Customer Report 2015/2016 1 Heritage Limited • Customer Report 2015/16 Heritage Bank Limited ABN 32 087 652 024. AFSL and Australian Credit Licence 240984.

Customer Report 2015/2016

Contents

Chairman’s Report...... 3 Auditors CEO’s Report...... 5 Ernst & Young Heritage Board & CEO...... 7 Registered Office Heritage Bank Limited About Heritage...... 8 6th Floor 400 Ruthven Street Qld 4350 The Customer Owned Advantage...... 9 Postal Address Putting Customers First...... 11 P.O. Box 190 Toowoomba Qld 4350 Australia Putting Communities First...... 13 Contact Details Putting Staff First...... 15 Telephone (07) 4690 9000 International 61 7 4690 9000 Evolving Our Business...... 18 Internet www.heritage.com.au Contact Centre 13 14 22 Financial Highlights...... 21 Heritage Access Line 13 14 72

Heritage Bank Limited • Customer Report 2015/16 2 Chairman’s Report

As a mutual financial institution, Most Satisfied Customers award in the Heritage Bank is committed to meeting Challenger Bank category across Australia. the needs of our members. That means We took out the 2016 Mozo People’s not only providing them with great value Choice Award for overall customer on their banking products, but also satisfaction in banking, an award based personalised service, and support for on customer reviews completed across their communities. I’m proud to say that Australia during the year. We also won the Heritage Bank has delivered on those AFR Smart Investor Blue Ribbon Award for commitments in 2015/16. Best Regional Bank 2016. In addition, independent analysis by Financial overview research company CANSTAR found that our customers were $50 million a year better off Our financial performance continues to be in 2015/16 through banking with Heritage, strong, with an increased profit, increased rather than one of the . retail deposits, and steady lending volumes. Our mutual ethos always requires us to strive for the right balance between New CEO providing financial benefits to our customers, The Board was delighted to appoint and generating the level of profit required Mr Peter Lock to the role of CEO at Heritage to secure appropriate levels of capital. Our in November 2015, following the retirement Kerry Betros, marginal decrease in total consolidated of Mr John Minz. Mr Lock brings 30 years Chairman assets this financial year is a factor of our of banking experience to the role, with a need to manage our prudential capital broad base of knowledge gained across requirements. Overall, Heritage continues several major and regional financial to maintain a strong financial position. institutions. His energy and passion for the This is evidenced by both Moody’s and Fitch future, combined with a respect for the rating agencies confirming our unchanged traditions and culture of our bank, will be ratings this year. vital for our continued success.

Customer satisfaction Corporate strategy measures The Board is fully supportive of the revised Financial returns are one measure of corporate strategy which was adopted in success. Another is how well we satisfy our early 2016 to guide our ongoing operations customers’ needs. Heritage continues to and directions. The strategy places customers perform strongly in this area. We finished and staff squarely at the centre of everything the 2015/16 year with a Roy Morgan MFI we do. It acknowledges our need to attract satisfaction rating of 94.3% - the highest and grow new customers, especially in the of any financial institution in . 20-40 years age bracket. It commits us to Canstar Blue awarded Heritage the 2016 deepening our relationship with existing

3 Heritage Bank Limited • Customer Report 2015/16 customers, who have helped build us into the bank we are today. It highlights the need to attract and develop passionate staff members who will deliver the kind of services that our customers expect. And it clearly sets out a mandate to modernise the way we operate, simplify our processes, and become easier to do business with.

Future prospects

Heritage does need to continue evolving, as our operating environment changes. The mobile device We finished the has rapidly become the channel of choice for many of our customers in carrying out their everyday 2015/16 year with banking transactions. Similarly the power of digital technology is also helping reshape back-office a Roy Morgan MFI processing operations, making them quicker and more automated. We have to ensure that Heritage satisfaction keeps pace with those changes. This is a challenge for us. But it is also a fantastic rating of 94.3% opportunity. In past eras, banks were constrained by the need to expand their bricks and mortar - the highest of presence to grow their loan books. Branch networks were the key to growing business. However the any financial arrival of the digital age opens greater scope for Heritage to spread and grow across Australia. institution Mutual sector in Queensland. The 2015/16 year has seen a continuation of the consolidation that is taking place across the mutual sector. As the largest mutual bank in the country, Heritage is well placed to survive and thrive in that environment. We are proud to have achieved this status from our Head Office in Toowoomba, and we look forward to remaining a strong and vibrant member of our community. We are also determined to continue championing the need for Australia to have a strong and competitive mutual sector, as a real alternative to the listed banks.

