Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — FY2013 Earnings Presentation
46 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 19, 2013
Slide 1: Bendigo and Adelaide Bank 2013 half year results
For personal use only Bendigo and Adelaide Bank 2013 half year results 19 August 2013
Slide 2: 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 does not purport to be complete. It is to be read in conjunction with the Bank’s full year results filed with the Australian
Slide 3: Agenda
For personal use only • Overview • Financial performance • Outlook • Appendices Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our result
Our result Financial performance - statutory profit after tax Financial performance - cash basis earnings For personal use only • Statutory profit after tax $352.3m • Cash earnings of $348.0m • Full year dividend of 61.0¢, fully franked1 • Cash earnings per share 85.4¢ • Return on average tangible e
Slide 6: 2009-13 – a story of evolution and consolidation
2009-13 – a story of evolution and consolidation 2010 2011 2012 2013 For personal use only • BEN takes 100pc • Fitch upgrades • BEN divests • BEN’s TORRENS ownership of credit rating to minority interest securitisation Rural Bank “A-” in IOOF, and sale program sets of B-notes held new benchmark • Ba
Slide 7: A unique and differentiated customer proposition
A unique and differentiated customer proposition • Continued maturation of Community Bank® For personal use only and retail network • Brand and customer advocacy Voted Australia’s favorite bank2 Voted best day to day banking2 Business bank of the year3 for 2 consecutive years (2011 and 2012) 1
Slide 8: Continued outperformance against system
Continued outperformance against system For personal use only 1. Source: APRA statistics June 2013, Nomura research. 2. BEN retail growth of 6.5% is for retail origination channel only Overview 8
Slide 9: Community Bank footings growth
Community Bank® footings growth For personal use only Overview 9
Slide 10: The Community Bank model has proven to be robust and sustainable
The Community Bank® model has proven to be robust and sustainable • More than $100m in community grants since inception – delivering tangible benefits for these communities and our business For personal use only • Provides banking services to more than 90 communities where there is no alternative pr
Slide 11: Financial performance
For personal use only Richard Fennell Chief Financial Officer Financial performance 11
Slide 12: At a glance
At a glance Change Change FY13 FY12 FY12 – FY13 1H13 – 2H13 For personal use only Cash earnings $348.0m $323.0m 7.7% 5.1% Statutory NPAT $352.3m $195.0m 80.7% (14.0%) Cash EPS 85.4¢ 84.2¢ 1.2¢ 1.6¢ Net interest margin 2.21% 2.11% 10 bps - Expense to income ratio 57.0% 59.1% (210 bps) (160 bps) Expen
Slide 13: Cash earnings continues to grow
Cash earnings continues to grow • Strong cost discipline while investing in the business For personal use only • Balance sheet strength and margin management a highlight • North Queensland cattle property exposures and Great Southern MIS portfolio impact credit outcome • Leading indicators remain so
Slide 14: Consistent earnings performance
Consistent earnings performance For personal use only Financial performance 14
Slide 15: Profitability improving
Profitability improving For personal use only • BEN continues to invest in the business and on key strategic initiatives • Basel II advanced accreditation project spend approx $12.5m (pre capitalisation) in FY13 •Return on Equity (ROE) is the net income returned as a percentage of shareholders equit
Slide 16: Net interest margin
Net interest margin For personal use only • Disciplined approach to pricing continues to deliver results • Customer proposition and brand positioning provide tangible funding benefits • Ratings upgrades reflected in improved diversity, tenor and price of funding alternatives Financial performance 16
Slide 17: Funding remains a strength
Funding remains a strength For personal use only • Recent wholesale issuance provides diversity, tenor and pricing benefits • Leveraging core strengths of the retail business and improved ratings and market conditions • BEN maintains a conservative approach to rollover risk Note : Term funding matur
Slide 18: Retail deposits
Retail deposits • For personal use only Management target of 75-80% retail funding remains • Term deposit retention rate consistently above 80% 1Source: Company data Financial performance 18
Slide 19: Successful repeat issuer of RMBS
Successful repeat issuer of RMBS For personal use only Distribution (TORRENS Series 2013-1) $850m Geographic Investor type • Two TORRENS RMBS transactions in 2013 have set a new benchmark 26% Domestic Bank Investor for BEN pricing 43% Offshore 57% Institutional Investor • Attracted a broad range of
Slide 20: Efficiency focus remains
Efficiency focus remains For personal use only • Maintaining positive ‘JAWS’ will remain a focus of management • Cost headwinds expected in FY14 include new Adelaide head office and Basel II Advanced Accreditation project Financial performance 20
Slide 21: Improvement in Tier capital
Improvement in Tier 1 capital • Proactive capital management has led to an 86bp improvement in Tier 1 For personal use only capital levels • Common equity Tier 1 capital showed moderate improvement to 7.82% • Significant headroom for further efficiency – primarily through Tier 2 subordinated debt, a
Slide 22: Capital materially stronger under S&P methodology
Capital materially stronger under S&P methodology For personal use only • BEN maintains a conservative capital management program based on the low risk and highly secured nature of its loan portfolio • S&P’s risk adjusted capital ratio (RAC) provides an accurate comparison of Australian bank capital
Slide 23: Business segment performance
Business segment performance For personal use only Note – Graphs refer to segment performance on p23 in 4E,excludes central functions. Financial performance 23
Slide 24: Homesafe contribution
Homesafe contribution For personal use only • YTD index changes • Melbourne +3.7% • Sydney +3.9% • Portfolio has grown to circa $300m 1 Based on calendar years Financial performance 24
Slide 25: Bad and doubtful debts
Bad and doubtful debts For personal use only • Credit costs remain at relatively low levels, despite deterioration in FY13 • Existing credit issues from Rural Bank and Great Southern MIS investors continue to dominate Financial performance 25
Slide 26: Bad and doubtful debts cont
Bad and doubtful debts cont For personal use only • Provisioning remains well in excess of historical loss experience • Portfolio remains well secured, with low LVR’s Financial performance 26
Slide 27: Arrears – days+
Arrears – 90 days+ For personal use only Financial performance 27
Slide 28: Outlook
For personal use only Mike Hirst Group Managing Director Outlook 28
Slide 29: In summary….
