Annual Report 2019–20 Front Cover: Top to bottom: Teacher and student – Growing Greater Together Campaign, Baby holding mother’s hand – Growing Greater Together Campaign. This spread: Builders on construction site – Growing Greater Together Campaign Chairman and CEO’s Report 4

Our Community 8

Greater Charitable Foundation 14

Financial Report 30 June 2020 20 Annual Report 2019–20

Chairman and CEO’s Report

There is no doubt that 2020 is and continues to be a year like no other. While the impacts of COVID-19 have challenged us as an organisation, our solid foundations of financial strength and prudential fiscal management have allowed us to deliver positive results for the 2020 Financial Year.

Much of the financial year’s business operations and of customer-facing features are expected to be rolled achievements have been shaped by the ongoing work out in the coming financial year. Apple and Android Pay, to deliver on our vision to be the ‘customer empowered as well as a new website will be significant steps in our bank’. While the ability to service the needs of our transformation journey and will provide an insight to our current, loyal customer base remains critical, it is future digital presentation. equally imperative that in our 75th year of operation we Significant work is continuing on our transformation continue to position our people, processes and system program with the aim of a full migration to the new capabilities to ensure we remain competitive in terms of system forecast to take place from early 2022. product and service delivery and become the preferred bank in our chosen markets. There is little doubt that this has been the most significant project the Bank has undertaken for some Our business transformation process is central to this time; however, we remain focused on the challenge and significant work and investment was undertaken of striking a balance between shifting product and during the year. As project milestones continue to be service offerings to meet the needs of future customers, met and system migration is ultimately completed, while not unnecessarily disrupting existing customers Greater Bank will be well positioned to respond to who are satisfied with what we already offer. a competitive environment where the increasingly complex needs of our regulators and customers are While the digital age will feature strong self-service not only met but also exceeded. capabilities, we are committed to remaining true to who we are and still firmly believe in building personal Our 2020 Annual Report provides an overview of the relationships with our customers. Central to this is our operations and achievements over the past reporting network of branches serving customers across NSW year and how we have performed against our strategy and South-East Queensland. of being a customer-owned and focused financial services provider. Sustainably grow our customer base Strengthen business capabilities Greater Bank today services more than 273,000 customers across a broad geographic base within For 75 years, Greater Bank has been a solidly performing NSW and South-East Queensland. financial institution that has operated to provide banking solutions that meet the growing needs of its Our digital and mobile banking, which has been driven customers and communities. While this underlying by customer demand as well as our growth aspirations, philosophy has and continues to serve us well, we have has allowed us to broaden our reach. Our mobile an ongoing focus on establishing new foundations that lending channels allow us to service customers further will ensure we not only remain relevant but also have the north into Queensland’s Sunshine Coast and south capacity to prosper in the future. to the ACT, while our digital banking platforms allow customers to access their accounts and interact with In the 2020 Financial Year, we continued our investment us anywhere, anytime. in the development and delivery of a core business system that will allow us to continue to provide quality The onset of the COVID-19 global pandemic in March and affordable products and services that keep pace 2020 resulted in a re-evaluation of our growth targets with expectations of our current and emerging markets, as we redirected focus and investment to support as well as access to service delivery channels of choice our existing customers, in particular those who faced where they need it with the view of receiving a solution financial hardship. in a timely manner. More than 1600 customers received financial assistance While much of the Digital Transformation work that through a range of initiatives. These included: has been undertaken to date has centred on the back-end capabilities and building capacity, a series

4 Chairman and CEO’s Report

a repayment holiday on current home, business Greater Bank has long built a reputation of consistently and personal loans; providing customers with comfort and security in knowing we are doing the right thing by them. This a reduction of up to 1.00%p.a. for 12 months on was reinforced in May when Greater Bank was named current variable rate business loans; and Australia’s Most Trustworthy Bank for the quarter. The providing business customers with greater flexibility findings were delivered by research platform Glow, to restructure existing lending facilities. which surveyed 1,250 Australians. In addition, credit card customers were offered We know that our customers are, and will continue a six-month pause on repayments and interest. to be, our greatest advocates. Providing outstanding This initiative was recognised by Australia’s leading products and services is not only critical to attracting consumer advocacy group, Choice, awarding Greater new customers, but also to ensure we are meeting, and Bank a ‘Shiny Award’. From almost 700 nominations, exceeding the expectations of current customers with Choice named Greater Bank as one of six businesses the aim of driving the highest levels of satisfaction, and that went above and beyond during the height in turn, customer retention. of the COVID-19 crisis to support their customers Our customer growth strategy resulted in a net growth and communities. of more than 4,000 for the year ending 30 June 2020. Given the continued uncertainty in the community surrounding the pandemic from both a health and Improve organisational efficiency economic perspective, customers experiencing Despite the impacts of COVID-19 in the final quarter, hardship can be assured that we will continue to Greater Bank has posted strong financial results for the support them through this crisis. year ending 30 June 2020, which is again reflective of Our product portfolio was again recognised by the strength, management and operational efficiency consumers and industry experts during the financial of the business. year, with Greater Bank being awarded a number of The group profit result of $23.11 million is below the industry accolades. previous year’s results primarily due to the significant Greater Bank was named the 2020 Customer-Owned investment we again made in Digital Transformation Institution as part of Money magazine’s 16th annual at around $20 million to deliver capabilities to meet Consumer Finance Awards. It was the third consecutive current and future customer needs. year that Greater Bank has been recognised by Money Interest rates are now at an all-time low with the Reserve magazine after receiving Home Lender of the Year in Bank of Australia announcing four reductions in the 2018 and 2019. In determining the award, Greater Bank official cash rate, bringing it down to a record low achieved the highest overall score among customer- of 0.25% by the year’s end. Greater Bank passed owned institutions competing across six individual on to customers 0.74% in interest rate reductions categories, including Home Lender, Personal Lender, during this period. Credit Card Issuer, Money Minder, Investment Lender and Business Banking. While changes in the official cash rate remain an important driver for our interest rates, other factors such The quality of Greater Bank’s product portfolio was as costs associated with funding and servicing loans, also reinforced by Rate City, awarding the Bank and also ensuring we continue to meet regulatory a Gold Award for four products – Great Rate Home responsibilities, must also be considered. It’s also Loan, Investor Ultimate Home Loan, Best Kids Savings important that we consider the conflicting interests Account and New Car Loan. In determining these of both borrowing and depositing customers before awards, Rate City analysed and compared more than making any decision on rate changes. 4,000 products from a variety of lenders and providers. Despite these challenges that we face when This industry recognition is testament to our mission of considering interest rate changes, one distinct delivering quality products that can be tailored to suit competitive advantage we have as a customer- individual customer needs to help them achieve their owned bank is our mutuality. Our profits are not paid financial goals. as dividends to shareholders but are reinvested into our Our commitment and dedication to serving the needs business to provide better value products and services, of customers was also recognised at the 2020 DBM develop our technological platforms to ensure we Australian Financial Awards. Greater Bank received the continue to service our customers well into the future Best Customer Service Award after being rated ‘best in and to foster and support the communities in which class’ by consumers. It is the second consecutive year we operate. Greater Bank has been recognised at these awards Our long-term interests are firmly aligned with the needs after taking out Most Recommended Customer-owned of our customers. It’s how we always have and always Bank in 2019. will continue to operate. The annual event recognises the best of the Australian Our other key reporting metrics for the year ending financial sector by collecting feedback from more than 30 June 2020, include: 80,000 consumers and business owners, based on their experiences with their financial institutions. Opposite page: Wayne Russell, Chairman; Scott Morgan, CEO. 5 Annual Report 2019–20

Total assets of $7.5 billion, up from $7.2 billion the In addition, our head office employees were required previous year. to work from home during the pandemic, and many continue to do so, with minimal impact on operations. Net loan approvals were just under $1.0 billion. We continued to engage with all parts of the head Total deposit growth of 5.0%. office operation to manage a staged ‘Return to Office’ Capital Adequacy of 17.7% remains well above our plan that meets strict compliance guidelines. prudential requirements and that of many other Through the Board committees, Chief Risk Officer and authorised deposit-taking institutions in Australia. external support, we ensure oversight of the risk profile This, along with our strong asset position, is a clear and risk management, as well as independent reporting indicator of our financial strength and security. lines to appropriately escalate issues.

Proactively manage regulatory change and risk Commit to Corporate Social Responsibility (CSR) The Board and Executive Committee are focused on Greater Bank is committed to contributing to the achieving and demonstrating the highest standards sustainable development of all our stakeholders by of corporate governance, as well as effective delivering economic, social and environmental benefits. management of risk and regulation. During the year we took strides in providing a more While our focus and risk appetite are set by the Board, holistic, coordinated approach to Corporate Social the management of our risk framework is undertaken Responsibility across the business, which will remain a at all levels of the business and is reinforced through focus into Financial Year 2021. a culture of placing the customers’ needs at the heart As a customer-owned bank that does not have of every decision. shareholders, our long-term interests are firmly aligned We continue to invest in governance and compliance with our customers’ needs. Our customers are who we to ensure that our interests are aligned with those work for and to whom we are answerable. It’s how we of our customers and the long-term, sound financial always have and will continue to operate. principal performance of the business is maintained. Our Community Engagement Strategy was established We achieved this through the ongoing values training in 2016 with the objective of supporting the communities to all employees, which aims to positively reinforce that support us. We do this through the ongoing risk-based decision-making and oversights across sponsorship and community engagement program that all areas of our operations. supports a range of groups, programs and events across Our three lines of defence model and Risk Management sport, education, arts and culture, and health. Framework is incorporated explicitly into all policies. The Our greatest contribution to the community has been framework allows us to identify, analyse and manage the establishment of the Greater Charitable Foundation. the current and emerging risks within the business. Since 2011, the Greater Bank Board has invested Due to the COVID-19 pandemic, the business was around $1 million annually to allow the Foundation to faced with its greatest operational risk when having provide grants to many charities that are making a real to manage the health and wellbeing of all employees difference to the lives of families and the communities in as social isolation and community lockdowns became which they operate. more prevalent across our areas of operations. However, We are exceptionally proud of the work we are doing in thorough planning coupled with the ability to adapt this space, in particular this year as we worked closely quickly enabled us to maintain a ‘business as usual’ with our community and foundation partners to pivot approach to servicing our customers during these times. their operations and delivery of programs to overcome As over-the-counter transactions rapidly declined, the challenges presented by COVID-19. we reduced the operating hours of the branch We encourage you to take the time to read about this network and redeployed employees to assist with in the ‘Our Community’ section of this report. customer contact enquiries, which increased by 50% during the same period. Greater Bank Board changes An additional level of complexity centred on the In June 2020, we announced the appointment of Customer Contact Centre where the health and three new Non-Executive Directors, Kylie Macfarlane, wellbeing of employees had to be carefully managed. Catherine Robson and Donna-Maree Vinci to the Board. Our cloud-based communications platform allows This followed the departure of Non-Executive Director our employees to work remotely to a point where Louise Eyres. we operated our Customer Contact Centre out of 41 Ms Eyres was appointed to the Board in July 2019 different locations. but resigned from the position in March 2020 after This technology and plan to enable our Customer confirming her appointment to a Group Executive role Contact Centre to operate from remote locations, and with a global investment advisor. the ability to redeploy other retail employees to scale The three new appointees are highly credentialed up the centre’s capacity was critical to our business directors who collectively bring a wealth of knowledge continuity during the pandemic.

6 Chairman and CEO’s Report and experience in the banking and financial service industry. Additionally, they, along with Jayne Drinkwater, ensure we have a gender balance on our Board. Queensland-based Ms Macfarlane brings more than 25 years’ experience in executive and board positions across the wealth management, banking and not- for-profit sectors highlighted by strong strategic, commercial and people leadership. Until recently she was the General Manager, Corporate Responsibility and Corporate Affairs Strategy at Commonwealth Bank, a role she held for over five years, prior to which she spent 13 years at Colonial First State. Melbourne-based Ms Robson is the founder of Affinity Private Advisers and has more than 20 years’ experience as a financial planner, including with Macquarie Bank and NAB. She is currently a Non-Executive Director of ASX-listed EQT Holdings Limited and has served on a number of Boards and committees over the past seven years, including Equity Trustees Superannuation Ltd, Scale Investors, Cancer Council Victoria and the Walter & Eliza Hall Institute of Medical Research. Ms Vinci brings extensive corporate and commercial experience in senior executive roles across global business operations, risk management, digital, data and technology. She is currently the Chief Operating Officer at GenVis Pty Limited prior to which she held senior executive roles at Bank of Queensland (BOQ), Insurance Australia Group (IAG) and Citigroup. She also currently serves as a Non-Executive Director on the boards of a number of organisations in the education, financial services and compliance and risk management sectors. We look forward to their contribution in what is a very important period for the business, as we navigate the ongoing COVID-19 crisis, and also continue with the digital transformation of the business that will provide a critical strategic platform for the future of our organisation.

Looking ahead Our strategic plan, coupled with our underlying philosophy to provide our customers and the communities we serve with banking solutions that genuinely meet their needs, has driven much change in the business over the last three years and will continue to guide us as we move into 2021 and beyond. of all our people – the Board, Executive team and all The COVID-19 pandemic has reinforced the themes that employees – many of whom have endured significant are driving us down the path of digitisation and self- disruption to their personal and professional lives this year. service capabilities, as well as the investment we are We thank you for the role you play every day in making making to deliver the program. We will continue with Greater Bank even greater and look forward to our optimistic and considered approach to ensure the continued success over the coming 12 months long-term success of the Bank, while balancing this with and beyond. supporting the current needs of our diverse and loyal customer base. In doing so, the next 12 months will see a strong focus on the retention and support for existing customers, as well as the maintenance of our portfolio. Wayne Russell Scott Morgan The successes of Greater Bank would not be possible Chairman CEO without the dedication, hard work and commitment Top to bottom: Greater Bank Executive Committee L to R: Craig Newham, Emma Brokate, Scott Morgan, Jeff McArthur, Bruce White and Bob Moffat; Greater Bank Board Members L to R: Jayne Drinkwater, Wayne Russell, Roger Cracknell, Russell Ware, 7 Donna-Maree Vinci, Kylie Macfarlane, Malcolm McDonald, Catherine Robson. Annual Report 2019–20

Our Community

Supporting the people who support us is firmly entrenched in our culture and offers far more than simply providing banking solutions that genuinely help our customers. Greater Bank has a long history of supporting the communities in which we operate and today this remains an important pillar of our overall business strategy.

We know this support has a positive impact on our Mid-North coast. Collectively, the clinics reached communities, but it also has a positive impact on the brand 1,400 junior footballers across these regions. perception of Greater Bank. Approximately two-thirds of The Newcastle Jets annual A-League and non-customers say knowing that Greater Bank supports W-League Community Rounds were again the community makes them “more likely” to feel positively supported by Greater Bank and gave young about us, and more than one-third say they are “more likely” football fans the chance to attend the matches to consider becoming a customer. In addition, customers for free. Both events offered a range of activities who are aware that Greater Bank supports at least one for all spectators, while the A-League Community sponsorship or charitable activity are far more likely to have Round also supported Greater Charitable positive perceptions of us than those who are unaware. Foundation partner, Ronald McDonald House Our Community Engagement Strategy was established Charities Northern NSW. in 2016 with the objective of formalising our community As an extension of our Major Community Partner support. We do this through the ongoing sponsorship and sponsorship with the Newcastle Jets, Greater community engagement programs that support a range Bank continued its major sponsorship of the Jets’ of groups, activities and events across sport, education, arts W-League team for the 2019–20 season. These and culture, health and the environment. talented athletes have shown that they are not only In addition, Greater Charitable Foundation continues great footballers but also outstanding role models to operate to improve the life outcomes of families and and ambassadors away from the playing field. communities throughout NSW and South-East Queensland. RunNSW The Foundation has committed more than $9.5 million in funding to support 31 charitable organisations over the past We understand the importance of an active and nine years. This has provided a direct benefit to more than healthy lifestyle, which is why we continue our 32,000 people. support of RunNSW. During the 2019 calendar year, events supported by Greater Community Engagement Framework Bank attracted more than 8,300 participants and included Here is a snapshot of our sponsorships and community the iconic Fernleigh15 in Newcastle, as well as other fun runs engagement programs we have undertaken and on the Central Coast, Armidale and Casino. supported in the 2020 Financial Year. Although COVID-19 restrictions saw the postponement of many of the 2020 Greater Bank Fun Run Series events, we Sport continued to work with RunNSW to present a new virtual running event designed to encourage everyone to get Newcastle Jets active during times of social isolation. As the Major Community Partner of the Newcastle Jets, The Greater Bank Virtual Fun Run gave participants of Greater Bank continues to work closely with the A-League all ages, abilities and fitness levels the opportunity to test Club to deliver a wide range of fan-based programs, themselves against others in the community and across the community clinics and school initiatives. state by covering 5km in their neighbourhood. For the fifth consecutive year, our partnership delivered the Greater Bank also helped participants prepare for the event Jets:CONNECT program, which provides a platform for Jets’ with the Bank Your Kilometres training program, tailored for players, coaching staff and Greater Bank employees to beginner and intermediate runners, and designed by the participate in a series of community events and activities. elite runners and coaches from RunNSW. The pre-season Jets:TOUR of regional NSW saw trial matches as well as community visits, conducted in Dubbo and Orange. In addition, Jets:PLAY coaching clinics hosted by the A-League and W-League squads were held across the Newcastle Jets visit Ronald McDonald House – Top row L–R: Hunter region, as well as Coffs Harbour and Lismore on the Lachlan Jackson, Dimi Petratos, Jason Hoffman, Bobby Burns, RMHC Northern NSW CEO – Ross Bingham. 8 Our Community

Netball Programs With much of the programs’ activities postponed in the first For more than 20 years, Greater Bank has proudly half of 2020, we look forward to continuing our sponsorship supported grassroots netball. In 2020, our support extended of the Academies and seeing the girls back on court to 13 associations across regional NSW, including Ballina, when possible. Bathurst, Charlestown, Grafton, Hastings Valley, Kurri Kurri, Our commitment to supporting regional netball pathways Manning Valley, Nelson Bay, Newcastle, Orange, Penrith, also continued through our partnership with National Singleton and Westlakes. League netballer Sam Poolman, to deliver the elite ASPIRE While COVID-19 saw the start of the netball season Development Program at 17 Netball Associations across postponed, players were back on court from July to take NSW inspiring the next generation of stars to reach the top part in a shortened 2020 season. in their sport. Our support of regional netball is also assisting some Designed to give young netballers aged 11 to 15 years the of the state’s brightest young netball stars on their opportunity to learn valuable netball skills, more than 350 representative journey through the sponsorship of the netballers took part in the ASPIRE Development Program Hunter, Central Coast and Western Region Academies during October and November 2019. of Sport netball programs. The three-week program focused on skill development, All three Academies give young athletes the opportunity attack and defending and was a wonderful opportunity to receive training of a national standard without the need for local players to receive coaching from Sam Poolman. to move or travel to a metropolitan centre. The netball The ASPIRE Development Program is in addition to development programs play a vital role in the Netball NSW Poolman’s ASPIRE Netball Program, launched in Athlete Pathway by identifying, monitoring and developing conjunction with the Hunter Academy of Sport in 2017. the skills of young players. Greater Bank partnered with Poolman to deliver the elite junior program.