Heritage Bank Limited • Customer Report 2015/16 4 CEO’s Report

Heritage is a strong bank with a proud Loan approvals were down slightly (3.45%), history and an exciting future. We have reaching $1.78 billion in 2015/16. Total great potential to build our position across consolidated assets were also marginally Australia as a real and vibrant alternative lower, down from $8.56 billion to $8.44 to the listed banks. As a mutual, we offer billion. However retail deposits grew strongly, great value to our customers and our up by $294 million (6.06%) to $5.16 billion. communities. The Heritage brand is not The six months to June 2016 saw us constrained by reference to any particular perform strongly. We achieved $970 million geographic region or industry. It appeals to in loan approvals for the second half of the customers the length and breadth of the year, compared to $810 million in the first. country. We are already Australia’s largest Similarly we grew our retail deposits by mutual bank with multiple distribution $183 million in the second half, compared channels including branches, online and to $111 million in the first. digital applications, agency agreements and a long established national presence That result followed concerted efforts in that through our mortgage broker partnerships. period to attract new customers and grow the There is enormous potential to continue to business, in line with our strategic objectives. grow our business. Simplifying our processes Doing so requires a plan that can translate our strengths into sustained success. That’s Our mission is to deliver a great customer Peter Lock, why a key focus this year has been a revamp experience every time. We are focussing CEO of our corporate strategy. I’m delighted that our efforts on simplifying our processes we have developed and launched a new vision and finding ways to make it easier and and mission; set four new strategic goals; and quicker for customers to do business with adopted four key values to guide our journey. Heritage. To help achieve that, in 2015/16 This new corporate strategy framework firmly we implemented the SNAP! Program, puts our customers and communities at the which urged all staff to identify simple, centre of our thinking and sets our priorities new achievable process improvements. The and our focus in coming years. program has been a great success, with staff contributing more than 200 ideas by the end of the financial year, with more than 50 Financial overview implemented so far. SNAP! is just the start of Heritage performed well in 2015/16, our journey and we are now looking at larger growing our profits and finishing the year transformation programs to position Heritage with strong momentum. for the challenge of delivering a great customer experience in the digital world. Our pre-tax profit was $51.11 million, up 6.46% on the $48.01 million achieved the National presence previous year. Our after-tax profit was $36.14 million, up 7.55% on the Heritage currently sells home loans $33.61 million achieved in 2014/15. throughout Australia via our network of

5 Heritage Bank Limited • Customer Report 2015/16 mortgage broker partners. We currently have broker distribution service staff located in Brisbane, Sydney, Melbourne, Adelaide and Perth. To achieve our agenda for growth, we aim to increase our loan volumes in areas outside our Queensland heartland, with a greater focus on serving our broker partners and their customers. To help achieve that, we created the new role of Head of Broker Distribution in 2015/16 to lead growth in the broker market.

Modern approach to banking

We continue to modernise our approach to banking both via our digital channels and our branch We are already footprint. Heritage now employs in-house app developers to ensure that our mobile device banking Australia’s largest system keeps pace with customer demand. That includes releasing regular updates to apps for mutual bank. both iOS and Android operating systems, with new features that add extra functionality for users. There is enormous We are also continuing to modernise the layout and design of our branches. The new designs take potential to a radically different approach, with greater use of technology and more open space. This redesign follows the changing needs of our customers and continue to grow reflects the modern world of banking. Six branches were upgraded this way in 2015/16. our business.

Industry Recognition

Putting People First is our motto, but it’s more than a logo, it’s a promise and it’s delivered every day through our team of dedicated, energetic and passionate people. This passion has helped deliver a string of industry awards culminating in the AFR Smart Investor Blue Ribbon Award for Regional Bank of the Year for 2016. I would like to thank all of our customers for continuing to support and help grow our bank. Heritage has enjoyed a successful 2015/16 and our team is committed to making us an even better bank and a real alternative to the listed banking sector.

