Update HY17 1 Suncorp Group Top 20 ASX listed company $17 - - PowerPoint PPT Presentation
Financial results for the Half Year 31 December 2016 Debt Investor Update HY17 1 Suncorp Group Top 20 ASX listed company $17 billion market capitalisation Leading financial services brands at 31 December 2016 in Australia and New Zealand
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Leading financial services brands in Australia and New Zealand
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̶ Dividend payout ratio of 60% to 80% ̶ Strategy focused exclusively in Australia and New Zealand ̶ De-risked and simplified business model ̶ Return surplus capital to shareholders
South Australia CTP
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259 369 207 208 78 36 544 613 1H16 1H17
Chart Title
Insurance Banking & Wealth New Zealand
SUNCORP GROUP
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As at 31 December 2016 GI Bank Life SGL, Corp Services & Consol Total Total as at 30 Jun 2016 CET1 2,848 2,913 525 121 6,407 6,338 CET1 Target 2,440 2,772 358 6 5,576 5,552 Excess to CET1 Target (pre div) 408 141 167 115 831 786 Group Dividend (383) (440) Group Excess to CET1 Target (ex div) 448 346 Common Equity Tier 1 Ratio 1.23x 9.20% 2.03x Total Capital 4,133 4,270 625 121 9,149 8,860 Total Capital Target 3,486 3,880 424 (11) 7,779 7,743 Excess to Target (pre div) 647 390 201 132 1,370 1,117 Group Dividend (383) (440) Group Excess to Target (ex div) 987 677 Total Capital Ratio 1.78x 13.48% 2.42x
SUNCORP GROUP
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Total capital ($m) Capital ratios vs peers
2,913 450 907 4,270
Risk weighted assets ($m)
8 28,186
98 3,391
31,675
■ Credit risk ■ Market risk ■ Operational risk
Source: Latest published company reports
13.48% RWA CET1 Target (8.5% – 9.0% RWA) 9.20% RWA
9.20% 9.00% 8.09% 9.77% 9.61% 9.56% 9.48% 1.42% 1.60% 2.31% 2.42% 2.21% 1.75% 1.69% 2.86% 1.69% 1.81% 1.96% 2.53% 2.01% 1.95%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
Advanced Standardised
■ Common Equity Tier 1 ■ Additional Tier 1 ■ Tier 2 ■ Common Equity Tier 1 ■ Additional Tier 1 ■ Tier 2
SUNCORP GROUP
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̶ Strong capital & balance sheet ̶ Disciplined cost management ̶ Improved credit quality ̶ Resilient funding profile ̶ Progress on strategic projects HY17 ($m) HY16 ($m) Change (%) Bank Net interest income 558 566 (1.4) Net non-interest income 39 49 (20.4) Operating expenses (307) (326) (5.8) Profit before impairment losses on loans and advances 290 289 0.3 Impairment losses on loans and advances (1) (11) (90.9) Income tax (86) (84) 2.4 Bank profit after tax 203 194 4.6 Wealth profit after tax 5 13 (61.5) Banking & Wealth NPAT 208 207 0.5
BANKING & WEALTH
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Lending assets by portfolio Portfolio by geography
53% 26% 10% 7% 4% 81% 10% 8% 1%
and other
BANKING & WEALTH 11
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Return on Common Equity Tier 1 Deposit to loan ratio Net interest margin (interest-earning assets) Cost to income ratio Lending growth (annualised) Impairment losses to gross loans and advances (annualised) 1.66% 1.86% 1.85% 1.78%
1H14 1H15 1H16 1H17
4.06% 1.37% 3.58%
(0.34%)
1H14 1H15 1H16 1H17
59.6% 52.2% 53.0% 51.4%
1H14 1H15 1H16 1H17
7.6% 12.1% 13.1% 13.5%
1H14 1H15 1H16 1H17
65.7% 66.6% 66.1% 67.2%
1H14 1H15 1H16 1H17
0.18% 0.17% 0.04%
<0.01%
1H14 1H15 1H16 1H17
BANKING & WEALTH
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Total assets of $44.1 billion
Portfolio by borrower type Portfolio by channel
50% 27% 11% 8% 4% 70% 30% 35% 65%
Portfolio by geography
BANKING & WEALTH
and other
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Total assets of $5.5 billion
Portfolio by industry Portfolio by exposure size
74% 14% 12% 35% 16% 9% 19% 7% 4% 10% 54% 15% 18% 13%
Portfolio by geography
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Total assets of $4.4 billion
