MYSTATE LIMITED — AGM Information 2013

Oct 27, 2013

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ASX Code: MYS
29 October 2013
MyState Limited
Annual General Meeting
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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, contingencies and other factors many of which are outside the control of MyState Limited (MYS), which may cause the results or actual performance to be materially different from the future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of presentation.

No presentation or warranty is or will be made by any legal or natural persons in relation to the accuracy or completeness of all or part of this document, or any constituent or associated presentation, information or material (collectively, the Information), or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, or implied by, the information or any part of it. The information includes information derived from third party sources that has not been independently verified. To the full extent permitted by law, MYS disclaims any obligation or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions. Nothing contained in the information constitutes investment, legal, tax or other advice. You should make your own assessment and take independent professional advice in relation to the information and any action on the basis of the information.

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Managing Director’s Address John Gilbert

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Highlights

A strong result in a challenging business environment

• Good cost management

NPAT

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30
$ Millions
28.5
25
23.4
22.0
20
17.3
15
10
5
0
2010 2011 2012 2013
23.4 reported + 2.1 merger costs
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• Achieved further integration benefits for both MyState Financial and The Rock

• Transitioning to a more sales-focused model for The Rock

• Excellent risk management and strong credit quality

• Efficient platform for further growth

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MyState Limited AGM Presentation

FY2013 results

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FY2013 FY2012 Change (%)
Revenue ($m) 248.1 241.1 2.8
28.5 25.5 11.8
Normalised net profit after tax ($m)
–
The Rock acquisition costs ($m) 2.1 N/A
28.5 23.4 21.7
Statutory net profit after tax ($m)
FY2013 FY2012 Change (%)
Earnings per share (cents) 32.7 29.9 9.3
–
Final dividend – fully franked 14.0 14.0
(cents)
–
Total dividends for the year – 28.0 28.0
fully franked (cents)
FY2013 FY2012 Change (%)
Cost-to-income ratio (%) 68.3 70.3 2.8
Net interest margin
MyState Financial (%) 2.78 2.99 7.0
The Rock (%) 1.78 1.86 4.0
Return on equity (%) 10.2 9.3 9.7
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• FY2012 figures after adding back The Rock acquisition costs.

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MyState Limited AGM Presentation

Balance sheet, capital strength and asset quality

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FY2013 FY2012 Change (%)
Total assets ($m) 3,629.7 3,658.6 (0.8)
Total liabilities ($m) 3,350.0 3,384.7 (1.0)
Net assets ($m) 279.7 273.9 2.2
Risk-weighted assets ($m) 1,322.0 1,285.5 2.8
Capital adequacy (%) 14.0 14.1 0.7
Funds under management ($m) 952.0 931.0 2.2
Funds under advice ($m) 733.0 698.0 5.0
Loans 30+ days in arrears (%) 0.5 0.9 40.0
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Banking asset growth flat due to lower broker channel broker originations

Strong capital adequacy (Tier 1 – 13.7%)

Modest growth for FUM and FUA

Credit quality of loan book amongst industry best with low arrears

Ratings – MyState Financial BBB (stable) – The Rock BBB- (positive watch)

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Basel III ready

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MyState Limited AGM Presentation

Arrears

MyState Financial mortgage loan arrears by units

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90+ days 60+ days 30+ days
90
80
70
60
50
40
30
20
10
0
Feb ‘12 Apr ‘12 Jun ‘12 Aug ‘12 Oct ‘12 Dec ‘12 Feb ‘13 Apr ‘13 Jun ‘13
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The Rock mortgage loan arrears by units

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90+ days 60+ days 30+ days
90
70
50
30
10
0
Feb ‘12 Apr ‘12 Jun ‘12 Aug ‘12 Oct ‘12 Dec ‘12 Feb ‘13 Apr ‘13 Jun ‘13
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Asset quality: 30+ day arrears

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MyState Financial The Rock S&P Mortgage
Performance Index
1.8%
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
Dec ‘11 Mar ‘12 Jun ‘12 Sep ‘12 Dec ‘12 Mar ‘13 Jun ‘13
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• Integration of The Rock into MyState Financial operations management

• Efficient and early engagement with problem loans

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MyState Limited AGM Presentation

“ MyState Financial provides retail and business banking, agribusiness and insurance services to 120,000 customers in Tasmania.

