Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — H1 2016 Earnings Presentation
28 slides from Bank Of Queensland's earnings presentation, Apr 7, 2016
Slide 1: Half Year Results for the half year ended 29 February 2016
FOR THE HALF YEAR ENDED 29 FEBRUARY 2016 7 APRIL 2016 Bank of Queensland Limited ABN 32 009 656 740. AFSL No 244616.
Slide 2: Presenters: Jon Sutton and Anthony Rose
JON SUTTON Managing Director & CEO ANTHONY ROSE Chief Financial Officer JON SUTTON Managing Director & CEO 2
Slide 3: Successful drive for growth whilst improving risk profile
Successful drive for growth whilst improving risk profile Margin maintained in competitive markets Expenses controlled, enabling reinvestment Asset quality metrics resilient Good progress against strategic priorities 3
Slide 4: Strong lending growth contributing to Net Interest Income growth
Strong lending growth … …contributing to Net Interest Income growth… Total loan growth ($m)(1) +$649m Net Interest Income ($m) +4% 1,949 459 467 1,300 1,249 448 399 577 362 4 1H14 2H14 1H15 2H15 1H16 1H14 2H14 1H15 2H15 1H16 Delivering cash earnings growth… ...and returns to shareholders Cash earnin
Slide 5: Diversifying by channel & geography
DIVERSIFHNG BY CHANNEL & GEOPRAPHY- epi Housing Settlements by channel 1H16 Total Lending by geography 2013 1H16 Portfolio Settlements OMB s=Corporate m= Broker BOQ Specialist QLD msNon-QLD
Slide 6: Strategic Pillar progress
Strategic Pillar Customer in Grow the There’s always Loved like charge right way a better way no other • 3,200 brokers • Credit quality • New lending • Consistent sales and 1H16 Progress accredited discipline maintained origination system service training rolled covering ~30% of out • Virgin Money •
Slide 7: Anthony Rose, Chief Financial Officer
ANTHONY ROSE Chief Financial Officer
Slide 8: Income and earnings summary
1H16 1H16 v 2H15 1H16 v 1H15 Net interest income $467m 2% 4% Non interest income $85m (11%) 1% Total income $552m (1%) 4% Operating expenses ($256m) 5% 0% Underlying profit $296m (5%) 7% Loan impairment expense ($36m) (5%) 0% Profit before tax $260m (5%) 8% Income tax expense ($81m) (2%) 11% Cash ea
Slide 9: Total lending up 10%
• Total lending up 10% (1.2x system), driven by new channels • Diversification of lending portfolio continues – QLD down to 48% (from 60% FY12) 41.0 42.9 38.4 35.3 (1) Includes BOQ Specialist from acquisition in 2014 9
Slide 10: Housing growth supported by broker expansion and BOQ Specialist
• Housing growth supported by broker expansion and BOQ Specialist 1.6x 0.9x 1.0x 0x 0.1x 10
Slide 11: Focus on targeted niche segments
• Focus on targeted niche segments • Not compromising credit quality for growth • Subdued economic conditions & lack of Growth in target niche segments business confidence 1H16 growth(2) 1H16 Balance Healthcare 14% $2.5bn (1) Retirement & Aged Care 100% $250m Hospitality & Tourism 15% $200m Agribusi
Slide 12: Growth in customer deposits
• Growth in customer deposits (10% annualised on 2H15) to support lending growth • Transaction account growth of 9% 45.4 42.5 43.5 43.4 9.3 9.1 38.7 8.6 7.9 8.0 68% 69% 66% 66% 66% Deposits to Loans ratio 12
Slide 13: NIM maintained in a challenging environment
• NIM maintained in a challenging environment • Funding spreads and hedging costs increasing with heightened market volatility • Prior period benefits of reduced funding costs no longer supporting margin 2.26% 2.27% Asset Pricing and Mix elements 3rd Party • 6bps benefit from repricing initiatives c
Slide 14: Lower Non Interest Income than 2H15
• Lower Non Interest Income than 2H15 with some seasonality impact 96 • Customer shift to lower fee products 87 84 85 such as Clear Path mortgage product 82 • Changes to interchange fee arrangements reduced result by $3m • St Andrew’s reduced contribution in line with expectations with claims experi
