Mystate Limited · ASX:MYS

Mystate — Debt Investor Presentation (June 2020)

44 slides from Mystate's debt investor presentation, Jun 29, 2020

  1. Slide 1: ASX release: Presentation to Debt Investors Correction

    ABN 26 133 623 962 Level 2, 137 Harrington Street Hobart 7000 Tasmania Australia 29 June 2020 The Manager Company Announcements Australian Securities Exchange MYS ASX Release – Presentation to Debt Investors Correction The attached Presentation to Debt Investors replaces the equivalent document rele

  2. Slide 2: Presentation to Debt Investors

    Presentation to Debt Investors Subordinated Debt Issuance June 2020

  3. Slide 3: Agenda

    Corporate profile Gary Dickson Chief Financial Officer Transaction details Ryan Sharp Treasurer Strategy & highlights Gary Dickson Chief Financial Officer Agenda Financial results Gary Dickson Chief Financial Officer COVID- COVID-19 Gary Dickson Chief Financial Officer Capital, funding & liquidity R

  4. Slide 4: Corporate profile

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  5. Slide 5: Corporate profile

    Sub Debt Issue | Investor Presentation Corporate profile MyState Group is a leading regional bank with Banking and Wealth Management operations • ASX listed company • Market capitalisation of c. $377m1 • Approximately 400 employees, over 140,000 customers Banking Wealth • Banking Home Loan Book: $4.

  6. Slide 6: Key metrics and performance drivers

    Sub Debt Issue | Investor Presentation Key metrics and performance drivers FINANCIAL PERFORMANCE Change* STRONG 1H20 PROFIT Net profit after tax1: $15.1m +5.4% driven by solid uplift in total operating income Earnings per share: 16.57cps +4.4% INCREASED NET INTEREST INCOME driven by balance sheet gr

  7. Slide 7: APRA regulatory group

    Sub Debt Issue | Investor Presentation APRA regulatory group Level 1 Level 2 MyState Bank MyState Limited MyState Bank Connect Asset Management TPT Wealth sits outside the APRA Regulatory Group

  8. Slide 8: Capital markets issuance

    Sub Debt Issue | Investor Presentation Capital markets issuance Strong capital markets brand Well established NCD programme Programmatic RMBS issuer via the Conquest RMBS programme. c. $2.9bn of capital markets RMBS issued since inception of the programme across 9 Trusts (8 public, 1 private placeme

  9. Slide 9: Transaction details

    Transaction details

  10. Slide 10: Proposed subordinated debt structure

    Sub Debt Issue | Investor Presentation Proposed subordinated debt structure Issuer: MyState Limited (ABN 26 133 623 962) Issuer Rating: Baa2/P-2 Expected Issue Rating Baa3 Documentation Information Memorandum, Pricing Supplement Instrument Subordinated Notes Offer Size AUD25,000,000 Structure 10NC5

  11. Slide 11: Proposed subordinated debt structure

    Sub Debt Issue | Investor Presentation Proposed subordinated debt structure Tax The Issuer intends to issue the Subordinated Notes in a manner which will satisfy the public offer test under section 128F of the Income Tax Assessment Act 1936 (Cth) Governing Law New South Wales, Australia Settlement E

  12. Slide 12: Proposed subordinated debt structure

    Sub Debt Issue | Investor Presentation Proposed subordinated debt structure Conversion Following a Non- If a Non-Viability Trigger Event occurs, the primary method of loss absorption is Conversion. Upon a Non-Viability Viability Trigger Event Trigger Event occurring, the Issuer may be required to Co

  13. Slide 13: Proposed subordinated debt structure

    Sub Debt Issue | Investor Presentation Proposed subordinated debt structure MyState Limited will be the issuer of the proposed Subordinated Notes Non-Operating Holding Company (NOHC) and head entity of the MyState Group and is ASX listed entity Regulated by APRA as an authorised NOHC of an APRA Leve

  14. Slide 14: Strategy & highlights

    Strategy & highlights

  15. Slide 15: Our strategic priorities

    Sub Debt Issue | Investor Presentation Our strategic priorities Our GOAL is to be Our STRATEGY is focused on Simple, Simple relevant and easy to “use” Growing and automating our bank Digitally Digitally enabled so that we can operations, increasing our digital attract and retain the target capabilit

  16. Slide 16: We are building a digital business that is attracting and engaging customers

    Sub Debt Issue | Investor Presentation We are building a digital business that is attracting and engaging customers* Growing contribution from digital 62% increase in online 89% of all customer transactions Over 20% growth in customer growth performed online or on a mobile device eStatement registra

