Mystate Limited · ASX:MYS
Mystate — FY2016 Earnings Presentation
26 slides from Mystate's earnings presentation, Aug 22, 2016
Slide 1: Investor Presentation: Building a platform for continued profitable growth
For personal use only August 2016 Investor Presentation Building a platform for continued profitable growth
Slide 2: Agenda
Agenda 1 Overview Melos Sulicich For personal use only CEO & Managing Director 2 Financial Results David Harradine Chief Financial Officer 3 Outlook Melos Sulicich CEO & Managing Director The MyState Australian Wooden Boat Festival celebrates Tasmania’s rich maritime history and $70 million wooden b
Slide 3: FY2016 Financial Performance Highlights
FY 2016 • Underlying NPAT of $31.1m, a 4.5% growth on pcp. Financial – Statutory NPAT of $28.3m, down 12.9% on pcp. For personal use only Performance • Underlying EPS growth of 4.4%, outperforming the sector. • Full year dividend 28.5 cps. Highlights • Underlying revenue of $123.4m, up 3.3% on pcp.
Slide 4: Key underlying performance metrics continue to trend favourably
Key underlying performance For personal use only metrics continue to trend favourably GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 4
Slide 5: Growth strategy delivers a resurgence in net interest income
Growth strategy delivers a For personal use only resurgence in net interest income MyState continues to gain market share in lending with 2016 growth 1.4x system.1 1. Source: APRA banking statistics June 2016. GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 5
Slide 6: Our transformation roadmap
Our transformation roadmap For personal use only 2015 Transformational journey 2019 Future benefits MANUAL • Fragmented view of PROCESSES • Single view of customer Customer experience customers future • Customer focused processes Barriers to great customer • Inward-focused (best for them) experience
Slide 7: Growth in revenue drivers on our strategic goals
Growth in • Underlying profit continues to grow. our • Focus on volume and margin management providing improved outcomes. Delivering GROW revenue drivers • Revenue growth achieved in a competitive environment, underpinned by growth in core net interest income. on our For personal use only • ADI cons
Slide 8: Agenda
Agenda 1 Overview Melos Sulicich For personal use only CEO & Managing Director 2 Financial Results David Harradine Chief Financial Officer 3 Outlook Melos Sulicich CEO & Managing Director MyState continues its support for Agfest, Tasmania’s premier rural showcase. The event regularly attracts over 6
Slide 9: Strong revenue and NPAT performance underpinned by sustainable growth
Strong revenue 2015 (Underlying) 2016 (Underlying) Change (v 2015) and NPAT For personal use only Revenue ($m) 119.5 123.4 3.3% performance Net profit after tax ($m) 29.7 31.1 4.5% underpinned by Statutory net profit after tax ($m) 32.5 28.3 -12.9% sustainable Net interest margin (%) 2.28 2.13
Slide 10: Reconciliation of underlying earnings with statutory profit
Reconciliation FY 2016 FY 2015 of underlying For personal use only Underlying net profit after tax $31.1m $29.7m earnings with statutory profit Profit on sale of Cuscal shares1 – $3.9m – Restructuring costs2 ($1.1m) 1. Sale of non-strategic asset (Cuscal Shares) to Software Intangibles Impairment3 –
Slide 11: Domestic economy
Domestic • Low growth environment expected moving forward. • Low rate environment changing industry dynamics. economy For personal use only • Total housing credit growth has eased to 6.7% over the year. • Investor lending down over the year to an annual growth rate of 5.0%. Owner-occupier lending st
Slide 12: Continued improvement in the Tasmanian economy
Continued The Tasmanian economy continues to see a modest lift in momentum: • Unemployment rate at 6.5%. improvement in For personal use only • Construction work 2.4% above ‘normal’ levels. the Tasmanian • Home prices up 6.2% over the 12 months to June 16, well above decade economy average of 1.6%.
Slide 13: Sustainable dividend performance providing consistent attractive yield
Sustainable Key dividend considerations dividend For personal use only performance • Seek to maintain or increase providing nominal dividend whilst being alert to capital generation needs. consistent attractive yield • Maintain payment ratio that is sustainable in the long term. • Pay fully franked
Slide 14: Profit uplift through income growth
Profit uplift through income For personal use only growth Strong loan book growth and margin management underpinned revenue growth. Competition for both lending and deposits continues. • Strong loan growth has underpinned FY16 Net Interest Income performance. Revenue growth outpaced costs, deliverin
Slide 15: Net Interest Margin
Net Interest Margin For personal use only NIM compression continues with competition for owner occupier lending intensifying and repricing from RBA rate reduction. Pressures on funding costs continue with wholesale market volatility and heightened competition for customer deposits. Third party costs
Slide 16: Growing sustainably is a strategic imperative
Growing sustainably is For personal use only a strategic imperative 92% of home loan growth achieved from <80% LVR lending. GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 16
Slide 17: Investor lending well below industry average
Investor lending well For personal use only below industry average GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 17
Slide 18: Continued geographic diversification with NSW and VIC
Continued geographic For personal use only diversification with NSW and VIC making nearly ¼ of the home loan book State 2 year CAGR VIC 64.5% SA 49.0% NSW 34.1% WA 22.5% QLD 12.6% NT 12.3% TAS 3.8% GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 18
Slide 19: Exemplary credit performance maintained
Exemplary credit For personal use only performance maintained Impairment charges 3bps of gross loans. Underlying impairment charge increase due to fall in recoveries and slight increase in home loan provisions. Management overlay applied as a prudent measure as loan book continues to grow. Arrears s
Slide 20: A stable funding mix supported by growth in customer deposits
A stable funding mix For personal use only supported by growth in customer deposits MTN program provides further funding diversification and tenor. Conquest 2016-1 Warehouse established in May 2016 provides further funding and capital flexibility. GROWTH – INVESTMENT – PERFORMANCE MyState Limited In
Slide 21: Wealth business steady, with opportunity to grow
Wealth business steady, with For personal use only opportunity to grow Current strategic focus • General Manager appointed. • Focus on business and operational improvements. • Improve distribution capability. • Deepening relationships across the entire business. GROWTH – INVESTMENT – PERFORMANCE MyS
Slide 22: Business efficiencies reinvested in building capability
Business efficiencies For personal use only reinvested in building capability and business development Cost to income ratio improves by 112bps to 63.2% on pcp. GROWTH – INVESTMENT – PERFORMANCE MyState Limited Investor Presentation 22
Slide 23: Increased capital diversity through MTN issue and new Conquest warehouse
Increased capital diversity through For personal use only MTN issue and new Conquest warehouse… ...with a range of capital options to support continued lending growth. S&P review resulted in a reassessment of MyState’s prospects, with a BBB positive outlook and likely to move to BBB+ within 12 month
Slide 24: Agenda
Agenda 1 Overview Melos Sulicich For personal use only CEO & Managing Director 2 Financial Results David Harradine Chief Financial Officer 3 Outlook Melos Sulicich CEO & Managing Director The MyState Student Film Festival showcases young Tasmanian talent to Australia – and the world. GROWTH – INVEST
Slide 25: Economic and regulatory outlook
Economic and • Australian economic outlook tempered by global regulatory uncertainty and low inflation. For personal use only outlook • Historic low interest rate environment with further risks to the downside. • Housing credit growth outlook stable with housing supply Changing industry dynamics. an
Slide 26: Building a platform for continued profitable growth
Building a What we’ve What we’re currently What’s to come: platform for achieved: working on: For personal use only continued • Loan growth 1.4x • Product rationalisation and • Continued investment in technology profitable system through improved sales culture. aligned core systems simplification to