Together We're Bigger
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together we’re bigger Annual Review 2014 The Alexander and Bridget Jones Memorial Scholarship has financially enabled me to study in Melbourne, helping me to reach my goal of learning as much as I can about law and philosophy to make a difference. I hope to return to society someday the knowledge study will give me. Welcome to the 2014 Annual Review. Bigger can refer to size, and as a Top 60 ASX listed Australian business we are bigger than many people realise. But bigger can also refer to actions. To be generous is to be big-hearted, to act selflessly is to take a bigger view. In many ways, Bendigo and Adelaide Bank acts in ways that are ‘bigger’ than people have come to expect from banks. We share revenue with our Community And innovate we do. Our wholly successful if our actions create Bank® partners, sponsor talented owned Community Telco Australia (CTA) success for all of the stakeholders in university students who might otherwise is small by telco standards but big on our business. miss out on higher study, work with initiative. With the support of global To publicly claim we are ‘Bigger than the not-for-profit sector on affordable tech giant Samsung, CTA developed a a bank’ is to hold ourselves up to the housing initiatives, and we invest in unique mobile payment system that judgment of others. But it also forces us and raise awareness of renewable not only rewards consumers and to put our decisions through that filter: energy. Our charitable foundation, benefits businesses, but also raises Is this a decision you would expect of a ™ Community Enterprise Foundation , is money to support community company that has a bigger purpose one of Australia’s biggest in terms of fundraising initiatives. than simply being a conventional bank? annual grants. We’re bigger in other – These and more stories are in this sometimes surprising – ways, too. We hope you enjoy this report. For Annual Review. It’s a report heavy on further information, or to view our In a world where banking, payments and outcomes, light on rhetoric, because Annual Financial Report, including the telecommunications are converging, we we have always believed that actions remuneration summary, please visit are providers in all three sectors, speak louder than words. Our actions www.bendigoadelaide.com.au giving us the flexibility to adapt and the are important because they speak to capability to innovate. our motives. And our motives remain Thank you for your support of our constant: We believe we can only be business. Brand Financial Chairman’s 04 Family 06 Performance 10 Message Managing Our Year Our new home Director’s 2013/2014 in Adelaide 12 Message 14 18 Our Bank Customer Leveraged 20 in Focus 26 Connection 30 Equities Community Community Environment & Bank® Enterprise Sustainability 32 34 Foundation™ 36 Supporting Sponsorships and Board and Australia’s Partnerships Executive 38 Youth 40 42 Front cover (L-R) James Corbett, Ellen Roberts, Najib Hashimi and Grace Newton received a scholarship through the Bendigo and Adelaide Bank Scholarship Program in 2014. 2013/14 ANNUAL REVIEW 3 Brand Family From rural communities, to suburban families, corporate investors to not-for- Bigger than a single profit organisations and businesses, the Bendigo and Adelaide Bank Group takes a long-term view. We want to bank; an entire group deliver sustainable outcomes and enable prosperity. of specialists. Bendigo Bank Renowned for its Community Bank® model and award-winning service, The Bendigo and Adelaide Bank Bendigo Bank is committed to investing Group helps customers and in the community it serves. Bendigo Bank offers banking and communities across Australia wealth management services to individuals, families and small to achieve their goals. medium businesses Australia-wide. Adelaide Bank Adelaide Bank, through its partners, is a popular mortgage provider, working with a national network of brokers and mortgage managers who service the home loans of more than 45 per cent of Australians. 4 Bendigo Wealth Delphi Bank Joint ventures, subsidiaries and other brands Bendigo Wealth is the wealth Delphi Bank offers a wide range of management division of Bendigo and banking services from 14 branches Our core brands are supplemented by Adelaide Bank. Sandhurst Trustees is across Victoria, New South Wales and joint ventures, subsidiaries and other a highly regarded financial services South Australia. brands that serve discrete markets and provider. Services include funds Built on three important pillars – add to our business diversity. management and trustee services, family, business and community, Delphi Community Telco® Australia is the superannuation, estate planning and Bank has been operating in Australia largest