  17. Slide 17: Outlook

    Sub Debt Issue | Investor Presentation Outlook Revenue growth through: Robotics technology now in use with more to come reducing • Bank balance sheet growth operating costs. • Focused margin management • FUM growth via mainland distribution Re- Re-engineering cost base, base improving productivity a

  18. Slide 18: Financial results

    Financial results

  19. Slide 19: Results summary

    Sub Debt Issue | Investor Presentation Results summary 1H20 1H19 Change* Change* Net interest income ($m) 48.16 44.15 +9.1% Positive jaws in 1H with income growth Total operating income ($m)1 63.34 59.36 +6.7% exceeding cost Operating expenses (excl. BDD) ($m)1 41.12 39.23 +4.8% growth leading to a

  20. Slide 20: MSB captures funding tailwinds

    Sub Debt Issue | Investor Presentation MSB captures funding tailwinds BBSW 1M BBSW 3M BBSW 6M BBSW 1.50 1.25 Net interest margin up +3bps on 2H19 1.00 Continued fall in wholesale funding costs 0.75 Narrowing of BBSW-OIS spread contributed 0.50 10bps TD rates falling as book rolls to lower rates 0.25

  21. Slide 21: Operating costs well managed

    Sub Debt Issue | Investor Presentation Operating costs well managed Operating costs increased 4.82% led by increased investment in capability, marketing and digital Increased investment in marketing of $0.8m, up 39% on pcp One-off investment costs of $0.65m relating to rebrand of TPT Wealth and laun

  22. Slide 22: NPAT bridge

    Sub Debt Issue | Investor Presentation NPAT bridge NPAT growth of 5.4% Net interest income grew 9.1% on pcp off the back of a higher average balance sheet, falling funding costs and focused margin management Disciplined management of costs while we continue to invest in marketing and digital Net bad

  23. Slide 23: Quality, low risk loan book

    Sub Debt Issue | Investor Presentation Quality, low risk loan book Emphasis on maintaining quality lending growth Home loan book – amidst strong competition applications and settlements ($b) 1H 2H Applications 2.50 Settlements Loan book growth eased in the half; offset by increases in NIM 2.00 Lendi

  24. Slide 24: High credit quality

    Sub Debt Issue | Investor Presentation High credit quality Home loan book – LVR profile ($b) Home loan book composition (%) Consistent focus on $0.20 $0.20 >90% lower LVR loans with $0.30 $0.35 85% - 90% 18% $0.20 $0.37 $0.35 80%-85% high asset quality $0.26 $0.39 Uptick in arrears has 79.4% 78.9% 7

  25. Slide 25: TPT Wealth

    Sub Debt Issue | Investor Presentation TPT Wealth Funds under management ($m) Net FUM growth to $1.19b Wealth revenue increased 5.1%* on pcp due to higher trustee fees and 1,186 funds management revenue 1,170 1,159 1,153 Rebranding of Wealth operations as 1,129 TPT Wealth and launch of new investor

  26. Slide 26: COVID-19

    COVID- COVID-19

  27. Slide 27: COVID-19 assistance to customers

    Sub Debt Issue | Investor Presentation COVID-19 assistance to customers On 24 March 2020, MyState Bank announced a range of new measures to support customers who may be experiencing financial hardship due to COVID-19. These measures included: • Home loan, personal loan or commercial loan customers c

  28. Slide 28: COVID-19 assistance to customers

    Sub Debt Issue | Investor Presentation COVID-19 assistance to customers Loans that have been provided assistance due to COVID-19: Total Balance of COVID-19 Assistance ($m) Assistance Type Home Loan Personal Loan MSB Commercial Total Restructure 59.14 0.18 0.11 59.42 Loan Pause 448.60 1.97 14.04 464.

  29. Slide 29: COVID-19 profile of customers provided assistance

    Sub Debt Issue | Investor Presentation COVID-19 profile of customers provided assistance Home Loan LVR Breakdown Total COVID-19 Loans 6.9% 0.9% 1.4% 0.8% 7.3% 0.3% 6.1% 79.7% <=80% 80.01%-85% 85.01%-90% 90%+ 96.6% Residential Portfolio - P&I v IO Residential Portfolio - OO v INV 88.85% 79.2% Housing

  30. Slide 30: COVID-19 profile of customers provided assistance

    Sub Debt Issue | Investor Presentation COVID-19 profile of customers provided assistance COVID-19 hardship loans are predominantly located in NSW ($170m), followed by VIC NT $0.47m, 0.08% ($144m), TAS ($137m) and QLD ($114m) QLD $114.01m, 19.60% WA $9.56m, 1.64% SA $4.10m, 0.70% NSW $170.12m, 29.25%