Portfolio by industry Portfolio by exposure size
61% 29% 10% 29% 31% 11% 8% 3% 3% 15% 49% 20% 25% 6%
Portfolio by geography
BANKING & WEALTH 15
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28 33 25 30 182 162 109 96 206 67 42 59
416 262 176 185 1H14 1H15 1H16 1H17
Gross impaired loans by segment ($m) Home lending credit quality (% gross home loans)
0.98% 0.74% 0.69% 0.67% 0.07% 0.02% 1H14 1H15 1H16 1H17
Past due loans Impaired assets Loss rate
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̶ Continued focus on credit quality and risk management ̶ Impairment losses <0.01% of GLA ̶ Limited exposure to resources and inner-city apartments ̶ Improving agribusiness conditions
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61% 64% 69% 73% 22% 24% 22% 22% 17% 12% 9% 5% 1H14 1H15 1H16 1H17
Home lending assets by LVR Home lending new business by LVR
66% 83% 88% 79% 8% 12% 10% 18% 26% 5% 2% 3% 1H14 1H15 1H16 1H17
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<0.01% 0.16% 0.11% 0.20% 0.14% 0.16% 0.35%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
Impairment losses to gross loans Net impaired loans to gross loans
Source: Latest peer financial reports
0.26% 0.27% 0.39% 0.28% 0.16% 0.35% 0.32%
SUN Regional 1 Regional 2 Major 1 Major 2 Major 3 Major 4
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5,964 5,593 5,203 5,462 3.45% 1.20% 0.81% 1.08%
1H14 1H15 1H16 1H17 Commercial portfolio ($m) Gross impaired assets/Total portfolio (%)
Commercial (SME) portfolio Agribusiness portfolio
4,039 4,311 4,484 4,624 4,534 4,400 4,258 4,360 4,383 2.46% 3.22% 4.06% 4.50% 3.58% 2.83% 2.56% 2.68% 2.19%
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00%1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17
Agribusiness portfolio ($m) Gross impaired assets/Total portfolio (%)
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Source: Roy Morgan, December 2016
Branch Business centre
WA 0.5%
2 1 123
ATM
8 1 440
TAS 0.4%
1 39 36 2 330 1 1 125
QLD 8.8%
106 11 516 14
NT 0.0% SA 0.3% NSW & ACT 0.8% VIC 0.4%
BANKING & WEALTH
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. 250. 500. 750. 1,000. 1,250. 1,500.
Jan 17 Feb 17 Mar 17 Apr 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Sep 18 Oct 18 Apr 19 May 19 Aug 19 Nov 19 Apr 20 Oct 20 Apr 21 Jun 21 Jun 23 Jun 25 Aug 26 Nov 26
Covered Bond Domestic Senior Unsecured Offshore Senior Unsecured (A$ equiv)
10yr Covered Bond FUNDING & LIQUIDITY 22
$m
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A+/A1/A+ creates genuine competitive advantage to other regional banks
multiple currencies with all funds swapped into A$
FY17/18
Issue Date Amount Tenor
Covered Bond
Dec 2016 A$100m Tap 10yr Fixed Aug 2016 A$350m 10yr Fixed Jun 2016 A$500m 5yr FRN Oct 2014 A$950m 5yr FRN/5yr Fixed Nov 2012 A$600m 5yr Fixed
Senior Unsecured
Private Placements
(current outstandings)
A$1,250m various May 2016 US$500m 3yr Fixed Apr 2016 A$750m 5yr FRN/Fixed Oct 2015 A$750m 5yr FRN/Fixed Apr 2015 US$600m 5yr Fixed Sep 2014 GBP250m 3yr FRN Apr 2014 A$750m 5yr FRN
RMBS
Mar 2015 A$1.25bn 4yrs Weighted Average May 2013 A$1.15bn 4yrs Weighted Average
Ratings Agency Short Term Long Term
Standard & Poors
A-1 A+ (stable)
Fitch
F1 A+ (stable)
Moodys
P-1 A1 (stable) FUNDING & LIQUIDITY 23
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3.6 3.5 4.6 5.4 3.6 3.4 4.0 4.4 4.3 13.0 11.5 12.3 1H15 1H16 1H17
Components of liquid assets ($b) Components of LCR* ($b)
4.05 4.59 4.20 4.20 6.35 6.76 1.90 2.03 2H16 1H17
BANKING & WEALTH
LCR 100% LCR 130% LCR 130% LCR 100%
* based off AUD LCR
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Mobility Money
Customer Referred Referred Approved Declined Approved
Origination Platform
decision engine model (scorecard) which reflects the Bank’s risk strategy and underwriting criteria
the scorecard is completed by accredited Suncorp staff under a Delegated Credit Authority approved by the Chief Risk Officer 1
