Auswide Bank Annual Report 2019

FY2019 Annual Report · Auswide Bank
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ANNUAL  
REPORT
2019

Contents

2
Auswide Bank – what we do

32
Directors’ statutory report

4
Chairman and Managing Directors’ report

46
Auditor’s independence declaration

8
Performance highlights

10
Achievements

12
3 year strategic direction

47
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:812)(cid:87)(cid:3)(cid:82)(cid:85)
loss and other comprehensive income

48
Consolidated statement of 

14
Queensland Rugby League partnership

49

16
Customer experience

18
Supporting our community 

20
Our people

22
Our technology

24
Managing risk

26
Board of directors

28
Leadership team

50
Consolidated statement of 
changes in equity

54
Notes to the consolidated 

114
Directors’ declaration

115
Independent auditor’s report

120
Corporate governance summary

122
Shareholder information

126
Financial glossary

For over 50 years, Auswide Bank has been providing an extensive range 
of  personal  and  business  banking  products  and  services  to  our  valued 
customers. Auswide Bank isn’t a big bank and we don’t want to be like one.

We believe it’s the small things that reveal who each of us are. Small is 
real. Small is sincere. It’s the smile on a familiar face and knowing how 
hard you’ve worked to get ahead. Small is ﬁ nding your voice and meaning 
what you say.

At Auswide Bank, we’re here to help our customers ﬁ nd that voice, to tell 
their  story  and  at  last  be  heard.  We  want  our  customers  to  discover  a 
whole new way to engage with a bank.

EMPOWER
Empowering 
customers and 
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change

ETHICAL

A commitment to be 
ethical and operate in a 
sustainable workplace  

WOW
Exceed our customers’ 
expectations and 
celebrate their 
successes and our own

REAL
Build open and honest 
relationships and 
deliver on our 
promises 

MAKE IT HAPPEN

Make decisions and 
adapt quickly to meet 
our customers’ needs  

P|2    AUSWIDE BANK ANNUAL REPORT 2019

OWN IT

Own our actions, 
decisions, customers 
and outcomes  

PURPOSE

Identify your purpose 
and be passionate 
about it

Our Mission is to 
demonstrate the 
‘power of small’ by 
placing our customers 
at the centre of 
everything we do.

Our Vision is to be the Bank 
that our customers and 
partners want their friends, 
family and colleagues to 
bank with.

At Auswide Bank we are very conscious of our impact on the environment and are increasingly aware of our community’s 
changing attitudes, expectations and our need to set an example to other businesses.

As a responsible corporate citizen, we have a responsibility to our customers, our community and to the world to reduce our 
own environmental impact and be transparent about our environmental approaches and performance. 

We also understand that any increase in natural disasters and negative environmental impacts from climate change, will impact 
the well-being and livelihood of our customers.   

For shareholders there is the additional risk that our loans portfolio will be at heightened risk if major natural disasters occur 
damaging security properties or our customers place of work, impacting on their ability to meet loan repayments.  Increased 
likelihood of disasters such as ﬂ ood or ﬁ re in vulnerable locations also means the additional cost of risk measures such as 
insurance for the bank and our customers as well as reducing opportunity for consumers as we seek to manage these risks.  We 
have a range of policies that assist in mitigating risk in high disaster prone areas.

Ways in which Auswide Bank is proactively reducing waste and reducing our envrionmental footprint include;  

•  Implementing ways to recycle paper generated internally e.g. document shredding and secure document destruction

•   Promoting electronic options as an alternative to paper for customers, shareholders, suppliers and partners 

•   Utilising energy eﬃ  cient LED lighting at all new and refurbished branches.

•   Switching oﬀ  air-conditioning, lighting and electrical appliances when not in use. 

•  Recycling of obsolete items including phone handsets, mobile phones, batteries and computer equipment.  

•   Recycling of printer, fax and photocopier cartridges through Cartridges 4 Planet Arc.

•  Encouraging our people to act responsibly and ethically in the workplace in line with our corporate values.

•  Not ﬁ nancing companies engaged principally in the exploration, mining, manufacture or export of thermal coal or coal seam 

gas. We do not intentionally invest directly in companies specialising in these areas 

Case study:

In the 2018-2019, we introduced eStatements via our Internet Banking platform to reduce customer’s reliance on paper 
statements.  This initiative was supported with extensive marketing focus urging customers to switch across and has already 
resulted in over 5000 customers making the switch, in turn eliminating tens of thousands of paper statements across thousands 
of accounts.

AUSWIDE BANK ANNUAL REPORT 2019    P|3

 
In the 2018/19 ﬁ nancial year, 
we successfully delivered on our 
commitment to grow the loan book 
responsibly and shift our funding 
mix to customer deposits.  

Underlying NPAT for the consolidated group was $17.201 
million representing a 0.5 per cent increase on underlying 
NPAT of $17.108 million in the prior year. The underlying NPAT 
for the 2018/19 ﬁ nancial year was the same as the statutory 
NPAT as there were no adjustments for one-oﬀ  or non-
recurring items. 

Auswide reports statutory net proﬁ t after tax (NPAT) of 
$17.201 million for the 2018/19 ﬁ nancial year. This was a 
3.8 per cent decline on the previous year which reﬂ ected the 
sale of a controlling equity stake in MoneyPlace in January 
2018. The sale had a one-oﬀ  positive impact on the 2017/18 
ﬁ nancial results with a NPAT contribution of $1.227 million.

The Board declared a fully franked ﬁ nal dividend of 18.5 cents 
per share, payable on 20 September 2019, which was a 0.5 
cents per share increase on the previous year. Total dividends 
of 34.5 cents per share represented a payout ratio of 84.6 
per cent and a dividend yield of 6.7 per cent. Given Auswide’s 
capital strength, the Board has maintained the suspension of 
the Dividend Reinvestment Plan for the ﬁ nal dividend. Once 
again, total dividends were higher than the previous year 
highlighting ongoing improvement in dividend returns to 
shareholders.

Net Interest Revenue increased by 3.5 per cent to $63.185 
million compared to $61.020 million in the previous ﬁ nancial 
year due to loan book growth and the optimisation of the 
funding mix. 

Net Interest Margin for the 2018/19 ﬁ nancial year was 1.87 
per cent compared to 1.93 per cent in the previous year. 
This was a credible performance with our net interest margin 
impacted by historically low interest rates, competitive 
housing ﬁ nance markets and elevated Bank Bill Swap Rates 
which increased wholesale funding costs for much of the year. 
Despite these challenges, our net interest margin stabilised 
through the second half, to exit the 2018/19 ﬁ nancial year at 
1.94 per cent due to material improvements in our funding mix 
and a reduction in Bank Bill Swap Rates.

