St.George Bank Limited ABN Contact Details Customer Services St.George Bank Limited St.George Registered Office St.George Customer Service Centre 13 33 30 ABN 92 055 513 070 St.George House New Account Enquiries and Insurance 13 33 30 AFSL 240997 4–16 Montgomery Street dragondirect 1300 301 020 Kogarah NSW 2217, Australia Private Bank (02) 9236 1882 Telephone (612) 9236 1111 Key Dates Business Direct 13 38 00 Annual General Meeting Facsimile (612) 9952 1000 St.George Financial Advice Contact Centre 1300 367 240 (Sydney) 19 December 2007 Secretary: M H S Bowan St.George Margin Lending 1300 304 065 Annual Report 2007 Annual Report Shareholder Information Meeting Automotive Finance and Business (Melbourne) 18 June 2008* St.George Share Registry Computershare Investor Services Equipment Finance 1300 301 315 Announcement of Results Pty Limited Group Treasury and Capital Markets (02) 9320 5555 Level 3, 60 Carrington Street Advance Investor Services 1800 819 935 and Ordinary Dividend Sydney NSW 2000, Australia ASGARD Investor Services 1800 998 185 • Interim (half year ended 31 March 2008) Postal Address: GPO Box 4519 Customer Relations 1800 804 728 6 May 2008* Melbourne VIC 3001, Australia • Final (year ended 30 September 2008) Telephone 1800 804 457 Email/Internet 30 October 2008* International (613) 9415 4000 Email: [email protected] Facsimile (613) 9473 2500 Internet: www.stgeorge.com.au Ordinary Shares Final Dividend (2007) paid BankSA Credit Ratings 18 December 2007 97 King William Street • Ex-dividend trading 23 November 2007 Adelaide SA 5000, Australia Short Long • Record date 29 November 2007 Customer Service 13 13 76 Term Term Interim Dividend (2008) paid 2 July 2008* Advance Investor Services Standard & Poor’s A-1 A+ • Ex-dividend trading 2 June 2008* Level 5, 182 George Street Moody’s P-1 Aa2 • Record date 6 June 2008* Sydney NSW 2000, Australia Fitch Ratings F1 A+ Customer Service 1800 819 935 SAINTS, SPS and CPS Payment date 20 February 2008* Asgard Capital Management Shareholder Update NOT Required • Ex-dividend trading 31 January 2008* Limited Shareholders who do not wish to receive the Shareholder • Record date 6 February 2008* Level 38, Central Park Update should contact the St.George share registry on 152 St. George’s Terrace 1800 804 457. Payment date 20 May 2008* Perth WA 6000, Australia Alternatively, if you would like to be notified by email • Ex-dividend trading 30 April 2008* Customer Service 1800 998 185 • Record date 6 May 2008* with a link to our Shareholder update or Annual Report online please visit www.investorcentre.com/au and provide your email Payment date 20 August 2008* Deutsche Bank (American Depository Receipts) address. If you are new to the Investor Centre website, simply • Ex-dividend trading 30 July 2008* click “Register Now” and enter your SRN and postcode. • Record date 6 August 2008* Depository Receipts Department Floor 27, 60 Wall Street Payment date 20 November 2008* New York, NY, USA • Ex-dividend trading 31 October 2008* Telephone (1 212) 250 1505 • Record date 6 November 2008* good with * Proposed dates only. Auditor KPMG 10 Shelley Street Sydney NSW 2000, Australia Designed and produced by Ross Barr & Associates Pty Limited Barr & Associates Designed and produced by Ross by John Marmaras Photography people good withmoney St.George Bank Limited ABN 92 055 513 070 ing di Annual Report 2007 elp sadv H an ta ge d an d d isab led cross Austra kids a lia e njoy a brighter future. Since 1990, the St.George Foundation has contributed more than $11 million to Australian children’s charities. For further information about the St.George Foundation, please visit www.stgeorgefoundation.com.au Table of contents Page Page Chairman’s Message 1 Liability Notes Acting CEO’s Letter 2 24. Deposits and other borrowings 72 Shareholder Friendly Financials 4 25. Payables due to other financial institutions 72 Board of Directors 8 26. Liabilities at fair value through the income statement 72 Corporate Governance Statement 9 27. Provision for dividends 72 Risk Management 15 28. Other provisions 73 5 Year Financial Summary 17 29. Bonds and notes 73 Directors’ Report 18 30. Loan capital 74 Income Statements 42 31. Bills payable and other liabilities 74 Balance Sheets 43 Shareholders’ Equity Notes Statements of Recognised Income and Expense 44 32. Share capital 75 Statements of Cash Flows 45 33. Reserves 76 Notes to the Statement of Cash Flows 46 34. Retained profits 77 35. Equity attributable to minority interests 77 Notes to the Financial Statements 1. Summary of significant accounting policies 47 Other Notes 2. Interest 55 36. Remuneration of auditor 78 3. Other income 56 37. Share and option plans 78 4. Bad and doubtful debts 56 38. Average balances and related interest 82 5. Operating expenses 57 39. Segmental results 83 6. Income