Bendigo & Adelaide Bank Ltd. · ASX:BEN

Bendigo & Adelaide Bank — H1 2018 Earnings Presentation

46 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 12, 2018

  1. Slide 1: Results Presentation for the half year ended 31 December 2017

    © Cp) sf a. = Results : (e) Presentation : —_ Bendigoand LL, the half year ended 31 December 201/ cad pela

  2. Slide 2: Overview, Financial performance, Summary and outlook, Appendices

    Overview Financial performance Summary and outlook Appendices > | Bendigoand AdelaideBank

  3. Slide 3: Mike Hirst, Managing Director

    Mike Hirst Managing Director s => > > | Bendigoand AdelaideBank

  4. Slide 4: Our 1H18 result

    Our 1H18 result Financial Performance For personal use only • Statutory profit after tax up $22.7m to $231.7m • Net interest margin up 18bps to 2.36% • Cash earnings up $21.8m to $225.3m • Cost to income ratio down 220bps to 54.2% • Cash earnings per share up 3.3 cents to 46.8 cents • Cash operating

  5. Slide 5: Result drivers

    Result drivers For personal use only 1. 1H18 settlement flows are based on comparison to PCP 2. Growth figures are June-17 to Dec -17 3. 1H18 movements are based on comparison to PCP 5

  6. Slide 6: Australia's most customer connected bank

    Australia’s most customer connected bank For personal use only 6

  7. Slide 7: Competitive environment

    Competitive environment For personal use only 7

  8. Slide 8: Our focus areas

    For personal use only Our focus areas 8

  9. Slide 9: Our vision is to be Australia's most customer connected bank

    Our vision is to be Australia’s most customer connected bank Mike Hirst Marnie Baker : Taso Corolis Richard Managing Chief Customer : Chief Risk Fennell Director Officer Officer Chief Financial Officer, Executive Corporate 160 years of making positive change Alexandra Gartmann Executive, Agribusines

  10. Slide 10: Richard Fennell, Chief Financial Officer

    Richard Fennell Chief Financial Officer > | Bendigoand AdelaideBank

  11. Slide 11: Financial performance - at a glance

    Financial performance - at a glance For personal use only Change Change 1H18 2H17 1H17 1H18 – 2H17 1H18 - 1H17 Statutory NPAT $231.7m $220.6m $209.0m 5.0% 10.9% Cash Earnings $225.3m $214.8m $203.5m 4.9% 10.7% Cash EPS 46.8¢ 45.0¢ 43.5¢ 1.8¢ 3.3¢ Net interest margin 2.36% 2.26% 2.18% 10 bps 18 bps E

  12. Slide 12: Balance sheet and capital - at a glance

    Balance sheet and capital - at a glance For personal use only Change Change 1H18 2H17 1H17 1H18 – 2H17 1H18 - 1H17 Lending assets $60.6b $60.9b $60.1b ($0.3b) $0.5b Risk weighted assets $37.7b $38.1b $38.3b ($0.4b) ($0.6b) Total assets $71.3b $71.4b $70.9b ($0.1b) $0.4b Deposit funding 79.6% 80.2% 8

  13. Slide 13: 1H18 growth outcomes

    1H18 growth outcomes For personal use only Source: APRA statistics December 2017 Note - Data is based on 6 month growth annualised and BEN includes Rural Bank 13

  14. Slide 14: 1H18 residential mortgage growth outcomes

    1H18 residential mortgage growth outcomes 10% Investor 30% Interest growth limit Only flows limit For personal use only 1 2 1. Loan settlements for Bendigo Bank excluding line of credits 2. Loan settlements for Adelaide Bank excluding line of credits 14

  15. Slide 15: Cash earnings growth

    Cash earnings growth  Strong margin performance Cash earnings ($m) For personal use only  Reduced contribution from trading book 225.3  Lower ATM and transaction fees 214.8 206.8  Efficiency focus maintained – FTE reduced 203.5 192.7  Increased credit costs from commercial property lending  Ca