The Bank’s underlying cost to income ratio was 64.5 per 
cent compared to 63.3 per cent in the prior year reﬂ ecting 
investment in customer service and technology. As part of 
this, the roll out of APPLY online origination remains on track, 
and our ongoing investment in data analytics and business 
intelligence is showing some good results.  

Loan book growth accelerated in the June half due to 
competitive pricing, broker relationships, reputational damage 
of the big banks and ongoing investment in customer service 
and technology. Despite a highly competitive lending market, 
this increase was almost twice system growth of 3.3 per 

Martin Barrett
Managing Director

P|4    AUSWIDE BANK ANNUAL REPORT 2019

Our investment in IT, product innovation and customer service were 
integral to realising the growth we achieved.

The Bank has retained a strong capital position with a capital 
adequacy ratio of 13.79 per cent and a Tier 1 capital ratio of 
11.76 per cent at 30 June 2019. We continue to meet APRA’s 
“unquestionably strong” capital requirements with a capital 
position that provides signiﬁ cant headroom for growth and is 
one of the best in the Australian banking sector. 

In the 2018/19 ﬁ nancial year, we also undertook our largest 
ever brand awareness campaign through our partnership with 
the Queensland Rugby League (QRL). As the oﬃ  cial bank of 
the Queensland Maroons, Auswide had front of jersey rights 
during the 2019 State of Origin series which attracted more 
than nine million viewers nationwide. Given the Auswide brand 
is only four years old, our objective is to raise brand awareness 
across Queensland and NSW. Post the series, initial studies 
show an increase in brand awareness while we have received 
positive feedback from customers and our broker network and 
a signiﬁ cant increase in traﬃ  c to our website. 

....our objective is to raise brand 
awareness across Queensland and NSW. 

cent. Loan book growth accelerated in the June half due 
to competitive pricing, broker relationships and ongoing 
investment in customer service and technology.

The housing and consumer portfolios recorded strong growth. 
Home loan settlements rose 13.3 per cent to $616.036 million 
and consumer lending increased to $62.312 million at 30 June 
2019 from $43.524 million a year earlier. From a geographic 
perspective, South East Queensland delivered the largest 
contribution to loan book growth and now represents 39.3 
per cent of the total loan book. The diversiﬁ cation of our loan 
book continued with 24.0 per cent of the lending portfolio 
now outside Queensland, with New South Wales experiencing 
an increase from 10.7 per cent to 11.5 per cent of the book 
across the year.

A strategic priority for the 2018/19 ﬁ nancial year was to 
optimise our funding mix by growing customer deposits and 
reducing our reliance on securitisation. Despite an extremely 
competitive market, customer deposits increased by 12.6 
per cent to $2.373 billion dollars highlighting the positive 
reception our term and at call deposit products received in the 
marketplace. At call deposits grew by 17.0 per cent during 
the ﬁ nancial year to $880.811 million. Since the 2015/16 
ﬁ nancial year, deposits have grown from 66.8 per cent to 71.4 
per cent of our funding while our reliance on securitisation has 
declined from 22.0 per cent to 14.8 per cent. Going forward, 
the change in our funding mix will enable us to 
better control our net interest margin.

Our commitment to lending discipline and 
responsible loan book growth is highlighted 
by our arrears which are at historical lows, 
representing 0.46 per cent of the total loan 
book at 30 June 2019. The majority of our home 
loan book is mature and remains well secured with home loan 
arrears signiﬁ cantly below our peers. The sound credit quality 
of Auswide’s home lending portfolio is further shown by our 
conservative loan to valuation ratio with 73.8 per cent of the 
loan book having a loan to valuation ratio of 80.0 per cent or 
less. 

We continue to manage risk well with prudent loan 
underwriting standards and sound controls that enable us to 
grow the loan book while maintaining a solid arrears position. 
The implementation of the new AASB 9 accounting standard 
in July 2018 further strengthens the provisions set aside for 
bad and doubtful debts. The Board is satisﬁ ed that existing 
provisions cover the risks relating to current and future 
doubtful debts. 

AUSWIDE BANK ANNUAL REPORT 2019    P|5

We will continue to build the Auswide brand through consistent 
messaging and enhanced customer service...

government investment occurring in Rockhampton, Mackay, 
Bundaberg and Townsville. 

Our three-year strategy which targets a cost to income ratio 
of 60 per cent, a return on net tangible assets of 10 per 
cent in the short to medium term, above system loan growth 
across home, personal and business lending and a stable net 
interest margin provides a roadmap for the business. Growth 
opportunities will also come from the ongoing reputation 
challenges, regulatory capital increases, remediation and 
greater regulatory focus on the big four banks. Going forward, 
we will continue to focus on disciplined cost management, 
expanding our digital footprint and enhancing our value 
proposition to our customers and our brokers.  

We would like to thank the Auswide team for their hard 
work and dedication and the Board for its ongoing support 
and counsel. Most importantly, we would like to thank our 
customers and shareholders for continuing to believe in the 
‘power of small’. 

John Humphrey  
Chairman

Martin Barrett  
Managing Director

We have a number of priorities for the 2019/20 ﬁ nancial year. 
It will mark the ﬁ rst year of a three-year strategic plan which 
broadly focuses on building brand awareness and partnerships 
and improving technology and eﬃ  ciency across the business. 

We will continue to build the Auswide brand through consistent 
messaging and enhanced customer service. Our partnership 
with the QRL is an important part of this journey as we 
leverage its membership base to drive loan ﬂ ows and new 
Customer Hub acquisition. At the same time, we will develop 
partnerships that support retail and business banking growth 
across our platforms and through member and community-
based organisations to drive low cost growth.

Improving the customer experience remains a priority as 
investment in technology and our Customer Hub will enable us 
to maximise the service we provide to our growing South-East 
Queensland and interstate customer base. A better customer 
experience and more eﬃ  cient digital capabilities will also help 
us lower our cost to income ratio and increase our return on 
net tangible assets. 

We are focused on automating our processes and simplifying 
our products to provide faster turnaround times, allowing us 
to maximise returns and capitalise on the opportunities ahead. 
This also means strengthening the Bank through enhancing 
staﬀ  capabilities, cyber risk resilience, which is critical today, 
and our ability to detect fraud while reducing errors and 
further developing our risk audit processes.