Heritage Bank Limited • Customer Report 2015/16 6 Heritage Board & CEO

Back (L to R): Dr Dennis P. Campbell (Deputy Chairman), Mr Stephen Davis, Mrs Vivienne A. Quinn, Ms Susan M. Campbell, Mr David W. Thorpe, Mr Brendan P. Baulch. Front (L to R): Mr Kerry J. Betros (Chairman), Mr Peter Lock, (CEO).

7 Heritage Bank Limited • Customer Report 2015/16 About Heritage

Heritage Bank is Australia’s largest- customer owned bank. Our origins go back to 1875 when the Toowoomba we are Australia’s Permanent was largest customer- formed, followed by the Darling Downs With almost Building Society in 1896. Those two owned bank organisations co-existed in Toowoomba until 1981 when they merged to become Heritage Building Society. In 2011, $8.5b Heritage Building Society changed its name to Heritage Bank. in total assets Heritage is a mutual bank – owned by customers, not shareholders. When you open an account at Heritage you become a part-owner with a voice in our future. Heritage does not pay dividends, so all $50M profits we make stay with us. Additional Heritage has 61 branches in southern Customer Queensland and sells home loans via a $40M network of mortgage brokers in every Benefit state and territory in Australia. That makes Heritage a national player in the home loan market. With almost Our customers $30M $8.5 billion in total assets, we are Australia’s largest customer-owned bank. were $50 million

Heritage offers a full suite of banking a year better products, including savings and $20M transaction accounts, term deposits, off in 2015/16 home loans, personal loans, business through banking banking, credit and debit cards, superannuation and financial planning, with Heritage $10M insurance, and foreign currency and travel finance products. rather than one of the big four banks*.

*12 months to June 2016 *Canstar Member Valuation, June 2016 2015/16 2014/15 2012/13 2013/14

Heritage Bank Limited • Customer Report 2015/16 8 The Customer Owned Advantage

The big difference between Heritage and We believe that our customer-owned additional benefit of $208.57 million the big banks is that we are owned by our structure, and the way this focuses our by banking with us, rather than with one customers, not by shareholders attention on delivering value for our of the big banks. customers, makes Heritage a very That’s a compelling demonstration of the So, why does that matter? attractive alternative. value that banking with a customer-owned It’s simple. Our sole focus is on giving We give better value institution can deliver. value to our customers, because they are also our owners. Everything we do is Our focus on customers translates into We care designed to benefit customers. The profits financial benefits. Because we don’t seek we make stay at Heritage and we use massive profits, we can give our customers We call our approach the People first them to improve our products, services and a better overall deal. difference because helping people is interest rates. Our goal is to maximise the That’s backed up by independent analysis from where our focus lies. Everything we do is value we provide for customers. research company CANSTAR, which found that underpinned by this philosophy. When you The big banks are different because they are our customers were $50 million a year better join Heritage, you’re not just a customer, owned by shareholders, not by customers. off in 2015/16 through banking with Heritage you’re a part owner of the business. You are They exist for the financial benefit of those rather than one of the big four banks*. the reason we exist. You are our focus. shareholders, who want a financial return Our customers gained an $18.35 million Our driving motivation is to help you achieve on their investment. That means the big benefit in rates and fees on our lending banks are always looking to maximise profits your financial dreams. That means great products, and $31.65 million because of better so they can pay higher dividends to their products, great rates and great service, interest rates and fees on deposit products. owners – the shareholders. Their goal is to every time. We truly care about your make money from their customers to benefit In fact, over the last five financial years, interests because that’s why we exist. their shareholders. Heritage customers have received a total We’re passionate about helping people.

The Customer Owned Advantage

THE BIG 4 BANKS

PROFITS STAY WITH US CUSTOMERS CUSTOMERS

$$$$ DIVIDENDS $$$$ PAID TO $$$$ SHARE HOLDERS MODEST HIGHER PROFITS PROFITS

Heritage Bank Limited • Customer Report 2015/16 *CANSTAR9 Member Valuation, commissioned by Heritage Bank, June 2016 The big banks often say they’re committed of our owners – you, the customers. We to customers. But at the end of the day face the same regulatory framework as the the people they truly serve are their big banks and have to meet strict financial shareholders. They make profits from their standards and requirements. We’re safe and customers so they can pay dividends to their secure, and we’re passionate about helping owners. That’s their bottom line. the people who hold memberships with us.

