Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — FY2007 Earnings Presentation
38 slides from Bank Of Queensland's earnings presentation, Aug 31, 2007
Slide 1: Full Year Results
Bank of Queensland Full Year Results 31 August 2007 1
Slide 2: Agenda
Agenda Result highlights David Liddy Managing Director Financial result in detail Robert Hines Chief Financial Officer Strategy and outlook David Liddy Managing Director Annual Results 2007 2
Slide 3: Result highlights
Result highlights Record NPAT Sector leading growth in lending and deposits Improving shareholder returns Stable margin Continuing double digit EPS growth Sound credit quality Annual Results 2007 3
Slide 4: Financial results
Financial results FY06 FY07 Headline profit after tax (statutory) $92.7m $129.8m Ï 40% Normalised cash profit after tax $86.7m $106.1m Ï 22% Cash EPS (normalised diluted) 79.8¢ 93.0¢ Ï 17% Ordinary full year dividend 57¢ 69¢ Ï 21% Net interest margin 1.83% 1.81% Ð 2bps Cost to income ratio (normalis
Slide 5: Strong lending and deposit growth
Strong lending and deposit growth Loan approvals Ç30% Lending growth 27% * Retail deposit growth 33% * 33% 27% $13.0b $10.0b 16% 9% 2006 2007 BOQ System BOQ System * Includes growth upon the acquisition of Pioneer Permanent Building Society Ltd. Annual Results 2007 5
Slide 6: Continuing asset quality
Continuing asset quality Loans past 90 days due Impaired assets to non-securitised lending 0.09% 0.08% $94m 0.08% 0.07% $86m $60m 2H06 1H07 2H07 1H06 2H06 1H07 2H07 Improved 2H07 performance Continuing growth flowing from expansion, not from compromising asset quality Annual Results 2007 6
Slide 7: Growing branch network
Growing branch network 11 OMBs and 1 corporate branch opened 15 Corporate branch conversions to OMBs Integrating Pioneer branches 237 Target of 12 new branches in FY08 215 86 OMBs 173 75 Interstate 142 34 5 120 98 Qld branches 151 (includes 137 139 140 120 Pioneer) 98 40 101 OMBs OMBs Aug 02 Aug 03
Slide 8: Increasing shareholder returns
Increasing shareholder returns 25% average 5 year annual total shareholder return BOQ share price v Financials index Dividends* 69¢ 11 Oct 07 BOQ $18.89 57¢ $3,300 48¢ 37¢ $2,900 30¢ $2,500 25¢ $2,100 $1,700 32¢ 27¢ BOQ $7.40 23¢ $1,300 $900 2005 2006 2007 -F 02 -F 03 -F 04 -F 05 -F 06 7 -A 03 -A
Slide 9: The result in detail
The result in detail Robert Hines, Chief Financial Officer 9
Slide 10: Summary of results
Summary of results FY06 FY07 % Change $m $m vs PCP Total operating income 385.0 500.0 30% Total expenses 249.1 294.7 18% Underlying profit 135.9 205.3 51% Impairment on loans and advances 12.3 20.9 70% Profit before tax 123.6 184.4 49% Income tax 30.9 54.6 77% Net profit after tax 92.7 129.8 40% Add
Slide 11: Normalising adjustments
Normalising adjustments Gain on sale of credit card business: After tax profit on sale $29.1m Costs of Pioneer Permanent Building Society integration After tax $2.8m Costs of merger proposal with Bendigo Bank After tax $0.6m Annual Results 2007 11
Slide 12: Stable margin
Stable margin (0.01%) 0.07% (0.07%) (0.01%) 1.83% 1.81% Margin Funding Asset mix 3rd party Credit Margin FY06 mix dist'ns cards FY07 divestment Annual Results 2007 12
Slide 13: Growing revenues
Growing revenues Net interest income Non interest income* 19% 19% $321m $137m $115m $270m 2006 2007 2006 2007 Growth off strong lending Increasing customer base and new and deposit performance, business driving strong whilst maintaining margins performance * = Normalised basis Annual Results 2007 13
Slide 14: Improving efficiency
Improving efficiency Cost to income ratio Expenses 16% $287m 65.8% $248m $11m Admin $11m $87m Operating $76m 64.5% $61m Computer $56m $18m Occupancy $15m $110m Employee 62.6% $90m 2005 2006 2007 2006 2007 Excludes Based on Normalised Earnings = After normalising tax profit excludingadjustments the i
Slide 15: Growing shareholder returns
Growing shareholder returns Cash ROE Cash diluted EPS growth 17% 93¢ 18% 80¢ 68¢ 15.4% 14.0% 14.6% 2005 2006 2007 2005 2006 2007 Based on cash normalised earnings = After tax profit excluding the impacts of significant and non-recurring items and amortisation of Customer Contracts Annual Results 200
Slide 16: Growing loans under management
Growing loans under management $19.2b $0.3b 14% $2.6b leasing $15.1b $0.5b 18% $12.4b $3.5b commercial $2.1b $10.9b $1.7b $2.7b $1.5b $2.3b $2.0b 67% $12.8b housing $9.8b $8.1b $7.1b 2004 2005 2006 2007 Annual Results 2007 16
Slide 17: Continuing strong lending growth
Continuing strong lending growth Strong growth in lending Overall 1.7x system growth * 31% 27% 26% 22% 16% 12% System System BOQ System BOQ BOQ BOQ Housing Commercial Overall lending growth * Includes growth upon the acquisition of Pioneer Permanent Building Society Ltd. If growth upon acquisition e
Slide 18: Market leading retail deposit growth
Market leading retail deposit growth Retail deposits Growth in retail deposits funded 33% $9.2b 56% of growth in loans under 18% management $6.9b Strong growth in Web Savings $5.8b Account and through launch of SME deposit products 2005 2006 2007 System = APRA monthly statistics, household deposits
Slide 19: Funding and liquidity
Funding and liquidity Key to BOQ’s funding philosophy has been and will remain, diversification of funding sources BOQ is still issuing senior debt domestically and in offshore markets Credit spreads have increased by around 10bp in the short end and 25bp in longer term paper Securitisation Markets
