Slide 1: Investor Presentation FY23 Financial Results
ASX:BBC INVESTOR PRESENTATION FY23 Financial Results 25 August 2023 1
Slide 2: Agenda
Agenda ASX:BBC FY23 Results Overview Allan Savins Chief Executive Officer FY23 Financial Results Andrew Kitchen Group CFO Strategy update and outlook Allan Savins Chief Executive Officer 2
Slide 3: 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 4: FY23 Results Overview
FY23 Results Overview ASX:BBC Allan Savins Chief Executive Officer 4
Slide 5: CEO quote on transformational 2023 financial year
ASX:BBC “The 2023 financial year has been transformational for BNK as our company’s strategic expansion into higher margin lending begins to deliver returns in a less favourable credit environment. Our promise from a year ago to achieve cash NPAT profitability in Q4 FY23 - ahead of our initial guida
Slide 6: FY23 Results Overview
FY23 Results Overview ASX:BBC Financial highlights • Achieved Q4 cash profit ahead of original FY24 timeline. $18.8m 1.32% • NII growth drives positive Jaws of 9.7% on a YoY basis. Net Interest Income Direct Net Interest • Exit NIM of 1.57% for FY23 marks progress +46% on FY22 Margin (NIM) towards 2
Slide 7: BNK Loan Book, Deposits & Net Interest Income
BNK Loan Book, Deposits & Net Interest Income Consistent growth achieved across lending and deposits ASX:BBC Loan book ($m) Deposit book ($m) Net Interest Income ($m) 18.8 1252 1349 965 12.8 984 636 7.2 537 7 FY21 FY22 FY23 FY21 FY22 FY23 FY21 FY22 FY23
Slide 8: BNK's Deposit Strategy
BNK’S DEPOSIT STRATEGY Investment that sustainably grows BNK’s deposit base Automation and innovation Technology and Brand • Automate direct customer Network and Relationship processes • Amalgamate and promote • Invest in digital customer BNK brand technology • Diversify and grow third party • Creat
Slide 9: Risk-managed growth and diversification in the BNK-funded lending portfolio
Risk-managed growth and diversification in the BNK-funded lending portfolio ASX:BBC Improved geographic mix and diversity of loan categories On Balance Sheet Loans Portfolio By Loan Type FY22 FY23 FY22 FY23 Increasingly Modest increase diverse in investor Other geographic lending supports Other WA m
Slide 10: Strong Cornerstone Portfolio
Strong Cornerstone Portfolio BNK has delivered growth while maintaining strength in its underlying ASX:BBC loan portfolio: Loan quality control maintained Loan size increased • Retained interest rate servicing buffer of 3.0% • Average loan size increased from $340k to in FY23. $382k YoY, while maint
Slide 11: FY23 Financial Results
FY23 Financial Results ASX:BBC Andrew Kitchen Chief Financial Officer 11
Slide 12: Positive momentum in earnings
Positive momentum in earnings Change on FY23 FY22 PCP Group Statutory NPAT $(3.9)m $59.8m ↓ LRG* Net Interest Income $18.8m $12.8m ↑ 46.2% Bank Cash NPAT $(1.5)m $(2.1)m ↑ 29.5% Group Net Assets $128.2m $190.4m ↓ 32.7%* Bank Net Interest Margin 132bps 126bps ↑ 6bps Capital Adequacy Ratio 22.8% 47.5%
Slide 13: Performance
Performance Underlying NPAT* ($m) Cash NPAT* ($m) Delivered Q4 cash profit FY22 FY23 FY22 FY23 ASX:BBC (3.7) (1.5) (6.9) (2.1) Cash NPAT bridge* ($m) (1.5) Net Provision Employee Tax* Cash Cash Net Upfront Net Trail Net Other Expenses Interest for Credit Benefits NPAT NPAT Commission Commission Inco