We’re safe and secure We give back to the

Heritage has a history stretching back to community 1875, so we are one of the longest-standing Heritage works to create better communities financial institutions in the country – in for our customers. We understand that it’s fact, we’ve been around longer than the not just the financial products we offer ! You don’t last for customers that can make a difference 141 years without building a strong and to their lives. It’s also the prosperity and sustainable operation. sustainability of their communities. We are the largest customer-owned bank in We support community-driven events the country, with almost $8.5 billion in total and organisations that make a positive assets. That makes us big enough to matter - contribution to society. We think about the yet still small enough to care. overall needs of our customers and their As a customer-owned bank, we are mindful communities, and throw our support behind of our obligations to protect the interests activities that make a difference.

Customer benefit $M Consolidated assets $Billion 10

9 $8.44B Deposit products 31.65 8

7 Lending products 18.35 6

5 0 5 10 15 20 25 30 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16

Heritage Bank Limited • Customer Report 2015/16 10 Putting Customers First

Heritage has always been focussed on their financial institution to someone else. Of Credit Loan – Bank: Home Advantage providing great value to our customers, The higher the “net promoter score”, the more Living Equity 250-699, Best Term Deposit above all else. likely it is that a customer will recommend Short Term – Bank Best Reverse Mortgage, A tangible way we deliver on our promise is their bank to friends or colleagues. As at and Cheapest Balance Transfer Credit Card – the way we price our products. 30 June 2016, Heritage recorded a net Bank - Gold Low Rate. Additionally, Heritage promoter score of 38.4, indicating a strong placed second for Cheapest Business Credit Because we don’t chase massive profits, our likelihood of customers recommending Card – Bank and third for Cheapest Credit goal is always to offer better value to our Heritage to others. The average score of the Card – Bank: Gold Low Rate. customers than the big banks. big four banks was just 6.6. Heritage was recognised as a Winner That’s why the interest rate on our standard for Employer of Choice in The Australian variable home loan was lower than that Awards Business Awards 2015. This is the fifth year offered by each of the big four banks in a row that Heritage has won the award. throughout the 2015/16 financial year. Heritage Bank won Best Value Savings Account – Base Rate at the 2016 Mozo Our standard variable rate at 30 June 2016 Experts Choice Awards. Mozo also Advances in online banking was 5.14% - 0.235 percentage points lower announced Heritage’s Discount Variable than the average of the big four banks. Heritage recognises that customers today Home Loan as a winner for Best Value First increasingly want to carry out their banking Our Roy Morgan main financial institution Home Loan and Best Value Variable Loan. customer satisfaction score* at 30 June online, especially from mobile devices. We are 2016 was 94.3% - more than 13% higher Heritage also achieved success at MOZO continuing an ongoing program of upgrades than the average score of the four big banks People’s Choice Awards placing in the Top 5 to our online banking services to ensure we in Queensland. That rating was the highest for Best Mutual Bank. keep pace with customer demand. of any financial institution in Queensland Heritage Bank was announced as a winner We now have Heritage banking apps in the survey. of five categories in Money Magazine’s available for both iPhone and Android users, Roy Morgan also provide us with customer annual Best of the Best Awards. Heritage and we have employed in-house developers advocacy results, which measures the won Cheapest Home Loan Package – Bank: to ensure we continue to keep pace with likelihood that customers would recommend Home Advantage Variable, Cheapest Line customer demand.

Standard %* Heritage Bank Variable 5.14 Interest Rates 5.37%* ANZ 5.35%* NAB 5.35%* Commonwealth Bank 5.43%* *Standard variable home loan annual percentage rate sourced from relevant websites as at 30 June 2016. 11 Heritage Bank Limited • Customer Report 2015/16 Customer Advocacy

40 39.4

20 Customer Satisfaction

13.4

10.3

3.9

-0.2 0 ANZ NAB Heritage - 94.3% Commonwealth - 83.9% NAB - 78.7% ANZ - 79.7% Westpac - 78.5% Westpac Heritage

*Consumer Banking in Queensland - Customer Satisfaction, Roy Morgan, June 2016 Commonwealth