regional telecommunications management. for 13 years as the bank of choice for provider, involved in voice, data and Leveraged Equities offers innovative the Hellenic-Australian community, mobile technologies and the and responsive margin loan and providing personal, friendly and expert convergence of banking and investment loan products, service. telecommunications. combined with standout private Community Sector Banking is Rural Bank banking-style service. Australia’s leading specialist banking service for not-for-profit organisations. Rural Finance Rural Bank provides specialist Community Enterprise Foundation™ banking solutions and services is the Bank’s philanthropic arm with For more than 65 years, Rural Finance to Australian farmers, and plays Sandhurst Trustees acting as trustee. has fostered long-term agricultural a vital role in supporting regional Our joint venture, Homesafe Solutions, prosperity by supporting young and rural communities. offers an equity release product to farmers and administering industry Rural Bank specialises in helping older Australians in selected areas. restructures, land restructures agribusiness succeed, but also offers and productivity programs across services for everyday Australians who Victoria. As a specialist rural lender, want good value banking. Rural Finance helps to build vibrant businesses and drive the growth of Victorian agriculture for a sustainable and productive R A N D S G B regional and rural Victoria. I N A T R E P O P R O D U C T I S S U E R B R A S N D D N A S R B R E H T O D N A J S O E I I N R T A I V D E I N S T B U U R S E , S 2013/14 ANNUAL REVIEW 5 Financial Performance Group performance highlights. Bendigo and Adelaide Bank achieved an after tax statutory profit of $372.3 million for the year ended 30 June 2014, a 5.7 per cent increase on the prior corresponding period. The statutory earnings per ordinary share were 87.7 cents (FY2013: 84.9 cents), an increase of 3.3 per cent, and the statutory return on average ordinary equity was 8.59 per cent (FY2013: 8.52 per cent). The result shows continued improvement in a range of profitability and efficiency measures including net profit, cash earnings, net interest margin, dividend, earnings per share and cost to income ratio. Net interest margin, in particular, was strong through the year improving by five basis points over the period, demonstrating the Bank’s pricing discipline, providing rates that are fair both to our customers and our shareholders. We continue to enjoy the strong support of our customers and the communities we operate in. This has again been reflected in asset growth across a range of portfolios, particularly in the second half. The business operates with a conservative funding and balance sheet structure and we have a highly engaged staff. Together these factors place us in an ideal position to benefit from any improvement in market sentiment and demand for credit. $372.3 m After tax statutory profit 6 Profit and Earnings 242.6 Group 2010 291.0 performance 83.3 342.1 2011 336.2 highlights. 92.3 195.0 2012 323.0 84.2 352.3 2013 348.0 85.4 372.3 2014 382.3 91.5 0 50 100 150 200 250 300 350 400 Statutory Profit ($m) Cash Basis Earnings ($m) Cash Earnings Per Share (cents) ROE and ROTE (cash basis) Cost to Income 8.18% 58.1% 2010 16.37% 2010 9.07% 57.4% 2011 16.88% 2011 8.36% 59.1% 2012 14.05% 2012 8.58% 57.0% 2013 13.48% 2013 8.96% 55.4% 2014 13.34% 2014 0 5 10 15 20 50 52 54 56 58 60 Return on Equity Return on Tangible Equity Business performance before specific items was $315.7 This continuing investment, combined million (FY2013: $297.2 million), with industry leading customer Cash earnings were $382.3 million, an increase of 6.2 per cent. satisfaction and brand advocacy, has a 9.9 per cent increase on the prior The operating expenses before allowed the business to grow total new corresponding period. Cash earnings specific items increased by 4.8 per loan approvals at an annualised rate per share were 91.5 cents, an increase cent to $816.3 million (FY2013: of 16.0 per cent over the past twelve of 7.1 per cent. $779.0 million) and the cost to income months. However, this was offset by higher rates of loan repayments. Net interest income increased by ratio was 55.4 per cent compared to 8.8 per cent to $1,118.2 million 57.0 per cent at June 2013. The bad and doubtful debts expense (FY2013: $1,027.5 million). Our expenses reflect increased costs was $81.9 million (FY2013: $69.9 million), an increase of 17.2 per cent. We increased our net interest margin from additional investment to improve to 2.24 per cent for the year, an our footprint and capability, such as increase of five basis points on the the Basel II Advanced Accreditation prior year and our non-interest income project and the new premises based in Adelaide.