  31. Slide 31: COVID-19 profile of customers provided assistance

    Sub Debt Issue | Investor Presentation COVID-19 profile of customers provided assistance Number of Advance Payments Purpose & Repayment Type $350 $297.47m Millions $300 $468.63m IO P&I $250 $500 Millions $200 $167.31m $400 $150 $300 $100 $200 $48.39m $33.68m $108.95m $50 $21.84m $6.33m $6.65m $100 $

  32. Slide 32: COVID-19 profile of customers provided assistance

    Sub Debt Issue | Investor Presentation COVID-19 profile of customers provided assistance Average Balance of Loans with COVID-19 Assistance ($) State Home Loan Personal Loan Commercial All Lending ACT 327,539 327,539 NSW 507,721 22,652 614,269 501,824 The average loan balance for NT 455,487 16,356 23

  33. Slide 33: Total portfolio arrears

    Sub Debt Issue | Investor Presentation Total portfolio arrears Home loan arrears profile (%) Home loan arrears The increase since Mar 20 partly reflects the focus of the 1.00% collections team on COVID-19 customer assistance. Resourcing 0.80% of the collections team has been >99% of home loan book a

  34. Slide 34: Provisions and coverage ratios

    Sub Debt Issue | Investor Presentation Provisions and coverage ratios Total Collective Provisions and GRCL ($m) Loan provisioning strengthened for the potential impact of COVID-19 pandemic 8.61 2.0 6.3 5.1 2.3 3.6 Total Provision Coverage Ratio 0.5% 4.4 2.4 (Collective and GRCL) 1.5 4.3 1.9 2.1 2.7

  35. Slide 35: COVID-19 economic outlook and scenario weightings

    Sub Debt Issue | Investor Presentation COVID- COVID-19 economic outlook and scenario weightings Housing Prices (%) -14% Economic outlook – scenario weights – $2.0m -12% Scenario weightings -10% -8% Jun-20 5% 50% 45% -6% -4% -2% Dec-19 15% 70% 15% 0% Strong recovery Base case Moderate recession Dec 1

  36. Slide 36: Capital, funding & liquidity

    Capital, funding & liquidity

  37. Slide 37: Well capitalised

    Sub Debt Issue | Investor Presentation Well capitalised Capital ratios comfortably above regulatory minimums Capital position supported by earnings growth and securitised funding Effective capital strategy underpinning growth and investment in digital capability Issuance of replacement subordinated

  38. Slide 38: Capital management approach

    Sub Debt Issue | Investor Presentation Capital management approach Capital is managed under the Board approved ICAAP framework pursuant to APS 110. Capital is monitored on three levels: • Regulatory Capital (APRA Approach) • Rating Agency Capital (Moody’s Approach) • Economic Capital (Internal Risk

  39. Slide 39: Funding mix

    Sub Debt Issue | Investor Presentation Funding mix Funding mix (%) Funding mix enhanced by lower cost at 22.7 24.5 25.5 call customer deposits 8.6 6.9 6.4 Programmatic RMBS issuance continues to be well supported by broad investor- base 68.6 68.6 68.1 Retail funding costs continuing to fall off the

  40. Slide 40: Customer deposits

    Sub Debt Issue | Investor Presentation Customer deposits Customer deposits are the core part of the MyState funding strategy and provide a MyState Customer Funding Ratio strong, sustainable base from which to 70% support lending growth. 69% The majority of deposits continue to be 68% originated via

  41. Slide 41: Wholesale funding composition

    Sub Debt Issue | Investor Presentation Wholesale funding composition Securitisation remains the largest portion of wholesale funding. Wholesale funding provides Approximately 80% of this is term MyState with diversification of its RMBS funding sources Securitisation is used for both Internal RMBS po

  42. Slide 42: Liquidity

    Sub Debt Issue | Investor Presentation Liquidity MLH Investments by Credit Rating MyState Bank is an MLH ratio bank Holding an elevated level of liquidity assets and 1 (S&P AA- or above) 34% contingent liquidity (i.e. internal RMBS) in response to 2 (S&P A- or above) the COVID-19 environment 41% Maj

  43. Slide 43: Contingent funding plan & liquidity stress testing

    Sub Debt Issue | Investor Presentation Contingent funding plan & liquidity stress testing The Contingent Funding Plan (CFP) is undertaken and tested regularly as part of MyState’s liquity risk management framework. Testing includes a fire drill test run by ALCO (at least annually) and regular testin

  44. Slide 44: Disclaimer

    Sub Debt Issue | Investor Presentation Disclaimer Summary Information financial performance, and financial position are also forward looking statements . This Presentation contains summary information about MyState and its activities Forward looking statements, opinions and estimates are based on as

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