Bendigo & Adelaide Bank Ltd. · ASX:BEN
Bendigo & Adelaide Bank — FY2011 Earnings Presentation
54 slides from Bendigo & Adelaide Bank's earnings presentation, Aug 8, 2011
Slide 1: Bendigo and Adelaide Bank 2011 full year results
For personal use only Bendigo and Adelaide Bank 2011 full year results August 8, 2011 1
Slide 2: Disclaimer
Disclaimer: 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 th
Slide 3: Agenda
For personal use only • Overview • Business performance • Outlook Agenda 3
Slide 4: Overview
For personal use only Mike Hirst Group Managing Director Overview 4
Slide 5: Our result
Our result For personal use only Financial performance • Net profit after tax $342.1m • Cash earnings $336.2m • Cash EPS 92.3¢ Growth • Retail deposits up by 12%1 • Loans increased by 8%1 • Total branches increased by 20 Funding and liquidity • Issued $3.5bn in RMBS since July 2010 • 75% retail fund
Slide 6: A strongly diversified business
A strongly diversified business Business Segment Business conditions For personal use only • Continued earnings and profitability momentum Domestic bank operating four distinct • Unique community, customer, and partner proposition brands • Ratings agency momentum • #1 banking brand for customer sati
Slide 7: A strongly diversified business
A strongly diversified business Business Segment Business conditions For personal use only Margin lending, wealth management, • Potential for strong growth superannuation • Independent provider of choice in select products • Increased investment in IT and distribution capability • Growing brand and
Slide 8: Rural Bank and Australia Post distribution agreement
Rural Bank and Australia Post distribution agreement • Agreement with Australia Post for distribution of Rural Bank services For personal use only • Rural Bank deposit products to be available at 1400 post offices around Australia progressively from November 2011 • 130 Australia Post offices to offe
Slide 9: Strong momentum across the group
Strong momentum across the group • Assets For personal use only – Above system growth • Liabilities – Growth in non-household and retail deposits at profitable prices – Term deposits used as a tool to manage liquidity • Ratings – Fitch upgrade to A- – S&P outlook upgraded to positive • Systems and I
Slide 10: The future…
The future… • Market conditions remain challenging For personal use only – Subdued demand for credit – record consumer savings – Competitive pressures – major banks, not ‘regional’ brands – Regulatory framework – APS 120, Basel III, advanced Basel II status • Maintain discipline in both asset and li
Slide 11: Business performance
For personal use only Richard Fennell Chief Financial Officer Business performance 11
Slide 12: Business performance - financials
$m FY June 2009 FY June 2010 FY June 2011 change (pcp) Cash EPS 62.9¢ 83.3¢ 92.3¢ 10.8% Cash earnings ($m) 182.2m 291.0m 336.2m 15.5% For personal use only Net profit after tax ($m) 83.8m 242.6m 342.1m 41.0% Dividend per share1 43.0¢ 58.0¢ 60.0¢ 3.4% Cost to income 62.5% 58.1% 57.4% ↓1.2% Net intere
Slide 13: Group performance
Group performance For personal use only Business performance - financials Note: figures are for six-monthly reporting periods 13
Slide 14: A diversified business
A diversified business For personal use only Business performance - financials Note: Figures exclude central functions 14
Slide 15: Net interest margin (%)
Net interest margin (%) For personal use only FY2010 FY2011 • Continued margin improvement • Expect competition for deposits to continue Business performance - financials 1. Normalised NIM for FY2010 to include 12 month contribution of Rural Bank. Actual FY2010 NIM was 2.09% 15
Slide 16: Net interest margin
Net interest margin For personal use only • Diligent and prudent pricing – particularly in TD market • June NIM run-rate of 2.21 per cent • Successful completion of ‘Restoring the balance’ project with the Community Bank® network Business performance - financials 16
Slide 17: Return on equity (ROE) and return on tangible equity (ROTE)
Return on equity (ROE) and return on tangible equity (ROTE) • ROE improvement of 120bps For personal use only over prior corresponding half year period • Maintain ROE discipline on investments and initiatives • Continued ROE improvement driven by strong ROTE performance Business performance - financ
Slide 18: Cost-to-income
Cost-to-income For personal use only • Full year cost-to-income at 57.4% (FY10 at 58.1%) • Trend of improving cost-to-income continues • Long-term target of 55 per cent remains Business performance - financials 18
Slide 19: Operating expenses
Operating expenses For personal use only • BEN BAU predominately staff cost related Business performance - financials Note: BEN BAU = BEN business as usual 19