Heritage Bank Limited • Customer Report 2015/16 12 Putting Communities First

Supporting our communities is extremely The annual family-friendly event was completed in June in the Brisbane important to Heritage Bank – in fact, encourages people of all ages and suburb of Chermside and is the only community is one of our core values. abilities to join in, offering distances of hospice in Queensland for young people We actively seek out ways that we can 2km, 5km, 10km and 21.1km. The fun aged up to 18. Heritage donated $4400 make a positive difference to the overall run encourages a ‘healthy body, healthy to Hummingbird House as one of five well-being of the communities we operate mind’ and raises money for the Gold Coast beneficiaries from the $22,000 raised via in. That means throwing our support Hospital Foundation. the Heritage Calendar. behind the key events and activities that • Heritage Bank Indooroopilly was a sponsor are important to them. It’s also about • Heritage sponsors many other community of Opera in the Gardens on 17 April. Held developing close links to our communities, events, including the Street Concert at at the beautiful Mt Coot-tha Botanic which helps us know what those key the Ipswich Festival, the Bundy Flavours Gardens, this annual event showcases the events and activities are. Festival in Bundaberg, the Ekka, the Apple talents of some of the country’s finest and Grape Festival in Stanthorpe, the • Heritage each year holds a Charity Golf Day opera singers while raising money for Business Excellence Awards in Gatton, in Toowoomba to raise money to support charity. Proceeds from the event were Warwick and Dalby, the Toowoomba worthy local charity and community donated towards raising money and organisations. The 2015 Charity Golf Day awareness for local Rotary community Carnival of Flowers and the Toowoomba raised $50,000, with donations distributed projects as well as local charities Drug Royal Show. to eight local organisations. This year’s ARM Australasia and the Rotary Oceania • Heritage Bank has also continued its event brought the total raised in the Medical Aid for Children (ROMAC). partnership with Tennis Queensland in event’s 17-year history to over $620,000. • Queensland’s first hospice for children a special community development • Heritage was the naming rights sponsor was one of the recipients of funds raised program that provides grants for for the 10km event at this year’s Heritage through the annual Heritage Calendar. improvements to facilities at local Gold Coast Bulletin Fun Run in April. Construction of Hummingbird House tennis clubs around the state.

13 Heritage Bank Limited • Customer Report 2015/16 Heritage Community Branches

Heritage operates seven Community Branch outlets, which are joint-ventures between us and local community companies. Under the operating model, the community companies must give their share of the profits back to their communities via funding grants to deserving local causes and organisations.

Heritage established our first Community Branch in Crows Nest in 1999.

Since then, our Community Branches have collectively put more than $37 million back into their local communities, through funding grants, wages, rent and payments for other goods and services.

The Community Branch model is a tangible expression of Heritage’s commitment to making a positive contribution to the wider community.

...our Community Branches have collectively put more than $37 million back into their local communities

Heritage Bank Limited • Customer Report 2015/16 14 Putting Staff First

People first is the philosophy that our staff make. This year we have totally Our People Rewards underpins our organisation. This approach revamped our formal recognition program applies not just to the way we deal with by introducing an exciting new on-line Our People Rewards is an online portal our customers but also to the environment system that has modernised the way we where employees can gain access to a that we create for our workforce. acknowledge outstanding achievements. wide variety of products and services, including discounted accommodation, travel, We aim to be a modern, flexible employer- The online system has two parts. theme park admission, and movie tickets. of-choice that attracts passionate people The new Heritage Heroes online portal This program also includes the option of and helps them grow and develop even more. contains a range of “ecards” that employees cash back - enabling employees to earn credits based on the purchase of products Heritage has received consistent recognition can send to each other at any time, to and services. as a great place to work by winning Employer provide an instant, virtual “well done”. Staff of Choice in The Australian Business Awards can customise the cards with their own In the last year employees have spent from 2011 to 2016. special message. Recipients are notified over $323,000.00 on Our People That does not happen by accident – we work immediately an ecard is sent to them. Rewards and saved over $25,000.00 hard to develop a fantastic work culture by on their purchases. The online portal also enables staff providing the right mix of conditions, reward to nominate colleagues for the new and recognition, training and development, Heritage Hero awards, which replace the Supporting the lifestyle initiatives and benefits, and former Employee of the Month awards. Community workplace tools. Staff can nominate colleagues for their Heritage Bank’s commitment to the efforts in five categories: Diversity and Inclusion community is supported by policies that • Passion give employees a day of paid leave to Heritage Bank is proud to support diversity help out in their community through our within the workforce. Our Diversity Policy • Courage Volunteers Leave provision and paid leave sets out our commitment to providing a • Teamwork to donate blood or plasma to their local working environment where all employees Red Cross Blood Bank. • Customer Service feel safe and included.