9 Annual Report 2019–20

Local sporting sponsorships Education Greater Bank also supported several other sporting Greater Bank’s Financial Literacy Program clubs and organisations during the 2020 Financial Year. Since 2018, Greater Bank has partnered with the University They included: of Newcastle to combine our strengths in education and Bathurst Golf Club banking to deliver a program that is dedicated to building financial literacy across the region. Casino Beef Week The free Finance Academy program was integrated into Casino Rugby Club various subjects across the Year 9 and 10 curriculum and Cessnock Goannas RLFC covered topics such as managing money, reducing debt Grafton District Pro-Am and implementing simple saving strategies. Gunnedah Little Athletics During the past financial year, the Greater Bank Finance Lake Illawarra Cricket Club Academy’s Fundamentals of Financial Literacy Program, a short course focused on informed financial decision- Lake Mac Vets Golf Day making, reached more than 900 students from 13 high Merewether Carlton Rugby Club schools across the Hunter and Central Coast. Pacific Pines Football Club Greater Bank employees delivered practical program Robina Raptors RLFC content while University of Newcastle Student Ambassadors Singleton United RLFC challenged students to think about their relationship with money and look at the theory and broader strategies South Dubbo Wanderers Football Club behind money management. Souths JRLFC Lunch As a result of COVID-19, the financial literacy program Toukley Athletics Club was transformed into an online resource and was made Wallsend Athletics Centre available to download for free. It included theoretical and Waratah-Mayfield Cricket Club practical content, as well as questions and activities that help solidify students’ learning at home. Waratah Rugby Club Warringah Rats Rugby Club Wests (Newcastle) Hockey

10 Our Community

Pending NSW Government Guidelines regarding COVID-19, the program will be delivered to 25 more high schools across the Hunter, Central Coast, Central West and Northern NSW regions in the coming year via digital platforms. BackTrack Since 2014, Greater Bank has partnered with BackTrack, a not-for-profit community organisation that aids and assists young people in the New England region who are struggling to reconnect with education and training. Beyond the more than $300,000 in funding that we have provided, a number of our New England-based staff have volunteered with BackTrack to assist some of the young boys involved in the AgLads program to complete tax returns and other aspects that underpin financial independence. This year the program also took participants to fire-affected areas of Regional NSW to work on community recovery projects. We are proud to work with BackTrack on a multi-faceted program that prepares disadvantaged youths for employment, helps them find job prospects and ultimately lead happier and more productive lives.

Top to bottom: Clontarf Academy Financial Literacy Program students undertaking the Finance Academy online via Zoom; Enjoying the fruits of the labour at Living Smart Festival; Façon Summer Runway.

11 Annual Report 2019–20

Arts and Culture Maitland Riverlights Festival For the third consecutive year, Greater Bank was the major sponsor of the 2019 Maitland Riverlights Festival. This diverse and colourful celebration of culture attracted more than 20,000 people and featured interactive stalls, dance, food, music and arts with more than 25 different cultural groups coming together to celebrate the region’s rich multicultural history. Our support of this event is more than just a financial contribution with a team of Greater Bank staff lending their support on the day. A group of our employees also assisted with the lantern making workshops prior to the event where they handed out prizes for the most impressive creations on display. Wallsend Winter Fair Greater Bank was proud to once again be the major sponsor of the iconic Wallsend Winter Fair; Newcastle’s largest, free outdoor community event. Attracting more than 30,000 people, the festival featured 150 vibrant market stalls and local businesses, including food vendors, family amusement rides, show bags, demonstrations and street performers. There was also an appearance by the Newcastle Jets A-League team, which was made possible through Greater Bank’s Major Community Partnership with the club. Italian Film Festival A prominent fixture on the region’s arts and culture calendar, the Newcastle Italian Film Festival celebrated 10 years of European film and culture in 2019. Presented by Hand in Hand Art House, and supported by Greater Bank, this year’s festival was held at its new home – Event Cinemas Kotara – and featured a range of contemporary Italian films of varied genres. Thanks to our ongoing support, more than $90,000 has been raised for charity partner Motor Neurone Disease Association NSW, over the past eight years. The Lakes Festival As part of our three-year agreement with Central Coast Council, Greater Bank was once again the Major Partner of The Lakes Festival in 2019. Held in November, the 10-day event attracted more than 40,000 visitors who enjoyed 20 sporting, family, cultural, educational and live music events across a range of locations from Budgewoi to Ettalong. Employees from our Central Coast branches volunteered their time to work across a range of events during the festival. Plus, one lucky person won $1,000 for showing us what makes the Coast greater during the festival as part of our #CoastMadeGreater competition.

Top to bottom: Winner of our “Freaky Fernleigh” competition as part of the Fernleigh15 Fun Run; Greater Bank junior mascots led by Jets player Cassidy Davis at a Jets Community Match.

12 Our Community

Façon Summer Runway Supporting the Hunter economy as well as local businesses within the fashion and design industry was the focus of Greater Bank’s platinum partnership of Façon Summer Runway. The choreographed runway event, held in the lead-up to Christmas against the stunning backdrop of Newcastle Ocean Baths, attracted fashionistas from across the region and beyond, showcasing the work of local designers, boutiques and fashion houses. It also provided an invaluable opportunity for both established and aspiring Hunter-based models, make-up artists, stylists and photographers to display their talents in front of many influential fashion industry leaders. Ambassador Natalie Roser, a Newcastle-born and internationally recognised model, supported the event, which captured the attention of local and national media providing significant brand exposure for Greater Bank. Mingara Carols Greater Bank is a long-time major sponsor of the Mingara Christmas Under the Stars event, demonstrating our ongoing commitment and support of the Central Coast community. Staff from our Central Coast branches also lent their time to help sell candles as part of fundraising activities which, together with ticket sales, helped raise close to $16,500 for two local charity partners: The Salvation Army Oasis Youth Centre and Books in Homes. These funds will be used to continue to provide much-needed support and services to homeless and disadvantaged youth on the Central Coast.

Environment Living Smart Festival We understand that living smart fosters healthy, happy and prosperous communities, which is why we were proud to support the Living Smart Festival for the first time in 2019. Considered one of the largest environmentally focused community events in Australia, the program featured workshops, cooking demonstrations and eco-living displays designed to raise awareness of environmental issues while inspiring people to live more sustainably. Held at Lake Macquarie’s Speers Point Park, the festival celebrated its 10th anniversary with a special appearance from Gardening Australia host and Gold Logie nominee Costa Georgiadis. As part of the festival, we ran fun activities for children designed to teach them about the simple changes they can make to conserve energy and protect the environment, while learning how these behaviours can help their financial sustainability. We also encouraged our customers to opt out of receiving paper statements.

Top to bottom: Façon Summer Runway; Central Coast Academy of Sports Greater Bank Athlete of the Year 2019, Eden Matterson, with Head Coach of the QBE Swifts Academy, Lenore Blades.

13 Annual Report 2019–20

Greater Charitable Foundation

The centrepiece of our community pillar is the Greater Charitable Foundation.

From top: Cerebral Palsy Alliance’s Early Response Program uses early intervention methods to diagnose infants at risk of Cerebral Palsy and give them and their family the support they need; Radiologist, Caitriona Quinn, Child Life Therapist, Pip Cordner, and Jorgee Stockdale with the Gold Coast University Hospital’s mock MRI machine that helps children become familiar with hospital procedures.

Since its establishment in 2011, the Greater Charitable Foundation has operated to improve the life outcomes of families and communities throughout NSW and South-East Queensland. We achieve this by supporting Australian-based charities undertaking practical, life-changing initiatives within Greater Bank’s areas of operations. Over the past nine years, we have committed more than $9.5 million in funding to support 31 charitable organisations. This has provided a direct benefit to more than 32,000 people. The 2020 funding round was postponed in mid-March due to the COVID-19 crisis. However, in June 2020 the Foundation committed more than $500,000 to assist its current charity partners to deal with the challenges of rolling out their programs under the constraints of the COVID-19 restrictions. Here is an overview of 13 charitable partners and the projects we supported over the last financial year.

Cancer Patients Foundation Look Good Feel Better Look Good Feel Better is a free, national community service program dedicated to teaching cancer patients how to manage the appearance-related side-effects caused by cancer treatment. Women, men and teens participate in practical workshop demonstrations covering skin care, make-up and head wear, leaving them empowered and ready to face their cancer diagnosis with confidence. In 2018 and 2019, Greater Charitable Foundation funded 25 Look Good Feel Better workshops in Newcastle, Dubbo, Grafton and Bomaderry. 14 Greater Charitable Foundation

Cerebral Palsy Alliance (CPA) Early Response Therapy Program Although one in every 600 Australian babies is diagnosed with Cerebral Palsy (CP), half of them don’t receive intervention before their first birthday and very few receive cerebral-palsy-specific intervention until after their second birthday. CPA’s Early Response Therapy Program provides services for babies in NSW at risk of developing cerebral palsy at a pivotal point in their development, which can reduce the severity and impact of disability for each child. The program focuses on ensuring early intervention and care is provided to babies diagnosed with cerebral palsy or diagnosed at risk of cerebral palsy in the critical first year of the baby’s life. Since August 2019, funding from the Greater Charitable Foundation has enabled 61 babies and their families to receive support, including 30 hours of critical specialised therapy from highly skilled occupational therapists, speech pathologists and physiotherapists. The COVID-19 pandemic created an immediate disruption to the delivery of the program leaving many at-risk babies unable to receive treatment and support. As a result of this, a funding commitment of almost $70,000 from Greater Charitable Foundation has been gifted to CPA so they can now provide early response therapy to clients through the telepractice service.

Children’s Hospital Foundation QLD Child Life Therapy Program The Child Life Therapy (CLT) Program at Gold Coast University Hospital is designed to help counteract a child’s fears, misconceptions and anxiety associated with hospital experiences. This is achieved through distraction therapy, as well as medical play activities that support the child’s developmental, social and emotional wellbeing. Funding from Greater Charitable Foundation helps the program deliver improved health and social outcomes for children following a period of hospitalisation. The Child Life Therapists have supported more than 1,000 children since the funding began in 2018 and are continuing to provide this service and ongoing support to children and their families throughout the COVID-19 crisis.

Clontarf Foundation Clontarf Academies The Clontarf Foundation program targets at-risk, Aboriginal and Torres Strait Islander male students who are not attending or have very low school attendance. Funding from Greater Charitable Foundation helps to address issues relating to long-term disadvantage at the grassroots level, and in doing so, brings about sustainable change for close to 1,250 students across 17 Academies based throughout Greater Bank’s operational footprint in NSW.

Top to bottom: The team from the Tamworth Branch at the Ronald McDonald House Tamworth NSW after cooking the families and volunteers at the House a meal; Muswellbrook Branch Manager, Kirralee Andrews, with Jake, Mary and Jacinta Ballard who were picking up their Christmas gift from the Cerebral Palsy Alliance’s Meredith Hudson at the Muswellbrook Branch; 15 Learning is fun with The Australian Literacy and Numeracy Foundation. Annual Report 2019–20

Hunter Medical Research Institute (HMRI) COVID-19 restrictions resulted in KidsXpress transitioning their services online to enable staff to continue their support of Phase 3 clinical trial of ‘Modafinil therapy’ in stroke survivors educators during these unprecedented times. One in five Australians will experience a stroke in their lifetime, and of those, half will experience severe and McGrath Foundation debilitating fatigue. McGrath Breast Cancer Nurse – Hunter Region Greater Charitable Foundation continues to support the Each year, more than 700 people in the Hunter New work of the HMRI Stroke Research Team as they undertake a England and Central Coast region will be diagnosed with Phase 3 clinical trial of ‘Modafinil therapy’ in stroke survivors breast cancer. To meet the growing demand in breast care to assist in alleviating post-stroke fatigue and improving support services, Greater Charitable Foundation funded quality of life. the McGrath Foundation to employ a second Breast The clinical trials were significantly impacted in April Cancer Nurse, Helen Moore, based at the Calvary Mater 2020 due to the COVID-19 pandemic. The Foundation’s Hospital in Newcastle. additional funding commitment of $180,000 will enable the

team to migrate the program online and conduct the trial McGrath Breast Cancer Nurses help to improve the via telehealth services. While this change occurred due to outcomes for people diagnosed with breast cancer by social distancing protocol, the ease of connectivity with trial acting as patient advocates, coordinating care, and patients will see the services continued to be rolled out and ensuring their physical, psychological and emotional needs used post-pandemic. are met. From 2017 through to 2019, Helen supported 611 patients KidsXpress and families and provided 3,343 episodes of care, which Trauma-informed professional development workshops continue to make a significant difference to the breast cancer health experiences for existing patients. Each year in Australia, one in five children are exposed to three or more Adverse Childhood Experiences and there is strong evidence that shows that the resulting trauma has a National Centre for Childhood Grief detrimental effect on a child’s ‘learning brain’. Grief Resource Packs and Children’s Grief Workshop KidsXpress provides educators and child-related It is estimated that one in 20 children will experience professionals with tools to create an underlying culture of the death of a parent, or other close relative who cares respect, support and an environment where both children for them, during their childhood. While there is growing and adults thrive. research and support for various physical and mental health issues that cause death, there is little support for the Greater Charitable Foundation’s funding is assisting children impacted by death. KidsXpress to deliver six trauma-informed professional development workshops for service providers and The National Centre for Childhood Grief is the only educators in the Hunter Region. Since the Foundation’s organisation of its kind in Australia providing face-to-face funding began in August 2019, KidsXpress have delivered counselling, group support and programs along with one trauma-informed workshop to more than 70 attendees. training and education for the professionals who work with bereaved children.

From left: HMRI Stroke Researcher Dr Andrew Bivard, and Greater Charitable Foundation CEO Anne Long; Educators attending a KidsXpress trauma-informed professional development workshop. 16 Greater Charitable Foundation

Greater Charitable Foundation’s funding supported an The Australian Literacy & Numeracy Foundation intensive workshop on Children’s Grief in 2019 for 24 school Early Language and Literacy (EL&L) Taree Project counsellors in the Hunter Region and the distribution of ‘Grief Resource Packs’ to more than 200 rural and regional With a significant Indigenous population that is highly schools throughout NSW over the funding period. disadvantaged, Taree, located on the NSW Mid North Coast, falls into the state’s top 5% most disadvantaged OzHarvest postcodes. The Early Language and Literacy Taree Project is an early years education program that incorporates Nutritional Education Sustenance Training (NEST) Program speech pathology and language principles to optimise the OzHarvest’s Nutritional Education Sustenance Training language and literacy outcomes of indigenous children (NEST) program provides vulnerable and disadvantaged within this community. community members with essential information and With Greater Charitable Foundation funding, the EL&L learnings regarding nutrition and life skills. Participants program is providing community members with the skills are taught about healthy eating choices, low-cost meal required to meet the language and literacy challenges planning, food shopping, healthy cooking and ways to including qualifications, skills-building workshops, resource minimise waste.

Greater Charitable Foundation has supported the program provision and ongoing mentoring for participants and across the Hunter and Gold Coast regions since 2016. In that participating sites such as preschools. time, our funding has helped OzHarvest deliver 57 programs This financial year, the program has reached almost 300 consisting of 231 workshops to 31 community agencies children, helped six educators gain qualifications and reaching 378 participants across both locations. distributed more than 500 books and literacy packs. COVID-19 restrictions forced OzHarvest to temporarily suspend the rollout of the NEST program and to develop University of Newcastle online sessions for clients. Healthy Youngsters Healthy Dads Program Ronald McDonald House Charities Northern NSW Studies undertaken by the University of Newcastle suggest that fathers’ weight profiles and parenting practices may Ronald McDonald Learning Program be more influential than mothers for a child’s obesity risk. Greater Charitable Foundation’s funding supports the Greater Charitable Foundation’s funding is supporting the Ronald McDonald Learning Program, which is delivered world’s first father-focused obesity prevention program at Ronald McDonald House at John Hunter Hospital in for preschool-aged children, providing fathers with the Newcastle. The program helps children who have suffered knowledge, parenting skills and motivation to improve their a serious illness to continue their schooling and provides health and become healthy role models for their children. them with individualised educational support tailored to Since 2019, there have been 114 families participate in the suit their specific needs. The pandemic led to educators Healthy Youngsters Healthy Dads program. However, due transferring their lessons to an online format. to COVID-19, the program facilitators and researchers were Since the Foundation began funding the program in forced to suspend the program, which will resume once August 2019, the number of students supported through the social distancing restrictions have eased. program has grown by more than 18% to 121 students.

