23 Nov

2021 Annual General Meeting Presentation

23 November 202 1 Auswide Bank Ltd (ABA) 202 1 Annual General Meeting Presentation Auswide Bank Ltd ’s (ASX: ABA ) 202 1 Annual General Meeting will be held today at 11.00am Brisbane time . The meeting will be held at Level 3 16 - 20 Barolin Street, Bundaberg and online at https://web.lumiagm.com/330064475 . The attache d presentation which provides a review of the economic environment and strategic progress of the company, together with a review of Auswide Bank’s operating activities an d performance will be presented at today’s Annual General Meeting. Authorised for lodgment by: Martin Barrett BA (Econ) MBA Bill Schafer BCom CA Managing Director Chief Financial Officer and Company Secretary +61 7 4150 4001 +61 7 4150 4075 mbarrett@auswidebank.com .au bschafer@auswidebank.com.au About Auswide Bank Ltd Auswide Bank became Australia’s tenth and Queensland’s third Australian owned bank, listed and trading on the ASX, on April 1, 2015. The company had operated as a building society since 1966. Auswide Bank has an Australian Credit Licence and an Australian Financial Services Licence issued by ASIC and is an Authorised Deposit - taking Institution prudentially supervised by the Australian Prudential Regulation Authority. Auswide Bank offers Australians an extensive range of personal and business banking products & services issued directly or in partnership with leading service providers via an omni - channel distribution strategy which includes branches, strategic relationships and online & digital channels. 23 NOVEMBER 2021 ANNUAL GENERAL MEETING Board of Directors & Company Secretary Diverse mix of skills and deep industry experience 2 AUSWIDE BANK | 2021 Annual General Meeting Sandra Birkensleigh Chair Bill Schafer Chief Financial O?cer & Company Secretary Martin Barrett Managing Director Barry Danger?eld Director Greg Kenny Director Grant Murdoch Director Jacqueline Korhonen Director AUSWIDE BANK | 2021 Annual General Meeting 3 01. Chair’s Address Sandra Birkensleigh 02. MD’s Address Martin Barrett 03. CFO’s Address Bill Schafer Chair’s Address Sandra Birkensleigh 01. 4 AUSWIDE BANK | 2021 Annual General Meeting Strategy & Outlook MD, Martin Barrett 02. 5 AUSWIDE BANK | 2021 Annual General Meeting Strategic Plan FY19 – 22 > Building the Auswide Brand through consistent messaging and enhanced customer service > Leverage QRL membership base, increase broker ?ows and expand community engagement > QLD / SEQ key growth opportunity BRAND AWARENESS > Improve e?ciencies by automating processes and simplifying products > Improve broker service proposition via faster turnaround times and consistency > Continue to optimise investment to growth opportunities / channels > Build partnerships that support retail banking growth across platforms and via member and community-based organisations > Achieve distribution reach beyond Auswide Bank physical and digital o?erings > Cost e?ective channels PARTNERSHIPS > Strengthen the bank through enhancing sta? capabilities, reducing errors and further developing risk audit processes > Enhance cyber risk resilience and fraud detection capability > Continue to mature diversi?ed funding lines and particularly customer deposits improving self-funding ratio > Optimise capital e?ciency and strength > Improve the customer experience through capable digital implementation > Support customer transition from branch to digital, drive higher product conversion rates increasing RONTA > ROI discipline extending digital solutions that solve customer and back o?ce challenges DIGITAL AND CUSTOMER HUB > Reviewing M&A, Fintech and other partnering opportunities to drive scale The bank that our customers, sta? and partners want their friends, family and colleagues to bank with OUR VISION STRENGTH NON-ORGANIC GROWTH EFFICIENCY 6 AUSWIDE BANK | 2021 Annual General Meeting Brokers represent important distribution channel Significant growth opportunity > Invest in business development managers to build stronger broker relationships > Back o?ce e?ciencies