MyState Limited A Growing Banking & Wealth Management Group MyState Limited UBS Australian Small...

ASX Code: MYSDecember 2014

MyState LimitedA Growing Banking & Wealth Management Group

Melos SulicichManaging Director & CEO

UBS Australian Small Caps Conference

2MyState Limited UBS Australian Small Caps Conference

Our core businesses

Company Profile

MyState Financial is a retail financial services ADI, regulated by the Australian Prudential Regulation Authority (APRA), operating predominately in Tasmania. MyState Financial was established on 1 July 2007 and is the result of a number of credit union consolidations; the most recent being the merger of islandstate and connectfinancial. MyState Financial, which demutualised in August 2009, provides financial services to approximately 120,000 customers and holds an Australian Financial Services Licence (AFSL) issued by the Australian Securities and Investments Commission (ASIC).

The MyState Financial Group also includes:

• MyState Financial Foundation Limited, which provides annual grants to charities to educate and nurture the young people of Tasmania; and

• Connect Asset Management Pty Ltd, which manages four securitisation programmes under the name of ConQuest: ConQuest Mortgage Trust, ConQuest 2007-1 Trust; ConQuest 2010-1 Trust and ConQuest 2010-2 Trust.

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,

MyState Financial (MSF) and The Rock Building Society Limited (The Rock) authorised deposit-taking

institution’s (ADI), and Tasmanian Perpetual Trustees (TPT) a trustee and wealth management company.

Headquartered in Tasmania, its diverse business operations cover:

Banking Services Trustee Services Wealth Management

Transactional and internet banking Estate planning Financial planning

Insurance and other alliances Estate and trust administration Managed fund investments

Savings and investments Power of attorney Portfolio administration services

Business banking Corporate and custodial trustee Portfolio advisory services

Agribusiness Private client services

Personal and business lending

The Rock Building Society Limited is a retail financial services ADI, regulated by APRA, operating predominately in Queensland. The Rock became a wholly owned subsidiary of the Company following a successful acquisition by MyState Limited on 1 December 2011. The Rock provides financial services to approximately 40,000 customers. The Rock holds an AFSL issued by ASIC.

The Rock also owns and operates the Rockhampton Custodial and Management Company Limited, a securitisation trust management and custodial company.

Tasmanian Perpetual Trustees was established in 1887 and is a major Tasmanian based provider of financial products and trustee services. Tasmanian Perpetual Trustees is a trustee company authorised under the Tasmanian Trustee Companies Act 1953 and the Corporations Act.

Tasmanian Perpetual Trustees holds an AFSL issued by ASIC.

Tasmanian Perpetual Trustees has over $930 million in funds under management on behalf of personal, business and wholesale investors in Tasmania. Tasmanian Perpetual Trustees also has a further $700 million of assets under advice, through the Company’s role as financial adviser, attorney or trustee on behalf of various trusts, estates and other clients.

02 COMPANY PROFILE

Company Profile






















02 COMPANY PROFILE

Banking Business

Wealth Business

MyState Bank (Tasmania)

The Rock Building Society

(Central Queensland)

Tasmanian Perpetual Trustees

As at June 2014 (1) Based on last sale price of MYS 25/11/2014

Customers

Branch network

Total assets

Retail deposits

Funds under management and advice

Capital adequacy ratio

Market value1

240,000

32 including 15 mini-branches

$3.6 billion

$2.1 billion

$1.8 billion

13.8%

$400 million


Operating nationally, known locally

MyState and The Rock provide banking, agribusiness, and insurance services to 150,000 customers mainly in Tasmania and central Queensland.

Tasmanian Perpetual Trustees is a major provider of estate planning, wealth management, investment and trustee services in Tasmania.

HOBART AND SURROUNDS

BURNIE

DEVONPORT

LAUNCESTONKINGS MEADOWS

HOBART

GLENORCHYNEW TOWN

NEW NORFOLK

ROSNY

KINGSTON

Company Profile






















02 COMPANY PROFILE

Company Profile






















02 COMPANY PROFILE

Company Profile






















02 COMPANY PROFILE

ROCKHAMPTON

YEPPOON

GLADSTONE

EMERALD

MACKAY

TOWNSVILLE

CAIRNS

BILOELA

GRACEMERE

BLACKWATER

BARALABA

EMU PARK

MOUNT MORGAN

THEODORE

MORRA HARVEY BAY

GOOMERI


Strong regional community ties Long term commitment to deep connections in our

local communities.• MyState Community Foundation• MyState Student Film Festival• CQ NRL Junior Development Program• John Maxwell Scholarship• Golden Mount Festival

• The Hardie Fellowship• Cape Hope• MyState Wooden Boat Festival• Staff Hands-On Program


Tasmanian economy slowly improving

Tasmanian economy continues to improve at a moderate pace.