From left: RMHC Learning Program Coordinator Dayle Cummings with a Learning Program student; Card Services Reconciliation /Assistant DR Officer Vim Hawtin volunteering at OzHarvest Newcastle’s NEST Program. Pictured with participants of the NEST Program. 17 Annual Report 2019–20

Youth Off The Streets It also meant that our support was more important than ever. Hunter Suspension Program Like our partners, the pandemic required us to reassess our The Hunter Suspension Program addresses the high rate Community Engagement Strategy to ensure our customers of school suspensions and expulsions in the Hunter New and the communities in which we operate remained England region. With Greater Charitable Foundation connected and supported throughout this crisis. funding, the program aims to assist up to 50 students over an 18-month period by providing tutoring and support for The solution was an online hub – Together Greater - that young people to access while they are suspended from features content developed in conjunction with our high school and working with them to transition back into partners to help the community to navigate through this the most appropriate educational setting. COVID-19 journey. It includes a range of tools, resources and activities that focus on four important lifestyle pillars - The program works closely with each student’s family, physical health, mental health, nutrition and education. school and local community to ensure they have holistic support surrounding them. During the early months of the Here is a snapshot of the Together Greater content. pandemic, in parallel with temporarily halting the program, A series of training videos presented by Newcastle the team experienced an increase in demand for intensive Jets player, Jason Hoffman, and ASPIRE Netball’s Sam support as a result of isolation and pivoted to provide Poolman that demonstrated a range of skills that young additional one-on-one assistance where required. athletes could practise at home. In order to support the team with this demand, Greater Our Financial Literacy Program was transformed into a Charitable Foundation committed an additional $27,000 to free online resource hosted on the hub to help students’ help provide staff and resources to assist students with their learning at home. return to school over the coming months. Professor Clare Collins, leading dietitian and HMRI researcher, provided advice and tips on how to bolster Greater Charitable Foundation Board your nutrition during times of lockdown and social The Greater Charitable Foundation Board met five times isolation. throughout the financial year and is served by four KidsXpress CEO & Founder Margo Ward spoke with RFS Directors: Wayne Russell, Anne Thurlow (Chair), Jayne Commissioner and now Head of Resilience NSW Shane Drinkwater and Ingrid Kaczor. Fitzsimmons about the importance of communication and connection when facing unprecedented Together Greater challenges. The immediate impact of COVID-19 on most of our To June 30, the Together Greater hub attracted 52,735 sponsorship, community engagement and Charitable unique pages views with an average time on page of more Foundation partners was significant. For some, social than four minutes, meaning the content resonated with distancing restrictions forced a rethink of program delivery, visitors to the site. In addition, more than half the total users while others pivoted their entire service model to address returned to the site at least once, meaning the episodic changing community needs. nature of the content roll-out was a success.

From left: Healthy Youngsters Healthy Dads’ Professor Philip Morgan from the University of Newcastle’s Priority Research Centre for Physical Activity and Nutrition and his ‘family’ team; Youth Off The Streets Hunter Valley Outreach Program Manager Kim Lenard accepting a delivery from Newcastle’s OzHarvest van driver.

18 Greater Charitable Foundation

Community Funding Program Recognised this year were IT Test Analyst, Neenu George and Helensvale Customer Service Supervisor, Krystelle Clark. At Greater Bank we understand that the best way to make communities stronger is by supporting the organisations that Both Neenu and Krystelle displayed outstanding passion for bring people together for the common good. community giving with Neenu raising $5000 for Youth Off The Streets by shaving her hair, while Krystelle volunteered Since September 2016, we have supported charitable tirelessly, encouraging her peers to join her, for OzHarvest and community groups across New England through Gold Coast and the Children’s Hospital Foundation. the #GreaterNewEngland Community Funding program. In December 2019, the program reached the $200,000 Both employees received $500, which they donated funding milestone that was distributed to 120 community back to their charity of choice, Youth Off The Streets and groups since its inception. Children’s Hospital Foundation, respectively. The funding program has now expanded into in the NSW In December, the 2019 GCF Employee Volunteer of the South Coast with the launch of the #GreaterIllawarra Year Awards winners, Vim Hawtin and Amy Dodd, received Program in June 2018. mentions at the 2019 NSW Volunteer of the Year Awards with Amy claiming a spot among the top four finalists. The program continued to provide $3000 monthly to support local community groups, while in March the “All of our partners rely heavily on the dedication of program offered a one-off funding round of $30,000 volunteers so we are lucky to have so many employees who to support bushfire-affected communities across the are willing to give up their time to help those who need it Illawarra and South Coast regions. Three local organisations most.” – Ms Anne Long, Greater Charitable Foundation CEO. that played a vital role in the bushfire relief and recovery From left: Insurance Business Development Officer for People Amy efforts – Blaze Aid, Lifeline South Coast and Wildlife Rescue Dodd at the 2019 NSW Centre for Volunteering Awards in Sydney South Coast Inc – were the beneficiaries of this support. where she was named as a top four finalist in the Corporate Volunteer of the Year award category; University of Newcastle’s Healthy In May 2020, a third program, #GreaterCentralCoast, was Youngsters Healthy Dads participants, Scott and his daughter Grace, launched on the NSW Central Coast. during the first round of workshops in Newcastle. Collectively, to 30 June 2020, the programs have now provided $341,000 to 219 local charities and community groups across the three regions.

Volunteering Volunteering remains a key platform for Greater Bank and the Greater Charitable Foundation. It is well supported by our employees, who display a strong commitment and passion for giving their time to the community. Over the last financial year, around 200 Greater Bank employees volunteered more than 700 hours to assist Greater Charitable Foundation’s partners, as well as Greater Bank-sponsored partners and events. Due to the implications of COVID-19, the Corporate Volunteering program was suspended in March 2020. In 2015, we established the Greater Charitable Foundation (GCF) Employee Volunteer of the Year Awards to recognise and acknowledge staff members who go above and beyond to ‘give back’ to their local community.

19 Annual Report 2019–20

20 Financial Report

Directors’ Report 22

Auditor’s Independence Declaration 26

Statements of Comprehensive Income 27

Balance Sheets 28

Statements of Changes In Equity 29

Statements of Cash Flows 30

Notes to and Forming Part of the 31 Financial Statements

Directors’ Declaration 69

Independent Auditor’s Report 70

21 Annual Report 2019–20 Directors’ Report

The Directors of Greater Bank Limited (Company) have much pleasure in presenting their report on the Company and the consolidated entity, Greater Bank Group (Greater Bank), consisting of the Company and the entities it controlled at the end of, and during the year ended 30 June 2020.

Directors The following persons held office as Directors for the whole of the financial year and up until the date of this report.

W M Russell, B.Comm, CA, GAICD, MIIA (Aust) Mr Russell joined the Board in April 2011. Mr Russell has extensive experience in providing auditing and assurance services, having worked as an audit and assurance partner at PricewaterhouseCoopers for 20 years. Mr Russell is currently a partner at accountancy firm Pitcher Partners. Mr Russell has been the Chair of the Board since his appointment on 29 November 2011. Special Responsibilities: Chair of the Board, Member of the Board Audit Committee, Member of the Board Risk Committee, Member of the Remuneration Committee, Chair of the Succession Planning Committee, Member of the Board Transformation Governance Committee and Director of the Greater Charitable Foundation Pty Ltd.

W R Ware, LL.M. (Hons), FAICD Mr Ware joined the Board in February 2009. Mr Ware practised law for 14 years until 1987 when he became a professional Company Director and Business Consultant. Mr Ware has served on the boards of a number of public companies in diverse industries for over 30 years. Mr Ware is a member of the Hunter Region Committee of the Australian Institute of Company Directors and a former president of the Newcastle Business Club and the Beauford Club of Newcastle. Special Responsibilities: Chair of the Remuneration Committee, Member of the Succession Planning Committee, Member of the Board Transformation Governance Committee and Chair of Greater Investment Services Pty Ltd.

M L McDonald, B Ec. FCA, GAICD Mr McDonald joined the Board in May 2009. Mr McDonald has practised as a Chartered Accountant for over 30 years and was a Partner in the Newcastle Offices of Touché Ross & Co and KPMG Peat Marwick until his resignation in 1994. Mr McDonald subsequently practised on his own account for several years. Mr McDonald served as a Trustee of the Anglican Diocese of Newcastle until February 2016. Mr McDonald has considerable involvement in the Not for Profit sector at Board and Committee level. Special Responsibilities: Chair of the Board Risk Committee, Member of the Board Audit Committee, Member of the Succession Planning Committee, Member of the Board Transformation Governance Committee and Director of Greater Investment Services Pty Ltd.

V J Drinkwater, B Ec. MBA (with merit), GAICD Ms Drinkwater joined the Board in October 2010. Ms Drinkwater has extensive experience as a Senior Executive in banking and financial services having worked across operations, customer service, IT and marketing. Ms Drinkwater was previously employed by nib holdings limited as Interim CEO New Zealand, and as Chief Marketing Officer and Chief Operating Officer at nib health funds limited. Special Responsibilities: Deputy Chair of the Board, Member of the Remuneration Committee, Member of the Succession Planning Committee, Chair of the Board Audit Committee, Chair of the Board Transformation Governance Committee, Director of Greater Investment Services Pty Ltd and Director of the Greater Charitable Foundation Pty Ltd.

R J Cracknell, CPA, FAICD Mr Cracknell joined the Board in May 2011. He was Chief Executive of ABS Building Society from 1973 until April 2011 and has over 40 years’ experience in the Building Society Industry. Mr Cracknell has held various executive positions with the Australian Permanent Building Societies (NSW Division) and was a Councillor of AAPBS (National). Mr Cracknell was a partner in the accountancy firm of Jones, Cracknell & Starr for over 40 years. Special Responsibilities: Member of the Board Audit Committee, Member of the Board Risk Committee, Member of the Succession Planning Committee & Member of the Board Transformation Governance Committee.

Previous spread: Teacher and student – Growing Greater Together Campaign 22 Financial Report

The following Director was appointed on 1 July 2019 and held office to 31 March 2020.

L M Eyres, B Bus, MBA (Exec), GAICD Ms Eyres has over 25 years’ executive experience in mining, financial services and federal government in Australia and Asia across marketing, customer and digital strategy. Ms Eyres was previously employed as Chief Marketing Officer, Sport Australia, General Manager Marketing, ANZ and as Global Head of Brand, BHP Billiton. Currently Ms Eyres is Head of Marketing, Vanguard Australia and is a Director of Plan International. Special Responsibilities: Member of the Succession Planning Committee and Member of the Remuneration Committee (from 1 September 2019).

The following Director was appointed on 1 April 2020 and held office to 30 June 2020.

S D Morgan, B.Comm, CA, GAICD, MBA, Masters of Risk Management Mr Morgan joined the Board in April 2020. Mr Morgan was appointed CEO of Greater Bank in September 2014 and prior to that was the Bank’s Chief Risk Officer. Mr Morgan has over 25 years’ experience spanning Banking/Financial Services, Risk and Assurance. Special Responsibilities: Member of the Board Transformation Governance Committee.

The following Directors were appointed on 1 July 2020 and continue in office at the date of this report.

C A Robson, BA, LLB (Hons), Grad Dip (Applied Finance), LLM (Tax), GAICD Ms Robson is the founder of Affinity Private Advisers and has more than 20 years’ experience as a financial planner, including with Macquarie Bank and NAB. Ms Robson is currently a Non-executive Director of ASX-listed EQT Holdings Limited, and has served on a number of boards and committees over the past seven years, including Equity Trustees Superannuation Ltd, Scale Investors, Cancer Council Victoria and Walter & Eliza Hall Institute of Medical Research. Special Responsibilities: Member of the Succession Planning Committee & Member of the Board Transformation Governance Committee.

D Vinci, GAICD Ms Vinci brings extensive corporate and commercial experience in senior executive roles across global business operations, risk management, digital, data and technology. Ms Vinci is currently the Chief Operating Officer at GenVis Pty Limited prior to which she held senior executive roles at Bank of Queensland (BOQ), Insurance Australia Group (IAG) and Citigroup. Ms Vinci also currently serves as a Non-executive Director on the boards of a number of organisations in the education, financial services and compliance and risk management sectors. Special Responsibilities: Member of the Succession Planning Committee & Member of the Board Transformation Governance Committee.

K M Macfarlane, B Bus, CISL Ms Macfarlane is a global consultant dedicated to optimising public and private sector responses to non-financial risk with a focus on governance, innovation and value creation. Ms Macfarlane has been at the forefront of Environmental and Social Governance (ESG) in Australia setting new standards in organisational reporting conventions on climate, and developing multi stakeholder approaches to social impact investment that are focused on producing shared outcomes and embed social licence. Over the last six years prior to joining the Board, Ms Macfarlane led the Commonwealth Bank’s Corporate Responsibility division and worked closely with the Executive Leadership Team and Board. Special Responsibilities: Member of the Succession Planning Committee & Member of the Board Transformation Governance Committee. Company secretary The Company has two company secretaries. Mr G Nyman was appointed company secretary on 18 January 2016 and is the Head of Legal at Greater Bank. Mr Nyman has over 20 years of experience in corporate legal practice, the majority of which was Special Counsel at Sparke Helmore Lawyers. Mr Nyman holds Bachelor of Laws and Bachelor of Commerce degrees from the University of Newcastle and is a graduate member of the Australian Institute of Company Directors, the Governance Institute of Australia, the Association of Corporate Counsel Australia, and the Law Society of NSW. Mr Nyman is admitted as a Legal Practitioner by the Supreme Court of NSW and the High Court of Australia. Mr R J Moffat was appointed company secretary on 5 October 2016 and is the Chief Financial Officer with responsibilities for all financial reporting and governance, treasury and business intelligence operations for Greater Bank. Mr Moffat has over 20 years of management experience within the finance industry and has held various roles across finance, strategy, treasury and capital management both in Australia and internationally. Mr Moffat holds a Bachelor of Commerce degree and a Masters of Business Administration from the University of Newcastle as well as a Diploma of Applied Finance from the Securities and Investment Institute. Mr Moffat is a member of the Chartered Accountants Australia and New Zealand and a graduate member of the Australian Institute of Company Directors. 23 Annual Report 2019–20

Corporate objectives Greater Bank will ensure its long-term financial viability by achieving the following short and long-term objectives: Sustainably grow our customer base in target markets, Improve organisational efficiency, Proactively manage regulatory change and risk, Strengthen business capabilities (people, process and systems), and Commit to corporate social responsibility. The current strategies in place to achieve these objectives are to maintain a distribution network that supports the increasing needs of customers, to provide a range of products and services to meet the demands of customers, to continue to provide a superior service level, and to enhance the customer experience at all points of contact. Furthermore, internal strategies are in place to ensure that Greater Bank provides a challenging and enjoyable workplace, continues to build capacity and knowledge with good corporate governance and is an employer of choice. Greater Bank measures its performance using a range of financial and non-financial indicators. The main financial indicators are interest margins, cost to income ratio, return on assets, loan portfolio growth and deposit portfolio growth, while non- financial indicators include customer metrics such as net growth, depth of relationship and sentiment, customer complaints and resolution, as well as staff and system metrics.

Principal activities The principal activity during the year of Greater Bank consisted of the provision of financial services to customers in the form of taking deposits and providing financial accommodation. Those activities enhanced the financial position of Greater Bank and provided the platform to enable Greater Bank to improve the quality of its distribution channels and expand the range of products and services available to customers.

Results of the consolidated entity

2020 2019 $’000 $’000 Profit after income tax expense 23,110 31,452

Review of operations A review of operations for Greater Bank is contained in the Chairman and Chief Executive Officer’s Report.

Directors’ meeting The persons holding office as Directors of the Company during the year were: W M Russell, W R Ware, M L McDonald, V J Drinkwater, R J Cracknell, L M Eyres and S D Morgan. The number of meetings of the Directors (including meetings of Committees) held during the year and the number of meetings attended by each Director were as follows:

M & A Succession Transformation Board of Audit Risk Remuneration Strategy Planning Governance Directors Committee Committee Committee Committee Committee Committee 1 2 Number of 12 4 5 2 (ceased 3 (established Meetings 1/03/2020) 1/04/2020) W M Russell 12 (12) 4 (4) 5 (5) 2 (2) 1 (1) 3 (3) 2 (2) W R Ware 11 (12) 2 (2) 3 (3) 2 (2) M L McDonald 12 (12) 4 (4) 5 (5) 3 (3) 2 (2) VJ Drinkwater 12 (12) 4 (4) 1 (1) 2 (2) 3 (3) 2 (2) R J Cracknell 12 (12) 4 (4) 5 (5) 1 (1) 3 (3) 2 (2) L M Eyres 8 (9) 1 (1) 1 (3) S D Morgan 3 (3) 2 (2)

Insurance of officers During the financial year, Greater Bank paid premiums to insure the Directors and Senior Executive officers of the Company and its controlled entities. In accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the nature of the liabilities covered by the insurance contract, is prohibited by a confidentiality clause in the contract. 24 Financial Report

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the consolidated entity.

State of affairs Significant changes in the state of affairs of Greater Bank during the financial year include: Financial impact of COVID-19 on the economy and the business of the Company (refer Note 1A). COVID-19 related loan loss provision (refer Note 11). Funding availability via the ‘Term Funding Facility’ (TFF) scheme (refer Note 1A). Other than the changes outlined above and covered in this report, there have been no other significant changes in the state of affairs during the financial year.

Member liability Greater Bank Limited is a company limited by shares (NIL issued) and guarantee. The guarantee is provided by members of the Company and is limited to $1 per member. The total amount that members of the Company are liable to contribute if the Company were wound up is $273,495.

