Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — H1 2014 Earnings Presentation
48 slides from Bendigo & Adelaide Bank's earnings presentation, Feb 17, 2014
Slide 1: Half year result presentation
For personal use only 19 August 2013
Slide 2: Disclaimer and non-IFRS information
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 the information. It is to be read i
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 half year result
Our half year result Financial performance - statutory profit after tax Financial performance - cash basis earnings For personal use only • Statutory profit after tax $180.7m • Cash earnings of $185.9m • Half year dividend of 31.0¢, fully franked1 • Cash earnings per share 45.0¢ • Return on average
Slide 6: Consolidation to investment
Consolidation to investment Consolidation Strengthening Investment For personal use only • Rating agency upgrades • BEN buys Australian arm • Basel II Advanced (Fitch “A-”, S&P “A-”) of Bank of Cyprus – later Accreditation naming it Delphi Bank • BEN’s securitisation • Opportunity for future program
Slide 7: A unique and valued customer proposition
A unique and valued customer proposition • Brand and customer advocacy For personal use only Leading financial institution for customer loyalty 20132 Top 100 fastest growing bank followings on Facebook • Continued maturation of Community Bank® and retail network 1. Roy Morgan Research – 6 month
Slide 8: Low growth environment
Low growth environment For personal use only Source: APRA statistics December 2013, Nomura research 1. Data is based on 6 month growth annualised 2. BEN retail growth of 3.8% is for retail origination channel only Overview 8
Slide 9: Loan approvals continue to grow
Loan approvals continue to grow For personal use only • Continued growth in new loan approvals • Accelerated amortisation of back book impacting net growth • No discernible increase in outward refinances • Some element of half-on-half seasonality evident in loan growth Overview 9
Slide 10: Pipeline to improve customer's digital experience
Pipeline to improve customer’s digital experience For personal use only • Launch of our new version of Bendigo Bank mobile e-banking • Bendigo Bank website enhancements to accelerate customer acquisition and product sales with online account opening • Launch of “redy” a new payment solution develope
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 1H14 2H13 1H13 1H13 – 1H14 2H13 – 1H14 For personal use only Cash earnings $185.9m $178.3m $169.7m 9.5% 4.3% Statutory NPAT $180.7m $162.9m $189.4m (4.6%) 10.9% Cash EPS 45.0¢ 43.5¢ 41.9¢ 3.1¢ 1.5¢ Net interest margin 2.24% 2.20% 2.19% 5 bps 4 bps Expense to income ratio 55
Slide 13: Solid cash earnings growth
Solid cash earnings growth • Margin management a continued focus For personal use only • Strong contribution from Homesafe portfolio • Staff costs impacted by Community Telco and salary adjustments • North Queensland cattle property exposures continue to impact credit outcome Financial performance 1
Slide 14: Positive earnings performance
Positive earnings performance For personal use only Financial performance 14
Slide 15: Steady growth in ROE
Steady growth in ROE For personal use only • Steady ROE & ROTE outcome • Strong growth in revenue • Capital base increasing for Basel III environment •Return on Equity (ROE) is the net income returned as a percentage of shareholders equity •Return on Tangible Equity (ROTE) is the net income returned
Slide 16: Net interest margin
Net interest margin For personal use only • Proactive and disciplined approach to pricing drives NIM improvement • Customer proposition and brand positioning provide tangible funding benefits • Continuing to utilise improved wholesale markets where appropriate Financial performance 16
Slide 17: Flexible funding position
Flexible funding position For personal use only • Continued wholesale issuance provides diversity, tenor and pricing benefits • Leveraging core strengths of the retail business and market conditions • No RMBS issued in 1H14 Note : Term funding maturity profile as at 31 December 2013, with Jan 2014 s
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% • Strong growth in call deposits, with movement from term deposits a contributing factor 1Source: Company data Financial performance 18
Slide 19: Efficiency focus remains
Efficiency focus remains For personal use only • Cost headwinds appearing - New Adelaide head office - Basel II Advanced Accreditation project • Maintaining positive ‘JAWS’ will remain a focus of management Financial performance 19
Slide 20: Capitalised software
Capitalised software • Capitalised software balance continues to reduce For personal use only • Levels will increase as strategic initiatives are finalised including Basel II Advanced Accreditation • $22m of Basel II costs yet to be added to capitalised software Financial performance 20
Slide 21: Stable capital position
Stable capital position For personal use only • Common equity Tier 1 capital improved to 7.86% • Negative impact from net RMBS movement Financial performance 21
Slide 22: Basel II Advanced Accreditation
Basel II Advanced Accreditation • Continuing to develop and embed the use of For personal use only enhanced models - Credit Risk, Operational Risk and IRRBB • Developing internal, external and regulatory reporting required of an Advanced institution. • Introducing enhanced risk-adjusted performance