substantially reduce loan processing times to among industry best > Reduce processing cost per loan > Support higher loan application volumes with ?exible workforce and tech initiatives including use of Robotics > QRL partnership lifts brand pro?le, valuable reference point > Broker Value Chain dissection and investment > Mortgage brokers continue to increase share of new home loans > Auswide now provides e?cient end-to-end home loan process and scalable business o?ering > Building a wider broker network and younger customer group > Diversifying geographic footprint outside Qld > Inclusion in First Home Loan Deposit Scheme from Feb 2020 KEY INITIATIVES TRANSFORM BROKER OFFERING BUILDING STRONGER BROKER RELATIONSHIPS ACROSS AUSTRALIA 7 AUSWIDE BANK | 2021 Annual General Meeting Medico Professional Misc. Accountants Lawyers Vet Dentist Engineer/Architecture Pro Sportsperson Misc. High Net Worth 42% 15% 9% 9% 7% 6% 4% 4% 3% 1% 8 Private Banking overview PRIVATE BANKING PORTFOLIO PORTFOLIO DISSECTION High Net Worth customers focusing on - medical, professional and sporting with borrowing needs ideally over $1m Material growth in Private Bank up from $125.4m at June 2020 to $259.7m at October 2021 $125.4m JUN 20 $219.5m $259.7m JUN 21 OCT 21 AUSWIDE BANK | 2021 Annual General Meeting 9 AUSWIDE BANK | 2021 Annual General Meeting Our branch network COOROY TOWNSVILLE YEPPOON ROCKHAMPTON NORTH MACKAY MACKAY, CANELANDS SARINA GLADSTONE BUNDABERG, HINKLER HERVEY BAY CALOUNDRA NORTH LAKES BRISBANE MARYBOROUGH GYMPIE BUNDABERG, STOCKLAND BUNDABERG, BAROLIN ST 2019 2020 2021 246.5 93.8 116.7 286.9 109.3 136.7 79.8 109.8 218.3 (000’s) 2019 2020 2021 673.5m 545.2m 521.8m 661.1m 536.4m 452.1m 593.8m 604.1m 740.7m (m’s) North Queensland Central Queensland SE Queensland Branch deposit growth North Queensland Central Queensland SE Queensland JUN 19 - 1,649.6 JUN 20 - 1,740.5 JUN 21 - 1,938.6 TOTALS (m’s) 2019 - 532.9 2020 - 457.0 2021 - 407.9 TOTALS (000’s) Branch transactions Branches contributing to growth 10 AUSWIDE BANK | 2021 Annual General Meeting CUSTOMER JOURNEY Brand & Marketing Customer Experience Operational processes TECHNOLOGY PLATFORM Technology systems Data & insights Cyber management LEADERSHIP & CULTURE Strategy & leadership Culture & people Ways of working Digital impacts every part of the organisation It changes the way an organisation creates, delivers and captures value Digital in every part of the bank Using technology to support growth and customer experience is a key focus area Page 1 of 1 Page 1 of 1 > Leveraging digital to support mortgage broker growth opportunity > Developing more e?cient processes that support increased sales volumes > Delivering automation across the organisation to support better customer experiences > Growing ways of working and skill sets to build a digital culture > Elevating our brand across digital platforms including mobile and website BUSINESS OUTCOMES TECHNOLOGY TO SUPPORT LOAN ORIGINATION INSISTING ON “BAKED-IN-SECURITY”LOAN ORIGINATION 11 Digital integration Transforming our business with technology AUSWIDE BANK | 2021 Annual General Meeting > Continued improvement of customer experience and supporting transition from branch to digital channel > Growing appeal within younger customer base with fully integrated digital banking > Improved loan processing experience and focus on reducing the cost per loan in a highly competitive market > Investment in technology to solve customer problems and broaden access to products and services > Ensuring consistently strong cyber resilience and strong protections to customer data CUSTOMER OUTCOMES Internet, mobile app banking truly integrated and responsive to customer touch point IMPROVING OUR FOUNDATIONS BUILDING DIGITAL EXPERIENCES Track record of delivering pro?table growth Above system loan book growth, NIM expansion and careful cost management STATUTORY NPAT LOAN BOOK STATUTORY EARNINGS PER SHARE (CPS) COST TO INCOME RATIO $24.2m $17.2m $17.9m $15.1m $18.5m JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 NET INTEREST REVENUE