Slide 20: Funding mix
Funding mix For personal use only • 91% retail funded on balance sheet • No Government Guaranteed wholesale funding rollover risk Business performance - financials Note: All figures include Rural Bank 20
Slide 21: Retail deposits
• Term deposits priced to manage liquidity Retail deposits • Successful growth and retention strategies in place • Not a price leader – value proposition driven For personal use only $18bn $11bn Business performance - financials 21
Slide 22: Capital
Capital For personal use only • Capital levels provide substantial flexibility • Post-balance initiatives include TORRENS 2011-1 – capital effective • 31 July 2011, Tier 1 approx 7.96% and Core Tier 1 approx 6.84% Business performance - capital 22
Slide 23: Capital adequacy ratio
Capital adequacy ratio For personal use only Business performance - capital 23
Slide 24: Core Tier improving
Core Tier 1 improving For personal use only • Continuing improvement in Core Tier 1 levels • Potential sale of subordinated securitisation notes to provide further benefit Business performance - capital 24
Slide 25: Total provisions and reserves for doubtful debts ($m)
Total provisions and reserves for doubtful debts ($m) • Total provisions increased $11.2 million over the For personal use only past six months • Rural Bank provisioning has increased from $21.3m (Dec-10) to $33.8m (Jun-11) • Great Southern represents $22.9m of total provisions Business performance
Slide 26: Specific provisions
Specific provisions For personal use only Represented by Provision as % of Consumer Retail 3rd Party Commercial Great Rural Wealth BEN portfolio Mortgages Mortgages / Business Southern Bank total FY2010 0.17% 0.02% 0.03% 0.62% 2.82% 0.40% 0.00% 0.18% FY2011 0.13% 0.02% 0.03% 0.48% 2.85% 0.97% 0.00%
Slide 27: Total provisions and reserves for doubtful debts ($m)
Total provisions and reserves for doubtful debts ($m) For personal use only Business performance - credit 27
Slide 28: Arrears performance
Arrears performance For personal use only Business performance - credit Note: Figures exclude Rural Bank 1. Includes mortgage loans currently under payment arrangements restructured on commercial terms 28
Slide 29: Outlook
For personal use only Mike Hirst Group Managing Director Outlook 29
Slide 30: Voted Most Trusted Bank
Voted Most Trusted Bank1 Still #1 for customer satisfaction… • • Awarded for Corporate Social Responsibility program2 For personal use only • Most loyal customers3 • Winner of People’s Choice Award for credit cards, personal loans and term deposits4 • Community Enterprise FoundationTM administered m
Slide 31: In summary….
In summary…. For personal use only • Leading brand advocacy • Credit ratings momentum – Reflects sound credit quality – Recognises appropriate and improving capital position – Indicative of our low risk funding profile • Well placed to navigate current market uncertainty • Proven implementation capa
Slide 32: Appendices
For personal use only Appendices 32
Slide 33: Geographic spread
2128 ATM’s 466 branches For personal use only 8 0 1 4 12 173 338 50 44 64 45 44 3 40 21 25 11 115 5 70 123 341 16 45 56 440 908 86 68 190 125 157 760 23 2 276 Community Bank® 9 7 Bendigo branded (3rd party) ATM’s 369 23 Geographic spread 33
Slide 34: Systematic growth in retail
Systematic growth in retail For personal use only • 18 Community Bank® branches opened in FY2011 • 15-20 branches to be opened in FY2012 • Relatively immature network Deposits per Community Bank® branch Community Bank® branches by age Community Bank® and retail Note: Branches that opened in years 10
Slide 35: Growth – retail banking
Growth – retail banking • Continued growth in retail network For personal use only • Strong pipeline for Community Bank® branches. Retail banking Source: BEN internal data. Notes: 2001 includes FABS acquisition, 2007 includes ADB merger. Excludes alliances and private franchises. 35
Slide 36: Growth – retail banking
Growth – retail banking • Still a relatively young branch For personal use only network • Growth expected in both liabilities and assets • Plan to grow by 15-20 branches in the coming financial year • Community Bank® model proven through the GFC • Footings maturity achieved post six years Retail net
Slide 37: Opportunities in Third-Party Banking
Opportunities in Third-Party Banking For personal use only • Above system growth • Fewer competitors in the market • Stable margin Growth 37
Slide 38: Margin Lending dependent on equity market sentiment
Margin Lending dependent on equity market sentiment • Independent margin loan provider of For personal use only choice • Strong long term relationships with many financial advisory firms • Strong margins • Low cost to income • Capacity for significant growth • Continued excellent credit quality Grow