The regulatory environment continues to evolve with APRA 
progressing changes to the capital framework to ensure ADIs 
remain on track to meet the “unquestionably strong” capital 
ratio benchmarks. Auswide’s capital ratio of 13.79 per cent 
means we are already well ahead of the new benchmarks. 
From a responsible lending perspective, we continue to 
operate prudently, continually reviewing our lending practises 
to ensure that we meet regulatory, and our own requirements.  

Recent industry events have highlighted the importance of not 
just having a healthy balance sheet, but strong governance, 
a sound culture and appropriate internal controls and clear 
accountabilities.  We believe the culture of Auswide Bank 
remains sound and we have been focusing on ensuring that 
we meet all our governance and regulatory compliance 
requirements. Finally, the so-called “uneven playing ﬁ eld” 
between the big banks and the rest is levelling as APRA 
implements a range of capital and other programs of work.

Economic activity continues to improve in regional 
Queensland.  There has been greater certainty since the 
Federal Election with several large projects and signiﬁ cant 

P|6    AUSWIDE BANK ANNUAL REPORT 2019

John Humphrey
Chairman

AUSWIDE BANK ANNUAL REPORT 2019    P|7

Improving the customer 
experience remains a 
priority as investment 
in technology and our 
Customer Hub will 
enable us to maximise 
the service we provide 
to our growing South-
East Queensland and 
interstate customer 
base. 

$2.373b

CUSTOMER DEPOSITS
   12.6%, 71.4% SELF FUNDING

$3.131b

LOAN BOOK
     6.3%, 1.9 x SYSTEM

13.79%

CAPITAL ADEQUACY RATIO
STRONG CAPITAL SUPPORTS GROWTH

$63.185m

NET INTEREST REVENUE
3.5%

$17.201m

UNDERLYING NPAT
  0.5%

34.5c

TOTAL DIVIDEND
  0.5c, YIELD 6.73%

Performance
highlights

P|8    AUSWIDE BANK ANNUAL REPORT 2019

RESPONSIBLE LENDING GROWTH

Strong loan book growth
1.9 X system growth

Sound credit quality
Arrears at historic lows, 74% loan book LVR 80% or less

Capital strength
“Unquestionably strong” capital supports loan book growth

OPTIMISE FUNDING MIX

Improved funding mix
12.6% growth in customer deposits, reduced reliance on
securitisation

Stabilised NIM in 2H
Despite challenging conditions due to better funding mix, 
deposit growth

CUSTOMER FOCUSED

APPLY online origination
Rollout continues

Customer-driven tech
Ongoing investment in data analytics, BI capabilities

QRL sponsorship
31.23% increase in Auswide brand awareness
across Queensland post State of Origin

Strong market 
share growth in 
challenging year

AUSWIDE BANK ANNUAL REPORT 2019    P|9

Net Interest Income rose by 3.5% to $63m due to loan 
book growth and strategic focus on building customer 
deposits while reducing reliance on securitisation. 

JUNE 16
$54m

JUNE 17
$58m

JUNE 18
$61m

JUNE 19
$63m

NET INTEREST INCOME

Net Interest Margin stabilised in the second half of the 
year following volatile BBSW levels in the ﬁ rst half.

JUNE 16
1.96%

JUNE 17
1.90%

JUNE 18
1.93%

JUNE 19
1.87%

NET INTEREST MARGIN

18.0

18.5

16.0

17.0

Further improvement and growth in dividend returns to 
shareholders (total dividend 34.5 cents per share fully 
franked).

14.0

14.0

16.0

16.0

JUNE 16

JUNE 17

JUNE 18

JUNE 19

1H

2H

DIVIDEND

P|10    AUSWIDE BANK ANNUAL REPORT 2019

27m

$

0m

$15.5m

$10.8m

$10.5m

$11.5m

$6.7m

$4.4m

$0.8m

$6.1m

$2.9m

$1.1m

$6.4m

$6.5m

$9.4m

$5.3m

$6.4m

$2.3m

$3.2m

$4.7m

$5.0m

$4.6m

JUN 16

DEC 16

JUN 17

DEC 17

JUN 18

DEC 18

JUN 19

30-60 days past due

60-90 days past due

Over 90 days past due

LOAN BOOK ARREARS

Arrears remain at historic lows at 0.46% of total loan book.

$62m

$122m

$2,947m

$44m

$120m

$2,781m

$29m

$108m

$2,651m

$14m

$96m

$2,558m

8.90%

9.20%

9.50%

9.10%

5.91%

6.03%

6.04%

6.73%

JUNE 16

JUNE 17

JUNE 18

JUNE 19

Dividend Yield

RONTA

RONTA (UNDERLYING) + DIVIDEND YIELD

Return on Net Tangible Assets 9.10% and Dividend 
Yield 6.73%.

JUNE 16
$2,668m $2,788m $2,945m $3,131m

JUNE 19

JUNE 18

JUNE 17

Housing loans

Business

Consumer loans

LOANS AND ADVANCES BALANCES

Strong loan book growth of 6.3% during the year, well 
ahead of system growth of 3.3%*.

*RBA Financial Aggregates – Total Credit Growth

AUSWIDE BANK ANNUAL REPORT 2019    P|11

Auswide Bank’s 2019-2022 Strategic 
Plan is imperative in determining 
our strategic direction, resource 
allocation and prioritisation of 
initiatives. We have delved into the 
biggest challenges we have as an 
organisation and collaboratively 
identiﬁ ed actions which will take us 
from where we are, to where we need 
and want to be.  
The achievement of these strategic 
imperatives will be delivered through 
a number of clearly identiﬁ ed goals.   

BRAND AWARENESS

•  Building the Auswide Brand through consistent messaging and enhanced 

customer service

•  Leveraging QRL membership base and driving new customer acquisition

•  Meeting 3 year target of >60% brand awareness

•  Increasing broker ﬂ ows 

•  Diﬀ erentiating Auswide Bank from the big 4 through community 

engagement and activities 

PARTNERSHIPS

•  Building partnerships that support retail and business banking growth 
across platforms and via member and community-based organisations

•  Leveraging partner’s technology and customer base to deliver low cost 

growth

P|12    AUSWIDE BANK ANNUAL REPORT 2019

 
 
 
 
 
 
 
 
 
DIGITAL AND   
CUSTOMER HUB

•  Improving the customer experience through capable digital implementation

•  Supporting customer transition from branch to digital channel, lowering CTI

•  Driving higher product conversion rates, increasing RONTA

•  Enhancing the Customer Hub to maximize our service levels and 

opportunities with our growing  customer base

•  Improve our customer retention capability and early intervention

EFFICIENCY

•  Improving eﬃ  ciencies by automating processes and simplifying products in 
key focus areas of back oﬃ  ce processing, ﬁ nance and credit decisioning (to 
drive down CTI)

•  Improving broker service proposition via faster turnaround times and 

consistency

STRENGTH

•  Strengthening the bank through enhancing staﬀ  capabilities, reducing errors 

and further developing risk audit processes

•  Enhancing cyber risk resilience and fraud detection capability

•  Maintaining strength of funding and capital

•  Fostering the right culture that continues to balance our stakeholder 

demands

NON-ORGANIC  
GROWTH

•  Reviewing M&A, Fintech and other partnering opportunities to drive scale

•  Considering opportunities where the partner can leverage our assets and 

we can leverage their technology to grow our customer base and eﬃ  ciently 
improve proﬁ tability

st rat egic direction 

AUSWIDE BANK ANNUAL REPORT 2019    P|13

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
...Auswide Bank has been on a journey to improve brand 
awareness and consideration...