After balance date events The Directors are not aware of any matters or circumstances that have arisen since 30 June 2020 that have significantly affected or may significantly affect: A) The operations of Greater Bank, B) The results of those operations, or C) The state of affairs of Greater Bank in the financial years subsequent to 30 June 2020.

Likely developments and expected results of operations There are no material likely developments in the operations of Greater Bank, other than continued profitable operations, at the date of this report.

Proceedings on behalf of the company No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001.

Environmental regulation Greater Bank is not subject to any significant environmental regulation.

Auditor’s Independence Declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.

Rounding of amounts The amounts in the financial statements have been rounded to the nearest thousand dollars under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Legislative Instrument applies.

Auditor PricewaterhouseCoopers Australia continues in office in accordance with section 327 of the Corporations Act 2001. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and non-audit services provided during the year are disclosed in Note 26.

W M Russell Chairman Signed at Hamilton this 22nd day of September 2020 in accordance with a resolution of the Directors. 25 Annual Report 2019–20

Auditor’s Independence Declaration As lead auditor for the audit of Greater Bank Limited for the year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Greater Bank Limited and the entities it controlled during the period.

Caroline Mara Newcastle Partner 22 September 2020 PricewaterhouseCoopers

PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

26 Financial Report Statements of Comprehensive Income for the year ended 30 June 2020

CONSOLIDATED COMPANY Notes 2020 2019 2020 2019 $’000 $’000 $’000 $’000

Interest revenue 2 251,730 277,228 267,100 300,175 Interest expense 3 (94,682) (126,765) (110,674) (150,362) Net interest income 157,048 150,463 156,426 149,813 Non-interest income 4 20,776 22,219 20,776 22,219 177,824 172,682 177,202 172,032 Non-interest expense 5 (140,782) (127,496) (140,495) (127,392) Loan Impairment (expense)/recovery 11a (3,874) (446) (3,874) (446) PROFIT BEFORE INCOME TAX 33,168 44,740 32,833 44,194 Income tax expense 6 (10,058) (13,288) (9,956) (13,281) PROFIT FOR THE YEAR 23,110 31,452 22,877 30,913

OTHER COMPREHENSIVE INCOME Items that may be reclassified to the statement of comprehensive income: Cash flow hedges 23 (767) 7,992 (767) 7,992 Income tax relating to these items 23 230 (2,398) 230 (2,398) Items that will not be reclassified to the statement of comprehensive income: Revaluation of land and buildings 23 (465) (472) (465) (472) Income tax relating to these items 23 139 142 139 142 Revaluation of investment securities 23 1,010 - 1,010 - Income tax relating to these items 23 (303) - (303) - TOTAL OTHER COMPREHENSIVE INCOME (156) 5,264 (156) 5,264 TOTAL COMPREHENSIVE INCOME 22,954 36,716 22,721 36,177 The above Statements of Comprehensive Income should be read in conjunction with the accompanying Notes.

27 Annual Report 2019–20 Balance Sheets as at 30 June 2020

CONSOLIDATED COMPANY Notes 2020 2019 2020 2019 $’000 $’000 $’000 $’000

ASSETS Cash and cash equivalents 7 132,464 191,655 95,957 156,465 Investment securities 8 1,502,926 1,208,861 2,242,926 1,948,861 Other receivables 9 3,860 2,650 8,993 8,098 Derivative financial instruments 10 4,949 5,669 4,949 5,669 Loans and advances 11 5,809,344 5,713,245 5,809,344 5,713,245 Other financial assets 12 615 615 695 695 Current tax assets 20 725 - 725 - Deferred tax assets 13 3,136 2,362 3,134 2,362 Property, plant and equipment 14 54,853 31,527 54,853 31,527 Investment properties 15 847 879 847 879 Intangible assets 16 6,241 4,168 6,241 4,168 TOTAL ASSETS 7,519,960 7,161,631 8,228,664 7,871,969

LIABILITIES Payables and other liabilities 17 16,437 13,955 16,062 14,850 Deferred revenue 18 1,427 1,732 1,427 1,732 Deposits and other borrowings 19 6,449,234 6,141,175 6,452,624 6,144,241 Current tax liabilities 20 - 601 - 601 Derivative financial instruments 10 46 111 46 111 Other financial liabilities 21 475,856 449,878 1,184,156 1,159,174 Provisions 22 6,282 5,915 6,282 5,915 TOTAL LIABILITIES 6,949,282 6,613,367 7,660,597 7,326,624 NET ASSETS 570,678 548,264 568,067 545,346

EQUITY Reserves 23 23,054 22,399 20,672 20,017 Retained profits 24 547,624 525,865 547,395 525,329 TOTAL EQUITY 570,678 548,264 568,067 545,346

The above Balance Sheets should be read in conjunction with the accompanying Notes.

28 Financial Report Statements of Changes in Equity for the year ended 30 June 2020

CONSOLIDATED COMPANY Notes 2020 2019 2020 2019 $’000 $’000 $’000 $’000

TOTAL EQUITY AT THE START OF THE FINANCIAL YEAR Reserves 23 22,399 20,906 20,017 18,524 Retained profits 24 525,865 494,218 525,329 494,221 548,264 515,124 545,346 512,745

TOTAL PROFIT FOR THE YEAR Retained profits 24 23,110 31,452 22,877 30,913 23,110 31,452 22,877 30,913

TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR Reserves 23 (156) 5,264 (156) 5,264 (156) 5,264 (156) 5,264

OTHER TRANSACTIONS WITHIN EQUITY FOR THE YEAR Transfer from reserves to retained profits 23 (811) (3,771) (811) (3,771) Transfer from reserves to retained profits 24 811 3,771 811 3,771 Retained profits – adoption of AASB 9 and AASB 15 24 - (3,576) - (3,576) Retained profits – recognition of Greater Charitable 24 (540) - - - Foundation grant obligations (540) (3,576) - (3,576)

TOTAL EQUITY AT THE END OF THE FINANCIAL YEAR Reserves 23 23,054 22,399 20,672 20,017 Retained profits 24 547,624 525,865 547,395 525,329 570,678 548,264 568,067 545,346 The above Statements of Changes in Equity should be read in conjunction with the accompanying Notes.

29 Annual Report 2019–20 Statements of Cash Flows for the year ended 30 June 2020

CONSOLIDATED COMPANY Notes 2020 2019 2020 2019 $’000 $’000 $’000 $’000 Inflows/ Inflows/ Inflows/ Inflows/ (Outflows) (Outflows) (Outflows) (Outflows) CASH FLOWS FROM OPERATING ACTIVITIES Interest received 252,942 277,553 268,313 300,500 Fees and commissions received 18,259 20,742 18,259 20,742 Other income received 433 454 433 454 Interest paid (103,708) (124,417) (118,966) (148,015) Operating expenses paid (121,069) (121,241) (120,573) (121,169) Income taxes paid (12,090) (16,313) (11,986) (16,313) Net (advances) and repayments in loans and advances (99,452) (328,548) (100,811) (327,789) Net (placements) and redemptions in investment securities (292,858) (96,049) (292,858) (101,049) Net acceptances and (payments) in deposits 314,923 381,390 315,248 381,825 NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 29a (42,620) (6,429) (42,941) (10,814)

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of financial assets and liabilities - (413) - (413) Payments for intangibles, property, plant and equipment (7,370) (6,232) (7,370) (6,232) Proceeds from sale of property, plant and equipment 606 6,403 606 6,403 NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES (6,764) (242) (6,764) (242)

CASH FLOWS FROM FINANCING ACTIVITIES Net issue/(repayment) of commercial notes - 50,000 (996) 62,657 Payments for the principal portion of lease liabilities (9,807) - (9,807) - NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES 29b (9,807) 50,000 (10,803) 62,657 Net increase/(decrease) in cash held (59,191) 43,329 (60,508) 51,601 CASH AT THE BEGINNING OF THE FINANCIAL YEAR 191,655 148,326 156,465 104,864 CASH AT THE END OF THE FINANCIAL YEAR 7 132,464 191,655 95,957 156,465 The above Statements of Cash Flows should be read in conjunction with the accompanying Notes.

30 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 1. Summary of significant accounting policies A) Basis of Preparation The financial report includes separate financial statements for Greater Bank Limited (Company) as an individual entity and the Greater Bank Group (Greater Bank), consisting of the Company and the entities it controlled at the end of, and during the year ended 30 June 2020. The financial statements of Greater Bank are general purpose financial reports prepared in accordance with provisions of Australian Accounting Standards and the Corporations Act 2001 in Australia. Greater Bank’s financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Greater Bank is a for-profit entity for the purposes of preparing financial statements. The financial statements of Greater Bank are prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of property and investment property at fair value. All amounts are expressed in Australian dollar currency. Notes containing prior year comparatives may have been restated to provide the user with additional details. Such changes do not alter the total balance as previously disclosed. The significant accounting policies adopted in the preparation of these financial statements and that of the previous financial year are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. i) Critical accounting estimates and significant judgements The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the accounting policies. The Notes to the financial statements set out the areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to Greater Bank’s financial statements. The most significant of these are: impairment losses on loans and advances (refer Note 11B), fair value of land and buildings (refer Note 14A), fair value of investment properties (refer Note 15A), fair value of financial instruments (refer Note 1P), and effective life of financial instruments (refer Note 1D i). Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Management believes the estimates and judgements used in preparing the financial statements are reasonable. Actual results in the future may differ from those reported. ii) Coronavirus (COVID-19) impact COVID-19 was declared a world-wide pandemic by the World Health Organisation in March 2020. This pandemic has had a significant impact on the economy. The Company has considered the impact of COVID-19 in preparing its financial statements. COVID-19 did not result in the identification of any further areas of judgement and critical accounting estimates in addition to that disclosed above; however, it did result in the application of additional judgement. Given the high degree of uncertainty, changes to this additional judgement may arise in future. Any such changes will be accounted for in future reporting periods. Refer to Note 11 for an explanation of scenarios and probabilities considered in determining the Company’s expected credit losses (ECL). These scenarios represent reasonable and supportable forward-looking views as at the reporting date. Furthermore, to support its customers during the COVID-19 outbreak, Greater Bank has provided the option for borrowers to defer loan repayments. A repayment deferral is a short-term arrangement whereby the customer is not obligated to make any loan repayments over a period of time, usually between 3 to 6 months. As at reporting date, the repayment deferrals segment was 5% of the total loan portfolio and Greater Bank has since observed a significant portion of repayment deferrals roll off and return to original contract terms. Greater Bank has participated in the RBA’s Term Funding Facility (TFF) scheme to access funding to help support Australian households and businesses during this unprecedented time. The TFF is a three-year facility with a fixed interest rate of 0.25% per annum. As at reporting date, Greater Bank has drawn $28M of its total available TFF allowance of $176M.

31 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 iii) New accounting standards and interpretations adopted A new accounting standard became applicable for the current reporting period and Greater Bank had to change its accounting policies as a result of adopting AASB 16 Leases. Recognition and accounting for leases (effective for financial reporting periods beginning on or after 1 January 2019) The AASB has issued a new standard, AASB 16 Leases, for the recognition and accounting for lease transactions. This new standard has replaced AASB 117 Leases. The new standard removes the classification and distinction between finance and operating leases. Lessees now bring to account a ‘right-of-use’ asset and lease liability onto the balance sheet for leases within the scope of AASB 16. Greater Bank adopted this new accounting standard from the beginning of the current reporting period and present a new note disclosure in this set of Financial Statements (refer Note 28). B) Consolidation i) Controlled entities The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The effects of all transactions between entities in the Greater Bank Group have been eliminated in full. Where control of an entity was obtained during the financial period, its results have been included in the consolidated statement of comprehensive income from the date on which control commenced. Where control of an entity ceased during the financial period, its results are included for that part of the financial period during which control existed. Investments in subsidiaries are accounted for by the Company at cost. ii) Securitisation Securitised positions are held through a number of Special Purpose Entities (‘SPEs’). These securitised positions allow the Company to access funding. The Company has consolidated its SPEs. Accordingly, their underlying assets, liabilities, revenues and expenses are reported in the Company’s consolidated balance sheet and statement of comprehensive income. C) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. All operating segments are less than the quantitative threshold required for separate disclosure. D) Revenue Recognition i) Interest revenue Interest income arising from loans and held to maturity investment securities is brought to account using the effective interest rate method. Incremental fees and transaction costs associated with the origination of loans and held to maturity investment securities which are an integral part of the effective interest rate are deferred and recognised in the statement of comprehensive income on a yield basis over the expected life of the financial instrument. The effective interest rate is that rate that exactly discounts estimated future cash flows throughout the life of the financial instrument. The balance outstanding of the deferred origination income and expense is recognised in the balance sheet as an adjustment to the carrying amount of the loans and held to maturity investment securities outstanding. ii) Other revenue Greater Bank earns commission and fee income on its banking products, lending activities and through referrals to partner products and services where Greater Bank is acting as an agent. Other revenue is recognised in the statement of comprehensive income as revenue when performance obligations in relation to the contract have been satisfied. Performance obligations are satisfied when the services promised in the contract have been provided to the customer, which are either as at a point in time or over time. The majority of other revenue is recognised at a point in time under AASB 15 (Refer Note 4), which is typically when payment is received. Some fees are charged by Greater Bank which represent services provided over time. Where consideration is provided for services and Greater Bank has not yet satisfied its performance obligations, either in part or in full, a deferred revenue liability (Refer Note 18) is recognised. Some annual fees are charged by Greater Bank which represent services provided over the full annual period. The liability is calculated as the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as at the end of the reporting period. Revenue is subsequently recognised by Greater Bank as performance obligations are satisfied. 32 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 E) Income Tax Greater Bank has adopted the balance sheet liability method of tax-effect accounting which focuses on the tax effect of transactions and other events that affect amounts recognised in either the balance sheet or a tax-based balance sheet. Deferred tax assets and liabilities are recognised for temporary differences, except where the deferred tax asset/liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and does not affect accounting profit or taxable profit at the time of the transaction. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that the future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. The Company and certain wholly owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2002. As a consequence, those entities are taxed as a single entity and the deferred tax assets and liabilities of those entities are set off in the consolidated financial statements. Tax funding and sharing agreements between the Company and certain wholly owned Australian controlled entities, known as ‘group member entities’, have been in place since 1 July 2013. Broadly, group member entities are required to calculate their notional tax liability as if they were standalone taxpayers before transferring their tax liability to the head entity. Such transfers will be effected on intercompany account. The Company has responsibility for settling the consolidated entity’s income tax liability with the ATO. F) Financial Assets All financial assets are initially recognised at fair value plus, in the case of financial assets and liabilities not classified as at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset. Financial assets are then classified as either a debt or equity financial asset, which in turn determines their subsequent accounting measurement. The categories and measurement treatments are: i) Debt Financial Asset A debt financial asset is classified as at amortised cost only if both of the following criteria are met: the asset is held within a business model with the objective to collect the contractual cash flows, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt financial asset are considered in determining whether the cash flows of the asset are solely payment of principal and interest on the principal outstanding and are not accounted for separately. A gain or loss on a debt financial asset that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in the statement of comprehensive income when the financial asset is derecognised or impaired and through the amortisation process using the effective interest rate method. A debt financial asset is classified as at fair value through other comprehensive income only if both of the following criteria are met: the asset is held within a business model with the objective to collect the contractual cash flows and sell the financial assets, and the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. The nature of any derivatives embedded in the debt financial asset are considered in determining whether the cash flows of the asset are solely payment of principal and interest on the principal outstanding and are not accounted for separately. A gain or loss on a debt financial asset that is subsequently measured at fair value through other comprehensive income and is not part of a hedging relationship is recognised in the statement of comprehensive income when the financial asset is derecognised or impaired and through the amortisation process using the effective interest rate method. The revaluation of such financial assets are recognised in the statement of other comprehensive income. If either of the two classifications above are not met, the debt financial asset is classified as at fair value through profit or loss.

33 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 A gain or loss on a debt financial asset that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in the statement of comprehensive income and presented net in the income statement within other income or other expenses in the period in which it arises. A debt financial asset relating to a loan or advance to a customer will only be recognised when the cash has been advanced to the customer. ii) Equity Financial Asset All equity financial assets are measured at fair value. Equity financial assets that are held for trading are measured at fair value through profit or loss. Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income or other expenses in the income statement as applicable. Interest income from these financial assets is included in the net gains/(losses). Dividend income is presented as other revenue. For all other equity financial assets (i.e. equity financial assets other than held for trading), Greater Bank can make an irrevocable election at initial recognition of each equity financial asset to recognise changes in fair value through other comprehensive income (OCI) rather than through profit or loss. Where management has elected to present fair value gains and losses on equity financial assets in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the statement of comprehensive income. Gains and losses arising from subsequent changes in fair value for equity financial assets nominated as fair value through other comprehensive income are recognised directly in the financial asset at fair value through other comprehensive income reserve in equity, until the asset is derecognised, at which time the cumulative gain or loss will be transferred to retained profits. Dividends from equity financial assets continue to be recognised in the statement of comprehensive income as other revenue when the right to receive payments is established and as long as they represent a return on investment. Equity financial assets are measured at fair value. Fair values of quoted equity financial assets in active markets are based on current bid prices. If the relevant market is not considered active (or the securities are unlisted), Greater Bank establishes fair value by using valuation techniques, including recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants. Where equity financial assets cannot be reliably valued they are recorded at cost. Greater Bank has considered expected credit losses for financial assets and determined that losses are immaterial. G) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and deposits at call and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to cash and are subject to an insignificant risk of changes in value. Greater Bank has considered expected credit losses for cash and determined that losses are immaterial. H) Investment Securities i) Asset recognition Investment securities are classified as debt financial assets and are measured either at amortised cost using the effective interest rate method, or at fair value through other comprehensive income (FVOCI). Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity. Any gains or losses from investments are recognised in the statement of comprehensive income when the investments are derecognised, on impairment, as well as through the amortisation process. The revaluation amounts of investments that are measured at FVOCI are recognised in the statement of other comprehensive income. ii) Revenue recognition Interest income arising from investment securities is recognised in the statement of comprehensive income using the effective interest rate method (refer Note 1D). Greater Bank has considered expected credit losses for investment securities and determined that losses are immaterial. I) Loans and Advances i) Asset recognition Loans and advances are classified as debt financial assets and are recognised when cash is advanced to customers. They are carried at amortised cost using the effective interest rate method (refer Note 1F).