approval authority
performed regularly by the Quality Monitoring team and QBE LMI for LMI loans
1 Delegated by the Chief Risk Officer to Chief Credit Officer for Delegated Credit Authority below Banking Credit.
Approved
Suncorp Central Processing Area SUNCORP STORES AGGREGATORS Automated Credit Scoring Model ‘Sunloans’ Customer
Referred Declined Approved
Delegated Credit Authority ‘DCA’
Referred Approved
57% 30%
Declined
13% 60% 13%
Percentages as at 31 December 2016
MORTGAGE ORIGINATION 35% 65%
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Self Property Mobility Money
Underwriting Criteria Valuation Requirements
Overview:
loan is referred via the scorecard to a higher approval authority for decision
selected Lending Staff who are achieving benchmark results in Compliance Overview:
Serviceability:
greater of the “floor” rate (5 year BBSW average for the previous quarter + 3% buffer + an overlay of 171bps) or the actual Customer product rate + 2%
details required
with income. These allowances are updated quarterly and align with recognised indices Valuations are required:
valuation system. ValEx is fully automated and allows the Bank to link to Valuation firms.
the type of valuation that will be applied for a particular scenario.
LVR for houses up to $1.5M and Units up to $1M; Desk Top valuation is allowed for an LVR up to and including 80% LVR and up to $1.5M. Over 80% LVR or over $1.5M, a Full Valuation is required.
loan amount does not exceed $1M and the Contract must be validated against an AVM Acceptable loan security:
maximum LVR and maximum loan amounts for particular locations
LVR, with maximum LVR for Interest Only and Investor loans capped at 90%
borrower Panel valuers are individually accredited based on:
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Self Property Mobility Money
Broker Accreditation Requirements Overview of Mortgage Brokers
Formal accreditation process:
Representative by a license holder
Finance Brokers Association of Australia (MFAA or FBAA)
Credit Protection (NCCP) training)
Broker responsibilities:
mortgage origination
part of the loan assessment, approval or servicing
Experience and training (administered by Aggregators):
Finance Brokers Association of Australia (MFAA or FBAA) and be personally identified (e.g. 100-point check)
An annual review process is performed by Channel Management
MORTGAGE ORIGINATION
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Day 7
predictive dialler
covering inbound calls
Power of Sale 32 days
day
Collections Team (5 staff)
application basis
Court
vacant possession
agent and complete any capital works as required
mitigation strategy (5 staff)
Customer Contact Strategy (Collections) Day 1 – Day 60 Mitigation Strategy (Recoveries) Day 60 – Day 90 Legal Process and Asset Realisation (Repossessions) 90 + Days
MORTGAGE ORIGINATION
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Self Property Mobility Money
Customer Referred Referred Approved Declined Approved
APOLLO 2017-1 STRUCTURE
1 The paydown analysis assumes a CPR of [21%] flat and that the 10% clean-up Call Option is exercised at the earliest
2 LMI independent required credit enhancement at Issue Date. 3 LMI dependent with one notch downgrade protection at Issue Date.
Class A Class AB Class B Class C Class D Class E
Issue Size [$500 million] Note Balance ($m) [460] [19.25] [8.5] [6.25] [2.75] [3.25] Note Percentage (%) [92.00]% [3.85]% [1.70]% [1.25]% [0.55]% [0.65]% Ratings by S&P / Fitch [AAA(sf)/AAAsf] [AAA(sf)/AAAsf] [AA(sf)/n.r.] [A(sf)/n.r.] [BBB(sf)/n.r.] [n.r/n.r.] Initial Subordination [8.00%] 2 [4.15%] 3 [2.45%] 3 [1.20%] 3 [0.65%] 3
[3.3yrs] [5.8yrs] [5.8yrs] [5.8yrs] [5.8yrs] [5.8yrs] Expected 1 Payment Window [Apr-17 to Jan-26 ] [Feb-20 to Jan-26 ] [Feb-20 to Jan-26 ] [Feb-20 to Jan-26 ] [Feb-20 to Jan-26 ] [Feb-20 to Jan-26 ] Benchmark 30-day BBSW First Payment Date [13 Apr 2017] Call Option 10% clean-up Legal Final Maturity For all Notes, the Distribution Date in [Sep 2048] Clearing System Austraclear and Euroclear, Clearstream via Austraclear bridge
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Principal Amortisation
− Prior to the Subordination Conditions being met principal will be allocated on a sequential basis. − Following the Subordination Conditions being met principal will be allocated pari passu amongst all Classes of Notes.