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BURNIE
DEvoNPoRT
LAUNCESToN
KINGS MEADowS
NEw NoRFoLK
GLENoRCHY
NEw TowN HoBART AND
RoSNY
HoBART SURRoUNDS
KINGSToN
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MyState Limited AGM Presentation

MyState Financial: performance summary

NPAT $22.3m, up by 8.5% on previous corresponding period reflecting:

• 4.1% increase in loan portfolio to $2.1bn

• Further fall in non-performing assets

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$ millions
25.0
3.3
22.3
20.0
20.6
19.9
15.0 15.7
10.0
5.0
0.0
2010 2011 2012 2013
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• Low 30-day+ secured loan arrears demonstrate high credit quality

• Net interest margin 2.78% (FY2012: 2.99%)

• Level 1 capital adequacy of 13.46%

• High quality liquid assets (HQLA) of 15.6%

• Average loan to value ratio (LvR) of 67.2% Branch refurbishment and consolidation program progressed

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MyState Limited AGM Presentation

MyState Financial: high customer satisfaction

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Average

Extremely Satisfed	17%	32%	17%	7%	14%	13%
Very Satisfed	37%	43%	41%	35%	33%	24%
Satisfed	30%	21%	32%	37%	33%	35%
Neither Dissatisfed (B3B)	8% 8%	1% 3%	4% 7%	12% 9%	11% 8%	7% 19%

Source: Independent quantitative brand research conducted by specialist brand research firm Millward Brown – August 2012

• Enjoys the highest level of customer satisfaction in this category at 96%

• 75% of customers are either extremely satisfied or satisfied

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• Second most considered brand in the State

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MyState Limited AGM Presentation

New core banking platform on track

Build phase completed

• Testing well underway including implementation of customer-focused system modifications

• Project completion on track for November 2013 – extended slightly from october to allow for further testing of customised functions

• Capital expenditure of project remains on budget

• Project is on track to achieve synergies post go-live in the form of:

• Reduced ongoing software maintenance costs

• Reduce data centre hosting costs

• Increased productivity

• Implementation represents a low risk and low cost conversion relative to many other core banking conversions

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MyState Limited AGM Presentation

“ The Rock provides retail banking and insurance services to 40,000 customers in Queensland and around Australia.

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caIrns
toWnsVIlle
Mackay
yeppoon
rockhaMpton
BlackWater
eMerald
eMU park
GraceMere
BaralaBa
BIloela
Morra harVey Bay
Gladstone
MoUnt MorGan
theodore GooMerI
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MyState Limited AGM Presentation

Central Queensland: economic environment

Strong population and employment growth

• Favourable demographics

• Diverse mix of industries to sustain growth, alongside mature, well-established businesses

Global demand for local commodities – particularly LNG – underpinning export potential

• Pipeline of major projects continues to stimulate further growth

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MyState Limited AGM Presentation

The Rock: performance summary

NPAT of $2.9m (pcp – 7 months only: $3.3m)

• Contributed $1.6m to group overheads (pcp: nil)

• Loan portfolio reduced by 9.7% to $0.9b due to less activity through broker channel – initiatives taken to reverse this decline

• Increase of 32% in direct loan sales

• Funding structure changing with more retail deposits and less wholesale/ channel-introduced funds

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$ millions
3.5
3.3
3.0
2.9
2.5
2.0
1.5
1.0
0.5
0.0
2010 2011 2012 2013
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• Cost efficiencies through centralising functions in group head office

• Net interest margin 1.78% (pcp – 7 months: 1.86%)

• Capital adequacy of 13.43%

• High quality liquid assets (HQLA) of 14.3%

• Average loan to value ratio (LvR) of 68.5%

• Significant increase in general insurance sales

• New products and services introduced including new card products

• Branch and refurbishment consolidation program progessed

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MyState Limited AGM Presentation

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

BURNIE

DEvoNPoRT

LAUNCESToN KINGS MEADowS

GLENoRCHY

RoSNY HoBART

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KINGSToN
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HoBART AND SURRoUNDS

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MyState Limited AGM Presentation

Tasmanian Perpetual Trustees: performance summary

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3.5
3.0 3.1
2.5
2.0
1.5 1.7
1.6
1.5
1.0
0.5
0
2010 2011 2012 2013
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NPAT of $3.1m, up 108.4% from previous corresponding period

• Cost reductions through integration of business units and centralisation of back office systems

• Higher commission income from estates under advice

• Improved inflow to FUM and FUA

• Total FUM up 2.2% to $952m

• Good fund flow into strongly performing income funds and into growth funds

• Investors moving away from cash

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MyState Limited AGM Presentation

MyState Limited:

group strategy

Maintain and grow strong presence in Tasmania:

• Banking, wealth management and asset management

• Capitalise on The Rock growth opportunities including:

• Enhanced product, service and channel offerings

• wealth offering

• Continued focus on enabling technologies – core platform; loan origination; accounting system

• opportunities for further mergers with like-minded ADIs

• Participation in industry rationalisation in trustee and wealth management sector

• ongoing focus on cost containment

• Retain strong balance sheet quality and capacity for both organic and inorganic growth opportunities

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MyState Limited AGM Presentation