Annual Report and Sustainability Update 2018–2019 “Our dedication to running an ethical and sustainable institution has been recognised with Teachers Mutual Bank Limited being named one of the World’s Most Ethical Companies for the sixth year running.” Contents Annual Report and Sustainability Update Our mission is to deliver quality financial products and services to workers and their families within the education, emergency services, and health communities. We will do this in an ethical, simple and friendly manner. Key financial performance 02 Chairperson and CEO’s report 04 Members 06 Social Responsibility 10 Community 14 Employees 18 Environment 22 Summary of Sustainability KPIs and targets 26 Directors’ report 28 Auditor’s independence declaration 32 Financial statements and notes 33 Statement of comprehensive income 34 Statement of changes in member equity 35 Statement of financial position 36 Statement of cash flows 37 Notes to the financial statements 38 Directors’ declaration 87 Independent auditor’s report 88 TEACHERS MUTUAL BANK LIMITED Telephone: 13 12 21 | Fax: (02) 9704 8205 Email: [email protected] | Address: 28-38 Powell Street Homebush NSW 2140 | PO Box: PO Box 7501 Silverwater NSW 2128 | ABN: 30 087 650 459 | AFSL/Australian Credit Licence: 238981 | Design: www.frescocreative.com.au 1 Key Financial Performance Our focus is to maintain sustainable growth to ensure we provide competitive products and services to enable our members to secure their financial futures. OVERVIEW Capital adequacy ratio Membership Capital adequacy is a ratio which protects depositors and Membership refers to all shareholders that are eligible to investors by indicating the strength of an institution. We are join under the common bond. well above APRA’s minimum requirement of 8%. 15.74% 15.85% 15.65% 15.09% 14.81% 205,113 198,440 191,415 177,357 166,046 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Profit after income tax Loan balances Profit after income tax1 is the amount of money we Loan balances are the total of money owed to us by our generate from operating our products and services minus members from personal loans, secured (home) loans, the cost of providing those products and services, including credit cards and overdrafts. all taxes. $6,474,612,597 $6,474,612,597 $31,798,362 $31,798,362 $30,212,047 $5,992,690,337 $5,992,690,337 $29,781,877 $29,781,877 $27,877,584 $27,877,584 $5,476,770,660 $27,064,492 $27,064,492 $4,595,064,694 $4,077,415,960 $4,077,415,960 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 1 Parent (Bank) – not consolidated group. 2 Teachers Mutual Bank Limited Overview Return on assets Reserves Return on assets measures how profitable a company is Reserves are accumulated profits held by us to ensure our relative to its total average assets and shows how efficiently ability to safely grow. a company uses its assets. 0.64% $548,549,088 $525,385,046 0.58% $492,226,302 $437,098,930 0.46% 0.46% $396,137,919 0.36% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Assets Member deposits Assets are the total of all Teachers Mutual Bank Limited Member deposits are made up of savings, investments and assets. shares, excluding interest accrued. ,055 ,055 $8,041,747,538 $8,041,747,538 $6,244,093,492 $6,244,093,492 78 $7,068,764,866 $7,068,764,866 $5,636,451,849 $5,636,451,849 $6,682,013,296 $5,294,128,446 $5,294,128,446 862,320,334 862,320,334 $4,550,804,608 $4,550,804,608 $5,542,509,266 $5,542,509,266 4, $3,975,1 $ 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 3 Chairperson and CEO’s Report In our 53rd year of operation, we have continued to build one of Australia’s largest and most successful mutual banks. OVERVIEW The 2018–19 financial year was a time of continued market and grow our niche brand offerings. success for Teachers Mutual Bank Limited, as we The case for further growth in our sector has developed our brand offerings and our operations. been sharpened through the passing of the As always, we worked to secure the financial Treasury Laws Amendment (Mutual Reforms) Act futures of our members and their families, whether 2019 by the Federal Parliament. This pioneering they are in the education, emergency services or legislation has introduced a positive legal healthcare sectors. As at the close of this financial definition of a mutual entity within Australian year we were responsible for maintaining $8 billion corporate law. Furthermore, it will allow new ways in assets for over 200,000 loyal members. for mutual banks to raise capital whilst retaining Our growth is attributable to the fact that our cherished ‘one share, one member’ model of members enjoy access to a wide suite of products mutual banking. with us. Our rates on term deposits, credit cards, We believe that these reforms will both provide and home loans