Subordination Conditions
− The Note Subordination to the Class A Notes has at least doubled since the Issue Date; − The Note Subordination to the Class AB Notes has at least doubled since the Issue Date; − The relevant Distribution Date is not a Call Option Date; − The second anniversary of the Issue Date has occurred on or before the relevant Distribution Date; − There are no Class E Note charge-offs which remain unreimbursed; and − The average for each of the last 4 Monthly Periods of the principal balance of the Mortgage Loans as at the last day of the relevant Monthly Period with arrears days greater than 60 days is less than 4.0% of the average for each of the last 4 Monthly Periods of the principal balance of all Mortgage Loans.
Class A Credit Support
− Initial credit support will be sized to achieve a AAA rating by S&P and Fitch for the Class A Notes assuming no credit is given to LMI. − The actual initial level of 8.0% subordination provides [3.12]% over-enhancement over the S&P “Pre-LMI independent credit enhancement level” of [4.88]%.
European Union Capital Requirements Regulation
− Suncorp undertakes to retain a net economic interest of at least 5% in this securitisation transaction for the purposes of Regulation (EU) No 575/2013 of the European Parliament and Council. − As at the Issue Date, such interest will be comprised of certain randomly selected exposures held on the balance sheet of Suncorp as required by the text of Article 405. APOLLO 2017-1 STRUCTURE 32
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Subordination of Mezzanine & Junior Notes
– Subordination of Class AB, B, C, D & E Notes (8.0% in aggregate). – Class A ‘AAA(sf)/AAAsf’ rating is independent from LMI rating from Issue Date.
Excess Spread
– Excess Spread is available to cover losses not covered by Lenders Mortgage Insurance and any liquidity shortfalls.
Lenders Mortgage Insurance
– All Classes of Notes will benefit from the Primary Lenders’ Mortgage Insurance available to cover losses. – Each Mortgage Loan with a loan-to-value ratio of greater than 80% upon origination is insured by a Mortgage Insurance Policy issued to the Seller by QBE LMI (Rated by S&P: A+ (Stable) and Fitch Ratings of AA- (outlook stable)) that covers 100% of the principal balance, the accrued interest amount and reasonable costs of enforcement. – Primary Lenders’ Mortgage Insurance covers approximately 30% of the pool.
LMI Policies cover
– 100% unpaid principal and accrued interest. – Reasonable enforcement and realisation costs. – No dollar limit on claims. APOLLO 2017-1 STRUCTURE
Class A Notes Note Percentage: 92.00% Credit enhancement: 8.00% AAA(sf)/AAAsf Class AB Notes Note Percentage: 3.85% Credit enhancement: 4.15% AAA(sf)/AAAsf Class B Notes Note Percentage: 1.70% Credit enhancement: 2.45% AA(sf)/n.r. Class C Notes Note Percentage:1.25% Credit enhancement: 1.20% A(sf)/n.r. Class D Notes Note Percentage: 0.55% Credit enhancement: 0.65% BBB(sf)/n.r. Class E Notes Note Percentage: 0.65% Credit enhancement: n/a n.r./n.r. Excess Spread Lenders Mortgage Insurance Weighted Average borrower equity of [35.05%]