Since converting to a bank and re-branding in April 2015, Auswide Bank has been on a journey to improve brand awareness and 
consideration.

We believe investment in our brand is crucial to our long term business success as it is one of the few diﬀ erentiating factors that 
remains principally within our control. We also recognise that our brand is a key intangible part of company value.  

To extend our brand and improve our brand visibility, particularly in the Queensland market, we considered  that aligning with a 
Queensland iconic brand which has national recognition and substantial support within our key markets, would be a signiﬁ cant step 
forward.  

Rugby League is the number one sport by participation and support base in Queensland - with approximately 62,000 registered 
players, 420 registered clubs, a growing female participation and an audience of over 10 million State of Origin television viewers. 

In September 2018, we established a 3 year Partnership Agreement with Queensland Rugby League which sees the Auswide Bank 
brand represented on the front of jersey for the Queensland Maroons team.  

The Maroons are an exalted brand in Queensland and for a 3 month period they dominate the Queensland sport media and rally 
Queenslanders like no other club, brand or business.   With games in New South Wales and other States by rotation there is also 
considerable national exposure.

9.537m

viewers watched the 2019 State of Origin
series. Games I, II & III were the three
most watched programs to date in 2019.

827,820

households exposed to the Auswide Bank 
Brand during 2019 State of Origin Game 1.

P|14    AUSWIDE BANK ANNUAL REPORT 2019

Importantly our strategic partnership also incorporates the support of ‘grassroots; rugby league  in our heartland regions of coastal 
Queensland and south east Queensland with Naming Rights of the Mal Meninga Cup under 18’s competition and representative side. 

In the ﬁ rst half of 2019 we launched Auswide Bank as the ‘Oﬃ  cial Bank of the Queensland Maroons’ - activating at Mal Meninga Cup 
games across Queensland, at each State of Origin game and at a series of associated events. These provided us with the opportunity to 
build brand awareness and create relationships.  

Our marketing plan called out targets in regard to brand metrics following the State of Origin series and we are pleased to see a lift 
across Queensland and core markets.  We commissioned an independent brand awareness survey of individuals aged over 18 years 
across Queensland. Across the state, brand awareness has increased by 31.23% from 2018. It was also up by 33.85% across South 
East Queensland and up 14.63% in our core regional market .  An estimated 827,820 households were exposed to the Auswide Bank 
brand during 2019 State of Origin Game I.     

As a major investment, apart from our brand goals, we also recognised the needs to return value for shareholders from our partnership 
with Queensland Rugby League.   

While a continuing uplift in brand recognition across our markets over the next few years will support these goals, with 200,000 
supporters seeking ﬁ nance (Queensland Rugby League 2019 State of Origin Media Report conducted by The Nielsen Company - August 
2019) there is a direct opportunity.   We are already taking steps to capitalise on this opportunity and in year two and three of our 
Partnership, we will increasingly seek to leverage oﬀ  our relationship with Queensland Rugby League to grow our customer base. 

194,171

fans attended the 2019
State of Origin series.

258,083

website views during campaign period 
(13.06% increase on last year).

AUSWIDE BANK ANNUAL REPORT 2019    P|15

Loyalty and advocacy built on strong 
customer relationships is critical... 

Auswide Bank has always had a reputation for customer 
service, however in 2016, as part of the 2016-2018 Strategic 
Plan, we consciously lifted our focus on the customer to a 
new level with the appointment of a Chief Customer Oﬃ  cer 
and Head of Customer Operations, a signiﬁ cant structural  
reorganisation, and the planning and deployment of a number 
of key customer focussed initiatives.

While this shift mirrors a similar change across ﬁ nancial 
services, Auswide Bank is not just following an industry 
trend.  We believe it represents a signiﬁ cant value creation 
opportunity.

A positive customer experience creates value by promoting 
customer loyalty and advocacy.  On the other hand a negative 
customer experience results in a loss of value both directly 
and through detraction.  To us, even a mundane experience 
simply means a loss of opportunity.  

Loyalty and advocacy built on strong customer relationships is 
critical in a competitive marketplace permeated by a reduction 
in diﬀ erentiation and, importantly from a shareholder’s 
perspective where cost management is critical, can help 
reduce marketing costs.

Our new 2019-2022 Strategic Plan targets our continued 
development of three business origination channels: face to 
face through our branches; digitally and over the phone via 
online origination and our Australian-based Customer Hub; 
and via mutually beneﬁ cial partnerships which includes broker 
and referrer relationships and ‘white label’ opportunities.

Customers originating in each of these channels have 
unique characteristics and needs and it is essential that we 
understand and respond to these diﬀ erent relationships in our 
delivery of customer experience.

In 2018-2019, we built on our customer-focussed 
foundations with further reinvention, innovation and 
deployment  of initiatives designed to support continuous 
improvement and transformation and improve our customer 
experience.  

Further restructuring of customer team roles with 
the appointment of a General Manager of Customer 
Experience, a Strategic Partnerships Manager and 
consolidation of several business functions as our 
Customer Experience team.

Restructuring of our contact centre which is now 
our Customer Hub under a new General Manager – 
Customer Hub & Digital Bank.

