Bnk Banking Corporation Limited · ASX:BBC
Bnk Banking — H1 2023 Earnings Presentation
22 slides from Bnk Banking's earnings presentation, Feb 24, 2023
Slide 1: Investor Presentation: 1H'23 Financial Results
ASX:BBC INVESTOR PRESENTATION 1H’23 Financial Results 24 February 2023 1
Slide 2: Disclaimer
Disclaimer ASX:BBC This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, business plans and objectives of management. All such forward‐looking statements involve known and unknown risks, significant uncertainties, assumptions, c
Slide 3: Agenda
Agenda ASX:BBC 1H23 Results Overview pg 5 Allan Savins Chief Executive Officer 1H23 Financial Results pg 11 Andrew Kitchen Group CFO Strategy update and outlook pg 16 Allan Savins Chief Executive Officer 3
Slide 4: 1H'23 Results Overview
1H’23 Results Overview ASX:BBC Allan Savins Chief Executive Officer 4
Slide 5: BNK: The bank for Enterprising Australians
BNK The bank for Enterprising Australians ASX:BBC Innovative product Focus on SME market Track record of Diversified funding range accelerated lending base growth • Strategy pivot to away from • Offers a diverse product • Loan book funded through range to assist a larger 100% residential home loans
Slide 6: BNK's evolution
BNK’s evolution Proud 40-year operating history ASX:BBC Goldfields Money merges with Finsure and Better Choice. Better Choice wins 2021 Non-Bank BNK expands its Goldfields Better Choice wins Lender of the Year Business residential home subsequently 2020 Non-Bank at the Australian established as loan
Slide 7: 1H'23 Results Overview
1H’23 Results Overview ASX:BBC Financial highlights $(2.7)m $(1.4)m • Achieved cash profit in the months of December 2022 and January 2023, driven by revenue growth Group Statutory NPAT Cash NPAT* and stringent cost control Down $(59)m on 2H’22 Down $(0.3)m on 2H’22 • Income growth of 163% exceeding
Slide 8: BNK Loan Book, Deposits & Net Interest Income
BNK Loan Book, Deposits & Net Interest Income Consistent growth achieved across lending and deposits ASX:BBC Loan book ($m) Deposit book ($m) Net Interest Income ($m) 8.7 1183 1166 965 7.0 984 829 5.9 740 636 4.5 537 3.3 391 305 8 1H21 2H21 1H22 2H22 1H23 1H21 2H21 1H22 2H22 1H23 1H21 2H21 1H22 2H22
Slide 9: Continued diversification in the BNK-funded lending portfolio
Continued diversification in the BNK-funded lending portfolio ASX:BBC Improved geographic mix and lending to owner occupiers On Balance Sheet Loans Portfolio By Loan Type H23 FY22 H23 FY22 Increasingly Consistently SA Other Other 4.2% 4.1% 7.6% diverse skewed to an geographic owner occupier WA custo
Slide 10: Strong Cornerstone Portfolio
Strong Cornerstone Portfolio BNK has delivered growth while strengthening the underlying ASX:BBC portfolio dynamics: Loan quality control maintained Loan size increased • Tighter lending controls to high debt to income • Average loan size increased from $340k to borrowers maintained. $357k during 1H
Slide 11: 1H'23 Financial Results
1H’23 Financial Results ASX:BBC Andrew Kitchen Chief Financial Officer 11
Slide 12: Performance
Performance Underlying NPAT* ($m) Cash NPAT* ($m) On track to deliver 2H22 1H23 2H22 1H23 ASX:BBC Q4'23 Cash Profit -2.6 -5.0 -1.1 -1.4 Cash NPAT bridge* ($m) -1.4 Cash Net Upfront Net Trail Net Net Other Provision Employee Expenses Tax* Cash NPAT Commission Commission Interest Income for Credit Ben
Slide 13: Bank Net Interest Margin
Bank Net Interest Margin NIM grows despite competitive mortgage market ASX:BBC • Net Interest Margin trending in the right direction, demonstrating BNK’s sound investment strategy. • Opportunities to improve NIM: -Fixed rate repricing, and -Expansion to higher margin SME market. 13
Slide 14: Credit Quality & Loss Protection
Credit Quality & Loss Protection Growth achieved without sacrificing credit quality ASX:BBC Historical Credit Charges (% of loan book) 0.07% Portfolio Hardship Rate (% of customers) 0.06% 3.00% 0.05% 2.50% 0.04% 2.00% 0.03% 1.50% 0.02% 1.00% 0.01% 0.00% 0.50% 2017 2018 2019 2020 2021 2022 2023 0.00%
Slide 15: Strategy Update and Outlook
Strategy Update and Outlook ASX:BBC Allan Savins Chief Executive Officer 15
Slide 16: Strategic Focus
Strategic Focus ASX:BBC STRATEGY TARGET FOCUS AREAS • Residential portfolio will remain the cornerstone to build upon • Uplift resourcing capability (namely in Risk & Compliance, Technology, Targeting an increase in BNK’s Capability) to support growth GROWTH balance sheet loan book to over • Upgrade
Slide 17: Summary and outlook
Summary and outlook ASX:BBC ✓ Clear priorities will drive strategic growth within risk appetite ✓ Extend suite of SME banking products tailored to our target market ✓ Grow recurring revenue base, whilst maintaining disciplined cost control ✓ Optimise capital consumption through selective product off
Slide 18: Appendix
Appendix 18
Slide 19: Strategic focus on SME market
Strategic focus on SME market Expand into higher margin SME market to increase returns ASX:BBC Rationale SME capabilities 1H'23 achievements Capital • Commercial settlements now • Finsure sale proceeds have enabled a contribute approx. 10% of 1H'23 greater emphasis on higher margin loans. total sett
Slide 20: Group Financial Snapshot
Group Financial Snapshot ASX:BBC 1H23 2H22 Bank Underlying NPAT ($m) (2.7) (0.7) Bank Underlying NPAT* ($m) (2.6) (4.9) Bank Cash NPAT* ($m) (1.4) (1.1) Group Statutory NPAT ($m) (2.7) 56.7 Group EPS (0.02) 0.48 Group Net Income ($m) 7.9 3.0 Operating Expenses ($m) 11.2 9.6 Direct Net Interest Margi
Slide 21: Underlying to Statutory NPAT Reconciliation
Underlying to Statutory NPAT Reconciliation ASX:BBC *Tax booking impacted by FY22 capital return and dividend payment. An adjustment has been made to normalise tax assuming c. 30% effective tax rate. 21
Slide 22: Balance Sheet
Balance Sheet BNK ASX:BBC 1H23 2H22 Assets Cash & Equivalents 426.7 412.1 14.6 3.5% NPV Asset 18.4 21.0 (2.6) (12.3%) Loans & Advances 1,173.0 990.1 182.9 18.5% Other Assets 18.1 18.5 (0.4) (2.3%) Total Assets 1,636.2 1,441.8 194.4 13.5% Liabilities Deposits 1,183.0 964.6 218.4 22.6% Other Liabiliti