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APOLLO 2017-1 STRUCTURE
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25 Oct-25 Jan-26 Credit Enhancement
Hypothetical Credit Enhancement Build-up Over Time
Class A Class AB Class B Class C Class D S&P AAA Required CE % Fitch AAA Required CE %
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Total Current Balance (A$) 550,056,453.24 Number of Loans 1,963 Average Loan Size (A$) 280,212.15 Maximum Loan Size (A$) 999,625.00 Weighted Average Current LVR 64.95% Weighted Average Seasoning (mth) 44 Owner Occupied / Investment 77.34% / 22.66% Metro / Non Metro 67.20% / 32.8% Fixed rate Loans 12.55% Interest Only Loans 20.06% Mortgage Insured 30.45%
APOLLO 2017-1 STRUCTURE
QLD, 43.68% NSW, 29.08% VIC, 12.87% WA, 9.17% ACT, 1.75% SA, 2.65% TAS & NT, 0.79%
Geographic Distribution Loan Purpose Interest Rate Type
16.77% 83.23% Unit House 12.55% 87.45% Fixed Rate Variable Rate
Property Type Mortgage Insurer
22.66% 77.34% Investment Owner Occupied 30.45% 69.55% QBE LMI No LMI Pool Insurance
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APOLLO 2017-1 STRUCTURE
QLD: Current LVR (Indexed Valuation*) vs Current LVR (Original Valuation) Australia: Current LVR (Indexed Valuation*) vs Current LVR (Original Valuation)
20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 0% ≤ 50% 50% ≤ 60% 60% ≤ 70% 70% ≤ 80% 80% ≤ 90% 90% ≤ 95% Current LVR Current Balance $ Index LVR Current Balance $
NSW: Current LVR (Indexed Valuation*) vs Current LVR (Original Valuation)
10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 0% ≤ 50% 50% ≤ 60% 60% ≤ 70% 70% ≤ 80% 80% ≤ 90% 90% ≤ 95% Current LVR Current Balance $ Index LVR Current Balance $
WAV Current LVR Analysis
20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 0% ≤ 50% 50% ≤ 60% 60% ≤ 70% 70% ≤ 80% 80% ≤ 90% 90% ≤ 95% Current LVR Current Balance $ Index LVR Current Balance $
Geographic Location WAVG Current LVR (Original Valuation) WAVG Current LVR (Indexed Valuation*) WAVG Current LVR (Indexed*– Original Valuation) QLD Loans Only 65.1% 58.5% +6.6% NSW Loans Only 64.5% 49.1% +15.3% Australia 65.0% 55.9% +9.1%
*Indexed Valuations are hypothetical estimates only based on RP Data property index as at 9 February 2017.
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Aggregated Average 21.19% CPR (across 8 active Trusts as at Nov 2016)
APOLLO 2017-1 STRUCTURE
APOLLO 2017-1 - WAL Sensitivity1
Note Class \ CPR 15% 18% 21% 25% 30% Class A Notes [4.5] [3.8] [3.3] [2.8] [2.3] Class AB – Class E Notes [7.8] [6.7] [5.8] [4.9] [4.1]
1: Assume a constant CPR, no defaults, no arrears, no principal draws, the Subordination Conditions are satisfied at the first possible date and that the Notes are repaid on the first possible Call Option Date.
Historically the prepayment behaviour has been consistent across the APOLLO trust pools (CPR modelled on six outstanding APOLLO transactions from 2009-1 to 2015-1 inclusive). A flat 21% CPR has been adopted taking into account historical average prepayments of 21.01%, as well as loan characteristics of the 2017-1 pool underlying the new Trust. 0% 5% 10% 15% 20% 25% 30% 35% 40% APOLLO Trusts CPR (3-Month Moving Average) CPR Guidance