Slide 15: Cost to income ratio 45% excluding one-offs
• Cost to income ratio 45% excluding one-offs • $15m restructure investment: $7m in 1H16 256 256 • Amortisation profile rising with investment in 244 digitisation in line with expectations 213 195 4% underlying cost growth 156 135 108 105 84 15
Slide 16: Slight reduction in impairment expense
• Slight reduction in impairment expense to 17bps of GLAs • Overall portfolio quality improved • Commercial uptick driven by small number of uncorrelated larger exposures • BOQ Finance portfolio performance back within expected range (1) Includes BOQ Specialist 16
Slide 17: Impairment expense down 7%
Down 111 298 293 7% 259 237 240 88 86 82 74 17
Slide 18: Housing arrears stable, with seasonal uptick post-holiday period
• Housing arrears stable, with seasonal uptick post-holiday period • Commercial arrears remains in acceptable range • BOQ Finance arrears performing well Seasonal uptick (1) Including BOQ Specialist (2) Housing excluding Lines of Credit 18
Slide 19: Lending to residential apartment construction
Lending to residential apartment construction Concentration Apartment construction exposures Limit - $61m • $284m current exposure to residential Exposure - $53m Limit - $242m construction(1) # Apts - 250 Exposure - $91m • 41 developments across 4 states, NT QLD # Apts - 916 completing 2016 through
Slide 20: Higher growth in the half supported by underlying capital generation
• Higher growth in the half supported by underlying capital generation • Seasonality and timing impacts reduced CET1 to 8.80% • Back-ended RWA growth without full period earnings contribution • Remain well capitalised relative to peers ( ) ( ) Underlying capital generation ( ) ( ) ( ) (1) Cash earni
Slide 21: Jon Sutton, Managing Director & CEO
JON SUTTON Managing Director & CEO
Slide 22: Economic and Regulatory outlook
• Positive factors supporting economic growth • Uncertainty over near-term outlook Economic • State economic performance remains mixed • Volatility hitting funding markets • Revised standardised approach • Capital floor for advanced banks Regulatory • Staged approach to advanced accreditation • Net
Slide 23: $15m investment to remove duplication and manual processes
• $15m investment to remove duplication and manual processes • Organisational model • Centres of excellence • Digitisation of cheques, e-statements, etc • Full return on investment within 12 months • Savings to be redirected into further efficiency programs • Continuous improvement culture • Targeti
Slide 24: Vision, Strategy, FY16 priorities
Vision … Strategy … Focus on niche segments that value a more intimate banking relationship There’s always a better FY16 priorities … Customer in charge Grow the right way way Loved like no other 1. Expand accredited 1. Continue to increase 1. Roll out new Lending 1. Instil sales and service brokers
Slide 25: Good result achieved in 1H16
Good result achieved in 1H16 Balancing growth, margin and credit Asset quality resilient Continued investment in growth businesses Delivering on strategy, with increased focus on cost efficiency 25
Slide 26: Glossary of abbreviations
1H: First half of financial year CTI: Cost-to-income ratio 2H: Second half of financial year DRP: Dividend Reinvestment Plan 30DPD: 30 days past due EPS: Earnings per share 90DPD: 90 days past due FY: Financial year AELA: Australian Equipment Lessors Association GLA: Gross Loans & Advances AFS: Avai
Slide 27: Important notice
The material that follows is a presentation of general background information about Bank of Queensland Limited’s (BOQ’s) activities at the date of this document. BOQ does not warrant the accuracy or completeness of the information contained in this document and has no liability for any reliance by a
Slide 28: Love a Bank
Firs possible to LOVE A BANK