34 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 ii) Revenue recognition Interest income arising from loans is brought to account using the effective interest rate method (refer Note 1D). Loan products that have both mortgage and deposit facilities are presented gross on the balance sheet, segregating the asset and liability component, because they do not meet the criteria to be offset. Interest earned on these products is presented on a net basis in the statement of comprehensive income as this reflects how the customer is charged. Loan fees received and transaction costs directly attributable to the acquisition of the loan are deferred and included as an adjustment to the interest revenue of the loan on a yield basis over the expected life of the loan using the effective interest rate method. The deferred revenues and costs are included in the balance sheet as part of the value of the loans and advances outstanding. Other loan fees, commissions and other service fees provided in relation to services are recognised in the statement of comprehensive income as other income when performance obligations in relation to the contract have been satisfied, which occur when the service promised in the relevant contracts have been provided to the customer. iii) Impairment (Loan Portfolio) Loans are subject to regular review and assessment for possible impairment. An expected credit loss (ECL) is applied to loans. Under the ECL methodology, Greater Bank calculates the allowance for credit losses by considering, on a discounted basis, the cash shortfalls it would incur in various default scenarios and multiplying the shortfalls by the weighting of each scenario. These scenarios are based on assumptions about the risk of default and expected loss rates. Assumptions are based on past history, existing market conditions, as well as forward- looking estimates at the end of each reporting period. Loans are classified into three stages within the ECL. The stages are based on changes in credit quality and are defined as follows: Stage 1: 12 month ECL. Loans that have not had a significant increase in credit risk since initial recognition. This applies to loans that are less than 30 days past due, except for those that have been up to 30 days past due within the last 12 months; Stage 2: Lifetime ECL. Loans showing a significant increase in credit risk since initial recognition. This applies to loans that have been up to 30 days past due within the last 12 months and those that are equal to 30 but less than 90 days past due and not considered credit impaired; and Stage 3: Lifetime ECL. Loans showing a significant increase in credit risk since initial recognition and deemed credit impaired loans. This applies to loans that are equal to or greater than 90 days past due plus those loans individually identified as credit impaired that may not yet be past due. As a result, these loans are considered to be in default. The default definition has been generally aligned with the default definition for prudential purposes of 90 days past due. However, unlike the APRA definition, the carrying value of loans within stage 3 is not adjusted for those considered well secured. Loans can move between stages during their lifetime. A credit loss reserve is maintained in equity to cover credit risks inherent in the loan portfolio. Whilst not required under any accounting standard, the credit loss reserve is an appropriation of retained profits (refer Note 1R) and calculated by management in accordance with the Prudential Standard APS 220 Credit Quality. iv) Restructured loans A restructured loan is a non-commercial facility where the original contractual terms have been modified to provide concessional changes for reasons relating to financial difficulties of the borrower. Where the loan after restructuring remains doubtful and it is not well secured (e.g. loan-to-valuation ratio is greater than 100%) the loan shall be subject to impairment. Loans will only be recognised as restructured once the customer has formally agreed to the new terms. v) Assets acquired through enforcement of security Assets acquired through enforcement of security are assets acquired in full or partial settlement of a loan or similar facility through enforcement of security arrangements. vi) Bad debts written off Bad debts are written off as identified by management and the Board of Directors when it is reasonable to expect that the recovery of the debt is unlikely. Bad debts will be written off directly to the statement of comprehensive income in the period in which they are identified. Bad debts can be written off directly against the allowance for impaired losses only to the extent that the allowance balance includes a specific allowance in respect of the debt being written off. 35 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 J) Property, Plant and Equipment i) Asset recognition Land and buildings are initially recognised at cost and then subsequently carried at fair value less accumulated depreciation. Plant and equipment are initially recognised at cost and then subsequently carried at cost less accumulated depreciation and less any impairment adjustment. Assets are reviewed for impairment annually. Cost includes expenditure directly attributable to the acquisition of the asset. Right-of-use assets are initially recognised at cost and then subsequently carried at cost less any accumulated depreciation, less any accumulated impairment losses and adjusted for any remeasurement of the lease liability. Items of equipment, furniture and fittings and other small assets, which cost less than $1,000, are expensed at the time of purchase. ii) Revaluations Land and buildings are carried at fair value at the date of the revaluation less any subsequent accumulated depreciation of buildings and accumulated impairment losses. Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other comprehensive income and accumulated in the property revaluation surplus reserve in equity. To the extent that the increase reverses a decrease previously recognised in the statement of comprehensive income, the increase is first recognised in the statement of comprehensive income. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to the statement of comprehensive income. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation surplus reserve relating to the particular asset being disposed is transferred to retained profits. The balances in the asset revaluation surplus reserve for each particular asset are net of any potential capital gains tax liability. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the year the item is derecognised. Fair value is determined by reference to market-based evidence, which is the amount that the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheet date. iii) Depreciation Depreciation is calculated so as to write off the net cost or revalued amount of each item of property, plant and equipment (excluding land) over its expected useful life. Additions are depreciated from the date of acquisition, which represents when the asset is ready for use. Greater Bank uses the following useful lives and methods of depreciation:

Useful Life Method Buildings 40 years straight line Office Equipment and Furniture 5–8 years reducing balance Motor Vehicles 7 years reducing balance Computer Hardware 3–5 years reducing balance Leasehold Improvements 5–10 years straight line Right-of-use assets are depreciated over the lease term on a straight line basis. Useful lives and residual values are reviewed annually and reassessed in light of commercial and technological developments. If an asset’s carrying value is greater than its recoverable amount due to a useful life, residual value or impairment adjustment, the carrying amount is written down immediately to its recoverable amount. Adjustments arising from such restatements and on disposal of fixed assets are recognised in the statement of comprehensive income.

36 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 For taxation purposes, Greater Bank adopts an effective life for the asset as determined by Taxation Rulings made public by the Commissioner of Taxation. Greater Bank generally uses the reducing balance method of depreciation for tax purposes. K) Investment Properties Investment properties are initially recognised at cost and then subsequently carried at fair value. Cost includes expenditure directly attributable to the acquisition of the asset. Fair value is determined by reference to market-based evidence, which is the amount that the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheet date. Changes in fair values for investment properties are recognised directly in the statement of comprehensive income. Where the property is used by Greater Bank for its own occupation, the property is classified as property, plant and equipment. L) Intangible Assets (Computer Software) Costs directly incurred in acquiring computer software, plus costs incurred in developing major products or systems that will contribute to future period financial benefits through revenue generation and/or cost reductions are capitalised to computer software and amortised over the estimated useful life. Costs incurred on research and software maintenance are expensed as incurred. Computer software assets are amortised over the shorter of the licence period or 5 years on a reducing balance basis, unless determined more appropriate to amortise on a straight line basis. Major system and product development assets are amortised over 3 to 7 years on a straight line basis. M) Deposits and Other Borrowings Deposits are measured at amortised cost using the effective interest rate method (refer Note 1F). Interest on deposits is brought to account using the effective interest rate method. Securities sold under repurchase agreements are retained in the Financial Statements where substantially all the risks and rewards of ownership remain with the Group. A liability for the agreed repurchase amount from the counterparty is recognised within deposits and other borrowings. N) Financial Liabilities Financial liabilities are measured at amortised cost using the effective interest rate method except for derivative instruments, financial liabilities designated as at fair value through profit and loss, and in other limited circumstances as allowed under AASB 9 Financial Instruments which are subsequently measured at fair value through profit and loss. All Greater Bank’s financial liabilities except for derivative instruments are classified at amortised cost. Lease liabilities for future lease payments are recognised and measured at the amounts expected to be paid according to the lease terms and are net present valued as per AASB 16. O) Provisions Greater Bank makes provision where it has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation. P) Derivative Instruments Greater Bank uses derivative financial instruments to hedge its exposure to interest rate risks arising from operational, financing and investment activities. In accordance with its treasury management policy, Greater Bank does not hold or issue derivative financial instruments for trading purposes. All derivatives, including those used for balance sheet hedging purposes, are recognised on the balance sheet at fair value and are disclosed as an asset where they have a positive fair value at balance date or as a liability where the fair value at balance date is negative. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured to their fair value at balance date. Fair values for interest rate swaps is the estimated amount that the Company would receive or pay to terminate the swap at the balance date, taking into account current interest rates and the credit worthiness of the swap counterparties. Movements in the carrying amounts of derivatives are recognised in the statement of comprehensive income, unless the derivative is designated as a hedge and meets the requirements for hedge accounting.

37 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 i) Cash flow hedges For a derivative designated as hedging a cash flow exposure arising from a recognised asset or liability (or a highly probable forecast transaction), the gain or loss on the derivative associated with the effective portion of the hedge is initially recognised in equity in the cash flow hedge reserve and reclassified into the statement of other comprehensive income when the hedged item is brought to account. The gain or loss relating to the ineffective portion of the hedge is recognised immediately in the statement of comprehensive income. ii) Fair value hedges For a derivative designated as hedging a fair value exposure arising from a recognised asset or liability (or a firm commitment), the gain or loss on the derivative is recognised in the statement of comprehensive income together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Greater Bank does not currently have any fair value hedges. Q) Employee Entitlements i) Wages and salaries and annual leave Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured at the amounts expected to be paid when the liabilities are settled and are recognised within payables and other liabilities. ii) Long service leave A liability for long service leave is recognised and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. iii) Superannuation Contributions are made by the Company to an employee’s superannuation fund and are charged as expenses when incurred. The Company has no legal obligation to cover any shortfall in the funds’ liability to provide benefits to employees on retirement. iv) On-costs On-costs associated with employees, including payroll tax, are recognised as liabilities and expenses when the employment to which they relate has occurred. R) Reserves On 1 July 2005 the Company established a reserve for credit losses to cover credit risks inherent but not yet incurred in the loan portfolio. Movement in the credit loss reserve is recognised as an appropriation of retained profits. S) Goods and Services Tax Where capital or expense acquisitions relate to input taxed activities, goods and services tax is generally non-recoverable from taxation authorities. Accordingly, where the amount of goods and services tax incurred is not recoverable, the tax is recognised as part of the cost of acquisition of an asset or as part of an item of expense. For the purposes of the statement of cash flows, receipts and payments from operations are inclusive of goods and services tax. T) Impairment The carrying amounts of Greater Bank’s assets (excluding financial assets – refer Note 1F) are reviewed at least at the end of each reporting period to determine whether there are any trigger events which may be an indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Any impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal but only to the extent of the previous revaluation amount. Refer Note 1I for impairment of Loans and Advances. U) Payables and Other Liabilities i) Creditors and other accruals Creditors and other accruals represent amounts payable to creditors and have been recorded at cost. All amounts are expected to settle within 12 months.

38 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 ii) Employee entitlements Liabilities for annual leave are recognised and are measured at the amounts expected to be paid when the liabilities are settled. V) Rounding of Amounts The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with this Legislative Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000 2. INTEREST REVENUE

Cash and cash equivalents 2,212 3,644 2,018 3,172 Investment securities measured at amortised cost 24,336 37, 0 8 4 39,90 0 60,503 Investment securities measured at fair value through other 369 - 369 - comprehensive income Loans and advances 224,813 236,500 224,813 236,500 251,730 277,228 267,10 0 300,175

3. INTEREST EXPENSE

Deposits 83,725 113,759 83,730 113,78 0 Commercial notes and securitisation liabilities 10,192 13,006 26,179 36,582 Lease liability 765 - 765 - 94,682 126,765 110,674 150,362

4. NON-INTEREST INCOME

Commission 3,552 4,398 3,552 4,398 Fee income 15,319 15,837 15,319 15,837 Bad debts recovered 277 71 277 71 Net gain on disposal of investment securities 1,361 1,589 1,361 1,589 Rental revenue 106 243 106 243 Other revenue 161 81 161 81 20,776 22,219 20,776 22,219

A) Revenue from Contracts with Customers

Commission 3,552 4,398 3,552 4,398 Fee income 15,319 15,837 15,319 15,837 18,871 20,235 18,871 20,235

Services transferred to customers as at a point in time 16,107 17, 0 8 0 16,107 17, 0 8 0 Services transferred to customers over time 2,764 3,155 2,764 3,155 18,871 20,235 18,871 20,235

39 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

5. NON-INTEREST EXPENSE

Amortisation of computer software 2,229 1,675 2,229 1,675 Consultants fees 6,650 2,735 6,646 2,731 Depreciation – buildings 399 435 399 435 Depreciation – right-of-use assets – branches 9,172 - 9,172 - Depreciation – right-of-use assets – ATM locations 452 - 452 - Depreciation – leasehold improvements 592 607 592 607 Depreciation – plant and equipment 2,649 2,651 2,649 2,651 Depreciation – right-of-use assets – motor vehicles 27 - 27 - Donations and sponsorships 1,821 1,788 1,822 2,003 Employee related expense 73,215 66,382 73,215 66,382 Marketing and promotions 8,554 8,783 8,554 8,783 Net loss on revaluation of investment properties 32 - 32 - Net loss on disposal of property, plant and equipment 2 775 2 775 Operating rental expense 1,096 10,545 1,096 10,545 Payment system processing costs 12,252 11,0 5 3 12,251 11,0 5 3 Repairs and maintenance costs 1,304 1,249 1,304 1,249 Technology and communication costs 6,332 5,229 6,332 5,229 Other general and administration expenses 14,004 13,589 13,721 13,274 140,782 127,496 140,495 127,392

6. INCOME TAX EXPENSE

A) Income Tax Expense

Current tax 10,750 12,049 10,646 11,95 3 Deferred tax (774) 1,239 (772) 1,328 Under/(over) provision in prior year 82 - 82 - 10,058 13,288 9,956 13,281

Income tax expense attributable to profit from operations 10,058 13,288 9,956 13,281 Aggregate income tax expense 10,058 13,288 9,956 13,281

Deferred income tax expense/(revenue) included in income tax expense comprises Decrease/(increase) in deferred tax assets 13 (718) (142) (716) (53) Increase/(decrease) in deferred tax liabilities 13 (56) 1,381 (56) 1,381 (774) 1,239 (772) 1,328

40 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

B) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable Profit from operations before income tax expense 33,168 44,740 32,833 44,193

Prima facie tax payable at 30% (2019 – 30%) 9,950 13,422 9,850 13,258 Tax effect of amounts which are not deductible (taxable) in calculating taxable income Non-assessable income/non-deductible expense (exempt 1 (67) - - Charitable Foundation) Entertainment expenses 20 16 20 16 Sundry items 4 (83) 4 7 Under/(over) provision in prior year 83 - 82 - 108 (134) 106 23 INCOME TAX EXPENSE 10,058 13,288 9,956 13,281

C) Amounts Recognised Directly in Equity/Other Comprehensive Income Aggregate current and deferred tax arising in the reporting period and not recognised in the statement of comprehensive income but directly debited or credited to equity Current tax – credited directly to equity 8 18 8 18 Net deferred tax – debited/(credited) directly to equity 58 (2,274) 58 (2,274) 66 (2,256) 66 (2,256)

7. CASH AND CASH EQUIVALENTS All Cash and Cash Equivalents are current assets Cash on hand 8,910 7,9 0 4 8,987 7,972 Financial institution balance – at call 68,570 58,948 31,986 23,690 Financial institution balance – short-term 54,984 124,803 54,984 124,803 132,464 191,655 95,957 156,465 Short-term cash and cash equivalents are those where original maturity is less than 90 days.

8. INVESTMENT SECURITIES Financial institutions balance 1,206,953 911, 879 1,206,953 911, 879 Investments in other securities 295,973 296,982 1,035,973 1,036,982 1,502,926 1,208,861 2,242,926 1,948,861 Investment securities with financial institutions are those where original maturity is greater than 90 days.

Investment securities expected to mature within 12 months 211,971 230,879 211,971 230,879 Investment securities expected to mature after 12 months 1,290,955 97 7,98 2 2,030,955 1,717,98 2 1,502,926 1,208,861 2,242,926 1,948,861

Investment securities measured at amortised cost 1,123,732 1,208,861 1,863,732 1,948,861 Investment securities measured at fair value through other 379,194 - 379,194 - comprehensive income 1,502,926 1,208,861 2,242,926 1,948,861

Greater Bank has considered expected credit losses for investment securities and determined that losses are immaterial (refer Note 1F).

