Bank Of Queensland Limited · ASX:BOQ
Bank Of Queensland — Macquarie Connections Australia Conference 2009
26 slides from Bank Of Queensland's conference presentation, May 7, 2009
Slide 1: Bank of Queensland
Bank of Queensland Macquarie Connections Australia Conference 7 May 2009
Slide 2: Difficult environment... Our response
Difficult environment... Our response The Environment.... Going forward Economic growth slowing… Unemployment rising towards 7-8%... Plan for economy to bottom in late 2010 Wholesale funding markets... Panic factor eliminated... Will remain volatile and expensive Credit growth next year in Housing 4
Slide 3: Strong financial results in tough market
Strong financial results in tough market 1H08 1H09 Normalised cash NPAT $65.3m $84.2m 29% Cash EPS (normalised fully diluted) 47.6¢ 47.3¢ - Ordinary dividend 35¢ 26¢ 9¢ Loan growth (pcp) *27% 13% Retail deposit growth (pcp) *25% 25% Net interest margin 1.62% 1.52% 10bps Cost to income ratio (normali
Slide 4: Strong lending and deposit growth
Strong lending and deposit growth Lending growth* Retail deposits* 13% 25% 24% 8% BOQ System BOQ System * Last 12 months v pcp Source: APRA data Macquarie Connections Australia Conference 4
Slide 5: Funding our growth
Funding our growth Reduced availability of wholesale funding increased reliance on retail deposits Retail deposits funding 169% of year to date LUM growth Last 12 months retail and wholesale sources have funded $1.4b in additional liquidity 64% 52% 1H08* 1H09* 33% 21% 17% 10% 2% 1% Retail Wholesale
Slide 6: NIM pressure in 1H09... Bounce in 2H09
NIM pressure in 1H09... Bounce in 2H09 Excess liquidity and the Mar ‘09 RMBS enables better margins in 2H09 Similar trend to FY08, with improvement in second half expected NIM up 8bps in 2H08 NIM down 18 bps in 1H09 31bps (23bps) (23bps) 4bps 15bps 4bps 1.70% (4bps) 1.62% (30bps) 1.77% (8bps) (4bps)
Slide 7: Risk adjusted NIM…..even playing field
Risk adjusted NIM…..even playing field Reported NIM adjusted for impairment charges shows a more even playing field across the banking sector Major bank risk adjusted NIM could be under greater pressure in a prolonged down turn 1.7%** 0.3% 1.5% 1.4% 1.4% 0.8% Majors* SUN BEN BOQ * Average of major b
Slide 8: Funding balance sheet impact
Funding balance sheet impact Shorter duration funding vs majors means higher costs of funds absorbed Securitisation funding retained with warehousing and 2H09 AOFM issue Material uplift in retail funding with long term target of 55-60% 87% of funding sources have immaterial (0-20bps) cost disadvanta
Slide 9: Targeting retail deposit self sufficiency
Targeting retail deposit self sufficiency Bank strategy has been able to Retail deposits secure a larger deposit base OMB model highly effective in 45% CAGR $16.1b securing new retail deposits Retail deposits growth accounted $14.0b for 169% of LUM growth in 1H09 $12.9b Retail deposits + matched RMB
Slide 10: Conservative capital and excess liquidity
Conservative capital and excess liquidity Tier 1 capital improved 0.8% to 8.0% at 1H09 Record liquidity levels well in excess of APRA and internal benchmark Capital adequacy Liquidity 17.9% 11.5% 16.2% 10.8% 11.0% 10.8% Tier 2 13.0% Tier 2 ratio 2.8% 11.1% Hybrid Tier 1 Tier 1 Tier 1 ratio 8.0% 2H07
Slide 11: Prudent capital management
Prudent capital management Dividend policy aimed at preserving capital strength in current volatile markets 9cps reduction in dividend maintains appropriate yield whilst preserving capital for continued growth Project Pathways delivering significant distribution and efficiency gains to earning base
Slide 12: Loans under management by product
Loans under management by product 27% CAGR $27.5b $26.3b $3.1b 11% $24.3b $3.0b leasing $2.9b $4.6b $4.4b 17% $4.1b commercial $19.2b $19.8b $2.7b $18.9b $17.3b $3.4b 72% Retail $13.1b 2H07 1H08 2H08 1H09 Retail Business Leasing Balance sheet skewed towards retail mortgages and residentially secured
Slide 13: Differentiated risk profile & fully provisioned
Differentiated risk profile & fully provisioned BOQ lending: secured, small exposures, no syndicated loans*, avoid non-recourse lending, high pre-sales on development Housing Personal Leasing Commercial Large exposures 70% of total 2% of total 11% of total 12% of total 5% of total lending lending le