Slide 23: Business segment performance
Business segment performance For personal use only Note – Graphs refer to segment performance on p44 in 4D,excludes central functions. Financial performance 23
Slide 24: Homesafe investment property portfolio
Homesafe investment property portfolio For personal use only • Asset growth driven by: New business (properties acquired) Portfolio revaluation (income contribution) o Change in property prices – residex index increase for 6 months1; Melbourne +4.7% Sydney +7.8% o Ageing of portfolio • Net avera
Slide 25: Bad and doubtful debts
Bad and doubtful debts For personal use only • Northern Queensland cattle properties continue to devalue • Improvement in Third Party Lending predominantly due to Great Southern MIS portfolio Financial performance 25
Slide 26: Bad and doubtful debts cont
Bad and doubtful debts cont For personal use only • Increase in collective provisions • Portfolio remains well secured, with low LVR’s * Collective provision (adjusted for tax) & GRCL to risk weighted assets Financial performance 26
Slide 27: Arrears
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 Performance Future Considerations • Strong margin and • Low growth balance sheet environment • Good cost control • Price vs value • Investing in customer • Emerging convergence experience and Basel II telco/payments/banking • Queensland cattle property values conti
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: The Community Bank model
The Community Bank® model 15 years old • More than $110m in community grants since inception – delivering tangible benefits for these For personal use only communities and our business • Circa 300 Community Bank branches with more than 90 in communities where there is no alternative provider • Prove
Slide 34: Diversity of revenue and profit contribution
Diversity of revenue and profit contribution For personal use only Note – Graphs refer to segment performance on p44 in 4D,excludes central functions. Appendices 34
Slide 35: Operating expenses
Operating expenses For personal use only Appendices 35
Slide 36: Margin Lending portfolio
Margin Lending portfolio • Margin lending portfolio stabilised For personal use only • Restablished our commitment to our customers and partners • Positioned to take advantaged of upswing in equities and renewed interest in leveraging products 1Source: RBA/APRA/Thomson one Appendices 36
Slide 37: Third party banking
Third party banking For personal use only • Investment in Adelaide Bank brand starting to show benefit in originations • Market conditions remain highly competitive, especially in the broker channel Appendices 37
Slide 38: Great Southern
Great Southern • The trial of group proceedings concluded on 25 October 2013 with judgement anticipated in the first half of 2014 For personal use only • Borrowers are generally high net worth that sought to take advantage of the upfront tax benefit from investing in MIS • All loans are full recours
Slide 39: Diverse geographic footprint
Diverse geographic footprint 1819 ATM’s 507 branches For personal use only 1 4 8 0 3 152 349 50 47 76 55 13 3 43 7 1 2 1 105 5 71 24 11 117 266 16 50 16 8 4 432 916 49 87 190 138 58 726 26 2 301 Community Bank® 9 8 Bendigo branded (3rd party) ATM’s 177 9 14 2 Appendices 39
Slide 40: Community Bank footings growth
Community Bank® footings growth For personal use only Appendices 40
Slide 41: Community Bank maturing
Community Bank® maturing For personal use only Appendices 41
Slide 42: Specific provisions
Specific provisions For personal use only Represented by Provision as % of Retail 3rd Party Commercial Delphi Great Consumer Rural Bank Wealth BEN total portfolio Mortgages Mortgages / Business Bank Southern June 2013 0.03% 0.03% 0.17% 0.29% 0.35% 3.50% 1.31% - 0.21% December 2013 0.04% 0.03% 0.21%
Slide 43: Secure and low risk loan portfolios
Secure and low risk loan portfolios For personal use only • 98.3% secured • 97.8% secured by mortgages and listed securities • Residential lending – average LVR 62.4% • Margin lending – average LVR 36% – 76% of portfolios held ≥ 4 stocks Appendices 43
Slide 44: Group exposure – total $51.0b
Group exposure – total $51.0b For personal use only Residential Mortgages1 Dec-13 Jun-13 Dec-12 Owner occupied 64.95% 64.4% 63.6% Investment 35.05% 35.6% 36.5% Lo Doc 4.48% 5.2% 5.9% Residential Detail Retail mortgages 53.75% 53.2% 52.3% Third Party mortgages 46.25% 46.8% 47.7% Mortgages with LMI 39
Slide 45: Business – industry split
Business – industry split For personal use only Note: All loan data above represented by security as per page 15 in the 4D. Data excludes Delphi Bank Appendices 45
Slide 46: Construction portfolio
Construction portfolio For personal use only • $1.1b of loans • 2.2% of total loans • $182k average loan size • $15.7m largest loan size • Geographic spread • $13.6m impaired loans (1.2%) • $13.7m in arrears (1.8% 90 days+) Note: Excludes Rural Bank Appendices 46
Slide 47: Rural Bank – loan portfolio
Rural Bank – loan portfolio For personal use only Appendices 47
Slide 48: Analyst and media contacts
Analysts Media For personal use only Travis Crouch Lauren Andrews Head of Capital and Investor Relations Senior Manager Media and Communications Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 3 5485 6261 Tel: +61 3 5485 7109 Mob: +61 418 552 922 Mob: +61 407 340 283 Ema
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