MYSTATE LIMITED — AGM Information 2015

Oct 20, 2015

ASX Code: MYS

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 Melos Sulicich

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FY2015 results

	2014	2015 (Statutory)	2015 (Underlying)	Change (Underlying v 2014)	Change (Underlying v 2014)
Revenue ($m)	119.3	125.1	119.5	!	0.2%
Net proft after tax ($m)	29.6	32.5	29.7	!	0.3%
Net interest margin (%)	2.43	2.28	2.28	"	-15bps
Cost-to-income ratio (%)	64.5	62.7	64.3	"	20bps
Capital adequacy ratio (%)	13.8	12.7	12.7	"	-110bps
Earnings per share (cps)	33.9	37.3	34.1	!	0.6%
Return on equity (%)	10.5	11.2	10.3	"	-20bps
Total dividends – fully franked (cents)	28.5	28.5	28.5	–	–

• Statutory earnings include $3.9 million profit from sale of non-strategic asset, Cuscal shares, to support growth and reinvestment; less $1.1 million restructuring and related costs

• Capital further enhanced post year-end through $25 million Tier 2 medium term notes issue, which if executed at 30 June would have resulted in a capital ratio of 13.98%.

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A sound underlying result which positions the Group well for the future.

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MyState Limited AGM Presentation 2015

Continued focus on strategic priorities

Stronger executive team with wealth of talent and experience

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• Record settlements – up 75% on prior year.

Growth in our revenue drivers

• Restored loan book growth of 16.3% (at 2.3x system).

GROW

• Successfully deployed new loan origination system “LendFast”.

Simplifying processes SIMPLIFY for third party and direct channels

• Continuing on further product simplification and digital technology upgrades.

• Easy to sell, easy to buy, easy to administer.

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• Sound capital ratio at 12.7%, further enhanced through issue of $25m Tier 2 notes post year-end.

Capital ratio and arrears levels maintained

STRENGTH

• Credit quality remains a cornerstone with bad and doubtful debts and arrears at continuing low levels.

• Continued investment in third party channel relationships and systems to support growth and profitability.

Better broker and customer engagement

RELATIONSHIPS

• Renewed focus on the customer, with engagement improving from already high levels.

• A new, experienced, and capable executive team.

Transforming TRANSFORM capability

• Team strengthened with talent and experience from banking and financial services, consulting, technology and telecommunications.

• Technology transformation underway.

• Launched first mobile application for iOS

• GROWTH
  –
  INVESTMENT
  –
  PERFORMANCE and Android. MyState
  Limited Investor
  Presenta,on 3

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MyState Limited AGM Presentation 2015

Loan book Gross loans and advances growth accelerated through the  [[0.5%]] year

 [16.3%]

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$3,544m
 [0.4%]
 [[0.5%]]
$3,047m
$3,033m
2013 2014 2015
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Settlements reached $1 billion for the first time in the Group’s history

Continued acceleration in settlements with 2H 2015 FY15 sett lements up 75% on FY14 ~50% above 1H 2015

FY15 settlements grew at 75% above prior year

Sound loan book growth; investor loans 13%, well below APRA ADI average of 35%

1Q 2016 loan book momentum well above system growth

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600
$597m
500
400
$404m
300 $327m
200 $246m
100
0
1H 2014 2H 2014 1H 2015 2H 2015
$ Millions
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MyState Limited AGM Presentation 2015

System growth: 9.66%

2H 2015 acceleration of retail deposits increased share of system growth

1Q 2016 deposit growth exceeds system growth

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16%
12%
8%
4%
0%
1H 2015 deposit growth at 0.42x system 2H 2015 deposit growth at 1.4x system
25% 25%
20% 20%
15% 15%
10% 10%
5% 5%
0% 0%
-5% -5%
-10% -10%
-15% -15%
HSBC BankMECU LimitedTeachers Mutual BankCBA Victoria TeachersWBC NABPolice BankPolice FS Suncorp BankANZ MyState GroupBEN Macquarie BankME BankING BankHeritage BankCiti groupCommunity CPSQT Mutual BankDefence BankPolice & Nurses AMP Bank Limited BOQRabobank
HSBC BankCiti groupWBCMECUTeachers Mutual BankCBA NABVictoria Teachers ANZPolice FSPolice BankQT Mutual Defence BankPolice & NursesING BankSuncorp BankAMP BankHeritage BankBENCommunity CPSMacquarie BankMyState GroupBOQRabobankME Bank ME BankMyState GroupMECUMacquarie BankTeachers Mutual BankSuncorp BankCBA BENPolice BankVictoria TeachersPolice FSWBCHeritage BankNAB Community CPSING Bank ANZHSBC BankBOQRabobankDefence bankAMP BankQT MutuialPolice & NursesCiti group
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1H 2015 deposit growth at 0.42x system