Implementation of the new Purecloud phone 
management system in our Customer Hub

Multiple actions as part of the bank’s Broker Journey 
Initiatives program

Improving the new Customer On-Boarding 
Experience

Restructuring and enhancing oversight of the bank’s 
Customer Complaint and Feedback process

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P|16    AUSWIDE BANK ANNUAL REPORT 2019
P|16    AUSWIDE BANK ANNUAL REPORT 2019

 
Increased focus on Customer Retention initiatives

Continued Product Simpliﬁ cation

Mapping of customer facing processes in Promapp to 
support the consistency of customer experience

Continued training of customer facing personnel to 
improve their capabilities and skills

Revision of customer team performance measures 
to increase the weighting on positive customer 
outcomes

Consideration of customer experience as a 
fundamental consideration in the development of a 
new version of the bank’s Mobile Banking App and 
in the deployment of online  origination of personal 
loans and deposit accounts projects

AUSWIDE BANK ANNUAL REPORT 2019    P|17

down the stigma of mental illness and in support of the 
Toowoomba Hospital Foundation. 

Australian Red Cross Blood Service 

Auswide Bank staﬀ  were again proud to be part of a staﬀ  donor 
program where we ‘United to Save Lives’ with regular blood 
donations to the Australian Red Cross. Our staﬀ  were proud to 
join in with over half a million unpaid voluntary donors making 
a diﬀ erence.

Movember

Our Auswide Bank ‘Mo Bros’ team raised almost $5000 for 
Men’s Health Initiatives through their ‘Mo growing’ eﬀ orts 
in November.  Since 2003, Movember has funded more than 
1,250 men’s health projects around the world.  

Jeans for Genes

Jeans for Genes was created by the community for one 
purpose – to do the diﬃ  cult research needed to save children’s 
lives.  Our Auswide Bank team again slipped into their best 
denim to support and raise much needed funds for this 
worthwhile cause and the work of the Children’s Medical 
Research Institute in their search for cures for children’s 
genetic diseases.  

HIGHLIGHTS

Queensland Young Achievers Awards

Auswide Bank was again a major sponsor of the Queensland 
Young Achievers Awards.  These Awards are the most 
prestigious youth awards program in the State and aim 
to encourage and most importantly promote the positive 
achievements of our young achievers.  Auswide was proud to 
provide successful young Queenslanders with a ﬁ nancial grant 
as recognition of their outstanding achievements.  

UCI Auswide Bank Cyclefest International

The UCI Auswide Bank Cyclefest International was a World 
Class recognised cycling competition held in Bundaberg over 
10 days in February featuring track cycling, super street 
criterion and triathlon. It bought together local, Queensland, 
Australian, and International competitors.  Auswide Bank was 
pleased to be a naming rights and foundation sponsor.  This 
event also helped shine a light on the Bundaberg region where 
Auswide Bank was founded. 

Red Shield Appeal

The Salvation Army play a pivotal role in our regional 
Queensland communities giving hope and making a diﬀ erence 
where it is needed most.  In May, Auswide Bank supported the 
meaningful work of the Salvation Army Red Shield Appeal with 
a signiﬁ cant ﬁ nancial donation.  

Fiver for a Farmer

Rural Queensland communities experienced and continue to 
experience the impacts of drought.  Our staﬀ  launched an 
appeal to support ‘Fiver for a Farmer’ raising over $10,000.  
This was generously supported by Auswide Bank customers 
with the funds donated to Rural Aid and Drought Angels to help 
farmers and their families through the tough times.  

Bundaberg to Brisbane Charity Ride

Our Managing Director, Martin Barrett, together with some of 
our partners from Financial Advice Matters and other riders 
took to their bikes to participate in a three day Bundaberg to 
Brisbane Charity Bike Ride of 530 kms. Their eﬀ orts raised 
important funds in support of ‘Turn to Me’, a cause breaking 

P|18    AUSWIDE BANK ANNUAL REPORT 2019

Auswide Bank originated 
in regional Queensland 
communities.  Community 
is part of our DNA. Over the 
course of 2018-19, Auswide 
Bank again contributed to 
various community events, 
charities and fundraising 
initiatives via corporate 
sponsorships and our 
Community Grant Scheme 
across South-East and 
regional Queensland.  

AUSWIDE BANK ANNUAL REPORT 2019    P|19

In working together, we ask that our People understand and commit to our Mission, Vision and Values - EMPOWER

Under our Code of Conduct and Ethics our staﬀ  commit to:

•  Conducting ourselves professionally and valuing Auswide 

Bank’s reputation at all times;

•  Demonstrating and role modelling the behaviours of honesty, 
integrity, fairness  and trust at all times in all our interactions 
with our customers, shareholders business partners and 
each other;

•  Setting an example for others to follow and seeking to 

recognise those that demonstrate these  behaviours in a 
positive and meaningful way;

•  Speaking up without fear of retribution when these 

behaviours are threatened or may be compromised; and 

•  Meeting and complying with our legal and regulatory 

obligations.

We continue to adopt strategies to improve on the social 
and emotional Health & Wellbeing of our People by playing 
our role in keeping our employees engaged, healthy and 
productive both at work and in their everyday life.  We will 
continue our focus on increasing our support and assistance 

P|20    AUSWIDE BANK ANNUAL REPORT 2019

to staﬀ .  This includes our commitment to our People Wellness 
Empowerment Days throughout 2019-2020. 

The annual Auswide Bank Employee Engagement & 
Satisfaction Survey was conducted in August 2019 with 
more than 89% of staﬀ  participating.  The response rate 
provides an opportunity for our People to provide feedback 
and comments that will contribute to building a better bank.  
The Staﬀ  Satisfaction Score of 83%, which is based on core 
metrics of engagement, staﬀ  loyalty, leadership, teamwork/
communication, customer/brand advocacy and innovation, is a 
positive result for the Bank.

In 2019-2020 we will maintain our focus on creating a 
positive culture and environment that supports our People, our 
customers and shareholders.

Through our People, Auswide Bank continues to 
deliver outstanding customer service and high 
performance standards. We are committed 
to increasing the knowledge, capability, 
professional and personal development of 
the team responsible for managing the 
relationships with our customers.

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AUSWIDE BANK ANNUAL REPORT 2019    P|21

P|22    AUSWIDE BANK ANNUAL REPORT 2019

Auswide Bank continues to deliver technological and digital 
enhancements to improve our customer experiences, support our 
drive to eﬃ  ciency and manage our risks.  

This year our strategic aim of creating a competitive digital bank and 
Customer Hub took a major leap forward with our investment in a 
new call centre platform and online origination of personal loans.  In 
2019-2020 this will be complimented by online origination of term 
deposits, transaction and savings accounts.  Our Customer Hub 
supports these online origination processes and will become a centre 
of capability that supports customers seeking digital engagement 
and which contribute to our revenue streams. 

We have also rolled out several internet banking and mobile banking 
app upgrades during the year with a further release of an enhanced 
mobile app targeted for quarter one 2019-2020 which includes 
facial and ﬁ ngerprint recognition and authentication. 

