Liberty Financial Group Ltd · ASX:LFG
Liberty Financial — H1 2023 Earnings Presentation
34 slides from Liberty Financial's earnings presentation, Feb 27, 2023
Slide 1: Liberty Financial Group Half Year Results
Liberty Financial Group Half Year Results For personal use only 27 February 2023
Slide 2: Presenting today
Presenting today For personal use only James Boyle Peter Riedel Chief Executive Officer Chief Financial Officer |2
Slide 3: Agenda
Agenda For personal use only 01 Highlights 02 Results Analysis 03 Business Update 04 Outlook 05 Summary 06 Questions |3
Slide 4: Highlights
For personal use only |4 01 Highlights
Slide 5: Highlights
Highlights For personal use only Continued portfolio growth through diversification % Lower NIM as BBSW increases Sound underlying performance Stronger balance sheet with 17% underlying ROE Small increase in arrears First non-bank to receive CDR accreditation Stable distribution to Securityholders |
Slide 6: Financial Highlights
Financial Highlights For personal use only % Underlying NPATA Net revenue NIM $104.8m ($122.4m) $311.4m ($324.9) 2.87% (3.14%) -14% -4% -27bps BDD Cost to income Distribution 2bps (-1bps) 25.8% (21.9%) 21c (21c) +3bps +390bps Stable |6 *Balances represent: 1H23 (1H22) change between the periods
Slide 7: Operating Highlights
Operating Highlights For personal use only Average financial assets New assets originated Impaired loans $13.1b ($12.4b) $2.9b ($2.8b) $135m ($174m) +6% +2% -22% FTE Staff Broker NPS Customer NPS 550 (501) 79 (83) 55 (63) +10% -5% -13% |7 *Balances represent: 1H23 (1H22) change between the periods
Slide 8: Results Analysis
For personal use only 02 Results Analysis |8
Slide 9: Profit Performance
Profit Performance For personal use only Statutory NPATA ($'m) Underlying NPATA ($m) $122.4 $122.4 $108.8 $109.9 $109.9 $108.8 $5.1 104.8 1H22 2H22 1H23 1H22 2H22 1H23 Reduction in statutory NPATA 10% (1H23 v 1H22) principally One-time impact of moving to full ownership of ALI explains explained by
Slide 10: Profit Drivers
Profit Drivers For personal use only Total Revenue ($'m) BDD (bps) $564.2 2 Consistent low loss performance with reduced impaired loans and $440.6 $428.5 Total revenue growth +28% (1H23 1 realised losses covered by specific v 1H22) and +32% (1H23 v 2H22) provisions driven by increased yield given RB
Slide 11: Revenue
Revenue For personal use only Average Assets ($'b) Lending Income ($'m) $38 $40 $12.4 $12.7 $13.1 Average asset growth +6% (1H23 $36 v 1H22) and +3% (1H23 v 2H22) Record new originations $2.9b Movement in lending income (v $2.7b 2H22 and $2.8b 1H22) between periods consistent with Loan discharges an
Slide 12: Funding
Funding For personal use only Cost of Funds Total Financing ($'b) 3.84% 12.8 (0.5) 0.7 13.0 1.85% 1.87% 2H21 1H22 2H22 Jun-22 Term Issues W'sale Mov't Dec-22 RBA rate increase 225bps in 1H23 Raised and retained $5b in funding since 30 June 2022 Average 1M BBSW 239bps in 1H23 (increase of 215bps v 2H
Slide 13: BDD
BDD For personal use only 1H22 (-1 bps) 1H23 (2 bps) 4 11 2 3 1 -14 -5 -1 Realised Loss Specific Specific Collective Specific Specific Provision Provision Provision Realised Provision Provision Collective (Release) (Increase) Loss (Release) (Increase) Provision 2H22 (1 bps) 3 Impairment expense 2bps
Slide 14: Loan Provisions
Loss Provisions For personal use only Provisions by Nature ($'m) Portfolio by Stage Collective Provision $65 Specific provisions at 1H23 $75 $64 ($m) by Stage ($m) ($11m) consistent with 2H22 $12,487 $12,935 $13,171 $54 and 1H22 $53 $53 $53 $53 $54 Slight increase in collective provisions at 1H23 to
Slide 15: Cost to income
Cost to income For personal use only Personnel cost increase in 1H23 v 2H22 reflects increase in FTE to 550 (from 524) to support Operating expenses 1H22 2H22 1H23 growth and wage inflation Personnel 42 42 45 Other expenses in 1H23 higher than 2H22 and 1H22 due to an increase in technology and Other
Slide 16: Distribution
Distribution For personal use only Interim distribution 21 cents paid for 5-month earnings period to Nov-22. Implied annualised yield of 13% based on security price of $3.99 Final distribution for 7-month earnings period to 28c 30-Jun-23 expected to be paid end of Aug-23. 24c Future distribution pay
Slide 17: Financial Position