In summary…. For personal use only Certain Uncertain • More regulation • Economy • Greater competition • Credit outcomes • Technology disruption • Funding cost and options • Constrained growth • Who are our competitors? • More opportunities • Basis of competition (new models) • Customer activism (so
Slide 30: Questions
For personal use only Questions 30
Slide 31: Appendices
For personal use only Appendices 31
Slide 32: A portfolio of diverse businesses
A portfolio of diverse businesses Business Segment Business conditions For personal use only Domestic bank operating five • Difficult and uncertain market conditions remain distinct brands • Unique community, customer, and partner proposition • #1 banking brand for customer and business satisfaction
Slide 33: Diversity of revenue and profit contribution
Diversity of revenue and profit contribution For personal use only Note: Figures exclude central functions Appendices 33
Slide 34: Operating expenses
Operating expenses For personal use only Appendices 34
Slide 35: Diverse geographic footprint
Diverse geographic footprint 1884 ATM’s 488 branches For personal use only 1 4 8 0 3 156 347 50 47 74 57 14 3 42 7 105 6 64 24 11 120 304 16 49 16 437 926 69 87 190 137 60 785 26 2 298 Community Bank® 9 8 Bendigo branded (3rd party) ATM’s 173 9 Appendices 35
Slide 36: Systemic growth in retail
Systemic growth in retail For personal use only Appendices 36
Slide 37: Third party banking
Third party banking For personal use only Appendices 37
Slide 38: Specific provisions
Specific provisions For personal use only Represented by Provision as % of Retail 3rd Party Commercial/ Delphi Bank - Consumer Rural Bank BEN total portfolio Mortgages Mortgages Business Business Dec 2012 0.17% 0.03% 0.03% 0.38% 1.06% 0.16% 0.21% June 2013 0.17% 0.03% 0.03% 0.29% 1.31% 0.07% 0.23% P
Slide 39: Secure and low risk loan portfolios
Secure and low risk loan portfolios For personal use only • 98.4% secured • 97.9% secured by mortgages and listed securities • Residential lending – average LVR 62.5% • Margin lending – average LVR 39% – 79% of portfolios held ≥ 4 stocks Appendices 39
Slide 40: Group exposure – total $50.7b
Group exposure – total $50.7b For personal use only Residential Mortgages Jun-13 Dec-12 Jun-12 Owner occupied 64.4% 63.6% 63.2% Investment 35.6% 36.5% 37.0% Lo Doc 5.2% 5.9% 6.5% Retail mortgages 53.2% 52.3% 51.7% Third Party mortgages 46.8% 47.7% 48.3% Mortgages with LMI 40.3% 39.5% 42.5% Average L
Slide 41: Construction portfolio
Construction portfolio For personal use only • $1.0b of loans • 2.1% of total loans • $162k average loan size • $50.5m largest loan size • Geographic spread • $21m impaired loans (down 27% from Dec-12) • $21.4m in arrears (2.1% 90 days+) Note: Excludes Rural Bank Appendices 41
Slide 42: MIP geographic distribution
MIP geographic distribution Commercial loans - industry split For personal use only Note: Includes Commercial property MIP and Business Banking portfolio. MIP# represents the percentage of MIP by the number of loans. Appendices 42
Slide 43: Commercial – industry split
Commercial – industry split For personal use only Appendices 43
Slide 44: Rural Bank – loans under management
Rural Bank – loans under management For personal use only Appendices 44
Slide 45: Capitalised software
Capitalised software For personal use only • Low levels of capitalised software • Levels will increase as strategic initiatives continue (primarily Basel II Advanced Accreditation) Financial performance 45
Slide 46: Contact
Analysts Media For personal use only Will Rayner Silvana Donato Head of Capital and Investor Relations Media and Communications Manager Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 8 8220 7764 Tel: +61 8 8220 7784 Mob: +61 437 794 366 Mob: +61 402 110 445 Email: will.
Bendigo and Adelaide Bank — FY2013 Earnings Presentation on 6ix