In the current climate and in line with our target to reduce costs 
we have sought to deliver on IT projects that create additional 
eﬃ  ciencies. Some of these include rollout of eStatements via internet 
banking reducing paper and mailing costs; the increased automation 
and third party integration of loan origination; and a raft of product 
improvements and rationalisations stemming from our product 
simpliﬁ cation project. 

We have also focused on projects to help us comply with our 
regulatory, industry, and payment scheme obligations. In an 
increasingly online and digital world, it is essential that ﬁ nancial 
institutions such as Auswide Bank strive to protect our customers 
and help our customers protect themselves. Some of the projects 
delivered in 2018-2019 that support this objective include new fraud 
detection and prevention capabilities and cyber security initiatives.  

Apart from the initiatives already listed above, in the year ahead we 
will deliver a core banking system upgrade to the latest version and 
features. We will also target real time payments for our customers 
now that many of the fraud and other risks are better understood by 
the industry.  Finally we will be exploring Open Banking to leverage 
oﬀ  opportunities from the new ﬁ nancial model that allows us to 
better connect to the banking ecosystem and participate in data 
sharing.    

AUSWIDE BANK ANNUAL REPORT 2019    P|23

Auswide Bank has a comprehensive risk and compliance 
management program to actively identify and eliminate risk where 
possible, and mitigate and minimise the impact of those risks that 
cannot be eliminated. Continuing to strengthen our risk management 
approach is an important element of the Company’s Strategic Plan 
and a high priority for the Board and management team. 

Since 2013, changes to the bank’s business strategy and risk appetite have resulted in a simpler business model and more 
conservative underwriting actively reducing its mortgages with higher risk proﬁ les, such as mortgages with interest-only features 
and mortgages with high LVR (loan-to-valuation ratios). 

Auswide Bank is well placed to manage the risks associated with these loan product concentrations which are managed in line 
with established risk appetite settings. 

We have a strong-values based culture that encourages the highest standards of openness, integrity, honest and accountability. 
We encourage an open culture in our dealings between our managers, employees and all people with whom we engage in the 
course of business.

Our people have a strong inclination to take responsibility for risk management across each business unit, and this culture 
underpins our Strategic Plan. 

The key features of how we manage risk as part of our Risk Management Framework include:

•  ‘Three Lines of Defence’ risk management model with Risk management accountabilities allocated for risk ownership (ﬁ rst line), 

functional oversight (second line) and assurance third line).  

Line 1 – 
Business 
Units

Line 2 – 
Risk and 
Compliance 
Management

Business units identify, assess, control and mitigate risks through internal policies and corrective actions 
to address process and control deﬁ ciencies.

Risk and Compliance Management maintains a risk management framework, measures risk exposures 
to support decision making, and provides risk management support, supervision and expertise to the 
business. They report to the Board and leadership team and make credit risk decisions under approved 
delegations and loan portfolio management.

Line 3 – Audit 
Management

An independent internal audit function, outsourced to PricewaterhouseCoopers, ensures the Bank has 
industry leading capabilities to review internal controls, risk management processes and governance 
systems. 

•  Incident management to increase our ability to identify, manage, report and remediate (if required) any incidents in a timely 

manner.

•  Whistle-blower Protection policy allowing employees to make conﬁ dential, anonymous submissions regarding misconduct or 

dishonest or illegal activity that has occurred

•  Strong Board oversight of the risk proﬁ le and risk management of the bank with reference to the Board determined risk appetite. 

P|24    AUSWIDE BANK ANNUAL REPORT 2019

Ongoing Regulatory Action

APRA is progressing changes to 
the capital framework to ensure 
ADI’s remain on track to meet the 
“unquestionably” strong capital 
ration benchmarks.  Auswide 
is already meeting the new 
benchmarks.

APRA continuing to highlight cyber 
security.

APRA to increase scrutiny of how 
banks are managing the ﬁ nancial 
risks of climate change to their 
business.

Auswide is compliant with APRA’s 
tightened requirements regarding 
interest-only and investor lending.

Banking Executive Accountability 
Regime (BEAR)  - Auswide’s 
submissions have been made to   
and the Remuneration Committee 
has reviewed policies to be 
compliant. 

APRA’s Prudential Inquiry into 
CBA and the Royal Commission 
have highlighted the importance of 
not just having a healthy balance 
sheet, but also strong governance, 
sound culture, appropriate internal 
controls and clear accountabilities.  
Auswide has done a self 
assessment of our culture  which 
has been submitted to APRA. 

AUSWIDE BANK ANNUAL REPORT 2019    P|25

John Humphrey LL.B
Chairman

Martin Barrett BA (Econ), MBA
Managing Director

Member of the Audit Committee

Board Member since September 2013

Board Member since February 2008

Professor Humphrey was appointed 
Chairman of the Board following the 
2009 Annual General Meeting.  He is 
a Senior Consultant in the Brisbane 
oﬃ  ce of international law ﬁ rm, King & 
Wood Mallesons, where he specialises 
in commercial law, corporate mergers 
and acquisitions.  He served as Executive 
Dean of the Faculty of Law at Queensland 
University of Technology (until June 2019). 
He was a non-Executive Director of Downer-
EDI Limited (until November 2016) and 
Horizon Oil Limited (until November 2018), 
and is currently a Non-Executive Director 
of Spotless Group Holdings Ltd and Lynas 
Corporation Limited.

Mr Barrett has extensive experience 
in the banking sector, having held 
the positions of Managing Director 
(Queensland, Western Australia and 
National Motor Finance Business) and 
General Manager NSW/ACT Corporate 
and Business Bank at St George Bank 
Ltd. Prior to working at St George Bank, 
Mr Barrett held senior roles at regional 
ﬁ nancial institutions in the United 
Kingdom and at National Australia Bank. 
He is currently a non-Executive Director 
of Impact Community Service.

Non-Executive Director

Chairman of the Group Board 

Remuneration Committee

Member of the Audit Committee

Member of the Risk Committee

Greg Kenny GAICD, GradDipFin
Non-Executive Director

Chairman of the Risk Committee

Member of the Audit Committee

Member of the Group Board 

Remuneration Committee

Board Member since November 2011

Board Member since November 2013

Mr Dangerﬁ eld had a successful 39 year 
banking career with Westpac Banking 
Corporation having held positions across 
Queensland and Northern Territory as 
Regional Manager of Business Banking, 
Head of Commercial and Agribusiness, 
and Regional General Manager of Retail 
Banking.   Mr Dangerﬁ eld is a Director of 
the Bundaberg Friendly Society Medical 
Institute which operates the Friendly 
Society Private Hospital and Pharmacies 
in Bundaberg. He is Chairman of the 
Institute’s Audit, Risk and Remuneration 
Committees. 