have been competitive for both Teachers Mutual Bank Limited with a means to depositors and borrowers. Our products are expand our operations, and healthily increase supported by quick, accessible banking services competition within the Australian banking sector. including the New Payments Platform, Apple We congratulate the Australian Government, Pay, Google Pay, Samsung Pay and internet and Federal Parliament, and financial regulators on mobile banking. However you bank with us, you, this historic legislation. our members are able to do so on your terms. This year will also see us move to update our This year we have also expanded our offering Common Bond. We have grown to serve the to members in the healthcare sector. Health financial needs of more groups of key workers Professionals Bank was launched in February within the Australian economy. Now we need to 2019 to provide our hardworking healthcare broaden our Common Bond to formally recognise professionals with a bank that is exclusively for them. Updating our Common Bond makes it them. This exciting new brand joins our established reflective of the business we have evolved into entities within the Teachers Mutual Bank Limited and makes us inclusive of more Australians while group: the original Teachers Mutual Bank, UniBank simplifying the Common Bond for all. You, our and Firefighters Mutual Bank. members, have the power to effect that change Our financial position has remained strong with through your vote at this year’s Annual General a net profit this year of $27.06 million. Our Board Meeting. of Directors and Executive team have committed Social responsibility has always been a to strong prudential standards of operation, cornerstone of our philosophy as a business. This maintaining a healthy Capital Adequacy Ratio of year we worked with the Responsible Investment 14.81%. We have continued to balance this with Association Australasia (RIAA) to certify new increased demand for our home loan products, mortgage and retail deposit products as socially which have helped us grow as a leading lender of responsible. This means members’ money will never choice for Australian key workers and their families. fund harmful operations, including those involved Despite increased economic, fiscal, and in environmental degradation, fossil fuel pollution, geopolitical pressures facing the market gambling, and tobacco amongst other activities. environment more broadly, we believe the Bank Furthermore, this certification means that is well placed to take advantage of the current every member deposit and saving account 4 Teachers Mutual Bank Limited Overview “We are proud to remain a leader in the field of responsible investment.” since December 2018 is a certified responsible of our Teachers Mutual Bank Limited brands: investment. We are the largest bank in Australia Firefighters Mutual Bank, Health Professionals to have achieved this RIAA certification and are Bank, Teachers Mutual Bank, and UniBank. proud to remain a leader in the field of responsible Finally, we want to thank our members who are investment. the first and final consideration in our business. We Such achievements would not be possible thank them for their ongoing dedication, support without our diligent Board of Directors and and belief as we seek to build the Bank to serve Management team, who are committed to our shared community. Our members come from making Teachers Mutual Bank Limited a bank some of the most community-orientated sectors that demonstrates member value in our sector. in our society: we look forward to the new financial They are supported by the expertise of our broader year and to putting them first in all we do. staff, to whom our thanks go for building strong outcomes for the Bank and its members this year. Their collective effort has ensured that in our 53rd year of operation we continued to deliver John Kouimanos Steve James exceptional banking services for members of all Chairperson Chief Executive Officer 5 Taking great care of our members Our members are essential to the education, safety and wellbeing of all Australians – and we believe they deserve a MEMBERS banking service that takes as much care of them as they take of all of us. That’s why we’re proud to provide socially responsible financial services and outstanding customer care to help our members to build and safeguard their financial futures. We’re now proudly serving Australia’s 92% of Teachers Mutual Bank members, and 85% health professionals of UniBank members. It was with great pleasure that we welcomed a We know our members value the skilled and new key worker community into Teachers Mutual efficient service provided by our friendly, helpful Bank Limited in 2019, with the launch of Health staff, and we remain dedicated to providing Professionals Bank.