Mystate Limited · ASX:MYS
Mystate — 1H 2014 Earnings Presentation
24 slides from Mystate's earnings presentation, Mar 10, 2014
Slide 1: Investor Presentation March 2014
ASX Code: MYS For personal use only March 2014 Investor Presentation
Slide 2: Highlights
Highlights Continued npat growth. L oan portfolio growth remains challenging, For personal use only but improving. argin slightly higher despite fierce M NPAT competition in the mortgage market. 16 14 14.6 14.8 Effective cost management. 12 10 11.2 S uccessful transition to new core banking platform
Slide 3: Increased earnings despite a low growth environment
Increased 1H 2013 2H 2013 1H 2014 Change 1H 2013 vs 1H earnings 2014 despite a Reported NPAT ($m) 14.6 14.0 14.8 2.0% For personal use only low growth Earnings per share (cents) 16.7 16.0 17.0 1.7% Dividend per share – fully franked (cents) 14.0 14.0 14.0 – environment Return on equity (%) 10.6 10.0
Slide 4: Reduction in operating costs drives NPAT improvement
Reduction $16 1H 2013 vs 1H 2014 in operating $ million $15 14.8 costs drives 14.6 1.1 0.2 0.6 0.0 For personal use only 0.6 0.0 0.3 1.6 0.2 NPAT $14 0.0 0.3 0.7 improvement $13 0.0 $12 $11 $10 es ffs e ts s s s s s ls x 14 13 M e st st st st st Ta om m tfu os NI fe -o 20 20 co co co co co co lc ub
Slide 5: Mixed economic environment
Mixed I n Tasmania, finance commitments have shown positive economic signs, with some recent improvement in building approval numbers and retail spending. environment For personal use only T he Queensland economy is faring significantly better, although benefits from the resources boom are beginning
Slide 6: Strong balance sheet
Strong Dec ‘12 Jun ‘13 Dec ‘13 Change Dec 12 – Dec 13 balance Total assets ($m) 3,647.5 3,629.7 3,605.8 (0.7%) sheet For personal use only Total liabilities ($m) 3,370.8 3,350.0 3,323.2 (0.8%) Net assets ($m) 276.6 279.7 282.6 1.0% Risk-weighted assets ($m) 1,303.0 1,322.0 1,296.4 (1.9%) Capital rat
Slide 7: MyState Group reporting framework
MyState Group reporting framework For personal use only Company Profile Company Profile MyState Limited (MYS), a non-operating holding Company, is a diversified financial services group listed on the ASX and provides a broad range of financial services through three wholly-owned subsidiaries, MyStat
Slide 8: Company Profile
Company Profile “ MyState Financial provides retail and business banking, agribusiness and insurance services to 120,000 customers in Tasmania. MyState Limited (MYS), a non-operating holding Company, is a diversified financial services group listed The Rock provides retail bankingonand “ the ASX and
Slide 9: Steady performance for the banking business
Steady S olid performance in low credit growth performance environment. for the For personal use only Flat net interest income for the half against pcp. banking T otal loan settlements down compared to 1H 2013, business but improved on 2H 2013, particularly in 2Q 2014. redit quality in loan book rem
Slide 10: Portfolio growth challenging – but improving
Portfolio 3.2 $ billion 4.0% Total settlements by quarter growth 3.0 2.0% 160 Broker Direct challenging 2.8 0.0% For personal use only 140 60 120 57 60 } 15% – but 2.6 -2.0% 100 39 33 34 improving 2.4 -4.0% 80 81 81 80 79 71 60 68 2.2 -6.0% 40 20 2.0 -8.0% 0 HY2 2013 HY1 2013 HY2 2013 HY1 2014 Sep ‘
Slide 11: Improved outlook in second half
30 day+ Improved Total settlements by quarter – outlook in positive trajectory Total settlements by quarter – 30 day+ arrears % second half positive trajectory For personal use only Broker Broker Direct Direct S & P Spin MyState Financial arrea S 180 1.8 180 1.6 1.8 160 1.4 1.6 160 140 19% 1.2 1.4 1
Slide 12: Working to increase diversification
Working to increase diversification For personal use only $1.9M 0.1% $453.7M 16.1% $61.2m 2.2% $20.4M 0.7% December 2013 home loan portfolio distribution based on primary security location. $232.3M 8.3% $141.2M 5.0% $1,904.6M 67.6% MyState Limited Investor Presentation 12
Slide 13: Arrears remain at low levels