41 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

9. OTHER RECEIVABLES All Other Receivables are current assets Accrued income 817 344 817 344 Prepayments 2,748 2,122 2,744 2,118 Other receivables 295 184 5,432 5,636 3,860 2,650 8,993 8,098

10. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instrument asset Interest rate swap contracts – cash flow hedges 4,949 5,669 4,949 5,669 4,949 5,669 4,949 5,669

Derivatives expected to mature within 12 months 1,089 2,094 1,089 2,094 Derivatives expected to mature after 12 months 3,860 3,575 3,860 3,575 4,949 5,669 4,949 5,669

Derivative financial instrument liability Interest rate swap contracts – cash flow hedges 46 111 46 111 46 111 46 111

Derivatives expected to mature within 12 months 46 111 46 111 Derivatives expected to mature after 12 months - - - - 46 111 46 111

Cash flow hedge ineffectiveness – gain/(loss) - - - -

11. LOANS AND ADVANCES

Overdrafts 64,979 78,330 64,979 78,330 Term loans 5,752,858 5,639,534 5,752,858 5,639,534 Gross loans and advances 5,817,837 5,717, 8 6 4 5,817,837 5,717, 8 6 4

Allowance for expected credit losses (8,493) (4,619) (8,493) (4,619) Net loans and advances 5,809,344 5,713,245 5,809,344 5,713,245

Loans and advances expected to be paid within 1,126,081 1,130,890 1,126,081 1,130,890 12 months Loans and advances expected to be paid after 12 months 4,683,263 4,582,355 4,683,263 4,582,355 5,809,344 5,713,245 5,809,344 5,713,245

42 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

A) Allowance for Expected Credit Losses (ECL)

Movement in the allowance for expected credit losses are as follows Opening balance 4,618 1,021 4,618 1,021 Write-off of known credit impaired loans (369) (776) (369) (776) New/(Released) provision 4,244 1,222 4,244 1,222 Adjustment on implementation of AASB 9 - 3,151 - 3,151 8,493 4,618 8,493 4,618

Stages of the ECL allowance are as follows – Consolidated Stage 1 – 12 Stage 2 – Stage 3 – Total ECL and Company month ECL lifetime ECL lifetime ECL allowance (not credit (credit impaired) impaired)

Balance as at 1 July 2018 - - 1,021 1,021 Movements 773 2,124 700 3,597 Balance as at 30 June 2019 773 2,124 1,721 4,618 Movements 91 4,479 (695) 3,875 Balance as at 30 June 2020 864 6,603 1,026 8,493

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

B) Credit Impaired Loans

Credit Impaired Loans with stage 3 ECL 5,261 7,915 5,261 7,915 Stage 3 ECL (1,026) (1,721) (1,026) (1,721) 4,235 6,194 4,235 6,194 Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit. The majority of the credit impaired loans remain well secured. Use of estimates and judgements The ECL allowance for loans are based on assumptions about risk of default and expected loss rates. Greater Bank uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on historical data, existing market conditions as well as forward-looking estimates at the end of each reporting period.

In determining the ECL allowance, Greater Bank segments its loan portfolio into groups which are typically based on shared risk characteristics. All estimation techniques and assumptions are consistent with prior year with the exception of the economic scenario weightings applied. During the current reporting period, Greater Bank increased the ‘bad case scenario’ weighting from 30% to 60% (and simultaneously decreased the ‘baseline scenario’ from 60% to 30%) to better reflect the weaker macroeconomic environment due to COVID-19 (refer to table below for each scenario, weighting probability and inherent economic condition). Furthermore an additional management overlay (‘economic adjustment top-up’) was applied to recognise the elevated credit risk associated with COVID-19. The repayment holiday loan segment together with an estimated higher probability of default and a forward-looking estimate of declining house prices/security values was used to formulate this economic adjustment top-up. 43 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

Scenario Weighting Economic condition Baseline Possible No major change in external factors. A 100% weighting to this scenario would reduce the model output by 7% and decrease the total provision by 1%. Good Unlikely Represents a decrease in unemployment and positive economic growth. A 100% weighting to this scenario would reduce the model output by 13% and decrease the total provision by 2%. Bad Probable Represents an increase in unemployment and negative economic growth. A 100% weighting to this scenario would inflate the model output by 6% and increase the total provision by 1%. The ECL relies on multiple variables and is inherently non-linear and portfolio-dependent which implies that no single analysis can fully demonstrate the sensitivity of the ECL to changes in the macroeconomic variables. Furthermore, it is observed that a change to only one economic factor in isolation is not sufficient enough to capture the full impact of COVID-19. When assessing loans on an individual basis for inclusion in stage 3 of the ECL, consideration is given to the counterparties’ willingness to meet their contractual obligations, the counterparties’ economic circumstances, their future prospects and the security provided.

C) Assets Acquired through the Enforcement of Security

Net fair value of assets acquired through the enforcement of security still held at the end of the financial year Real estate 10 1,340 10 1,340 Other assets - - - - 10 1,340 10 1,340

Assets acquired during the year are disposed of as soon as practically possible with the proceeds used to reduce the outstanding indebtedness. Any residual proceeds after the debt is repaid are returned to the borrower. There were no assets acquired through the enforcement of security during the year that were used by Greater Bank in its operations.

12. OTHER FINANCIAL ASSETS All other financial assets are non-current assets Equity financial assets 615 615 615 615 Investments in controlled entities - - 80 80 615 615 695 695

Controlled Entities

Investment Holding Class of Name of Entity 2020 2019 2020 2019 Nature of Business Share % % $’000 $’000

Greater Investment Services Pty Ltd Ordinary 100% 100% 80 80 Management Services

Greater Charitable Foundation Trust N/A 100% 100% - - Charitable Foundation

Greater Charitable Foundation Pty Ordinary 100% 100% - - Trustee Ltd

Mortgage securitisation GBS Receivables Repo Trust N/A N/A N/A N/A N/A special purpose entity

Mortgage securitisation GBS Secured Funding Trust No 1 N/A N/A N/A N/A N/A special purpose entity

44 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

Notes: a) All the above entities are incorporated/established in Australia. b) The Company has control of GBS Receivables Repo Trust and GBS Secured Funding Trust No 1 as the Company is exposed to, and has the ability to affect, the variable returns associated with these special purpose entities. c) The GBS Receivables Repo Trust is an internal securitisation and the Company holds all of the notes on issue. At balance date the units had a value of $700M (2019 $700M). d) The GBS Secured Funding Trust No 1 is an internal securitisation and the Company holds part of the notes on issue. At balance date the units had a value of $40M (2019 $40M).

13. DEFERRED TAX ASSETS

Net deferred tax assets 3,136 2,362 3,134 2,362

A) Composition of Net Deferred Tax Assets Deferred tax assets The balance comprises temporary differences attributable to Doubtful debts 2,548 1,385 2,548 1,385 Impaired assets - - - - Employee benefits 3,247 3,089 3,247 3,089 Property, plant and equipment 892 1,431 892 1,431 Deferred revenue 9 58 9 58 Accrued expenditure 1,271 1,286 1,269 1,286 7,967 7,249 7,965 7,249 Amounts recognised directly in equity/other comprehensive income Cash flow hedges - - - - 7,967 7,249 7,965 7,249

Deferred tax liabilities Less set-off of deferred tax liabilities The balance comprises temporary differences attributable to Property, plant and equipment (1,060) (1,059) (1,060) (1,059) Prepaid Expenditure (16) (16) (16) (16) Securitisation trust establishment costs (13) (12) (13) (12) (1,089) (1,087) (1,089) (1,087) Amounts recognised directly in equity/other comprehensive income Property revaluation surplus reserve (2,039) (2,178) (2,039) (2,178) Investment securities revaluation reserve (303) - (303) - Cash flow hedges (1,400) (1,622) (1,400) (1,622) Total set-off amount of deferred tax liabilities (4,831) (4,887) (4,831) (4,887)

45 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

B) Movements in Net Deferred Tax Assets

Attributable to deferred tax assets Opening balance 7,249 7,107 7,249 7,196

Credited/(charged) to the statement of comprehensive 707 2,469 705 2,469 income

Credited/(charged) to equity/other comprehensive - (2,416) - (2,416) income Under/(over) provision in prior year 11 89 11 - 7,967 7,249 7,965 7,249

Less set-off of deferred tax liabilities Attributable to deferred tax liabilities Opening balance 4,887 3,506 4,887 3,506 Charged/(credited) to the statement of comprehensive (114) 1,248 (114) 1,248 income Charged/(credited) to equity/other comprehensive income 58 142 58 142 Under/(over) provision in prior year - (9) - (9) Total set-off amount of deferred tax liabilities 4,831 4,887 4,831 4,887

NET DEFERRED TAX ASSETS 3,136 2,362 3,134 2,362

C) Recovery of Deferred Tax Assets

Attributable to deferred tax assets Deferred tax assets to be recovered after more than 2,394 2,692 2,392 2,692 12 months Deferred tax assets to be recovered within 12 months 5,573 4,557 5,573 4,557 7,967 7,249 7,965 7,249 Attributable to deferred tax liabilities Deferred tax liabilities to be settled after more than 12 months 3,370 3,205 3,370 3,205 Deferred tax liabilities to be settled within 12 months 1,461 1,682 1,461 1,682 4,831 4,887 4,831 4,887 NET DEFERRED TAX ASSETS 3,136 2,362 3,134 2,362

46 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000 14. PROPERTY, PLANT AND EQUIPMENT

All property, plant and equipment are non-current assets Land and buildings 22,358 23,203 22,358 23,203 Right-of-use asset – branches 33,252 - 33,252 - Right-of-use asset – ATM locations 1,034 - 1,034 - Less accumulated depreciation (9,295) - (9,295) - 47,349 23,203 47,349 23,203

Leasehold improvements 13,571 13,915 13,571 13,915 Less accumulated depreciation (12,319) (12,359) (12,319) (12,359) 1,252 1,556 1,252 1,556

Plant and equipment 20,180 20,076 20,180 20,076 Less accumulated depreciation (14,237) (13,308) (14,237) (13,308) Right-of-use asset – motor vehicles 336 - 336 - Less accumulated depreciation (27) - (27) - 6,252 6,768 6,252 6,768 PROPERTY, PLANT AND EQUIPMENT 54,853 31,527 54,853 31,527

A) Valuation of Land and Buildings

Use of estimates and judgements The valuation of land and buildings is on the basis of fair market values based on existing use and are classified as level 3 assets. In determining fair value, Greater Bank uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Specifically, inputs include observations of the net rental market and current commercial capitalisation rates. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from the fair value. The Directors’ assessments are supported by independent valuations. Details of the independent valuations are shown below. June 2020 – Directors’ assessment of fair value at 30 June 2020 having considered the independent valuations undertaken at 30 June 2020 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265). June 2019 – Directors’ assessment of fair value at 30 June 2019 having considered the independent valuations undertaken at 30 June 2019 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265) and H Pawlik, FAPI CPV, of WBP Group (Reg Valuer No. 67837).

B) Carrying amounts that would have been recognised if Land and Buildings were stated at cost

Freehold land and buildings stated on the historical cost basis, would be as follows

Land and buildings Cost 19,697 19,678 19,697 19,678 Accumulated depreciation (6,260) (5,859) (6,260) (5,859) Net book amount 13,437 13,819 13,437 13,819

Right-of-use assets are already stated on the historical cost basis and have not been included above.

47 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000 C) Movement in Land and Buildings

Balance as at start of year 23,203 23,437 23,203 23,437 Additions 19 1,045 19 1,045 Disposals - (400) - (400) Revaluation increment/(decrement) recognised in other (465) (444) (465) (444) comprehensive income Depreciation expense (399) (435) (399) (435) Right-of-use asset recognised on adoption of AASB 16 28,766 - 28,766 - Right-of-use asset additions – renewed leases 5,519 - 5,519 - Depreciation expense – right-of-use assets (9,295) - (9,295) - Balance as at end of year 47,349 23,203 47,349 23,203

The adoption of AASB 16 Leases on 1 July 2019 resulted in the recognition of $28,766,212 right of use asset. Refer Note 1A (iii) and Note 28 for details on the adoption of AASB 16.

D) Movement in Leasehold Improvements

Balance as at start of year 1,556 1,561 1,556 1,561

Additions 263 602 263 602

Disposals - - - - Work in progress 25 - 25 - Depreciation expense (592) (607) (592) (607) Balance as at end of year 1,252 1,556 1,252 1,556

E) Movement in Plant and Equipment

Balance as at start of year 6,768 6,473 6,768 6,473 Additions 2,431 3,443 2,431 3,443 Disposals (642) (469) (642) (469) Work in progress 35 - 35 - Revaluation increment/(decrement) recognised in other - (28) - (28) comprehensive income Depreciation expense (2,649) (2,651) (2,649) (2,651) Right-of-use asset additions during the year 336 - 336 - Depreciation expense – right-of-use assets (27) - (27) - Balance as at end of year 6,252 6,768 6,252 6,768

48 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

15. INVESTMENT PROPERTIES

All Investment Properties are non-current assets Investment properties 847 879 847 879

A) Valuation of Investment Properties Use of estimates and judgements The valuation of investment properties is on the basis of fair market values based on existing use and are classified as level 3 assets. In determining fair value, Greater Bank uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Specifically, inputs include observations of the net rental market and current commercial capitalisation rates. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from fair value. The Directors’ assessments are supported by independent valuations. Details of the independent valuations are shown below. June 2020 – Directors’ assessment of fair value at 30 June 2020 having considered the independent valuations undertaken at 30 June 2020 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265). June 2019 – Directors’ assessment of fair value at 30 June 2019 having considered the independent valuations undertaken at 30 June 2019 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265) and H Pawlik, FAPI CPV, of WBP Group (Reg Valuer No. 67837).

B) Movement in Investment Properties

Balance as at start of year 879 5,857 879 5,857 Revaluation increment/(decrement) recognised in the (32) - (32) - statement of comprehensive income Disposals - (4,978) - (4,978) Balance as at end of year 847 879 847 879

C) Amount recognised in the Statement of Comprehensive Income for Investment Properties

Rental income 106 243 106 243 Direct operating expenses (23) (118) (23) (118) 83 125 83 125

D) Maturity analysis of Lease Payments to be received (undiscounted)

Lease Payments to be Received – Maturity Profile 2020 – Consolidated & Company Less than 12 1 to 2 2 to 3 3 to 4 4 to 5 Over 5 Total months years years years years years $’000 $’000 $’000 $’000 $’000 $’000 $’000 Rental Income 121 121 66 57 57 - 422

Lease Payments to be Received – Maturity Profile 2019 – Consolidated & Company Less than 12 1 to 2 2 to 3 3 to 4 4 to 5 Over 5 Total months years years years years years $’000 $’000 $’000 $’000 $’000 $’000 $’000 Rental Income 69 - - - - - 69

49 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

16. INTANGIBLE ASSETS

All intangible assets are non-current assets Computer software 17,315 13,086 17,315 13,086 Less accumulated amortisation (11,074) (8,918) (11,074) (8,918) 6,241 4,168 6,241 4,168

A) Movement in Software Balances

Balance as at start of year 4,168 6,032 4,168 6,032 Additions 1,291 1,044 1,291 1,044 Disposal (2) (127) (2) (127) Work in progress 3,013 - 3,013 - Amortisation expense (2,229) (1,675) (2,229) (1,675) Impairment expense - (1,106) - (1,106) Balance as at end of year 6,241 4,168 6,241 4,168

17. PAYABLES AND OTHER LIABILITIES All payables and other liabilities are expected to be settled within 12 months Creditors and other accruals 11,896 9,573 11,521 10,468 Employee benefits 4,541 4,382 4,541 4,382 16,437 13,955 16,062 14,850

18. DEFERRED REVENUE

Expected to be brought to account within 12 months 1,427 1,732 1,427 1,732 Expected to be brought to account after 12 months - - - - 1,427 1,732 1,427 1,732

A) Movement in Deferred Revenue Balances

Opening deferred revenue 1,732 306 1,732 306 Adjustment for adoption of AASB 15 - 1,370 - 1,370 Consideration received from customers 2,690 3,031 2,690 3,031 Revenue recognised in reporting period (2,995) (2,975) (2,995) (2,974) Closing deferred revenue 1,427 1,732 1,427 1,732

50 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

19. DEPOSITS AND OTHER BORROWINGS

Call deposits 3,663,645 3,132,529 3,667,035 3,135,595 Term deposits 2,717,169 2,898,582 2,717,169 2,898,582 Securities sold under repurchase agreements 68,420 110,064 68,420 110,064 6,449,234 6,141,175 6,452,624 6,144,241

Refer Note 30E for the split of current and non-current deposits. Securities sold under repurchase agreements are with the Reserve Bank of Australia.

Collateral Arrangements – Assets Pledged Securities* 80,548 127,488 80,548 127,488 80,548 127,488 80,548 127,488 * Represents assets pledged as collateral to secure liabilities. The corresponding liability has been disclosed above in Securities sold under repurchase agreements. Greater Bank has pledged collateral as part of entering repurchase agreements. Repurchase Agreements are transacted under market standard terms and conditions as per the Global Master Repurchase Agreements with our counterparties.

20. CURRENT TAX LIABILITY / (ASSET) All current tax assets and liabilities are expected to be settled within 12 months Income tax payable (725) 601 (725) 601 (725) 601 (725) 601

21. OTHER FINANCIAL LIABILITIES

Commercial notes 449,947 449,878 - - Loans – securitisation special purpose entities - - 1,158,248 1,159,174 Lease liability 25,908 - 25,908 - 475,856 449,878 1,184,156 1,159,174

Other financial liabilities expected to be settled within 124,546 117,940 286,792 275,330 12 months Other financial liabilities expected to be settled after 12 months 351,310 331,938 897,364 883,844 475,856 449,878 1,184,156 1,159,174

51 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

22. PROVISIONS

Long service leave provision 6,282 5,915 6,282 5,915 6,282 5,915 6,282 5,915 Provisions expected to be settled within 12 months 687 630 687 630

Provisions expected to be settled after 12 months 5,595 5,285 5,595 5,285

6,282 5,915 6,282 5,915

Movement in provisions – Consolidated & Company 1 Jul 19 Increase Released 30 Jun 20 $’000 $’000 $’000 $’000 Long service leave provision 5,915 1,309 (942) 6,282

5,915 1,309 (942) 6,282

23. RESERVES

Community support reserve 497 631 497 631

Cash flow hedge reserve 3,255 3,792 3,255 3,792

Credit loss reserve 11,457 10,512 11,457 10,512

Property revaluation surplus reserve 7,138 7,464 4,756 5,082

Investment securities revaluation reserve 707 - 707 - 23,054 22,399 20,672 20,017

MOVEMENT IN RESERVES

A) Community Support Reserve

Balance as at start of year 631 861 631 861

Transfer (to)/from retained profits (134) (230) (134) (230)

Balance as at end of year 497 631 497 631

The community support reserve has been set aside to provide services and facilities in the communities in which Greater Bank operates.