Slide 20: Capital adequacy
Capital adequacy 12.4% 12.5% 11.5% Tier 2 Tier 2 ratio 3.3% Hybrid Tier 1 Deductions 0.3% Tier 1 Tier 1 ratio 8.5% Targets: 2005 2006 2007 Tier 1 of 7%-8% Total of 10% to 11% Annual Results 2007 20
Slide 21: Capital initiatives
Capital initiatives Non-innovative hybrid capital issue $150m issue (with ability to accept over subscriptions) Non-cumulative preference share structure with the view to being accepted by APRA as Non-Innovative residual Tier 1 Capital Fully franked dividends based on a margin over 180 day BBSW Exis
Slide 22: Basel II
Basel II Progressing towards completion of standardised approach, will be ready to report in 2008 Preliminary calculations indicate Basel II will be essentially capital neutral for BOQ AIFRS transitionary relief expires in January 2008 Annual Results 2007 22
Slide 23: Strategy and outlook
Strategy and outlook David Liddy, Managing Director 23
Slide 24: New team for a new growth phase
New team for a new growth phase We have a new team to meet the opportunities and challenges ahead Better alignment, more focus David David Liddy Liddy Group Group Strategy Strategy Managing Managing Director Director & & CEO CEO Robert Robert Hines Hines David David Marshall Marshall Ram Ram Kangath
Slide 25: Strategic intent
Strategic intent Understanding and growing our core, maximising our adjacencies Core capability is distribution Be the ‘real’ banking alternative – the ‘other bank’ National distribution – but “big small bank not a small big bank” approach Aggressive customer acquisition – service led, not by price
Slide 26: Growing national presence
Growing national presence Over 2,600 ‘touchpoints’ Growing branch network, complemented by acquisitions Home acquisition to boost branch numbers to a critical mass in WA >30 branches Annual Results 2007 26
Slide 27: Strong organic growth to continue
Strong organic growth to continue Continuing retail distribution expansion Growth to flow from branches moving into the ‘emerging’ phase Branch maturity (237 branches) OMB maturity $150m New Emerging Mature 111 $125m $100m Avg Footings 126 (under 5 years) $75m $50m Avg Lending 35 26 28 23 $25m 14 Av
Slide 28: Increased productivity from OMBs
Increased productivity from OMBs Now converted 18 corporate branches to OMBs, 15 in this year Monthly fundings have increased significantly driving lending growth of 23% Positive outcome from each: Annualised growth before and after conversion Post conversion 23% 6 months 17% pre-conversion 4% 5% Le
Slide 29: Growing our business banking presence
Growing our business banking presence Overall strategy is to achieve SME dominance in chosen segments in Queensland and leverage branches outside Queensland Our target market is Middle Market and SME customers - not institutional Our dedicated long established property finance business continues to
Slide 30: Customer satisfaction
Customer satisfaction 60% Retail customers 93% Commercial customers 56% 87% 83% 50% 79% 79% 77% 43% 72% 69% 36% 28% Z A B ac Q e N Z B A A B rg ac p go Q O e tp A N C N or B A rg B O eo tp A es di C N nc B eo es G en W Su G W St B St August 2007 QLD MFI Customer Satisfaction - 6 months to August 200
Slide 31: Proposed mergers
Proposed mergers Home Building Society Proposal values Home at $600m1 29 branches Proceeding towards completion by the end of the year $2.4b loans under mgmt Great opportunity to expand upon Home’s WA footprint $2.2b retail deposits Expect to be cash EPS accretive in FY10 $21m in FY07 normalised NPA
Slide 32: Credit card alliance and portfolio sale
Credit card alliance and portfolio sale Sale announced in April 2007 and settled July 2007 12 month migration process for BOQ cards across to Citigroup platform Credit cards to be provided by Citigroup through a “white labelled” distribution arrangement Customers to benefits through greater support,
Slide 33: Strong growth outlook
Strong growth outlook Financial goals 1.5x – 2x system growth for lending and deposits Diversify revenue Normalised cash EPS growth of 10% - 12% Maintain credit quality Continue reduction in cost to income ratio Operational goals Higher productivity from maturing branch network Geographic expansion
Slide 34: Our priorities
Our priorities Successful execution of acquisitions Continued distribution expansion More brand investment ‘Red carpet’ retail and business banking delivery Sound capital/liquidity management To be the consolidator of choice The big small bank Annual Results 2007 34
Slide 35: Bank of Queensland
Bank of Queensland
Slide 36: Additional information
Additiona bank different® Bank of Queensland
Slide 37: Hybrid capital
Hybrid capital Proposed Non-innovative capital issue - PEPS $150m issue (with ability to accept over subscriptions) Non-cumulative preference share structure with a view to being accepted by APRA as Non-Innovative residual Tier 1 Capital Fully franked semi-annual dividends based on a margin over 180
Slide 38: Hybrid capital
Hybrid capital Proposed non-innovative capital issue - PEPS (cont'd) To be issued via prospectus - expected to be lodged within a few weeks Offer intended to be underwritten Intention to list PEPS on ASX Existing BOQ shareholders and holders of existing S1RPS and RePS will be given priority in alloc