Slide 39: Towards a resolution
Towards a resolution • Reducing portfolio and borrowers • Court date now set for M+K class action – August 2012 For personal use only Great Southern 39
Slide 40: Secure and low risk loan portfolios
Secure and low risk loan portfolios • 98.2% secured For personal use only • 97.7% secured by mortgages and listed securities • Residential lending – arrears have been steady in FY11 – average LVR 61%1 • Margin lending – average LVR 43% – 88% of portfolios held ≥ 4 stocks – negligible arrears Credit
Slide 41: Construction portfolio
Construction portfolio For personal use only • $757m of loans (2.6% increase since HY11) • 1.6% of total loans • $137k average loan size • $54m largest loan size • Geographic spread • $41m impaired loans • $49m in arrears (6.4% 90 days+) Credit Note: Dec-10 figure of $740m by loan purpose. HY11 pres
Slide 42: Group exposures – total $46.5bn
Group exposures – total $46.5bn Mortgages Jun-11 Dec-10 Owner occupied 62.7% 62.6% For personal use only Investment 37.3% 37.4% Lo Doc 7.5% 7.9% Retail mortgages 49.4% 49.4% Third Party mortgages 50.6% 50.6% Mortgages with LMI 44.6% 47.8% Average loan balance $170k $171k 90+ arrears 1.2% 1.1% Impair
Slide 43: LVR trends
LVR trends For personal use only • No material change in LVR trends of new business written • LMI required for high LVR loans Credit 43
Slide 44: MIP geographic distribution
MIP geographic distribution For personal use only Credit Note: Includes Commercial property MIP and Business Banking portfolio. MIP# represents the percentage of MIP by the number of loans. 44
Slide 45: Commercial – industry split
Commercial – industry split For personal use only Credit 45
Slide 46: How the Community Bank® model works
How the Community Bank® model works For personal use only • Reverse enquiry franchise model with local communities • Broad-based local ownership for each community company • BEN provides capital for balance sheet, banking infrastructure and credit • Community capital is solely for initial working ca
Slide 47: The Community Bank® model has proven to be robust and sustainable
The Community Bank® model has proven to be robust and sustainable For personal use only • Communities have proven to be great partners in banking, and together we have opened more than 270 branches in 12 years (more than 65 in the last three years) • More than $58m in Community grants over 12 years
Slide 48: Dividends for the community
Dividends for the community For personal use only 1. Create or retain banking infrastructure in the community 2. Strengthening local business and commerce 3. Building the community balance sheet 4. Shareholder dividends The Community Bank® model – how it works 48
Slide 49: Community Bank® model performance: profit correlates with maturity
• 66% of companies posted a profit for FY10 For personal use only • Profit correlates with maturity • 9% had losses as a result of branch expansion or significant community grants • Of the remaining 25% that declared a loss: – 70% were < 3 years of age and budgeted to make a loss, – 28% were drought
Slide 50: Community Bank® model performance: net equity
• 90% of companies either still drawing down capital or in capital generation phase For personal use only • Of the 10% that have negative net equity, 50% are sites recently or currently affected by drought • 4 companies with negative net equity made profits in 2010 • Those companies with low or nega
Slide 51: Community Bank® model performance: community contributions
• 144 companies declared contributions to local community For personal use only purposes totalling $11.7m in FY10 • Average contribution for sites >3 yrs of age = $102k • 39% made contributions >$50k • 30% made contributions >$100k • 14% made contributions >$200k The Community Bank® model - performa
Slide 52: Community Bank® model performance: shareholder dividends
• 48% of companies paid shareholder dividends For personal use only • 58% of sites >3 yr of age paid shareholder dividends • Average shareholder dividend yield is 8.4% • Yield increases strongly with age The Community Bank® model - performance Source: Company data, Community Bank® annual reports 52
Slide 53: Rural Bank – loan diversity
Loans under management For personal use only Rural Bank – loan diversity 53
Slide 54: Analysts and Media contacts
Analysts Media For personal use only Will Rayner Lauren Treacy Head of Capital and Investor Relations Head of Media and Communications Bendigo and Adelaide Bank Limited Bendigo and Adelaide Bank Limited Tel: +61 8 8220 7764 Tel: +61 3 5485 7109 Mob: +61 437 794 366 Mob: +61 407 340 283 Email: will.r
Bendigo and Adelaide Bank — FY2011 Earnings Presentation on 6ix