NET INTEREST MARGIN 2.00% 1.87% 1.93% 1.90% 1.97% JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 $78.2m $63.2m $61.0m $57.5m $70.5m JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 $3,593m $3,131m $2,945m $2,788m $3,266m JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 60.1% 63.5% 66.0% 62.5% JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 56.7 40.8 42.8 37.3 43.8 JUN 19 JUN 21 JUN 17 JUN 18 JUN 20 64.5% 12 AUSWIDE BANK | 2021 Annual General Meeting Balance sheet strength Strong deposit growth, RONTA ahead of FY21 targets CUSTOMER DEPOSITS > 11.9% growth in deposits re?ects strategic focus on cost e?ective funding lines > 75.7% of funding from deposits (FY20: 74.5%) $2,057m JUN 17 $2,108m JUN 18 $2,373m JUN 19 $2,620m JUN 20 $2,933m JUN 21 CAPITAL ADEQUACY RATIO > Capital remains strong at 13.31% > CET1 of 10.84% 14.58% JUN 17 14.89% JUN 18 13.79% JUN 19 12.95% JUN 20 13.31% JUN 21 STATUTORY RONTA > Return on Net Tangible Assets of 12.1% up from 8.9% in June 17 > Ahead of strategic target of 10% 8.9% JUN 17 9.9% JUN 18 9.1% JUN 19 9.7% JUN 20 12.1% JUN 21 13 AUSWIDE BANK | 2021 Annual General Meeting 14 AUSWIDE BANK | 2021 Annual General Meeting Environmental, Social and Governance (ESG) vision Areas of focus for our business > Responsible lending > Fair fees and interest rates > Business conduct and ethics > Risk management > Transparent disclosure > Cybersecurity and data protection > Information security and privacy protection > Fraudand?nancialcrime prevention and protection > Governance and conduct > Sustainable shareholder returns GOVERNANCE > Supporting businesses > Community partnerships > Volunteering and fundraising > Disaster relief > Ethical and sustainable business practices > Our people > Employee engagement > Diversity and inclusion > Pay equality > Wellbeing and safety > Talent development SOCIAL > Energy footprint > E?cientuseofresources > Waste management and recycling > Education and community involvement > Environmentally-friendly property and assets > Digital approach > Preservation of natural environment ENVIRONMENT 15 AUSWIDE BANK | 2021 Annual General Meeting Corporate ESG Policy Develop an ESG Management System framework Establish an ESG Management Committee for ongoing monitoring and oversight De?ne curre nt activity: > What can we measure? > Develop KPI’s for measurement Determine initiatives we can implement over the next 12 months De?ne long term projects greater than 12 months Our way forward “ Sustainability is no longer about doing less harm, it’s about doing more good!” Auswide Bank believes that its ESG responsibilities and business objectives are connected and our goal is to be a healthy and sustainable organisation which generates positive and sustainable economic growth. We want to take care of our community and ensure that the Bank’s activities incorporate environmental and social accountability while demonstrating Auswide Bank shareholder value. Continued loan book diversi?cation as younger customers are attracted and diversify outside Queensland FY22 outlook 16 Cost to Income ratio of 60% Stable trend in NIM across FY21 Return on equity of 10% Above system loan growth 3-year strategic objectives achieved in 18 months FINANCIAL TARGETS FY19-22 LOOKING FORWARD > Continue above system loan growth > Material growth in Private Bank > Digital and data initiatives to position for substantial 2023 growth trajectory AUSWIDE BANK | 2021 Annual General Meeting Results Overview CFO, Bill Schafer 03. 