Slide 14: Bank Net Interest Margin
Bank Net Interest Margin Growth in Exit NIM despite competitive mortgage market ASX:BBC • Growth in NIM despite industry headwinds reflects BNK’s competitive product mix. • Steady progress towards exit NIM target of 2% Strong Jun-23 reflects BNK’s sound strategy. exit NIM of 1.57% • Opportunities to
Slide 15: Operating Expenses
Operating Expenses YoY Movement ASX:BBC Revenue Growth $4.1m Expense Growth $2.9m Operating Bridge ($m) JAWs $ $1.2m JAWs % 9.7% Includes Marketing, T&E and Other Admin Due to securitization and warehouses. 15
Slide 16: Credit Quality & Loss Protection
0.04% 0.00% 0.02% 0.03% 0.05% 0.06% 0.07% 0.01% 2017 2018 2019 2020 2021 2022 Historical Credit Charges (% of loan book) 2023 Credit Quality & Loss Protection 0.00% 0.50% 2.00% 2.50% 1.00% 1.50% 0.00% 0.50% 2.00% 2.50% 1.00% 1.50% Growth achieved without sacrificing credit quality Jul-20 Aug-20 Jul-
Slide 17: Well Capitalised
Well Capitalised Change in capital due to loan book growth and capital/dividend return ASX:BBC Balance sheet portfolio growth to $1.3b from $0.9b. Impact of $60m distribution MTM: Mark to Market 17
Slide 18: Strategy Update and Outlook
Strategy Update and Outlook ASX:BBC Allan Savins Chief Executive Officer 18
Slide 19: Strategic progress in FY23
Strategic progress in FY23 Strong performance despite economic headwinds ASX:BBC GROWTH MARGIN PROFITABILITY TARGET: Increase BNK’s TARGET: Positive cash NPAT in TARGET: Move into higher margin balance sheet loan book to FY24. ROE of >10% in the medium lending with 15%-20% in commercial over $3bn pr
Slide 20: Strategic focus for FY24
Strategic focus for FY24 Steady, confident growth into the SME space ASX:BBC GROWTH MARGIN PROFITABILITY TARGET: Increase BNK’s balance TARGET: Increase BNK’s Net TARGET: Focus on achieving steady, sheet loan book to over $3bn Interest Margin to 2% over the sustainable growth with a Cost to over the
Slide 21: Summary & Outlook
Summary & Outlook ASX:BBC Becoming a market leading SME bank ✓ Improve cost of funds to assist in delivering higher margins and sustained cash profitability ✓ Leverage existing relationships to increase market share in higher margin lending and deposit space ✓ Transform technology stack to drive eff
Slide 22: Appendix
Appendix 22
Slide 23: Group Financial Snapshot
Group Financial Snapshot ASX:BBC FY23 FY22 Bank Underlying NPAT ($m) (3.7) (6.9) Bank Cash NPAT* ($m) (1.5) (2.1) Group Statutory NPAT ($m) (3.9) 59.8^ Group EPS (0.03) 0.51^ Group Net Income ($m) 17.7 9.7 Operating Expenses ($m) 21.6 18.6 Direct Net Interest Margin (Avg) 1.32% 1.26% Capital Adequac
Slide 24: Underlying to Statutory NPAT Reconciliation
Underlying to Statutory NPAT Reconciliation ASX:BBC FY23 FY22 Statutory Net (Loss)/Profit After Tax ($’000s) (3,935) 59,786 Revenue adjustments · Sale of equities - (319) Expense adjustments · Restructuring and transition costs - 4,833 · Share Based Payments - 1,742 · APRA Infringement Penalty 248 -
Slide 25: Balance Sheet
Balance Sheet ASX:BBC Group ($m) FY23 FY22 $ Var. % Var. Assets Cash & Equivalents 92.6 140.0 (47.5) (33.9%) NPV Asset 16.8 21.0 (4.3) (20.3%) Loans & Advances 1,357.5 990.1 367.5 37.1% Other Assets 212.9 290.7 (77.7) (26.7%) Total Assets 1,679.8 1,441.8 238.0 16.5% Liabilities Deposits 1,252.3 964.