Mystate Limited · ASX:MYS
Mystate — Investor Presentation (February 2024)
37 slides from Mystate's investor presentation, Feb 23, 2024
Slide 1: 1H24 Results Investor presentation
1H24 Results Investor presentation For the half year ended 31 December 2023 23 February 2024 1
Slide 2: Contents
Contents 1 Overview Brett Morgan { Managing Director & CEO 2 Financial results { Gary Dickson Chief Financial Officer 3 Outlook Brett Morgan{ Managing Director & CEO 4 Appendices { 2
Slide 3: Overview
Overview 1 Brett Morgan Managing Director & CEO 3
Slide 4: Key messages
Key messages ● Strategy unchanged – profitably grow our share of home lending, household deposits and funds under management ● Dynamically evaluating and optimising the balance between growth and margin ● Managing costs well in high-inflation environment { ● Continuing to invest in strategic priorit
Slide 5: Responding to the current operating environment
Responding to the current operating environment Since launching our growth strategy in mid-2021, we have grown our mortgage and customer deposit portfolios by 45% and 37% respectively. Bank operating efficiency has improved by 20% 1 Economic and industry dynamics MyState’s 1H24 response • Dynamicall
Slide 6: 1H24 summary
1H24 summary Challenging operating environment. Dividend stable $7.9b $6.1b 7,690 Home loan book Customer deposits New to bank customers acquired +1% on pp -2.3% on pp +4.5% on pp $26.0m 15.9cps 11.5cps Core earnings Earnings per share Stable dividend -5.3% on pp -5.8% on pp Note: Financial performa
Slide 7: Financial results
Financial results 2 Gary Dickson Chief Financial Officer 7
Slide 8: 1H24 financial performance
1H24 financial performance Metric 1H24 2H23 1H24 v 2H23 Total operating income ($m) 75.8 78.0 -2.9% ▼ Relative to 2H23: Total operating expenses ($m) 49.8 50.6 -1.5% ▼ ● Revenue challenge predominantly from NIM compression Core earnings ($m) 1 26.0 27.4 -5.3% ▼ ● Expenses well managed ● Sound capita
Slide 9: Half year NPAT
Half year NPAT Well-managed expenses partially offsetting revenue challenges Net profit after tax ($m) 1.6 0.8 0.1 0.5 0.4 0.3 Increase Decrease 18.4 17.5 2H23 Statutory Net interest income Other banking Wealth Operating Net bad and Income tax 1H24 Statutory NPAT income management expenditure doubtf
Slide 10: Operating costs well-managed in inflationary environment
Operating costs well-managed in inflationary environment ● Operating costs decreased by 1.5% ($0.8m) ● Underlying salary costs flat with 3% lower FTE at 31 December, offset by CPI related increases ● Marketing costs down with an uplift expected in 2H24 to support retail deposit growth ● Technology c
Slide 11: MyState Bank
MyState Bank
Slide 12: Challenging margin environment
Challenging margin environment ● Constantly optimising the balance between growth and margin ● Margins impacted by o home loan and deposit price competition o deposit switching o increase in securitisation funding o higher liquids holdings NIM waterfall Average NIM trend Origination costs 0.01% 0.03
Slide 13: Quality home loan book
Quality home loan book ● Home loan portfolio up $77m to $7.9b Home loan book – 1H 2H applications and settlements ($b) Applications ● Growth in low risk <80% LVR lending: +$180m Settlements ● Improving run-off in Q2 relative to Q1 FY24 4.9 ● Average number of days to unconditional approval in line w
Slide 14: Prudent loan provisioning
Prudent loan provisioning ● Increase in total collective provisions consistent with Credit provisions ($m) uptick in arrears 7.7 6.9 ● Forward looking overlay has remained steady at $1.6m 6.0 2.7 (represents 19% of total collective provision) 4.5 2.4 4.2 1.8 1.5 1.5 2.0 ● Very low loss history 1.5 1
Slide 15: Diversified funding mix
Diversified funding mix Funding mix (%) 17.6% 14.4% 16.3% 19.6% 9.0% 12.6% 10.9% 10.9% ● Securitisation remains an important source of funding and provides 73.4% 73.1% 72.8% 69.5% additional capital flexibility (largest MyState deal issued in Sept-23: $500m) ● RMBS deal provided flexibility to run-o
Slide 16: Increased total capital
Increased total capital ● MyState remains well capitalised with total capital ratio up 16 bps to 15.59% ● During the half, capital relief term RMBS and warehouse drawdowns were completed ● Dividend supported by the organic generation of capital Capital 0.68% 0.46% 0.63% 0.36% 15.43% 0.01% 0.40% 15.5
Slide 17: TPT Wealth
TPT Wealth]
Slide 18: TPT Wealth providing income diversification
TPT Wealth providing income diversification Operating income ($m) 14.8 14.3 ● TPT provided $6.8m in fee revenue and income diversification for the Group 5.2 5.0 ● Improved operating efficiency with underlying expenses 12% lower than pp 6.8 ● Solid uplift in NPAT 9.6 9.3 2.7 ● TPT’s competitive focus
Slide 19: Outlook
Outlook 3 Brett Morgan Managing Director & CEO 19
Slide 20: New growth, revenue and efficiency initiatives in 2H24
New growth, revenue and efficiency initiatives in 2H24 Bank Wealth Group Expanding Multiple New digital Trustee efficiency experience services initiatives offer 20 20
Slide 21: Outlook
Outlook Based on the current operating environment, we expect performance for the full year to be in line with the guidance provided in December 1H24 progress FY24 guidance MyState Bank lending 0.5x system Lending growth 1.0x system MyState Bank deposit composition 69.5% Customer deposits >70% of fu
Slide 22: Appendices
Appendices 4 22
Slide 23: Why MyState?