tax expense 58 40. Deed of cross guarantee 86 7. Significant items 60 41. Commitments 87 8. Discontinued operation 61 42. Contingent liabilities, assets and commitments 88 9. Dividends provided for or paid 62 43. Liability for defined benefit fund obligation 88 10. Earnings per share 63 44. Financial risk management 89 45. Interest rate risk 91 Asset Notes 46. Derivatives 92 11. Cash and liquid assets 64 47. Fair values of financial instruments 94 12. Receivables due from other financial institutions 64 48. Related parties 95 13. Assets at fair value through the income statement 64 49. Events subsequent to balance date 101 14. Available for sale investments 65 Directors’ Declaration 102 15. Loans and other receivables 65 Independent Audit Report 103 16. Provisions for impairment 66 Supplementary Information 17. Impaired financial assets 66 Capital Adequacy 104 18. Concentration of credit risk 67 Information Regarding Shareholdings 106 19. Investments in controlled entities 67 Contact details Back Cover 20. Property, plant and equipment 69 21. Intangible assets 70 22. Deferred tax assets/liabilities 71 23. Other assets 72 Chairman’s Message I am delighted to report another St.George has a solid track record of record full-year result for the delivering on its earnings guidance and Group. Our cash profit after has forecast 10% growth in EPS for 2008. This assumes a reasonably sound tax increased 13.1% to reach economic environment, especially in $1,160 million – reinforcing the New South Wales. We expect NSW to strength of St.George’s strategy continue to strengthen in the year ahead and unique culture. as the effects from the drought, high house prices and population movements Over the past five years, St.George to other states decline. Bank has pursued a consistent strategy of growing organically, investing in its The turnaround in NSW can be seen in business and focusing on our most the June National Accounts that showed important assets: our people and the state grew by 4.3% in the year to customers. The Group’s outstanding June 2007, which was only slightly below performance over the past year a strong national average of 5.3% for demonstrates yet again how successful the year. The same data showed the this approach has been. It has also exceptional strength of Queensland and enabled us to deliver excellent returns Western Australia, where St.George is for shareholders. actively investing in growth with new branches and other initiatives. Earnings per share (EPS) increased 11.8% to 218.9 cents for the year to On behalf of the Directors, I would like 30 September 2007. The Directors were to take this opportunity to thank the pleased to declare a fully-franked final management team and all our staff for dividend of 86 cents, taking the full-year delivering another exceptional result. dividend to 168 cents – an increase of We are particularly grateful to outgoing 11.3% compared to last year. Managing Director, Mrs Gail Kelly for her outstanding contribution over the past Our capital remains within our agreed five years and wish her the very best in targets and we have an active program in her new role. The organic strategy she place to drive our continued growth. put in place has been fully embraced Highlights for the year by the Group Executive and will remain • Revenue up 10.8% to $3,272 million. central to the Bank’s approach as it implements new three and five year • Return on equity further improved strategic plans that were approved by to 23.2%. the Board in mid-2007. • Expense-to-income ratio down from 44.0% to 42.5%. • Total assets up 17.6% to $125.8 billion. John M Thame Chairman 1 ST.GEORGE BANK ANNUAL REPORT 2007 Acting CEO’s Letter Many companies now talk A highlight of this year’s result is a 10.8% Deposits about their commitment to increase in revenue to $3,272 million. Deposits grew to $47.8 billion, a solid their people, customers and This was gained from a wide diversity of increase of 10.9% on last year in a largely recurring sources. This growth very competitive area of the market. the community. At St.George, reflects our continued investment in Overall, our market share is 8.2%. we’ve been focused on this for the Group. Over the same period our Of particular note are our transaction decades and the results can be operating expenses only increased by account balances, which increased by seen in our continued growth. 7%, further enhancing our expense-to- 14.8% and represent a valuable source income ratio, which is 42.5% and lower of funding for the bank. Retail deposits Since 2002, St.George has pursued a than all our major competitors’. growth were particularly strong, low-risk, organic growth strategy that representing 53.8% of our total funding focuses on forming strong customer Our growth in earnings was provided by requirements.