B) Cash Flow Hedge Reserve

Balance as at start of year 3,792 (1,802) 3,792 (1,802)

Recognised in equity during the year (740) 8,051 (740) 8,051

Transferred to the statement of comprehensive income (27) (59) (27) (59) during the year Deferred tax 230 (2,398) 230 (2,398)

Balance as at end of year 3,255 3,792 3,255 3,792

The cash flow hedge reserve represents the future value of hedged instruments that have been designated as effective hedges in accordance with hedge accounting as described in Note 1P (i).

52 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

C) Credit Loss Reserve Balance as at start of year 10,512 14,053 10,512 14,053 Transfer (to)/from retained profits 945 (3,541) 945 (3,541) Balance as at end of year 11,457 10,512 11,457 10,512 The credit loss reserve is a requirement of Australian Prudential Regulation Authority Prudential Standards and represents the potential inherent losses in the loans and advances portfolio under a stressed economic environment.

D) Property Revaluation Surplus Reserve Balance as at start of year 7, 4 6 4 7,794 5,082 5,412 Revaluation gross (864) (906) (864) (906) Deferred tax 259 272 259 272 Depreciation transfer gross 399 434 399 434 Deferred tax (120) (130) (120) (130) Balance as at end of year 7,138 7,464 4,756 5,082 The property revaluation surplus reserve is used to record the unrealised increments and decrements on the revaluation of property as described in Note 1J.

E) Investment Securities Revaluation Reserve Balance as at start of year - - - - Net gain/(losses) on revaluation of investment securities 1,010 - 1,010 - Deferred tax (303) - (303) - Balance as at end of year 707 - 707 - The investment securities revaluation reserve is used to record the unrealised increments and decrements on the revaluation of securities.

24. RETAINED PROFITS

Retained profits 547,624 525,865 547,395 525,329

Movement in retained profits Balance at beginning of year 525,865 494,218 525,329 494,221 Adjustment for adoption of AASB 9 - (3,151) - (3,151) Tax effect of adoption of AASB 9 - 945 - 945 Adjustment for adoption of AASB 15 - (1,370) - (1,370) Adjustment for recognition of Greater Charitable (540) - - - Foundation grant obligations 525,325 490,642 525,329 490,645 Net profit in the year 23,110 31,452 22,877 30,913 Transfer (to)/from credit loss reserve (945) 3,541 (945) 3,541 Transfer (to)/from community contribution reserve 134 230 134 230 547,624 525,865 547,395 525,329

53 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $ $ $ $ 25. RELATED PARTIES

A) Controlled Entities

Information in respect of controlled entities is disclosed in Note 12. Transactions with these entities are disclosed in Note 25C below.

B) Key Management Personnel

Key management personnel are the Directors and those Senior Executives who are responsible for the planning, directing and controlling of the activities of Greater Bank. Details of changes to the Directors are shown in the Directors’ Report.

i) Compensation paid to key management personnel

Short-term employee benefits 3,426,822 3,502,483 3,426,822 3,502,483 Post-employment benefits 214,172 230,534 214,172 230,534 Other long-term benefits 289,191 231,102 289,191 231,102 Termination benefits - - - - 3,930,185 3,964,119 3,930,185 3,964,119

ii) Loans to key management personnel

Loans outstanding at beginning of year 5,071,944 6,162,223 5,071,944 6,162,223 Net balances from changes in personnel - (1,478,123) - (1,478,123) Advances made during the year 1,540,042 626,978 1,540,042 626,978 Interest and fees charged 195,934 225,731 195,934 225,731 Repayments made during the year (550,970) (464,865) (550,970) (464,865) Loans outstanding at end of year 6,256,950 5,071,944 6,256,950 5,071,944 Loans granted at commercial terms are provided at the same interest rate and terms available to customers. Security is taken in accordance with the Company’s normal credit risk policy.

iii) Deposits made by key management personnel

Deposits outstanding at the beginning of year 2,846,605 2,113,827 2,846,605 2,113,827 Net balances from changes in personnel (166,043) (215,247) (166,043) (215,247) Interest paid 32,972 30,071 32,972 30,071 Net movement in deposits during the year (27,6 69) 917,95 4 (27,6 69) 917,95 4 Deposits outstanding at the end of the year 2,685,865 2,846,605 2,685,865 2,846,605

The Company provides each staff member a deposit account upon which no transaction fees are payable. These accounts are included in the above disclosure.

54 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

C) Transactions with Other Related Parties The Company has related party transactions with the following entities: i) Greater Investment Services Pty Ltd invests funds with the Company. At balance date these deposits totalled $973,000 (2019 $720,000). In support of the entities AFS licence, the Company has provided a support agreement including a financial support commitment to the entity. The entity acts as the manager for GBS Receivables Repo Trust and GBS Secured Funding Trust No 1. The Company provides administration services to the entity for $NIL (2019 $NIL) consideration. During the year Greater Investment Services Pty Ltd paid a dividend of $NIL (2019 $NIL), issued NIL shares (2019 NIL) and returned capital of $NIL (2019 $NIL) to the Company. ii) The Company provides custodian, basis swap, interest rate swap and redraw commitment facilities to GBS Receivables Repo Trust and GBS Secured Funding Trust No 1 as well as acting as servicer of the securitised mortgages. These trusts are special purpose entities that allow the Company to access funding by securitising mortgage loans. The Company holds all the units in GBS Receivables Repo Trust. At balance date the units had a value of $700,000,000 (2019 $700,000,000). In addition, the Company holds units in GBS Secured Funding Trust No 1. At balance date the units had a value of $40,000,000 (2019 $40,000,000). iii) Greater Charitable Foundation invests funds with the Company. At balance date these deposits totalled $2,417,000 (2019 $2,345,000). The Trust’s principal activities are the provision of distributions to other entities or persons to advance or promote a charitable purpose. During the year the Company donated $1,000,000 (2019 $990,000) to the foundation. During the year, the Company provided administrative services to the foundation of $379,000 (2019 $329,000) for nil consideration.

26. REMUNERATION OF AUDITORS

PricewaterhouseCoopers Australia CONSOLIDATED COMPANY During the year the following fees were paid or payable for 2020 2019 2020 2019 services provided by the auditor of the parent entity: $ $ $ $ Auditing services for the financial statements & prudential regulation reporting of any entity within the consolidated 410,986 376,006 363,173 329,656 entity Other audit-related work 43,726 31,409 39,601 27,409 Taxation advisory services 21,640 - 21,640 - General advisory services 33,001 110 33,001 110

509,353 407,525 457,415 357,175

55 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

27. COMMITMENTS Greater Bank leases various ATM locations and Branch offices under non-cancellable operating leases expiring within one to twelve years. The leases have varying terms, escalation clauses and renewal rights. From 1 July 2019 Greater Bank has adopted AASB16 Leases which has recognised a Right-of-use Asset and a Lease Liability in the Balance Sheet (refer Note 28). Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows

i) Lease commitments Within one year - 9,496 - 9,496 Later than one year but not later than five years - 18,062 - 18,062 Later than five years - 3,132 - 3,132 - 30,690 - 30,690

ii) Capital commitments As at 30 June 2020, Greater Bank has a commitment of $51,388 (2019 $5,500) for IT related projects.

iii) Project commitments As at 30 June 2020, Greater Bank has a commitment of $19,232,414 (2019 $3,599,707) for the Digital Transformation project being contracts for software subscriptions and consulting.

A) Reconciliation of Closing Lease Commitments to Opening Lease Liability

Operating lease commitments as at 30 June 2019 30,690 Discounted using the interest rate implicit in the lease (1,924) Lease liability recognised as at 1 July 2019 28,766

28. LEASES Greater Bank adopted AASB 16 Leases on 1 July 2019. Greater Bank has applied AASB 16 retrospectively using the Modified Retrospective Method, with the cumulative effect recognised at the date of initial application. Therefore there are no prior year comparatives. Greater Bank has elected to apply the Initial Recognition Exemption for deferred taxes. This exemption allows Greater Bank to avoid raising a deferred tax asset and deferred tax liability for the Lease Liability and right-of-use asset (respectively). Recognition AASB 16 removes the distinction between finance and operating leases. Lessees are now required to recognise a ‘right-of- use’ asset and a lease liability on the balance sheet for all leases (with the exception of short-term leases and low value asset leases). Greater Bank has recognised all Branch, ATM and Motor Vehicle leases in the balance sheet by class of underlying asset and the corresponding lease liability is recognised within other financial liabilities. Key judgements AASB 16 requires the future lease payments to be discounted using the interest rate implicit in the lease, if this can be readily determined, otherwise the lessee’s incremental borrowing rate is to be used. Greater Bank has determined its incremental borrowing rate at 3% as at 1 July 2019 to be most appropriate. A key judgement has been made to include all options to extend leases in the measurement of the right-of-use asset and the lease liability based on the Company’s historical leasing arrangements. Adjustments shall be made if the Company determines a lease option is not likely to be exercised.

56 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

Lease Disclosures

LEASES Consolidated Consolidated Company Company 2020 2019 2020 2019 $’000 $’000 $’000 $’000 Depreciation – right-of-use assets – land & buildings 9,624 - 9,624 - Depreciation – right-of-use assets – plant & equipment 27 - 27 - Lease liability interest expense 765 - 765 - Variable lease payments expense not included in the (2) - (2) - measurement of lease liabilities Rental expense – ad hoc use of office space 136 - 136 - Total cash outflow for leases 9,781 - 9,781 - Additions to right-of-use assets 5,855 - 5,855 - Carrying amount of right-of-use assets – Land & Buildings 24,990 - 24,990 - Carrying amount of right-of-use assets – Plant & Equipment 309 - 309 -

Undiscounted Lease Liabilities Contractual Maturity Profile 2020 – Company & Consolidated Less than 3 3 to 12 1 to 3 3 to 5 Over 5 LEASE LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Lease liabilities 2,428 6,672 10,867 3,704 3,347 27,018

Undiscounted Lease Liabilities Contractual Maturity Profile 2019 – Company & Consolidated Less than 3 3 to 12 1 to 3 3 to 5 Over 5 LEASE LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Lease liabilities ------

57 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

29. RECONCILIATION OF NET CASH

A) Provided by Operating Activities to Operating Profit after Income Tax

Operating profit after income tax 23,110 31,451 22,877 30,913 Depreciation and amortisation 15,520 5,368 15,520 5,368 Impaired losses/(gains) on loans 5,453 4,507 5,453 4,507 Profit on sale of investments (1,361) (1,589) (1,361) (1,589) Loss/(profit) on sale of property, plant and equipment 2 775 2 775 Fair value movement of land and buildings - - - - Fair value movement of investment properties 32 - 32 - Increase/(decrease) in accrued interest payable (8,698) 572 (7,962) 571 Decrease/(increase) in accrued interest receivable 1,212 325 1,212 325 Decrease/(increase) in other receivables (473) 395 (473) 395 Decrease/(increase) in net deferred tax assets (707) (1,113) (705) (1,025) Decrease/(increase) in sundry debtors and prepaid (559) (697) (737) (422) expenditure Increase/(decrease) in deferred revenue (305) (112) (305) (112) Increase/(decrease) in income taxes payable (1,326) (2,008) (1,326) (2,008) Increase/(decrease) in creditors and accrued expenses 2,678 (1,611) 2,571 (1,601) Increase/(decrease) in other provisions 367 377 367 377 Decrease/(increase) in loans and advances (99,452) (328,548) (100,811) (327,789) Decrease/(increase) in investment securities (292,858) (96,049) (292,858) (101,049) Increase/(decrease) in deposits 314,923 381,390 315,248 381,825 NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES (42,620) (6,429) (42,941) (10,814)

B) Provided by Financing Activities to Other Financial Liabilities

Balance as at start of year 449,877 399,807 1,159,174 1,096,445 Cash flows (9,807) 50,000 (10,803) 62,657 Non-cash movement 35,786 70 35,785 72 Balance as at end of year 475,856 449,877 1,184,156 1,159,174

58 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

30. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

A) Financial Assets and Liabilities The carrying amount of the following categories of financial assets and liabilities are

Financial assets Financial assets measured at amortised cost 7,075,632 7,121,029 7,784,258 7,831,287 Fair value through other comprehensive income 379,808 615 379,888 695 Financial assets that are designated hedging instruments 4,949 5,669 4,949 5,669 7,460,389 7,127,313 8,169,095 7,837,651

Financial liabilities Financial liabilities measured at amortised cost 6,940,692 6,602,358 7,652,007 7,315,614 Financial liabilities that are designated hedging instruments 46 111 46 111 6,940,738 6,602,469 7,652,053 7,315,725 Greater Bank early adopted AASB 9 Financial Instruments and AASB2009-11 Amendments to Australian Accounting Standards arising from AASB 9 from 1 July 2010 and on review of the current AASB 9 Financial Instruments adopted from 1 July 2018, there have been no changes to financial asset or liability classifications.

B) Risk Management Framework Greater Bank’s activities are principally related to the use of financial instruments. Greater Bank predominantly accepts deposits from customers at both fixed and floating rates for various periods and lends to retail borrowers at both fixed and floating rates with a range of credit standings for a variety of purposes such as residential, personal and commercial. Surplus funding is invested in high quality liquid or investment securities. Accordingly, Greater Bank’s activities are exposed to the following key financial risks: market risk, credit risk and liquidity risk. Risks are monitored and managed using an enterprise wide risk management system. This system records all the identified risks, the risk controls and risk mitigants used to manage the risks and an assessment of each risk. These risks are formally reviewed by management and presented to the Board Risk Committee on a quarterly basis. Risk management is carried out by the Executive Committee, comprising of Senior Management Executives, under policies approved by the Board of Directors (the Board). The Board provides written principles for the overall risk management, as well as written policies covering specific areas as required, to meet minimum Prudential Standards requirements issued by the Australian Prudential Regulation Authority (APRA). These Risk Management Policies and supporting documents identify Greater Bank’s policies and procedures, processes and controls that comprise its risk management and control systems. These systems address key material risks, financial and non-financial, likely to be faced by Greater Bank. The policies and procedures are reviewed annually by senior management and the Board to take account of changing circumstances. In addition, the Chief Executive Officer annually certifies to APRA that Senior Management and the Board have identified key risks facing Greater Bank. The Board has established systems to monitor those risks, including setting and requiring adherence to a series of prudential limits, adequate timely reporting processes, and compliance reporting demonstrating that these risk management systems are operating effectively and are adequate having regard to the risks they are designed to control.

59 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

C) Market Risk The predominant market risk that Greater Bank is exposed to is interest rate risk. Greater Bank is not exposed to foreign exchange or other price risk. Greater Bank’s interest rate risk arises from the net difference in cash flows from long-term fixed rate assets or liabilities which are funded by or invested in floating rate assets or liabilities. Long-term fixed rate assets include loans advanced to customers and other investment securities, while long-term fixed rate liabilities includes deposits raised from customers and other wholesale funding arrangements. This exposure creates an interest rate risk because the net balances and cash flows generated from these assets and liabilities are dependent upon movements in interest rates. Greater Bank has established policy limits for the level of interest rate risk. Current policy measures interest rate risk in terms of the net present value of a basis point (PVBP) movement in interest rates. PVBP measures the net effect on the fair value of financial instruments for every one basis point (0.01%) change in the interest rate yield curve. The policy has limits for the amount of movement in the fair value of net assets or liabilities exposed to a hypothetical basis point variance before the risk requires active management. The limits are placed for specific time periods together with an overall portfolio limit. The risk is managed by, or a combination of, changes to product pricing or product terms to change consumer product purchasing preferences, by the use of interest rate swaps or other derivative instruments, or by the maturity placement of investment securities. When interest rate swaps are used for the above purpose, Greater Bank uses hedge accounting. For the PVBP model the cash flows from financial assets and liabilities are spread over time buckets based on contractual repricing except for ‘at call’ transactional accounts. At call transactional accounts are liabilities raised from customers and historically have limited sensitivity to movements in interest rates. The model allocates the portion of the transactional account balances that is sensitive to movements in interest rates into the less than three months’ time bucket while the remaining portion of transaction account balances that are not sensitive to interest rate movements are evenly allocated into each time bucket over a five year time horizon. The yield curve used in the PVBP model is based off the relevant published market interest rates. The following tables set out the Company’s and Greater Bank’s exposure to interest rate risk, measured by the present value of a basis point change in the yield curve.

Present Value of Basis Point (PVBP) Profile 2020 – Consolidated Financial Instruments Less than 3 3 to 12 1 to 3 3 to 5 Over 5 Total months months years years years Net Exposure ($’s) 10,481 (12,921) (15,620) 35,047 (1,149) 15,838

Present Value of Basis Point (PVBP) Profile 2020 – Company Financial Instruments Less than 3 3 to 12 1 to 3 3 to 5 Over 5 Total months months years years years Net Exposure ($’s) 10,492 (12,873) (15,456) 35,253 (1,149) 16,267

Present Value of Basis Point (PVBP) Profile 2019 – Consolidated Financial Instruments Less than 3 3 to 12 1 to 3 3 to 5 Over 5 Total months months years years years Net Exposure ($’s) 12,099 (8,157) (7,903) 6,163 (1,419) 783

Present Value of Basis Point (PVBP) Profile 2019 – Company Financial Instruments Less than 3 3 to 12 1 to 3 3 to 5 Over 5 Total months months years years years Net Exposure ($’s) 12,107 (8,121) (7,742) 6,363 (1,419) 1,188

D) Credit Risk Greater Bank’s credit risk predominantly arises from the risk that counterparties will not meet their contractual obligations with the consolidated entity. The main exposure to credit risk for Greater Bank is either loans provided to customers or investments made for prudential liquidity needs. Credit risk exposure for loans is minimised by prudent assessment of each individual loan applicant, obtaining security for the majority of loans made and where credit risk warrants undertaking credit insurance.