  16. Slide 16: Net interest margin

    Net interest margin  Disciplined approach to both asset and liability pricing For personal use only  Exit margin of 2.38%  January 2018 monthly margin of 2.37%  Front book discounts will challenge margin in 2H18 1. Community Bank & Alliance Bank share 16

  17. Slide 17: Homesafe investment property portfolio

    Homesafe investment property portfolio  Proceeds on completed contracts continue to exceed For personal use only pre-overlay values  Overlay reflects an assumed 3% increase in property prices for the next 18 months before returning to a long term growth rate of 6%  Average annual return on comple

  18. Slide 18: Active cost management

    Active cost management  Strong jaws outcome For personal use only  Exiting non core businesses - Telco, Wills and Estates and Debenture Trustee  Software amortisation up $4.5m (50%) on 1H17  Staff costs up 0.7% on PCP  Salary increase of 2.5% for salaried staff and 3.0% for Enterprise Agreement

  19. Slide 19: Business segment performance (cash earnings)

    Business segment performance (cash earnings)  All lending markets remain highly competitive  Margin improvement in Local and Partner Connection For personal use only businesses  Strong cost control in all segments 1  Managed funds up 10% , Bendigo SmartStart Super up 33%1  Increased credit expe

  20. Slide 20: Industry leading funding position

    Industry leading funding position  Funding mix continues to be a strength providing flexibility for organic and inorganic asset growth For personal use only  Continued organic growth in retail call deposits  LCR of 128.8% at 31 December 2017  Indicative NSFR ~111%  RMBS deal of $750m completed

  21. Slide 21: Bad and doubtful debts

    Bad and doubtful debts  BDD charge 15 basis points of gross loans, 13 basis points excluding Great Southern For personal use only  Higher BDD charge in 1H18 driven by commercial property lending  Provision coverage 106% of impaired assets  Reduced Agribusiness provisions reflect improved credit

  22. Slide 22: Arrears remain benign

    Arrears remain benign Business Loan Arrears For personal use only 3.0% 2.0% 1.0% 0.0% Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Bus 90d+ Consumer Loan Arrears 1 3.0% 2.0% 1.0% 0.0% Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 PL 90d+ CC 90d+ Note - Data excludes commercial arrangement loans 1. Keystart included from

  23. Slide 23: Continued CET1 organic growth in 1H18

    Continued CET1 organic growth in 1H18 3 For personal use only  Organic capital growth reflecting strong profitability, stable balance sheet and move to lower risk exposures  Unquestionably strong target achieved  Average credit risk weight down 1.3% from 48.7% to 47.4% of total assets  S&P capit

  24. Slide 24: Basel III: Revised capital for Credit Risk

    Basel III: Revised capital for Credit Risk For personal use only 24

  25. Slide 25: Marnie Baker, Chief Customer Officer, and Mike Hirst, Managing Director

    Marnie Baker Mike Hirst Chief Customer Officer Managing Director > | Bendigoand AdelaideBank

  26. Slide 26: Delivering on strategy

    Delivering on strategy For personal use only 1. Company data as at 31 December 2017 2. Roy Morgan Single Source, Bendigo Bank customers aged 14+ (any relationship), 6 months to December 2017 26

  27. Slide 27: Investment for the long term

    Investment for the long term For personal use only 27

  28. Slide 28: For personal use only

    FOr personel use only > | BeridigoandAdelaideBank 28

  29. Slide 29: Questions

    For personal use only Questions > | Bendigoand AdelaideBank

  30. Slide 30: Appendices

    Appendices > | BendigoandAdelaideBank

  31. Slide 31: Our vision, strategy and purpose

    Our vision, strategy and purpose For personal use only 31

  32. Slide 32: A diverse business

    For personal use only A diverse business 32

  33. Slide 33: Connected with our customers

    Connected with our customers For personal use only 33

  34. Slide 34: Agribusiness

    Agribusiness For personal use only 1 1. 18% jointly managed in partnership with Community Banks 34

