southern
Great Southern Great Southern portfolio1 • Great Southern portfolio continues to contract and is $m adequately provisioned 200 2,000 Millions rsonal use only • Portfolio represents less than 0.1% of total gross loans 1,600 • As at 31 December 2020, portfolio comprised of 153 130.6 1,200 100 customer
Slide 59: Total income (cash)
Total income (cash) 1H21 2H20 1H20 1H21 vs 2H20 1H21 vs 1H20 ($m) ($m) ($m) rsonal use only Net interest income $711.4 $670.0 $676.4 6.2% 5.2% Fee income $76.5 $76.2 $79.3 0.4% (3.5%) Commissions $26.5 $27.4 $29.2 (3.3%) (9.2%) FX income $10.0 $10.2 $12.4 (2.0%) (19.4%) Trading book income $6.9 $6.4
Slide 60: Operating expenses (cash)
Operating expenses (cash) 1H21 2H20 1H20 1H21 vs 2H20 1H21 vs 1H20 ($m) ($m) ($m) rsonal use only Staff costs $294.2 $293.6 $273.5 0.2% 7.6% Occupancy, property, plant and equipment $49.7 $50.3 $50.4 (1.2%) (1.4%) IT costs $38.9 $37.6 $33.3 3.5% 16.8% Amortisation of software intangibles $14.4 $14.7
Slide 61: 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 realised income 61
Slide 62: 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 63: 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
Bendigo and Adelaide Bank — H1 FY2021 Earnings Presentation on 6ix