Mr Kenny had a long and successful
career with Westpac Banking
Corporation and St George Bank Ltd,
and prior to that with Bank of New York 
and Bank of America in Australia. At 
St George Bank, he held the positions 
of Managing Director (NSW and ACT), 
General Manager Corporate and 
Business Bank, and General Manager 
Group Treasury and Capital Markets.

Sandra Birkensleigh BCom, CA, GAICD, ICCP (Fellow)  
Non-Executive Director

Chairperson of the Audit Committee

Remuneration Committee

Member of the Risk Committee

Board Member since February 2015

Member of the Group Board 

Ms Birkensleigh was a partner at PricewaterhouseCoopers for 16 years until 2013. During 
her career, her predominant industry focus was Financial Services (Banking and Wealth 
Management). Ms Birkensleigh has also advised on risk management
in other sectors such as retail and consumer goods, retail and wholesale electricity, 
resources, and education. Ms Birkensleigh is currently a non-Executive Director of MLC 
Insurance Limited, the National Disability Insurance Agency, Horizon Oil Limited, 7-11 
Holdings and its subsidiaries and the Sunshine Coast Children’s Therapy Centre. An 
independent member of the Audit Committee of the Reserve Bank of Australia, and a 
Council Member of the University of the Sunshine Coast.

P|26    AUSWIDE BANK ANNUAL REPORT 2019

Greg Kenny
Non-Executive Director

John Humphrey
Chairman

Martin Barrett
Managing Director

Barry Dangerﬁ eld
Non-Executive Director

Sandra Birkensleigh
Non-Executive Director

AUSWIDE BANK ANNUAL REPORT 2019    P|27

Bill Schafer
Chief Financial Oﬃ  cer and Company 
Secretary

•  Group Accounting and Treasury

•  Budgeting and ﬁ nancial analysis

•  Financial and management 

reporting

•  Statutory, ASX and regulatory 

reporting

•  Capital, funding and liquidity 

planning strategy

•  Investor Relations

Mark Rasmussen
Chief Operating Oﬃ  cer

Damian Hearne
Chief Customer Oﬃ  cer

•  Lending Services

•  Banking Services

•  Lending Origination Services

•  Support Services Operations 
including Business Continuity 
Planning

•  Reengineering Services

•  Customer experience strategy and 

management

•  Retail and business banking sales 

and distribution

•  Mortgage broker and third party 

relationships

•  Marketing, products and 

partnerships

•  Customer Hub and Digital Bank

P|28   AUSWIDE BANK ANNUAL REPORT 2019

Martin Barrett

Managing Director

•  Strategy development and implementation

•  Group operational and ﬁ nancial performance

•  Regulatory engagement

•  Risk culture and management

•  Customer satisfaction and growth

•  Shareholder returns

Stephen Caville
Chief Information Oﬃ  cer

Gayle Job
Chief People & Property Oﬃ  cer

Craig Lonergan
Chief Risk Oﬃ  cer

•  Group Information Technology 

strategy and management

•  People engagement and 

performance

•  Risk proﬁ le within Board approved 

risk appetite

•   IT Strategic Plan

•  Key technology project 

implementation

•  Payroll management, remuneration 

•  Risk management strategy and 

and beneﬁ ts

practices

•  Talent acquisition, recruitment and 

retention strategies

•  Learning and development

•  Employment law regulation and 

compliance

•  Staﬀ  wellbeing and workplace 

health and safety

•  Property portfolio management of 
leased and bank owned assets

•  Risk management and compliance 
framework and control systems

•  Risk culture awareness

•  Credit portfolio review

AUSWIDE BANK ANNUAL REPORT 2019    P|29

P|30    AUSWIDE BANK ANNUAL REPORT 2019

contents

32
Directors’ statutory report

46
Auditor’s independence declaration

47
(cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:812)(cid:87)(cid:3)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)

48
Consolidated statement o(cid:73)(cid:3)(cid:812)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)

49
Consolidated statement o(cid:73)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:813)(cid:82)(cid:90)(cid:86)(cid:3)

50
Consolidated statement o(cid:73)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)

54
Notes to (cid:87)(cid:75)(cid:72) consolidate(cid:71)(cid:3)(cid:812)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)

114
Directors’ declaration

115
Independent auditor’s report

120
Corporate g(cid:82)(cid:89)ernance summary

122
S(cid:75)ar(cid:72)(cid:75)(cid:82)(cid:79)der information

126
Financial glossary

AUSWIDE BANK ANNUAL REPORT 2019    P|31

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FOR THE YEAR ENDED 30 JUNE 2019

Review and results of operations

The underlying net proﬁ t after tax (NPAT) for the consolidated entity for ﬁ nancial year 2018/19 was $17.201m compared to 
$17.108m for 2017/18. This represents an increase of 0.5%.

The statutory consolidated NPAT for the 2018/19 ﬁ nancial year was $17.201m compared to the result of $17.886m for the 
2017/18 year.

The loan book of Auswide Bank Ltd (grossed up for Investments in Managed Investment Schemes reported in Other ﬁ nancial 
assets in the Statement of Financial Position) increased from $2.945b at 30 June 2018 to $3.131b at 30 June 2019, an 
increase of $186m. This represents growth of 6.3% for the 2018/19 ﬁ nancial year. The loan book growth of 6.3% compares 
favourably with the Reserve Bank of Australia data which discloses credit provided to the private sector increased by 3.3% 
over the 12 months to June 2019.

Consumer lending

The consumer lending portfolio increased from $43.524m at 30 June 2018 to $62.312m at 30 June 2019, an increase of 
$18.788m. The growth in consumer lending has contributed signiﬁ cantly to the operating results of the Company with net 
interest revenue of approximately $3.306m derived from the portfolio in the ﬁ nancial year.

Customers 

Auswide Bank is undertaking a review of the Broker home lending business to examine and improve:

•  the customer proposition - product, pricing and brand;

•  end to end process and operations;

•  credit process and risk settings;

•  supporting systems and documentation; and

•  sales force eﬀ ectiveness.

The key objectives include improving both the customer and the broker experience and to become known as the bank who is 
consistent and simple to do business with.

Digital branch and automation

Auswide Bank recognises that customers are moving to online services which provide speed, ease of use and the accessibility 
of services. The strategic goal is to create an end-to-end digital banking experience and the bank has initiated projects to 
deliver online application capabilities.