• Tasmanian Housing Finance Commitments have recovered off a low base

• Growth in Tasmanian state final demand relatively solid in 2014

Tasmanian housing finance commitments

Change in state final demand %

• Tasmania has the lowest proportion of weekly income required to pay home loan of any state (25.0%)


MyState Group Key Results – June 2014

NPAT of $29.6m increased by 3.9% on previous year• Tight cost control• Soft revenues• Low bad debts expense reflecting

sound credit quality

Cost to income ratio of 64.5%, down from 65.7%

Return on average equity of 10.5%, up from 10.4%

Annual dividend increased by 3.6% to 28.5 cents per share, fully franked

20

15

10

5

0Jun ‘10 Dec ‘10 Jun ‘11 Dec ‘11 Jun ‘12 Dec ‘12 Jun ‘13 Dec ‘13 Jun ‘14

$ M

illio

ns

9.1

11.6

10.411.2

12.2

14.613.9

14.8 14.8

20

15

10

5

0Jun ‘10 Dec ‘10 Jun ‘11 Dec ‘11 Jun ‘12 Dec ‘12 Jun ‘13 Dec ‘13 Jun ‘14

Cent

s p

er s

hare

12.512.0 12.0

15.0

14.0 14.0 14.0 14.014.5

Half year earnings (NPAT) $m Half year dividends paid (cps)


Banking Business Key Results – June 2014

NPAT of $25.0m is 0.8% down on previous year• Revenue impacted by loan

portfolio dynamics

Total loan portfolio growth of 0.4%• First half impacted by significant

reduction in broker channel business• Broker channel growth in the second

half regained first half portfolio loss• Business development managers

deployed to support mortgage broker channels in Sydney and Melbourne

Net interest margin of 2.43%• Margins remain under pressure due to

strong competitive environment• Discounting prevalent to win new

business and retain customers• Cost of funds improved at The Rock

30

25

20

15

10

5

0

$ M

illio

ns

Banking Business NPAT $m

2011 2012 2013 2014

19.9

24.425.2 25.0


Loan book growth gathering momentum

3.120

3.100

3.060

3.040

3.020

3.000

2.980

$ B

illio

ns

Jun 13 Dec 13 Jun 14 Oct 14

1.500

1.450

1.400

1.350

1.300

1.250

1.200

$ B

illio

ns

Jan 14

Feb 14

Mar 14

Apr 14

May 14

Jun 14

Jul 14

Aug 14

Sep 14

Oct 14

Retail Broker

Banking business loan book $b Home loan book $b

Focus on basic drivers of the business has delivered a turnaround in business momentum.

Most growth coming from the broker channel.


Settlements are growing

Loan approval momentum is building and will deliver further uplift in settlements heading into the second half.

The home loan portfolio is growing well above system after a period of below system growth.

• Settlements reach a higher plateau

• MyState growing above system and faster than most other banks

Source: APRA Banking Statistics, September 2014

250

200

150

100

50

0Sep 12 Qtr Dec 12 Qtr Mar 13 Qtr Jun13 Qtr Sep 13 Qtr Dec 13 Qtr Mar 14 Qtr Jun 14 Qtr Sep 14 Qtr

$Mill

ions

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%

-2.00%

-4.00%

-6.00%

Teac

hers Mutu

al Ban

k

QT Mutu

al Bank

Defense

Bank

MECU

ANZ

MySta

te Lim

ited

P&N LtdNAB

ME Bank

Westp

ac

Police FS

HSBCCBA

ING A

ustralia

Victoria

n Teach

ers

Police Bank

Citigro

up

Bendigo

AMP Bank

BOQ

Suncorp

Heritage Bank

September Quarter annualised System

Residential mortgage book growth annualised % September quarter – excluding Macquarie