17 AUSWIDE BANK | 2021 Annual General Meeting 1. Including Investments in Managed Investment Schemes (MISs) reported in Financial Assets in Balance Sheet 2. System growth of 3.1% per RBA Financial Aggregates – total credit growth FY21 ?nancial highlights Strong FY21 performance across all key metrics NET INTEREST MARGIN 200BPS 3BPS HOME LOAN APPROVALS $1.012b 38.1% LOAN BOOK $3.593b 1 10.0% GROWTH, 3.2x SYSTEM 2 CUSTOMER DEPOSITS $2.933b 11.9% RONTA 12.1% FROM 9.7% 56.7CPS 12.9CPS EPS CAPITAL 13.31% FROM 12.95% JUN 20 COST TO INCOME RATIO 60.1% 2.4% COST TO INCOME RATIO STATUTORY NPAT $24.155m 30.5% TOTAL DIVIDEND 40.0CPS 12.25CPS 18 AUSWIDE BANK | 2021 Annual General Meeting Loan book Strong growth in net interest revenue > Net interest revenue of $78m, up 10.8% on FY20 > Net interest margin of 2.00% (FY20: 1.97%) > Loan book growth of 10.0% on FY20, 3.2x system, re?ecting strong broker ?ows, First Home Loan Deposit Scheme (FHLDS) and partnerships > Housing loans of $3,432m, up 12.5% on FY20 (95.5% of loan book) > Business lending of $98m following change in strategy with lending pause in place (2.7% of loan book) LOANS AND ADVANCES BALANCES NET INTEREST REVENUE $78m $63m $61m $71m JUN 19 JUN 21 JUN 18 JUN 20 2.00% 1.87% 1.93% 1.97% JUN 19 JUN 21 JUN 18 JUN 20 NET INTEREST MARGIN Housing Loans Business Consumer Loans $2,781m $2,945m $2,947m $3,131m $3,050m $3,266m $3,593m $44m $62m $80m $63m JUN 18 JUN 19 JUN 20 JUN 21 $3,432m $120m $122m $136m $98m 19 AUSWIDE BANK | 2021 Annual General Meeting Loan book distribution Loan diversification accelerates driven by strong broker flows and private bank > Strong broker ?ows accelerate growth in SE QLD, NSW and Victoria > 28.8% of loan book outside Queensland (FY20: 25.1%) > SE QLD remains a signi?cant growth opportunity and largest contributor to loan book by region > In FY21, growth in broker ?ows contributed to: • 38.1% increase on FY20 Home Loan Approvals • 41.8% increase on FY20 Home Loan Settlements SOUTH EAST QUEENSLAND QUEENSLAND OTHER NSW VICTORIA AUSTRALIA OTHER LOAN BOOK % OF LOAN BOOK $1,244.2m $1,370 .9m 10.2% 38.9% 38.7% $1,148.7m $1,150.9m 0.1% 36.0% 32.5% $381.3m $484.7m 27.1% 11.9% 13.7% $255.0m $341.6m 34.0% 8.0% 9.6% $166.8m $195.2m 17.7% 5.2% 5.5% JUN 20 JUN 20 JUN 21 JUN 21 GROWTH RATE 20 AUSWIDE BANK | 2021 Annual General Meeting Loan book arrears Arrears at historic lows and well below peers Over 90 days past due 60-90 days past due 30-60 days past due $2.9m $6.4m 0.73% $10.0m $1.1m $6.5m 0.68% $11.5m $0.0m $4.7m $9.4m $2.3m $5.0m 0.42% $5.3m JUN 17 DEC 17 JUN 18 DEC 18 $3.2m $4.6m 0.46% $6.4m $0.9m $3.5m 0.39% $7.5m $1.1m 0.39% $9.9m $0.1m $3.4m 0.26% $0.7m $3.0m 0.25% $5.3m $5.2m JUN 19 DEC 19 JUN 20 DEC 20 JUN 21 Arrears as % of Loan Book $1.6m 0.48% 0m 0 25m 1 $ 0m 10m $ % 21 AUSWIDE BANK | 2021 Annual General Meeting Total provisions & GRCL Board confidence in collective provision > Total provisions and GRCL of $8.9m provides con?dence provisions are adequate based on economic outlook scenarios > $1.0m COVID-19 overlay retained in provisions for volatility and economic uncertainty > Non COVID-19 arrears remain at historically low levels Collective Provisions Speci?cProvisions GRCL COVID-19 Overlay 2.0 2.4 7.0 2.6 JUN 19 2.8 2.4 7.3 2.1 DEC 19 4.1 2.4 1.8 9.9 1.6 DEC 20 1.8 JUN 21 3.7 2.4 8.9 1.0 3.6 2.4 1.0 2.5 JUN 20 9.5 Net interest margin progression Steady NIM growth > NIM rose 3bps from 1.97% in FY20 to 2.00% in FY21 > Bene?ts from reduced funding costs outweighing the impact of highly competitive home loan interest rates Impact of Lower Asset Yields (0.43%) Impact of Lower Customer Funding rates 0.41% Impact of Lower Wholesale Funding rates 0.23% Impact of growth in Interest Bearing Assets (0.18%) FY20 NIM 1.97% FY21 NIM 2.00% 22 AUSWIDE BANK | 2021 Annual General Meeting Funding mix Strategic focus on funding mix supports margin growth > Ongoing strategic focus on expanding customer deposits and tight management of funding costs > 11.9% growth in customer deposits to reach 75.7% of funding (June 18: 68.4%) > 27.7% growth in lower cost at call savings accounts from $1.13b to $1.44b > Reduced reliance on securitisation (more expensive funding line); 8.6% of funding in June 21 vs 19.7% in June 18 > RBA Term Funding Facility of $151m fully drawn > Maintained dual investment grade ratings from Fitch & Moody’s of BBB+ and Baa2 respectively Customer Deposits Securitisation NCDs Subordinated debt Senior unsecured FRNs RBA Term Funding Facility JUN 18 JUN 19 JUN 20 JUN 21 $2,108m = 68.4% $2,373m = 71.4% $2,620m = 74.5% $2,933m = 75.7% $258m = 8.4% $607m = 19.7% $490m = 14.8% $421m = 12.0% $334m = 8.6% $81m = 2.6% $119m = 3.6% $131m = 3.7% $165m = 4.2% $28m = 0.9% $28m = 0.8% $28m = 0.8% $42m = 1.1% $50m = 1.4% $151m = 3.9% $311m = 9.4% $267m = 7.6% $252m = 6.5% 23 AUSWIDE BANK | 2021 Annual General Meeting Capital Strong capital position supports above system loan book growth > Capital remains strong at 13.31% and comfortably meeting APRA’s unquestionably strong requirement > CET1 of 10.84% > Capital ratio has increased from 12.95% at 30 June 2020 due to strong operating results, issuance of $12m in Tier 2 capital in August 2020 and further increase by $2m when maturing Tier 2 was reissued in May 21 > E?cient capital supply drivers will include Dividend Reinvestment Plan for the ?nal dividend Dividends Paid (0.78%) Movement in Retained Earnings (excl. Dividend Paid) 1.51% Tier 2 Capital issued ($14.0m subordinated debt) 0.86% Growth in RWA (1.31%) Other 0.08% Jun 20 CAR 12.95% Jun 21 CAR 13.31% 24 AUSWIDE BANK | 2021 Annual General Meeting Dividend and returns Dividend reflects very strong operational performance and prudent capital management TOTAL DIVIDEND (CPS) > Final fully franked dividend of 21.0 cents re?ects balance between prudent capital management and providing returns to shareholders 31.0 JUN 17 34.0 JUN 18 34.5 JUN 19 27.8 JUN 20 40.0 JUN 21 STATUTORY EPS (CPS) > Final dividend payout ratio of 70.9%, within Board target range of 70-80% (FY20: 63.4%) 37.3 JUN 17 42.8 JUN 18 40.8 JUN 19 43.8 JUN 20 56.7 JUN 21 STATUTORY RONTA > RONTA of 12.1%, up from 9.7% in FY20 > Ahead of strategic target for RONTA of 10% 8.9% 9.9% 9.1% 9.7% 12.1% JUN 17 JUN 18 JUN 19 JUN 20 JUN 21 25 AUSWIDE BANK | 2021 Annual General Meeting 26 AUSWIDE BANK | 2021 Annual General Meeting 1. System growth of 5.3% per RBA Financial Aggregates – total credit growth year ended September 2021 2. FY22 information is based on unaudited management accounts for the four months to 31 October 2021 FY22 trading update Strong performance across all key metrics to 31 October 2021 COST TO INCOME RATIO NPAT $8.77m 17.8% INCREASE ON PCP COST TO INCOME RATIO NET INTEREST MARGIN 1.99% DOWN 1BP ON FY21 NET INTEREST INCOME $27.51m 9.2% INCREASE ON PCP CUSTOMER DEPOSITS $3.004b ANNUALISED GROWTH OF 7.4% RETURN ON EQUITY 10.21% UP 0.47% ON FY21 EPS 60.76CPS UP 4.06CPS ON FY21 LOAN BOOK $3.687b ANNUALISED GROWTH OF 8% 1.5 X SYSTEM COST TO INCOME RATIO 59.37% DOWN 0.73% ON FY21 Questions | Thank you This Presentation has been prepared for Auswide Bank Ltd ABN 40 087 652 060, Australian Financial Services and Australian Credit License Number 239686, ASX Code ABA. The information is current as at 22 November 2021. FINANCIAL AMOUNTS All dollar values are in Australia dollars (A$) and ?nancial data is presented as at the date stated. Pro-forma ?nancial information and past information provided in this Presentation is for illustrative purposes only and is not represented as being indicative of ABA’s views on its future ?nancial condition and/or performance. Past performance, including past trading or share price performance of ABA, cannot be relied upon as an indicator of (and provides no guidance as to) future ABA performance including future trading or share price performance. FUTURE PERFORMANCE This Presentation contains certain “forward-looking statements”. Forward-looking statements can generally be identi?ed by the use of forward-looking words such as “anticipate”, “believe”, “expect”, “project”, “forecast”, “estimate”, “likely”, “intend”, “should”, “will”, “could”, “may”, “target”, “plan” and other similar expressions within the meaning of securities laws of applicable jurisdictions. The forward-looking statements contained in this Presentation involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of ABA, and may involve signi?cant elements of subjective judgment as to future events which may or may not be correct. There can be no assurance that actual outcomes will not di?er materially from these forward-looking statements. 28 AUSWIDE BANK | 2021 Annual General Meeting Disclaimer
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