Financial Position For personal use only Stable balance sheet and lower leverage $m Jun-22 Dec-22 Investment grade rating BBB- (positive outlook) affirmed following analysis of FY22 results Cash 654 594 Annualised underlying ROE 17% with modest leverage Financial assets 12,916 13,167 Loans to relate
Slide 18: Business Update
For personal use only 03 Business Update | 18
Slide 19: Business Update
Business Update For personal use only Record originations with continued portfolio growth Residential impacted by slower demand and discharges Continued growth in SME and SMSF lending Motor growth fuelled by new distribution partnerships Fin Services benefitting from growth in PL lending Small incre
Slide 20: Segment Loan Origination
Segment Loan Origination For personal use only Residential ($'m) Secured ($'m) $2,029 $1,002 $1,879 $1,747 $684 $714 40% growth in 1H23 v 2H22 driven 7% reduction in 1H23 v 2H22 by continued strong growth in auto reflecting slower credit growth finance lending as market share given interest rate cyc
Slide 21: Segment Loan Portfolio
Segment Loan Portfolio For personal use only Residential ($'m) Secured ($'m) $4,206 $8,527 $8,654 $8,348 $3,754 $3,504 Accelerating growth in Secured loan Portfolio growth continues to be portfolio driven by growth in auto impacted by higher than trend finance lending, with steady discharges and amo
Slide 22: Portfolio Risk
Portfolio Risk For personal use only +30 Day Delinquency +90 Day Delinquency 3.6% 3.4% 1.4% 3.3% 1.2% 1.0% 1H22 2H22 1H23 1H22 2H22 1H23 Early-stage delinquency lower at Dec-22 v Dec-21 demonstrating Consistent reduction in impaired loans through the periods ability of borrowers to absorb rate incre
Slide 23: Outlook
For personal use only | 23 04 Outlook
Slide 24: Outlook
Outlook For personal use only Economic indicators support slower credit growth Refinance activity to continue as fixed rate loans expire Greater customer support needed as rates increase % NIM reduces as higher 1M BBSW cost normalises Auto supply chain recovery supporting finance growth Demand for i
Slide 25: Summary
For personal use only | 25 05 Summary
Slide 26: Summary
Summary For personal use only Measured growth in financial asset portfolio Diverse customer solutions balancing margin pressure Steady distributions supporting Securityholder returns Strong liquidity and capital position to support growth Ongoing investment in diversifying customer solutions Ongoing
Slide 27: Questions
For personal use only | 27 06 Questions
Slide 28: Appendix
For personal use only | 28 Appendix
Slide 29: Who is LFG?
Who is LFG? For personal use only Liberty Financial Durable Business Model Diversified Portfolio Started 1997 and only investment Advanced risk-management grade non-bank (BBB-/positive/A-3) capabilities Pioneered specialty finance industry Proprietary technology supports in Australia and New Zealand
Slide 30: Products and Services
Products and Services For personal use only Residential Finance Financial Services Australian mortgages Personal loans • Personal loans in Australia • Prime and custom lending for residential owner occupier and investment properties SME loans • SME loans in Australia New Zealand mortgages General in
Slide 31: Segment Performance
Segment Performance For personal use only Portfolio Net Contribution 2% 3% 3% 3% 4% 8% 8% 9% 8% 7% 27% 27% 28% 29% 44% 44% 43% 43% 44% 32% 71% 70% 69% 68% 64% 48% 48% 48% 49% 48% 1H21 2H21 1H22 2H22 1H23 1H21 2H21 1H22 2H22 1H23 Residential Secured Fin Services Residential Secured Fin Services Net R
Slide 32: Reconciliation Statutory to Underlying
Reconciliation Statutory to Underlying For personal use only $m HY22 HY23 Statutory NPAT 116 104 IP amortisation 6 6 Statutory NPATA 122 110 Commission income - (23) Commission expense - 7 Contingent consideration expense - 10 Tax effect of adjustments - 5 Tax cost base reset benefit - (4) Adjustmen
Slide 33: Disclaimer
Disclaimer For personal use only The information provided in this presentation and any information supplied in connection with this No offer of securities presentation (“Presentation”) has been prepared by Liberty Financial Group Limited (ACN 125 611 574) This Presentation is not, and does not const
Slide 34: Thank you
For personal use only | 34 Thank you
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