Arrears Despite economic conditions, arrears remain low. remain at Low interest rate environment having positive low levels impact on arrears as customers making For personal use only additional repayments. Centralisation and standardisation of arrears management across the group. Standardisation of
Slide 14: Bad debts expense likely to flatten
Bad debts 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 expense Bad debts written off ($m) 2.093 2.741 2.192 1.887 1.156 likely to Less bad debts recovered ($m) (0.515) (0.628) (0.708) (0.829) (0.878) For personal use only Less increase/(decrease) in (0.282) (1.125) (0.520) (0.395) 0.049 flatten provision
Slide 15: Solid retail funding base
Solid retail Maintained strong and stable retail funding base. Successful RMBS issue, well subscribed across all tranches, further funding diversified securitisation funding. base For personal use only Securitisation funding used to replace ‘expensive’ warehouse funding, reducing average cost of fun
Slide 16: Improved funding costs helps to maintain margin
Improved NII (net interest income) flat due to sluggish growth. funding NIM for the group improved slightly through costs helps management of the liability base to improve margins. For personal use only to maintain Funding costs reduced through repayment of higher margin priced wholesale funds; repl
Slide 17: Prudent cost management for current market conditions
Prudent cost Personnel costs $m 20.5 Marketing costs $m 2.0 management 20.0 20.2 1.8 for current 1.5 For personal use only 19.5 1.7 1.6 market 19.0 18.5 1.0 conditions 18.0 18.3 18.6 0.5 17.5 17.0 0 1H 2013 2H 2013 1H 2014 1H 2013 2H 2013 1H 2014 Substantial cost savings achieved due to right-sizing
Slide 18: Cost to income improves despite revenue fall
Cost to Income Cost-to- Total income $m (LHS) Total costs $m (LHS) Cost to income % (RHS) income $90.0 80.0% improves 78.0% For personal use only $80.0 76.0% despite 74.0% revenue fall $70.0 72.0% $60.0 70.0% 68.0% $50.0 66.0% 64.0% $40.0 62.0% $30.0 60.0% 1H 2012 2H 2012 1H 2013 2H 2013 1H 2014 ost
Slide 19: Core banking platform completed
Core New core banking platform successfully launched banking in MyState Financial in Nov 2013. platform For personal use only Project completed in 15 months, at a cost of $7.3m completed – substantially less than our peers have spent on core banking technology transitions. Common core platform now i
Slide 20: Tasmanian Perpetual Trustees
“ Tasmanian Perpetual Trustees is a major provider of estate planning, wealth management, investment “ and trustee services in Tasmania. For personal use only Burnie Devonport Launceston Kings Meadows Glenorchy Rosny Hobart Kingston Hobart and surrounds MyState Limited Investor Presentation 20
Slide 21: Sound contribution from the wealth business
Sound I ncreased contribution – up $0.2m / contribution 9.5% on pcp. from the I mprovement in equity markets + For personal use only wealth reinvestments contributed to $36.4m / business 3.8% increase in FUM. NPAT 2.5 ost reductions and further C 2 2.1 integration of back office activities led 1.9 t
Slide 22: Future outlook
Future W e expect business conditions will improve at a outlook gradual pace. For personal use only D emand for credit starting to lift. I nitiatives to re-invigorate growth via 3rd party channels starting to bear fruit as loan originations continue to improve. A strong balance sheet and lower cost
Slide 23: Evolution of the MyState Group
MyState Limited (MYS), MyState a non-operating Limited holding (MYS), a Company, non-operating is a diversified holding MyState Company, financial Limitedis services (MYS), a diversified agroup non-operating financial listed services holdinggroup Company, listedis a diversified financial services gr
Slide 24: Disclaimer
Disclaimer This presentation contains certain forward-looking statements with respect to the financial condition, results of operations, business plans and objectives of management. All such forward-looking statements involve known and unknown risks, significant uncertainties, assumptions, contingen