Slide 14: Portfolio quality
Portfolio quality Arrears 90+ days (% of portfolio, excluding securitised loans) 1.00% 0.91% 2H07 0.75% 0.61% 1H08 0.50% 2H08 1H09 0.24% 0.25% 0.00% Retail Business Leasing Total 90 days past due $156.7m which represents 0.78% of portfolio (non-sec) Macquarie Connections Australia Conference 14
Slide 15: Impairment levels remain low
Impairment levels remain low Impaired assets increasing in line with softer conditions, but no systemic issues Conservative risk profile leading to superior credit quality 250 2.0% $219.2m $189.0m 90+ days due 200 1.5% Impaired Assets $ (90+ days due + Impaired 150 Millions $126.8m Assets) / RWA (RH
Slide 16: Conservative provisioning
Conservative provisioning Portfolio focus remains on well secured housing and SME lending with no single name exposures of significance. Gross impaired assets remain near historical lows, particularly when compared to major banks and peer group Total provisions Impaired assets / RWA * % of RWA 0.67%
Slide 17: Efficiency initiatives next phase...
Efficiency initiatives next phase... Objective of the Efficiency Team was to reposition the current cost base to react to the current financial environment and for future growth A cross functional group of senior staff were brought together to target a combined ~$50 million+ in cost saving opportuni
Slide 18: Efficiency program overview
Efficiency program overview Annualised Benefit Organisational alignment Completed ~$20m Phase One Expense optimisation Completed ~$30m ~$50m WIP TBD Phase Two Simplification Sourcing Review & Opportunities WIP TBD Macquarie Connections Australia Conference 18
Slide 19: Key initiative: structural efficiency
Key initiative: structural efficiency Organisational restructure now complete Involved merging our Retail and Business Financial Services channels into one channel: Banking Head Office support functions realigned and refined Frontline staff not affected David Liddy Managing Director & CEO Ram Kangat
Slide 20: A more efficient model to challenge scale players
A more efficient model to challenge scale players These initiatives expect to show further step change improvements in next three years, via structural, distribution and key sourcing changes Cost-to-Income Ratio Targets 64.5% 62.6% 56.1% 54.3% - 1H09(A) Step change improvements in Phase 1 – Efficien
Slide 21: Key initiative: NSW consolidation
Key initiative: NSW consolidation 56 branches in NSW Majority open for over 3 years Total loans under management in NSW of $2.7b BOQ operating 15 OMBs Deposit growth has been a positive with >60% growth during FY09, total deposits in NSW now $1.8b NSW branch maturity 23 18 10 4 1 <1 year <2 years <3
Slide 22: OMBs remain core to our strategy
OMBs remain core to our strategy The rest of the OMB network is performing in line with expectations The productivity of the model is unmatched We have now converted 31 corporate branches to OMBs Average monthly settlements have increased 64% post conversion Annualised growth before and after conver
Slide 23: Resilient network gaining momentum
Resilient network gaining momentum Total OMB commissions OMB income split 1H09 Upfront Income, $54.4m 31% 24% Share of Fees 17% CAGR $48.7m $45.0m Other Income, 14% $39.5m Trail Income, 38% 2H07 1H08 2H08 1H09 Total OMB commission payments Majority OMB income comes from have consistently increased e
Slide 24: Project Pathways
Project Pathways Rationale Current actions ensure viability and shareholder accretion stand alone Consolidation in Australian banking is inevitable... irreversible St. George and Bankwest takeovers leaves a big 5th Bank alternative open Enablers Internal efficiency and portfolio optimisation initiat
Slide 25: Summary
Summary Strong performance given current economic climate Very successful in retail and wholesale funding growth OMB network resilient despite conditions NSW actions provide a platform for a future healthy network in that state Single channel to Retail & SME market strengthens our model Strong credi
Slide 26: Bank of Queensland
Bank of Queensland
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