Diversity is the differences that exist • All Rounder Career Development between people including gender, culture, The Heritage Hero award winners are Developing the careers of individual race, ethnicity, sexual orientation, age, considered for the quarterly Silver Heritage employees is facilitated through the language, religion, nationality and family/ Hero Awards, and can also then go into the provision of information through our marital status. Inclusion refers to ensuring running for the annual Platinum Heritage Learning Portal and the Career Development that employees have equality of opportunity Hero Awards, which reward the best of the Guide, as well as networking opportunities in the organisation without barriers or best across Heritage. such as the Leadership Networking Breakfast obstacles as a result of these differences. This innovative program provides a quick Series, annual Leadership Summit and the Our People Conference. Heritage Heroes and easy way for people to recognise the great work of their peers, and a better way to Heritage also provides a comprehensive At Heritage, we understand the importance capture a more comprehensive cross-section study assistance program and has formed of recognising the contributions that of achievements across the business. a unique partnership with the University

15 Heritage Bank Limited • Customer Report 2015/16 Staff members from our Contact Centre celebrate at their annual awards event.

We aim to be a modern, flexible employer-of- choice that attracts passionate people and helps them grow and develop even more.

Heritage Bank Limited • Customer Report 2015/16 16 of Southern Queensland through the USQ Pathways program that gives employees access to courses with recognised prior learning linked to the completion of one of Heritage Banks nationally recognised qualifications. Initiatives and programs like Heritage-University of Southern Queensland (USQ) Pathways, the Mentoring Program and the Well-being Portal have contributed to the success of Heritage Bank’s culture, performance and reputation.

Tour de Office

For the first time ever in 2015, Heritage Bank staff took part in the Tour de Office event that not only raises money for charity but also promotes a healthier workplace.

Tour de Office was launched in 2011 as an office-based cycling relay challenge for workplaces across Australia. The challenge sees staff ride on a stationary road bike placed in the office to raise money for charities, while promoting an active lifestyle for desk-bound workers.

Staff ride for 30 minutes at a time, seeking sponsors for their efforts, which are live- streamed on the Tour de Office website.

Heritage adopted the children’s hospice Hummingbird House as its chosen charity and raised $10,000 toward the construction costs of the new facility in Brisbane.

The event raises awareness among office-bound staff about the dangers of prolonged sitting, urging them to find the time to be active. It also proved a lot of fun, with staff dressing up as super-heroes during their rides, and also trying to out-do each other in terms of distances ridden and speeds reached.

17 Heritage Bank Limited • Customer Report 2015/16 Evolving our business

Heritage Bank continues to evolve and elements of the revised strategy are a new in our branches, or in talking to our adapt to the ever-changing environment vision, a new mission, the creation of Contact Centre staff. It also means having in which we operate. The rapid rise of four key strategy goals, and the adoption simple, easy processes with as little red digital technologies is a key driver for of four key values, to focus our energies tape as possible, and having the services change, impacting not just our approach going forward. people want, such as effective online to IT, but our approach to the business banking capabilities. of banking as a whole. We continue to Vision: Passionate about transform our business in response to Helping People Strategic goals: these changes, and to other environmental changes that are affecting the banking Having a passion for helping people is the Our four key goals spell out the key things sector in Australia. essence of why we exist. At Heritage, our that we need to focus on for Heritage’s goal is to make banking a force for good. continued success. We have to attract New CEO We’re not motivated by how much profit new customers, particularly in younger we can make. We’re motivated by making age brackets. At the same time we have In November 2015, Heritage welcomed people’s lives better. to respect our existing customer base and senior banking executive Mr Peter Lock Putting People first is embedded in develop new ways of helping them enjoy as our new Chief Executive Officer (CEO), our thinking and represents not just a better value. We have to become even taking over the role from the retiring friendly attitude, but a service-based more professional about everything we Mr John Minz. philosophy that defines the way we do do – more efficient and more modern, Mr Lock boasts more than 30 years’ business. We help people with the basics with simpler and quicker processes. And experience in the sector, of everyday living by taking care of the we have to make sure our people have the including management roles at the financial needs they might have. passion and the skills to deliver the fantastic , St George Bank and By being customer-focused, we can outcomes our customers are looking for. Our Commonwealth Bank, after starting his assist people at every stage of their life to strategic goals are: career with the . improve their financial well-being and to • Attract and grow new customers achieve their dreams and aspirations. Setting a new direction • Build & maintain existing customers Mission: Delivering a • Build a bank to be proud of Executing a well-considered corporate great customer experience strategy is fundamental to the success • Attract and grow passionate people every time of any organisation, and Heritage Bank is no exception. We aim high at Heritage. We take pride Values: Our Board and Senior Executive Group in giving our customers the best experience we possibly can – consistently, across The key to Heritage’s ongoing success is a undertook a review of our corporate great company culture based on a strategy in early 2015, to test its continuing everything we do. set of core values. That’s what will drive relevance in setting the right directions We don’t shy away from striving for our performance and enable us to achieve for our future. excellence in customer service. In fact, our business goals. Our core values guide that’s our obsession. Out of that review has come a revamped our decision-making and what’s important corporate strategy that CEO Peter Lock Delivering a great customer experience to us. They set out clearly the way we launched to staff in June 2015. The key means not just how welcome people feel want our people to do things at Heritage.