Why MyState? Comprises a growing bank Trusted Tasmanian brand and a trusted { wealth with strong { market share management business and leading advocacy Proven and consistent Delivering on long-term { { growth strategy financial performance 23 23
Slide 24: Consistent strategic direction
Consistent strategic direction Our ambition is to profitably grow our share in deposits, lending and funds under management. Together for the better Transaction Savings accounts Home lending Commercial lending Wills and estates planning accounts Term deposits Investment Income funds Trustee and exec
Slide 25: Corporate profile
Corporate profile MyState is a provider of banking, trustee and wealth management services to over 180,000 customers across Ratings MyState Limited MyState Bank Australia through its retail brands – MyState Bank and TPT Wealth. MyState listed on the ASX in 2009. Moody’s Baa3 Baa2 MyState has a marke
Slide 26: What does this mean for: our purpose
What does this mean for: : ‘¥ = Our shareholders | We deliver sustainable, profitable growth ‘VY Our community L Together for a the better. We invest into and support | our local communities What does this mean for: i eee B: ¥ Our customers and clients — We care about what matters Our purpose ¥ Ourp
Slide 27: Focusing on community
Focusing on community MyState Bank Arena MyState Foundation Naming rights sponsorship of the Over 20 years of supporting new home { of entertainment and the community. { Over $2.5m in sport in Tasmania. grants provided to not-for-profit organisations. Tasmania JackJumpers Football Tasmania Principal
Slide 28: 1H24 financial performance
1H24 financial performance Metric 1H24 2H23 1H23 1H24 v 2H23 1H24v 1H23 Total operating income ($m) 75.8 78.0 82.3 -2.9% ▼ -7.9% ▼ Total operating expenses ($m) 49.8 50.6 52.0 -1.5% ▼ -4.3% ▼ Relative to 2H23: Core earnings ($m) 1 26.0 27.4 30.3 -5.3% ▼ -14.2% ▼ ● Revenue challenge predominantly fro
Slide 29: Operating costs
Operating costs Operating costs breakdown ($m) -2.8% -1.5% ● Operating costs have declined for the 2nd half in a row 52.0 50.6 48.8 49.8 47.1 5.8 4.2 Relative to pp: 3.1 5.8 4.5 6.9 8.4 8.4 ● Operating costs declined 1.5% 9.2 8.5 15.8 ● Personnel costs increased with lower FTE in 1H24 offset by sala
Slide 30: Home loan book
Home loan book Loan balance and lending flows ($b) ● Growth driven by lower risk owner occupied P&I lending with LVR <80% 0.4 0.6 0.9 0.6 ● Variable rate lending as a proportion of total flow increased to 97% in 1H24 (96% in pp) ● Run-off remains a sector wide challenge and the run-off rate increase
Slide 31: Continued high credit quality
Continued high credit quality ● Maintaining quality lending growth underpins our balance sheet strength ● Our focus is on low-risk, owner occupied lending with a LVR of less than 80%; portfolio LVR 56.0% at 31 December 2023 ● Arrears remain below industry average MyState 30+ days S&P arrears data 90
Slide 32: Forward looking economic overlay assumptions
Forward looking economic overlay assumptions ● Forward looking overlay has remained steady at $1.6m with Assumptions June 24 June 25 sentiment the economy is on track for a relatively soft landing Unemployment (year ended) ● At 31 December 2023, the key assumptions used to determine the overlay inco
Slide 33: Fixed rate home loan profile
Fixed rate home loan profile New HL flow – fixed rate issuance Fixed rate HL expiry schedule as at 31 Dec 23 600.0 m 100% 90% 533m 500.0 m 479.2 m 440.7 m 80% 400.0 m 70% 60% 294m 300.0 m 50% 249m 40% 178m 200.0 m 158.6 m 30% 72m 20% 23m 43m 25m 100.0 m 40.0 m 42.7 m 35.2 m 10% 14.6 m 2.9 m .5 m .5
Slide 34: Capital, stock and flow metrics
Capital, stock and flow metrics Movement Stock metrics Dec-23 Jun-23 Jun-22 31-Dec-23 30-Jun-23 30-Jun-22 % (Jun-Dec ‘23) Broker 82% 82% 78% $m $m $m $m Proprietary 18% 18% 22% Qualifying capital Owner occupied 79% 80% 81% Common equity tier 1 capital (CET1) Investor 20% 19% 19% Ordinary share capit
Slide 35: ESG
ESG We know that progress on ESG is an evolution, and we are proud to be taking steps to positively impact our customers and our wider stakeholder groups. The 6 ESG topics that matter most to us: Helping our Digital Governance, Environmental Supporting Community people be enablement and conduct sust
Slide 36: Glossary
Glossary 1H: First half of financial year EPS: Earnings per share NIM: Net Interest Margin 2H: Second half of financial FHLDS: First Home Loan Deposit Scheme NPAT: Net Profit after Tax year FUM: Funds under management NPBT: Net Profit before Tax ADI: Authorised deposit-taking institution FY: Financi
Slide 37: Disclaimer
Disclaimer Summary information Past performance not indicative of future performance The material in this Presentation is general background information about MyState Limited (ABN Past performance information, including past share price information, should not be relied upon 26 133 623 962) and its