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MyState Limited AGM Presentation 2015

Strong credit quality and conditions reflected in continued decline in bad and doubtful debts

Bad and doubtf ul debts charge

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$ Millions
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 [28.8%]

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1.627
2013
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 [47.4%]

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 [29.1%]
0.852
0.602
2014 2015
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90+ day arrears tracking at 35% of regional banks’ average

30+ day arrears well below peers

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S&P Major Banks S&P Regional Banks MyState Limited
1.62% 1.86%
0.85%
0.74%
0.76% 0.72%
Aug13 Oct13 Dec13 Feb14 Apr14 Jun14 Aug14 Oct14 Dec14 Feb15 Apr15 Jun15
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S&P Major Banks S&P Regional Banks MyState Limited
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0.70% 0.74%
0.34%
0.30%
0.35%
0.26%
Aug13 Oct13 Dec13 Feb14 Apr14 Jun14 Aug14 Oct14 Dec14 Feb15 Apr15 Jun15
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MyState Limited AGM Presentation 2015

Delivering on our strategy to further diversify the loan book and achieve lower geographic concentration

Increasing diversification through growing mainland home loan book

June 2014 home loan book

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0.1%
$2.3M 16.2%
$468.6M
2.2%
$61.9M 0.7%
19.2M
8.3%
$234.1M
5.7%
$161.1M
66.8%
$1,890.5M
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June 2015 home loan book

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0.1%
$2.6M
2.6%
$85.9M 0.9%
28.5M
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0.1% $2.6M 16.4% $547M 0.9% 28.5M 10.0% $332.7M

9.1% $302.8M

60.2% $2,010.8M

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MyState Limited AGM Presentation 2015

Funds Under Management

Funds Under Advice

Wealth continued to deliver consistent, stable returns

Modest growth in FUM and FUA

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$1,773 $1,799
$1,693
766 $2,310782
734 $2,163
 [0.4%]
959 1,007 1,017
2013 2014 2015
$ Millions
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Core wealth income steady

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Financial Planning Funds Management
Trustee Services
3.43 3.42 3.51
5.05 4.84 4.76
8.95 9.16 9.37
2013 2014 2015
$ Millions
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Increase in open estates

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94.0
83.0 82.9
2013 2014 2015
$ Millions
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MyState Limited AGM Presentation 2015

Employee Connectivity and

Customer Engagement both increased

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Employee Connecti vity Score

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90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
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Analysis of the Employee Connectivity Survey points to the following factors:

• New leadership and company direction

• Strong internal communications

• Culture building centred on ‘The MyState Way’

• Staff benefits and rewards and recognition programs

• Employee/community recognition

Customer Engagement Index

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2014 2015
90%
85%
80%
75%
70%
65%
60%
MyState The Rock TPT Group
Bank
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Customer Engagement strength driven by:

• Improvement in new customers’ experience of joining MyState

• Continued strong customer service experienced across all channels

• Reduction in reported errors

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MyState Limited AGM Presentation 2015

MyState in the community

MyState is committed to being a pillar of the local communities in which we live and work

The MyState Foundation donated $106,000 in grants to 14 organisations across Tasmania in FY2015

Sponsorships include the MyState Wooden Boat Festival, MyState Student Film Festival and Central Queensland NRL Bid Junior Development program

We are proud to sponsor the Hobart Hurricanes in Cricket’s 2015-2016 Big Bash

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MyState Limited AGM Presentation 2015

Summary and outlook

Well positioned for the future

Strong balance sheet and capital position

Increased momentum to deliver enhanced profitability and performance

• Clear
  vision,
  strategy
  and
  commitment
  to
  execu,on

• Restored
  third
  party
  rela,onships
  and
  systems
  and
  sales
  culture

• Record
  sehlements
  and
  loan
  book
  growth

• Capital
  and
  credit
  quality
  as
  a
  cornerstone
  of
  sustainable
  growth

• M&A
  pipeline
  (core,
  aligned,
  adjacent
  businesses)

• New,
  experienced
  and
  capable
  leadership
  team

• Merged
  ADIs
  and
  aligned
  core
  systems

• Enhanced
  digital,
  online,
  internet,
  mobile
  and
  back-­‐office
  capability

• Digi,sing
  and
  streamlining
  back-­‐off
  func,ons

• Product
  ra,onalisa,on
  and
  alignment

• Analy,cs
  and
  CRM
  for
  improved
  customer
  service
  and
  profitability

  • Further
    improved
    sales
    culture
    and
    customer
    focus

  • Contribu,ng
    to
    our
    local
    communi,es

  • A
    connected,
    commihed
    and
    diversified
    workforce

  • Momentum
    delivering
    enhanced
    profitability
    and
    performance

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MyState Limited AGM Presentation 2015