Heritage Bank Limited • Customer Report 2015/16 18 19 Heritage Bank Limited • Customer Report 2015/16 Our core values are: cash. Heritage currently supports brands including Australia Post, , , • Passion Travelex and MasterCard’s Multi-currency • Courage CashPassport

• Integrity Heritage is continuing negotiations with a • Respect number of other companies to help enable other products using its cards and virtual CEO Peter Lock launched the revised payments expertise. corporate strategy with presentations to Head Office and retail staff in June. All Heritage staff members received a pack Transformed including a “Passionate about Helping branches rolled out People” booklet, and a pack of playing cards Heritage Bank has continued the rollout of with suits that aligned to the four strategic new-look branches that feature a radically goals, and which each had a message that reinforced the new strategic directions. different approach to technology, design and layout. The first of the new-style branches Heritage took an even more colourful was opened at Robina on the Gold Coast in approach to spreading the revised corporate June 2015. strategy by commissioning street art collective Kontraband to paint murals on In the 2015/16 financial year, we selected internal walls of our Head Office have opened revamped branches at building with the revised strategic messages. Chermside, Carindale, Beenleigh, Loganholme, The Pines and Runaway Bay Cards and Payments using the new design template. innovation As a result, our new design template eliminates the traditional row of tellers Heritage continues to look for opportunities behind a counter and has moved to an open to expand its specialist expertise in the plan layout, with staff using tablet devices to pre-paid card market. Heritage is already the serve customers throughout the branch. largest issuer of pre-paid cards in Australia, particularly travel cards, working with a The layout features multiple meeting number of companies that sell pre-paid spaces, with digital signage and displays, cards – for instance gift cards, or debit cards plus “self-serve” areas with a smart ATM that can be re-loaded and used instead of and other technology.

Heritage Bank Limited • Customer Report 2015/16 20 Financial Highlights

2016 2015

TOTAL Profit before tax $51.11 million $48.01 million $ CONSOLIDATED ASSETS Profit after tax $36.14 million $33.61million 8.44b

Loan approvals $1.78 billion $1.84 billion LOAN $ APPROVALS Total consolidated assets $8.44 billion $8.56 billion 1.78b Capital adequacy 13.95% 13.37%

Liquidity 15.94% 19.39%

Mortgage loan arrears 0.30% 0.39% greater than 30 days

1,838 52.96 1,775 50.04 51.11 48.01 44.36 1,435 1,440 1,339 2011/12 2012/13 2013/14 2014/15 2015/16 2011/12 2012/13 2013/14 2014/15 2015/16

PRE TAX PROFIT ($M) LOAN APPROVALS ($M)

8,507 8,519 8,557 8,440 5,155 8,221 4,861 4,706 4,369 4,033 2011/12 2012/13 2013/14 2014/15 2015/16 2011/12 2012/13 2013/14 2014/15 2015/16

CONSOLIDATED ASSETS ($M) RETAIL DEPOSITS ($M)

21 Heritage Bank Limited • Customer Report 2015/16 Heritage Bank Limited • Customer Report 2015/16 22 23 Heritage Bank Limited • Customer Report 2015/16