Quarterly home loan settlements $m


Margins are tightening, but credit standards remain strong

• Margins under competitive pressure

• Sound credit standards have arrears well below industry

• New business profile skewed away from high LVR lending

3.00%

2.80%

2.60%

2.40%

2.20%

2.00%

Jan 13

Feb 13

Mar 1

3

Apr 13

May 13

Jun 13

Jul 1

3

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

Jan 14

Feb 14

Mar 1

4

Apr 14

May 14

Jun 14

Jul 1

4

Aug 14

Sep 14

Oct 14

2.20%

1.70%

1.20%

0.70%

0.20%

Feb 12

Apr 12

Jun 12

Aug 12

Oct 12

Dec 12

Feb 13

Apr 13

Jun 13

Aug 13

Oct 13

Dec 13

Feb 14

Apr 14

Jun 14

Aug 14

Oct 14

— S&P SPIN – Prime — S&P SPIN – Regional Banks — MYS Group

70%

60%

50%

40%

30%

20%

10%

0%%

of s

ettl

emen

ts

LVR band<80% 80-90% 90-95% 95%+

Net interest margin %

30+ day arrears %

Home loans funded by LVR band Jul-Oct ‘14 %


Increasing loan book diversity

JUN ‘14 2.2% $61.9mOCT ‘14 2.3% $66.9m

JUN ‘14 0.1% $2.3mOCT ‘14 0.1% $2.7m

JUN ‘14 0.7% $19.2mOCT ‘14 0.7% $19.4m

JUN ‘14 16.2% $459.4mOCT ‘14 16.2% $468.6m

JUN ‘14 8.3% $234.1mOCT ‘14 8.1% $235.4m

JUN ‘14 5.7% $161.1mOCT ‘14 6.5% $188.6m

JUN ‘14 66.8% $1,890.5mOCT ‘14 66.1% $1,914.7m

Home Loan Growth (Jul-Oct ‘14)

% (p.a.)

Mainland 13.8%

Tasmania 3.8%

Total 7.1%

Loan book diversity changing away from Tasmania.


Strong retail funding base an advantage

Our credit union heritage provides a strong and stable retail funding base.

• MyState Bank Limited and The Rock Building Society, both rated BBB (Stable) by Standard and Poors

• MyState is an issuer in the RMBS market

32 % Retail Savings

33 % Retail Term Deposits

8% Wholesale TermDeposits

7% NCD

17% Securitisation

3% Third Party Deposits

65% Total Retail


NPAT of $4.6m is up 46.4% on previous year• Improved NPAT through cost reductions and back office integration • $55.4m increase in Funds Under Management (+ 5.8%) • $32.3m increase in Funds Under Advice (+4.4%)• Select Term Fund closed and Cash Management Fund merged into the At Call Fund

to simplify the product set

2,000

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

Funds under Management and Advice $m FUA FUM

2009 2010 2011 2012 2013 2014

$ M

illio

ns

$766

$743 $737$698

$734

$766

$1,006$934 $930 $931 $952

$1,007

Not just a bank; the Wealth Management business provides:

• Income diversity

• Steady earnings

Wealth Management Key Results – June 2014


Wealth management business sound and steady

• FUM fees generate the majority of revenue for the wealth business, and are continuing to grow

• Majority of TPT funds have outperformed their benchmark over 3M, 1Y, 3Y and 5Y time periods

• Stable trustee estate flows

3.00%

2.00%

1.00%

0.00%

(-1.00%)

(-2.00%)

(-3.00%)

At Call Fund

Fixed Term Fund

Long Term Fund

Select Mortgage Fund

Property Fund

Australian Share Fund

International Share Fund

Equity Fund

Balanced Fund

5 Ye

ars

p.a

.

TPT funds – 5Y margin to benchmark %

100%

75%

50%

0%

2012 2013 2014

35.5%

48.1%

16.4%

32.1%

17.3%

50.6%

31.4%

16.9%

51.7%

Financial Planning FUM Estates

Wealth management fees %

Value of open estates $m

Conservative risk profile; the Funds avoided having to close during the GFC liquidity crisis.

$Mill

ions


Our strategy for growth

Grow

• Sales development• Brand development• Customer base growth• M&A opportunities

Strength

• Balance sheet• Cost control• Risk appetite• Business Information

Simplify

• Policy• Process• Empower staff• Continuous

improvement

Relationships

• Community development

• Know the customer• Communication• Stakeholder partnership

Transform

• Leadership• Culture• Innovation• Diversification• Meet changing

customer behaviours

Maintain & grow strong presence in core markets• Banking and Wealth Management• Consolidate and strengthen customer offerings

Continued focus on enabling technologies• Core platform • Loan origination• Digital transformation

Ongoing focus on cost management • Simplify and garner efficiencies • Reinvest savings for growth

Opportunity for further mergers • Potential to grow for scale and diversity benefits across – banking – funds management – wills & estates – financial planning


Major projects New core banking platform deployed by MyState Bank

• Increased capability to launch product and integrate new technologies

• Planning underway to consolidate core systems• Single instance will provide further cost savings and

productivity gains• Investment in new systems and a focus on simplification will

provide a firmer platform for growth

New loan origination system to increase lending and deposit capability

• Greater simplicity and faster processing• Quicker decisioning• Making it easier to do business with us

MyState gains bank status

• Increases credibility• Building reputation as a local bank

Ongoing focus on digital technologies

Simplifying front-end customer servicing

Investment in new systems and a focus on simplification will provide a firmer platform for growth.


Summary • Sales momentum is building, and the home loan book is growing faster than system

• Increasing loan book geographic diversity

• Strong and stable retail funding base

• Wealth management business is steady, providing income diversity

• Continuing to invest in systems – to make it easier to do business with us

• Open to M&A opportunities

MyState Limited A Growing Banking & Wealth Management Group MyState Limited UBS Australian Small...

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