2010 Our Vision

happier banking Members’ Report 2010 Our vision To be the financial institution of choice to the people in, or aligned to, north eastern Victoria and southern New South Wales while providing Our values national convenience. Our mission Compassion We seek to understand and support the needs and goals To build and enhance of members, each other and the community. relationships with members Respect to enable them to make We are inclusive and will act fairly, honestly and with integrity with consideration for others. rewarding financial choices. Aspiration We empower and challenge each other to deliver operational excellence and will strive to improve everything we do. Commitment We work together as a team with dedication and loyalty to our organisation and take responsibility for our actions. Responsive We act with purpose, conviction and courage to deliver in a timely manner. Hume Building Society Ltd ABN 85 051 868 556 AFSL No. 244248 www.humebuild.com.au Contents Key Statistics 2 Chairman and CEO’s Report 3 2010 Highlights 5 We give back more to our members 7 Convenient banking 8 Creating a clean and green future 10 Investing in the future 12 Summarised Financial Report Statement of Comprehensive Income 16 Statement of Financial Position 17 Statement of Cash Flows 18 Independent Audit Report 19 KEY STATISTICS 93.1% Total Loans Customer Satisfaction $555m (Roy Morgan Research) 89.3% Members Employee Key Statistics Satisfaction 52,100 (Hay Group) $705m $5m Total Assets Operating Profit Before Tax Success is going beyond what is $635m $141m expected in everything we do, Total Deposits Net Loan Approvals by the values we share. TOTAL DEPOSITS ($m) TOTAL LOANS ($m) TOTAL ASSETS ($m) 700 700 700 600 600 600 500 500 500 400 400 400 300 300 300 200 200 200 100 100 100 0 0 0 2007 2008 2009 2010 2007 2008 2009 2010 2007 2008 2009 2010 2 Chairman and CEO’s Report Hume’s ability to achieve outstanding results this year is a testament to our strategic plan and dedication to provide Ulf Ericson Chairman exceptional service. Andrew Saxby CEO Review of Operations informed of Hume’s plans and in charges levied upon members. As a member owned, mutual ensuring they have the training Fees and commissions from organisation, Hume Building and equipment they need to members decreased by 6.3% to Society measures success by provide excellent service to $1.075 million while income from the increase in the number members. non-members (Insurance and Visa of members, the number of commissions, ATM fees and rent) relationships they have with Profitability and Growth increased by 12.9% to $1.839 Hume and by their satisfaction Hume’s financial performance million. This is a clear benefit of in the way Hume develops and throughout 2009/10 was also banking with a member-owned maintains those relationships. Other pleasing; with a number of organisation that responds to measures of success include staff factors contributing to a much members’ feedback. engagement or satisfaction as improved result. After tax profit well as a number of financial and of $3.585 million is comparable Operating expenses increased by prudential measures. to the $3.567 million achieved 4.3% to $15.275 million ($14.646 in 2007/08 but is an increase of million 2008/2009) with staffing By all measures, 2009/10 was 85.8% from the $1.929 million in expenses, which make up 51.1% a great year for Hume Building 2008/09. of total expenses, increasing by Society. The number of members 8.4%. The number of full-time continued to increase and Total assets increased by 8.6% to equivalent staff increased by 4.8% exceeded 52,000 at year end. $705 million ($649 million at June to 104 at 30 June 2010; with The strength of their relationships 2009) as a result of continued most of the increase occurring in improved to 2 products per strong deposit growth which branches; including 3 staff in the member according to Roy Morgan allowed record net loan approvals. Thurgoona branch which opened Research’s Single Source data Net interest income (the difference in the last week of June. as a broader range of accounts between what Hume earns on and services were made available loans and investments and what Marketing was the only other to them. Member satisfaction, it pays on deposits) increased expense to increase by more than extracted from Roy Morgan to $17.404 million from $14.656 CPI; however that expense included Research’s database, remains million the year before (an significant rebranding costs as comfortably above other financial increase of 18.8%). Members the remaining branches were institutions operating in north benefit from much higher interest refurbished to Hume’s current, high eastern victoria and Southern New rates on term deposits and iSave standard. South Wales and, at 93.1%, is