21% Guidance CPR
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Aggregated Average 21.19% CPR (across 8 active Trusts as at Nov 2016)
1.20 1.06 0.0 0.5 1.0 1.5 2.0 2.5
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17
90+ days 61-90 days 31-60 days AUS Prime SPIN
%
As at 31 December 2016
RMBS Transactions Total Notes Issued Claims Submitted to LMI Claims Paid by LMI Net Losses Claims Submitted as % of Total Issue Size Charge-Off to Notes Excess Spread Total Issues 20 $22.53b $2.2m $2.0m $0.14m 0.10% Nil $316m Arrears are reported on a “scheduled balance” basis APOLLO 2017-1 STRUCTURE
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Aggregated Average 21.19% CPR (across 8 active Trusts as at Nov 2016)
Collateral Details APOLLO APOLLO APOLLO APOLLO APOLLO APOLLO APOLLO 2017-1 2015-1 2013-1 2012-1 2011-1 2010-1 2009-1
Closing Date Mar-17 Mar-15 May-13 Sep-12 Dec-11 Jun-10 Sep-09 Issue Size (A$ equiv) [550,000,000] 1,250,000,000 1,150,000,000 1,000,000,000 1,250,000,000 500,000,000 1,478,000,000 Average Loan Size (A$) [280,212] 207,000 241,000 229,000 222,000 208,000 196,000 Maximum Loan Size (A$) [999,625] 1,000,000 1,000,000 750,000 750,000 750,000 750,000 WA Current LVR [64.95%] 64.0% 65.5% 63.1% 63.8% 62.8% 67.5% Maximum LVR [95%] 95% 95% 95% 95% 95% 95% WA Seasoning (mths) [44] 47 35 46 45 44 38 Fixed Rate Loans [12.55%] 21.20% 15.20% 8.80% 9.40% 14.90% 33.00% Interest Only Loans [20.06%] 14.10% 16.70% 14.20% 15.60% 18.50% 15.50% Investment Loans [22.66%] 21.70% 22.90% 21.60% 20.70% 18.30% 20.40% LMI Coverage [30.45%] 100% 100% 100% 100% 100% 100% Credit Support pre-LMI [4.88%] 5.1% 5% 4.4% 4.5% 3.9% 4.8% Credit Support with LMI [3.78%] 2.1% 1.3% 1.1% 1.2% 1.0% 1.2% Class A Subordination [8%] 8% 7% 7% 7% 7% 10% APOLLO 2017-1 STRUCTURE
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Aggregated Average 21.19% CPR (across 8 active Trusts as at Nov 2016)
APOLLO REDS MEDL Kingfisher SMHL Progress Torrens NRMBS 2017-1 2017-1 2016-2 2016-1 2016-1 2016-1 2016-1 2016-1
Closing Date Mar-17 Feb-17 Nov-16 Nov-16 Oct-16 Sep-16 Aug-16 Jun-16 Total Issue Size (A$m) [550] 1,000 2,000 2,000 1,500 750 700 2,000 Average loan size (A$) [280,212] 226,700 278,810 222,638 149,571 316,815 229,811 298,371 Maximum Loan Size (A$) [999,625] 929,195 998,161 1,962,595 999,500 993,677 748,175 1,300,000 Weighted average Current LVR [64.95%] 58.31% 59.80% 53.60% 62.13% 65.15% 66.63% 59.40% Loans with LVR> 90% [0%] 0% 1.2% 0.30% 3.75% 1.00% 0% 0.04% WA Seasoning (mths) [44] 36 34 45 68.5 34 40 29.6 Fixed Rate [12.55%] 24.32% 18.3% 5.8% 46.39% 24.55% 40.21% 8.60% Interest Only [20.06%] 21.15% 19.2% 11.7% 19.02% 33.6% 0% 18.7% Investment Loans [22.66%] 27.84% 25.5% 20.5% 23.15% 23.83% 3.84% 21.4% LMI Coverage [30.45%] 100% 17% 12% 55% 100% 25% 10% ‘AAA’ LMI independent buffer multiple [3.12%] 3.88% 4.06% n/a 4.87% 4.93% 5.99% 4% Class A Subordination [8%] 8% 8% 8% 8% 8% 8% 8% APOLLO 2017-1 STRUCTURE
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All reports will be available under the Suncorp Bank webpage, under Treasury Funding then select Securitisation.