60 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 The credit risk policy assesses the credit worthiness of the applicant considering not only the ability to service the loan but also other factors such as length and stability of employment, asset accumulation and stability of residency. To facilitate this, a credit risk grading system is used that scores or grades loan applicants based on the above criteria. Security still remains an important consideration in assessing the granting of credit. The pricing offered to loan applicants is dependent upon a combination of the loan applicant’s credit risk grade, the security provided and the reason or purpose for the credit request. Greater Bank minimises concentration of credit risk in relation to loans by dealing with a relatively large number of individual customers. Exposure to credit risk is limited to the market area that Greater Bank participates in. Greater Bank is active in the retail finance markets of Newcastle, Hunter Valley, Central Coast, Sydney, South Coast, Central West and North Coast of New South Wales and South-East Queensland. The Company imposes portfolio limits for each loan product and for each credit risk grade. These portfolio limits seek to limit Greater Bank’s exposure to certain products that represent a specific credit exposure and also to ensure the portfolio is not concentrated in a specific category of credit risk grade loan applicants. Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit. Where appropriate, guarantees are also sought from related parties to a loan. No security is taken for loans via credit cards and some personal loans. Credit risk also arises in relation to financial guarantees given to certain parties. Such guarantees are secured by a registered mortgage over real estate property or by a charge over funds held on deposit. The Company has entered into a number of residential mortgage backed securitisation arrangements. Loans are equitability assigned to special purpose vehicles. These special purpose vehicles issue commercial notes to note holders secured by the cash flows arising from the loans. A substantial component of the credit risk has been transferred to the unit holders. The Company still retains the market risk, operational risk and some credit risk from these loans. Due to the retention of substantially all the risks and rewards of these loans, Greater Bank continues to recognise these assets as ‘loans and advances’. The following sets out the carrying value of securitised loans and the associated liabilities. The fair value of the transferred assets and associated liabilities approximates their carrying value.

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000

Carrying amount of transferred assets Loans and advances 441,179 441,916 441,179 441,916

Carrying amount of associated liabilities to the transferred assets Commercial notes 450,000 450,000 450,000 450,000

Credit risk exposure for treasury transactions (i.e. investment securities, cash and derivative transactions) to counterparties is minimised by limiting transactions to pre-approved financial institutions. Greater Bank also has policies that limit the amount of credit exposure to individual counterparties and limit portfolio exposures based on external credit rating agency bands. As a result, there is currently no impairment against the treasury transactions. The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount of these indicated in the balance sheet except for loans and advances. For loans and advances the maximum credit risk exposure for Greater Bank is $5,380M (2019 $5,280M) and for the Company $5,380M (2019 $5,280M). For loans that are securitised, credit risk is transferred to a special purpose vehicle (refer Note 1B). This maximum exposure does not take into account the value of any security. The credit quality of financial assets that have not had a significant increase in credit risk can be assessed by reference to the external credit rating (if available) or the security provided. The following table provides an analysis of credit risk for financial assets that have not had a significant increase in credit risk by either external credit rating or type of security.

61 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

CONSOLIDATED COMPANY 2020 2019 2020 2019 $’000 $’000 $’000 $’000 Financial assets that have not had a significant increase in credit risk Cash on hand 8,910 7,904 8,987 7,972 Cash & cash equivalents – by external credit rating (S&P) - A1+/AAA 68,570 58,948 31,987 23,690 - A1/AA+/AA/AA- 39,988 94,837 39,988 94,837 - A2/A+/A/A- 14,996 29,966 14,996 29,966 - A3 - - - - - Unrated - - - - Investment securities – by external credit rating (S&P) - A1+/AAA 295,972 296,982 1,035,972 1,036,982 - A1/AA+/AA/AA- 561,699 514,039 561,699 514,039 - A2/A+/A/A- 498,396 262,121 498,396 262,121 - A3 - - - - - BBB+ 31,057 18,077 31,057 18,077 - BBB 87,222 81,377 87,222 81,377 - Unrated 28,580 36,265 28,580 36,265 Other receivables (unsecured) 3,860 2,650 8,933 8,098 Derivative financial instruments - A1+/AAA 4,949 5,669 4,949 5,669 Loans and advances - mortgage over residential property security 5,196,698 5,078,403 5,196,698 5,078,403 - mortgage over other property 2,630 2,881 2,630 2,881 - other security 70,504 73,966 70,504 73,966 - no security 63,439 49,905 63,439 49,905 Other financial assets (unsecured) 615 615 695 695 6,978,084 6,614,605 7,686,790 7,324,943

Effect of collateral – all loans where the consolidated entity bears the credit risk For loans where Greater Bank bears the credit risk, the carrying value of the loans and the degree of credit risk involved is shown in the table below. Loans classed as ‘Fully Secured’ are residentially secured loans with either full mortgage insurance or with a loan to valuation ratio of 80% or less. Loans classed as secured are residentially secured loans with either partial or no mortgage insurance or a loan to valuation ratio of more than 80% plus commercial loans secured by non-residential property, plus secured consumer loans and secured guarantees. Loans with no security are unsecured consumer loans or credit cards.

All Loans Where Entity Bears The Credit Risk 2020 – Consolidated & Company LOANS Fully Secured Secured No Security Total $’000 $’000 $’000 $’000 Mortgage Over Residential Property 5,086,712 150,205 - 5,236,917 Mortgage Over Other Property - 2,630 - 2,630 Other Security - 71,326 - 71,326 No Security - - 68,805 68,805 Total 5,086,712 224,161 68,805 5,379,678

62 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

All Loans Where Entity Bears The Credit Risk 2019 – Consolidated & Company LOANS Fully Secured Secured No Security Total $’000 $’000 $’000 $’000 Mortgage Over Residential Property 4,971,588 169,880 - 5,141,468

Mortgage Over Other Property - 2,881 - 2,881 Other Security - 75,433 - 75,433 No Security - - 61,021 61,021 Total 4,971,588 248,194 61,021 5,280,803

Loans where credit risk has increased significantly but are not credit impaired An analysis of loans where credit risk has increased significantly but are not credit impaired (excluding those in repayment deferral to enhance comparability) is set out in the table below. A loan is considered to be past due when any payment under contractual terms has been missed. The amount included is the carrying value, rather than the overdue amount.

2020 Loans where credit risk has increased significantly but are not credit impaired Consolidated & Company

Mortgage Over Residential Property 41,195 Mortgage Over Other Property 285 Other Security 620 No Security 2,546 Total 44,646

2019 Loans where credit risk has increased significantly but are not credit impaired Consolidated & Company

Mortgage Over Residential Property 47,386 Mortgage Over Other Property 191 Other Security 800 No Security 3,675

Total 52,052

63 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 Loans that are credit impaired The following table shows the gross amount of loans considered credit impaired, along with the ECL (provision for impairment) and assessment of the coverage provided by collateral held in support of impaired loans. The coverage provided by collateral held in support of loans that are credit impaired is shown in the table below. The estimated realisable value of collateral held is based on a combination of formal valuations currently held in respect of such collateral and management’s assessment of the estimated realisable value of collateral held given its experience with similar types of loans in similar situations and the circumstances peculiar to the subject collateral. A loan is deemed ‘Fully Secured’ when it is residentially secured with either full mortgage insurance or with a loan to valuation ratio of 80% or less. ‘Partially Secured’ includes other residentially secured loans not considered ‘Fully Secured’ and other loans that have a non-residential property security. A loan is classed as ‘Unsecured’ if there is no security or if the security value is less than the loan carrying amount.

Effect of Collateral – Impaired Loans 2020 – Consolidated & Company LOANS Fully Secured Partially Secured Unsecured Total $’000 $’000 $’000 $’000 Mortgage Over Residential Property 3,710 507 - 4,217 Mortgage Over Other Property - - - - Other Security - 62 - 62 No Security - - 982 982 Total 3,710 569 982 5,261 Expected Credit Loss (Impairment Provision) (24) (20) (982) (1,026) Carrying Amount 3,686 549 - 4,235

Effect of Collateral – Impaired Loans 2019 – Consolidated & Company LOANS Fully Secured Partially Secured Unsecured Total $’000 $’000 $’000 $’000 Mortgage Over Residential Property 2,703 4,595 - 7,298 Mortgage Over Other Property - - - - Other Security - - - - No Security - - 617 617 Total 2,703 4,595 617 7,915 Expected Credit Loss (Impairment Provision) (576) (528) (617) (1,721) Carrying Amount 2,127 4,067 - 6,194

64 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

E) Liquidity Risk Greater Bank’s liquidity risk arises from the risk that Greater Bank will encounter difficulties in financing its obligations associated with financial liabilities. Greater Bank manages liquidity risk by maintaining sufficient cash and highly marketable securities to not only respond to expected cash flow events but also to provide for a range of unexpected cash flow events. Greater Bank has established policy limits around the minimum level of liquidity and the quality of liquid assets that it holds for liquidity management purposes. The following tables show the contractual maturity of financial liabilities

Financial Liabilities Contractual Maturity Profile 2020 – Consolidated Less than 3 3 to 12 1 to 3 3 to 5 Over 5 FINANCIAL LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Payables and other accruals 11, 896 - - - - 11, 896 Deposits 4,940,558 1,159,391 205,385 75,480 - 6,380,814 Derivatives 14 32 - - - 46 Other financial liabilities 23,066 101,480 344,188 3,657 3,465 475,856 Securities sold under repurchase agreement 40,312 - 28,108 - - 68,420 TOTAL 5,015,846 1,260,903 577,681 79,137 3,465 6,937,032 Unrecognised loan commitments 3 8,211 - - - - 3 8,211

Financial Liabilities Contractual Maturity Profile 2019 – Consolidated Less than 3 3 to 12 1 to 3 3 to 5 Over 5 FINANCIAL LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Payables and other accruals 9,573 - - - - 9,573 Deposits 4,439,097 1,239,996 310,583 41,435 - 6,031,111 Derivatives 64 47 - - - 111 Other financial liabilities 32,600 85,340 331,938 - - 449,878 Securities sold under repurchase agreement 110,064 - - - - 110,064 TOTAL 4,591,398 1,325,383 642,521 41,435 - 6,600,737 Unrecognised loan commitments 71,712 - - - - 71,712

65 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

Financial Liabilities Contractual Maturity Profile 2020 – Company Less than 3 3 to 12 1 to 3 3 to 5 Over 5 FINANCIAL LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Payables and other accruals 11, 521 - - - - 11, 521 Deposits 4,943,948 1,159,391 205,385 75,480 - 6,384,204 Derivatives 14 32 - - - 46 Other financial liabilities 53,334 233,458 5 87, 3 6 5 129,387 180,612 1,184,156 Securities sold under repurchase agreement 40,312 - 28,108 - - 68,420 TOTAL 5,049,129 1,392,881 820,858 204,867 180,612 7,64 8,347 Unrecognised loan commitments 3 8,211 - - - - 3 8,211

Financial Liabilities Contractual Maturity Profile 2019 – Company Less than 3 3 to 12 1 to 3 3 to 5 Over 5 FINANCIAL LIABILITIES Total months months years years years $’000 $’000 $’000 $’000 $’000 $’000 Payables and other accruals 10,468 - - - - 10,468 Deposits 4,442,163 1,239,996 310,583 41,435 - 6,034,177 Derivatives 64 47 - - - 111 Other financial liabilities 75,987 199,344 580,850 125,778 177,215 1,159,174 Securities sold under repurchase agreement 110,064 - - - - 110,064 TOTAL 4,638,746 1,439,387 891,433 167,213 177,215 7,313,994 Unrecognised loan commitments 71,712 - - - - 71,712

F) Fair Value Measurements The fair value of financial assets and liabilities traded in active markets (such as publicly traded equity financial assets) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the consolidated entity is the current bid price. These instruments are included in level 1. The fair value of financial assets and liabilities that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. The fair value of interest rate swaps is calculated as the present value of estimated future cash flows. These instruments are included in level 2. During the financial reporting period no assets or liabilities were transferred between categories. Level 3 financial assets and liabilities are investments in non-listed entities, including controlled entities as set out in Note 12. These investments are illiquid and include non-traded shares and units in unit trusts where there are no reliable inputs that can be used to estimate a fair value. The Company therefore measures these investments at cost, which is supported by the net tangible assets of the entities invested in exceeding the cost value of the shares. The carrying value of level 3 existing financial assets and liabilities has not changed during the financial year.

66 Financial Report Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020 The following tables present Greater Bank’s financial assets and liabilities measured and recognised at fair value as at the reporting date.

Financial Assets and Liabilities

FAIR VALUE MEASUREMENTS Consolidated Consolidated Company Company 2020 2019 2020 2019 $’000 $’000 $’000 $’000

ASSETS

LEVEL 1 Interest rate swap contracts – cash flow hedges - - - - Interest rate swap contracts – at fair value - - - - Debt financial assets 379,193 - 379,193 - LEVEL 2 Interest rate swap contracts – cash flow hedges 4,949 5,669 4,949 5,669 Interest rate swap contracts – at fair value - - - - LEVEL 3 Interest rate swap contracts – cash flow hedges - - - - Interest rate swap contracts – at fair value - - - - Equity financial assets 615 615 615 615 TOTAL ASSETS 384,757 6,284 384,757 6,284

LIABILITIES

LEVEL 1 Interest rate swap contracts – cash flow hedges - - - - Interest rate swap contracts – at fair value - - - - LEVEL 2 Interest rate swap contracts – cash flow hedges 46 111 46 111 Interest rate swap contracts – at fair value - - - - LEVEL 3 Interest rate swap contracts – cash flow hedges - - - - Interest rate swap contracts – at fair value - - - - TOTAL LIABILITIES 46 111 46 111

67 Annual Report 2019–20 Notes to and Forming Part of the Financial Statements for the year ended 30 June 2020

31. CAPITAL MANAGEMENT Greater Bank has established an Internal Capital Adequacy Assessment Process (ICAAP) Policy. Its objectives are to ensure that Greater Bank maintains a level of capital that is: consistent and appropriate to the risks Greater Bank is exposed to from its activities; sufficient to provide a buffer to absorb any unanticipated losses from its activities and, in the event of any major problem, enable it to continue operating while the problem is being addressed; and sufficient to provide depositors and creditors confidence that Greater Bank will continue to honour its obligations to them. The above policy is consistent with the requirements of the Prudential Standards issued by the Australian Prudential Regulation Authority (APRA). Greater Bank is required by APRA to measure and report capital on a risk weighted basis in accordance with the requirements of the Prudential Standards (known as ‘capital adequacy’). APRA requires Greater Bank to maintain minimum levels of capital to risk weighted assets. Greater Bank has met the capital requirements imposed by the Prudential Standards throughout the current and previous financial year. The Board has a policy of imposing an additional level of capital above the minimum required by APRA. Capital adequacy is measured as a ratio of capital to risk weighted assets. Capital is split into two tiers. Common Equity Tier 1 is generally retained earnings, property reserves, reserve balances available for general use and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes. It excludes the fair value assets through other comprehensive income reserve. Tier 2 capital includes qualifying subordinated liabilities and the credit loss reserve. Greater Bank has adopted the standardised approach for measuring credit and operational risk. Credit risk is measured based on allocating weightings to assets that seek to reflect the varying levels of risk associated to on balance sheet assets and off balance sheet exposures. Operational risk is measured based on risk weighting the investment and lending portfolios, plus each significant non-interest income source. Greater Bank’s capital results can be viewed at: https://www.greater.com.au/legal/regulatory-disclosures These results are unaudited, but are consistent with Greater Bank’s prudential reporting requirements.

32. SUBSEQUENT EVENTS There were no material subsequent events since 30 June 2020 and up until the date of this report.

33. COMPANY DETAILS Greater Bank Limited (ABN 88 087 651 956) is a company limited by shares and guarantee, incorporated and domiciled in Australia. Greater Bank’s Legal Entity Identifier (LEI) is 2549006OX3X023N1WR46. The registered office and principal place of business is: Greater Bank Limited 103 Tudor Street Hamilton NSW 2303 The financial report was authorised for issue by the Directors on the 22nd day of September 2020. The Directors have the power to amend and reissue the financial report.

68 Financial Report Directors’ Declaration

In the Directors’ opinion: A) The financial statements and Notes set out on pages 27 to 68 are in accordance with the Corporations Act 2001, including: i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and ii) Giving a true and fair view of Greater Bank Limited’s and the consolidated entity’s financial position as at 30 June 2020 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date; and B) There are reasonable grounds to believe that Greater Bank Limited will be able to pay its debts as and when they become due and payable; and C) Note 1A confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the Directors.

W M Russell Chairman

Signed at Hamilton this 22nd day of September 2020.

69 Annual Report 2019–20

Independent auditor’s report To the members of Greater Bank Limited

Our opinion In our opinion: The accompanying financial report of Greater Bank Limited (the Company) and its controlled entities (together the Group) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Company's and Group's financial positions as at 30 June 2020 and of their financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

What we have audited The Company and Group financial report comprises: the Consolidated and Company balance sheets as at 30 June 2020 the Consolidated and Company statements of comprehensive income for the year then ended the Consolidated and Company statements of changes in equity for the year then ended the Consolidated and Company statements of cash flows for the year then ended the notes to the financial statements, which include a summary of significant accounting policies the directors’ declaration.

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Company and the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

PricewaterhouseCoopers, ABN 52 780 433 757 Level 3, 45 Watt Street, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

70 Financial Report

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Company and the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf. This description forms part of our auditor's report.

PricewaterhouseCoopers

Caroline Mara Newcastle Partner 22 September 2020

71 Annual Report 2019–20

Head Off ice: 103 Tudor Street Hamilton NSW 2303  PO Box 173 Hamilton NSW 2303 P 1300 651 400 F 02 4921 9112 Greater Bank Limited ABN 88 087 651 956. 72AFSL/Australian Credit Licence No. 237476.