a accounts and these higher rates true recognition of Hume’s success. means net interest income is only The cost to assets ratio, Hume’s 3.6% higher than the $16.8 million preferred way of measuring Staff satisfaction, measured by earned in the year to June 2008; efficiency, improved from 2.36% in global management consulting despite assets being 19.3% higher 2009 to 2.26% in the year under firm, the Hay Group, also remains than 2 years ago. review – despite an increase in the well above benchmark levels. A number of branches and staff to rating of 89.3% confirms that staff Hume continues to focus on ways ensure Hume’s high service levels value the efforts Hume makes of generating non-interest income are maintained or improved. in keeping them involved in and without increasing fees and Improved profitability allowed HUME BUILDING SOCIETY Members’ Report 2010 3 Chairman and CEO’s Report continued the Capital Adequacy Ratio to in advance” are encouraged by Regulations remain at similar levels to last year Hume as they allow members to As predicted in last year’s Annual despite comparably good growth repay their loans faster or provide Report, regulatory change is almost in assets. The Capital Adequacy them with a buffer against higher certain following the financial crisis Ratio finished the year at 13.97% interest rates. that beset global markets over (down from 14.12% at June the past 24 months. Changes to 2009) however, when compared Compared to a national Capital Adequacy and Liquidity to the international standard of benchmark for loan arrears of requirements are likely to be 8%, Hume continues to exceed 1.44%, despite a slight increase announced by APRA this financial prudential requirements by a in loans in arrears to 0.82% year. comfortable margin. of balances (0.72% at June 2009) Hume’s loan portfolio is The impact of the new regulations Local Economy performing well. Actual bad will be assessed once they are As economic growth recovered and doubtful debts written off released and, although there is from the global slow-down during the year were a negligible recognition that smaller, member in 2009, the Reserve Bank of $28,057. owned, mutual organisations like Australia increased the cash rate Hume did not contribute to the 6 times during 2009/10 to reduce Convenience and Price global financial crisis, they will be the stimulatory effect of low Over the past three years, Hume adversely impacted as responses interest rates. Despite the average has opened new branches in are developed and implemented to of the major banks’ standard Wangaratta, Rutherglen and, more the new rules and regulations. variable loan rates now being near recently, in Thurgoona. Hume’s the longer term average of around internet banking solution, iBank, is Members should be confident 7.50%, the Reserve Bank has regularly upgraded and a mobile that Hume will not only adhere indicated that further increases version, mBank was launched in to the letter of the law, it will may be necessary to keep August 2010. The number of ATMs continue to comply with the spirit inflationary pressures at bay. continues to increase, however of the regulations and will therefore Hume recognises that many continue to exceed prudential North east Victoria and southern people prefer dealing face to face requirements. New South Wales will not directly so branch expansion will continue. benefit from continuing investment Thanks in mining activities contributing to The level of Hume’s fees and The results achieved by Hume are those inflationary pressures so the charges is set to only recover due to the efforts of many, many higher interest rates predicted by costs incurred. When combined people. Directors and Senior the Reserve Bank will tend to slow with increasing convenience from Managers have developed a strategy local growth. more branches and ATMs and that is proving not only to be resilient improved internet banking options, but very successful. Management’s Hume’s standard variable it is no surprise that the number efforts in implementing the Strategy and basic variable loan rates of Hume members increased are carefully monitored and refined continue to lag those of its major by 1,489 during the year. At by the Directors via numerous Board competitors and contributed to an annualised growth rate of and Committee meetings. record net lending during the 2.9%, the number of members is It has been a challenging year and year under review. Net Loan increasing at a faster rate than the we thank them for their continued Approvals were $140.776 million, local population. contributions. 2.5% higher than the previous highest in 2005/06 and 6.6% Other improvements requested We would also like to specially higher than 2008/09.

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