https://www.suncorp.com.au/banking/about- us/investors/securitisation-apollo.html Erin Strang Simon Lewis Andrew Power Maddalena Gowing Adam Parry Treasurer Deputy Treasurer Senior Manager - Funding Senior Manager - Securitisation & Covered Bonds Senior Manager - Institutional Funding erin.strang@suncorp.com.au simon.lewis@suncorp.com.au andrew.power@suncorp.com.au maddalena.gowing@suncorp.com.au adam.parry@suncorp.com.au +61 7 3362 4051 +61 7 3362 4037 +61 7 3362 4016 +61 7 3362 4038 +61 7 3362 4031
Suncorp supports user defined cashflow, collateral, delinquency, default & loss scenario analysis of the APOLLO pool via:
<APLLO><Mtge><Go> www.Intex.com www.ABSNet.net
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Australia Queensland Data
Population growth 1.4% 1.4% Jun-16, annual Economic growth 2.2% 2.0% AUS: Sep-16 annual, trend QLD: 2015-16 annual Unemployment rate 5.6% 5.9% Nov-16, trend Inflation 1.3% 1.5% Sep-16, annual Budget position $37bn deficit (2.1% of GDP) $2bn surplus (0.6% of GSP) 2016-17 estimate Credit rating (S&P / Moody’s) (AAA neg outlook / Aaa stable) (AA+ stable / Aa1 neg outlook) Dec-16
̶ Supportive fundamentals for both Australia and Queensland ̶ Australia continues to see moderate growth despite the fall in mining investment ̶ For Queensland, population growth has lifted and the budget is in surplus
“The economy continues to adjust to the end of the resources boom. Our expectation is that GDP growth will be close to potential over the next few quarters”
RBA, 22 November 2016
ECONOMY
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̶ Australia is forecast to record continued moderate economic growth, with domestic income and demand recovering ̶ Queensland is projected to lead economic growth amongst the states
“Queensland has a lovely portfolio
Deloitte Access Economics, September 2016
Gross State Product annual average forecast 2017-2019 Source: Deloitte Access Economics, Sep-16
State prospects GDP outlook 1.9% 1.6% 2.0% 2.6% 3.9% 2.8% 3.1%
ACT: 2.2%
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 2012 2013 2014 2015 2016e 2017f 2018f 2019f
Source: ABS, Suncorp, Deloitte Access Economics
Annual % Change
ECONOMY
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̶ Cash rate reached a record low in August 2016. No further cuts anticipated from here ̶ Low rates are supporting residential and, recently, non-residential building ̶ Inflation likely to return to the RBA target range during 2017
Inflation and interest rates
1 2 3 4 5 6 7 8 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Std Var Mortgage Rate RBA Cash Rate Headline Inflation Rate Source: ABS, RBA, Bloomberg % 20 40 60 80 100 120 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Total Non-Residential Residential Source: ABS $bn, per annum
Building approvals
Inflation Target Range
45 ECONOMY
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46
̶ Housing being supported by demographics, low rates and a sound economy ̶ Some areas of localised
̶ Household debt elevated, yet servicing ratio low and savings still above pre-GFC levels ̶ RBA states that household risks have eased
(FSR Aug-16)
House prices Household debt and debt servicing
300 400 500 600 700 800 900 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16 Sydney Melbourne Brisbane Source: Bloomberg, ABS, RP Data Median House Price ($ '000) 160 165 170 175 180 185 190 2 4 6 8 10 12 14 Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16 Source: RBA % Debt to disposable income (LHS) Interest payments to disposable income (RHS) %
ECONOMY
HY17
47
̶ Despite faltering job growth, unemployment has eased ̶ Encouragingly, future job growth is expected to be concentrated in those sectors that are the largest employers
Labour market Sector employment
4.9 5.2 5.5 5.8 6.1 6.4
25 50 75 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Nov-16 Employment Unemployment Rate (%) Monthly Change ('000) Source: Bloomberg
1 4 7 10 13 200 400 600 800 1000 1200 1400 1600 1800
Agriculture Mining Retail & Wholesale Utilities Manufacturing Construction Recreation Information & Telecommunications Transport Healthcare Public Admin Business Services Education Finance & Insurance Real Estate
Forecast employment growth 2017-2019, %
Sector employment Nov-16, '000
47 ECONOMY
HY17
48
̶ Commodity prices have lifted, assisted by improved Chinese industrial activity ̶ Tourism earnings are rising strongly (annual growth of 11%
̶ Other areas of export growth include financial and IT related services
Commodity prices Service exports and tourism
30 50 70 90 110 130 150 170 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Iron Ore WTI Oil Source: Bloomberg $US price Thermal Coal 1.4 1.7 2.0 2.3 2.6 2.9 3.2 3.5 3.8 4.1 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Service Exports (ex-Tourism) Tourism Exports $bn Source: ABS
ECONOMY
HY17
49 49
This report contains general information which is current as at 9 February 2017. It is information given in summary form and does not purport to be complete. It is not a recommendation or advice in relation to the Group or any product or service
It is not intended to be relied upon as advice to investors or potential investors, and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. This report should be read in conjunction with all other information concerning Suncorp filed with the Australian Securities Exchange (ASX). The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp’s intent, belief or current expectations with respect to the business and
specific provisions and risk management practices at the date of this report. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which are beyond Suncorp’s control, which may cause actual results to differ materially from those expressed or implied. Suncorp undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this report (subject to ASX disclosure requirements).