  35. Slide 35: Residential lending

    Residential lending For personal use only Source: Company data, APRA statistics December 2017 1.Based on APRA statistics (loans to households : owner occupied & investment and housing loans securitised) 35

  36. Slide 36: The Community Bank model

    The Community Bank® model  Over $183m in community contributions1 For personal use only since inception – delivering tangible benefits for these communities and our business  320 Community Bank® branches with more than 90 in communities where there is no alternative provider  Proven, reliable and

  37. Slide 37: Alliance Bank loan & deposit growth

    Alliance Bank® loan & deposit growth  7.3% loan portfolio growth for past 12 months For personal use only  Innovative social impact loan program  Two new entrants due for completion in 2018  Confidentiality agreements with two other credit unions  150 employees  40,000 customers 37

  38. Slide 38: Homesafe investment property portfolio (based on statutory earnings)

    Homesafe investment property portfolio (based on statutory earnings) For personal use only 1H18 2H17 1H17 2H16 ($m) ($m) ($m) ($m) Profit on sale $1.0 $0.3 $1.4 -$1.1 Discount $10.4 $9.4 $9.0 $8.7 Property valuations $30.1 $36.4 $38.5 $11.2 Portfolio overlay -$1.9 -$2.1 -$2.5 $6.4 Total income $39.6

  39. Slide 39: Specific provisions

    Specific provisions For personal use only Represented by Local Partner Provision as % of Connection Business Connection Delphi Great Alliance each portfolio’s Consumer Agribusiness BEN total residential Lending residential Bank Southern Partners gross loans mortgages mortgages December 2017 0.03% 0.

  40. Slide 40: Funding

    Funding For personal use only 3 2 Dec-17 Note – Reclassification of some middle market deposits from Retail to Whole has reduced the retail deposit ratios: Dec-16 by 2.7% and June-16 by 2.4% 1.Company data 2.Wholesale funding composition excludes financial markets NCD’s 3. $500m senior unsecured com

  41. Slide 41: Key capital ratios

    Key capital ratios 1H18 2H17 1H17 2H16 For personal use only Common equity tier 1 8.61% 8.27% 7.97% 8.09% Additional tier 1 2.37% 2.22% 2.20% 2.31% Tier 1 Capital 10.98% 10.49% 10.17% 10.40% Tier 2 2.00% 1.97% 2.03% 1.99% Total regulatory capital 12.98% 12.46% 12.20% 12.21% Risk weighted assets (RWA

  42. Slide 42: Residential LVR breakdown at origination

    Residential LVR breakdown at origination For personal use only Dec-17 Note - Breakdown of LVRs for by residential mortgages at 31 December 2017 by origination 42

  43. Slide 43: Secure and low risk loan portfolios

    Secure and low risk loan portfolios For personal use only Residential Mortgages2,3 Dec-17 Jun-17 Residential Mortgages2,3 Dec-17 Jun-17  98.4% secured Retail mortgages 58% 57% Mortgages with LMI 27% 27%  97.9% secured by mortgages and Third Party mortgages 42% 43% Average LVR 61% 61% listed securi

  44. Slide 44: Great Southern paying down

    Great Southern paying down  Past due 90 days of $62.7m1, a 21% reduction For personal use only from 30 June 2017  Specific provision of $7.6m1, down 36% since 30 June 2017  Collective provision maintained at $16.5m  Proactive recovery on written off loans  Performing loans of $28.6m1 represent

  45. Slide 45: Investor relations and media contacts

    For personal use only Analysts Media Nicole Rooke Silvana Arena Head of Investor Relations Head of Public Relations Tel: +61 3 5485 6286 Tel: +61 8 8220 7784 Mob: +61 431 442 808 Mob: +61 402 110 445 Email: nicole.rooke@bendigoadelaide.com.au Email: silvana.arena@bendigoadelaide.com.au Alex Hartley

  46. Slide 46: Disclaimer

    Disclaimer For personal use only 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 th

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