APPLY - Personal Loans, which provides the ability for single applicants to apply for a personal loan via Auswide Bank’s 
website, went live in February 2019. APPLY will also facilitate the opening of term deposits, savings and transaction accounts 
via Online Banking and is expected to be released in H1 of FY2020.

Nintex Promapp is an online repository which simpliﬁ es process management and provides real-time feedback and 
collaboration. This project was delivered in September 2018. Nintex provides powerful, easy to use workﬂ ow automation 
capabilities to allow staﬀ  to quickly and easily manage, automate and optimize its business processes.

Principal activities and signiﬁ cant changes

Auswide Bank Ltd is an approved deposit-taking institution and licensed credit and ﬁ nancial services provider. Auswide Bank 
provides deposit, credit, insurance and banking services to personal and business customers across Australia, principally in 
regional and metropolitan Queensland, Sydney and Melbourne.

Strategic plan

A new three year strategic plan was adopted by the Board in March 2019. The six pillars of the strategic plan are as follows:

•  building awareness and consideration via consistent messaging, customer service and leveraging the QRL sponsorship to 

drive customer acquisition;

•  establishing partnerships that support growth in retail and business banking platforms, member based and community 

organisations;

•  improving customer experience through digital implementation and the Customer Hub to increase product conversion rates 

and lower the cost to income ratio;

•  improving eﬃ  ciencies through automation and simpliﬁ cation with focus on back oﬃ  ce, ﬁ nance, credit and broker service;

•  strengthening the bank via enhanced staﬀ  capabilities, risk audit processes, capital and funding strength, as well as cyber 

risk and fraud detection capability; and

•  reviewing M&A, Fintech and partnering opportunities.

P|32    AUSWIDE BANK ANNUAL REPORT 2019

Branch network

The Company has a diversiﬁ ed branch network consisting of 21 branches and agencies across Queensland, and a business 
centre in Brisbane. The Company also employs Business Development Managers in Sydney and Melbourne to conduct 
interstate business. All regional loan staﬀ  and panel valuers are locally based ensuring an in-depth knowledge of the local 
economy and developments in the real estate market.

There is focus on ensuring future investments are aligned with growth opportunities and strategic initiatives, ensuring a 
consistent review of historical investments including branches.

Technology

Investment in technology continues with focus on improved security and fraud protection as well as enhanced customer 
experience. The key technology strategies include:

•  investment in the customer experience by updating the Customer Hub platform;

•  cyber security programs to maintain a strong security posture in a changing cyber landscape;

•  core system updates to the latest version and features of Ultracs;

•  improved digital channel capability across self-service account origination; and

•  approved Lending Platform updates to increase automation and 3rd party integration.

Net Interest Margin

The Net Interest Margin (NIM) has been impacted by interest rates at historic lows and the continuance of highly competitive 
housing ﬁ nance markets across the 2018/19 ﬁ nancial year, in addition to elevated funding markets in the ﬁ rst three quarters 
of the ﬁ nancial year. In order to maintain stability in the NIM, the bank closely monitors the competitive pricing of products and 
continues to proactively manage assets and liabilities.

The net interest margin for the 2018/19 year was 1.87% compared to 1.93% in the 2017/18 ﬁ nancial year.

Arrears and collections

Total arrears greater than 30 days past due (excluding the eﬀ ects of hardship accounts) increased from $14.058m to 
$14.302m. Arrears have decreased as a percentage of the Group’s total loan book from 0.48% at 30 June 2018 to 0.46% at 
30 June 2019.

The Board is satisﬁ ed that the provisions set aside cover the risks arising from current and future doubtful debts.

Risk

Auswide Bank takes a proactive approach to risk management, which can be demonstrated by the bank’s adoption of 
methodologies to curtail excessive exposures to risky product markets.

The early introduction of Investor, High LVR and Interest Only lending initiatives together with continued review of underwriting 
and serviceability assessments ensured that Auswide Bank was well placed to manage the risks associated with its lending 
portfolio together with regulatory requirements.

The Board Risk Committee provides strong oversight of the risk framework across the organisation. The Board remains 
focused on the portfolio quality as the loan book grows and this is highlighted by the continuing positive trend in relation to 
loan arrears.

Acquisitions

The Board will continue to monitor opportunities to acquire loan books or suitable institutions as they arise and the Board will 
review any oﬀ ers made which may complement the overall operations of the Group.

Matters subsequent to the end of the ﬁ nancial year

There has been no other matter or circumstance since the end of the ﬁ nancial year that will signiﬁ cantly aﬀ ect the results of 
operations in future years or the state of aﬀ airs of the Company.

Capital

The capital adequacy ratio for the Auswide Bank Group at 30 June 2019 was 13.79% (2018: 14.89%). The tier 1 capital ratio 
at 30 June 2019 was 11.76% (2018: 12.68%).

The Group’s strong capital position allows for continued growth with signiﬁ cant capital headroom.

Dividends

A fully franked interim dividend of 16.0 cents per ordinary share was declared and paid on 25 March 2019 (26 March 2018: 
16.0 cents). A fully franked ﬁ nal dividend of 18.5 cents per ordinary share has been declared by the Board and will be paid on 
20 September 2019 (21 September 2018: 18.0 cents).

Although the dividend payout ratio of 84.6% for the ﬁ nancial year exceeds the Board guideline of 70% to 80%, the Board of 
Directors declared an 18.5 cent dividend based on the strength of the bank’s capital.

AUSWIDE BANK ANNUAL REPORT 2019    P|33

Directors

The names and particulars of the Directors of the Company in oﬃ  ce during or since the end of the ﬁ nancial year are:

Professor John S Humphrey LL.B

Professor Humphrey was appointed to the Board on 19 February 2008, and was appointed Chairman following the 2009 
Annual General Meeting. He is a Senior Consultant in the Brisbane oﬃ  ce of international law ﬁ rm, King & Wood Mallesons, 
where he specialises in commercial law, corporate mergers and acquisitions. He served as Executive Dean of the Faculty of 
Law at Queensland University of Technology (until June 2019). He was a Non-Executive Director of Downer-EDI Limited (until 
November 2016) and is currently a Non-Executive Director of Horizon Oil Limited. Professor Humphrey is a member of the 
Audit Committee and is an independent Director.

Mr Barry Dangerﬁ eld

Mr Dangerﬁ eld was appointed to the Board on 22 November 2011. Mr Dangerﬁ eld has had a successful 39 year banking 
career with Westpac Banking Corporation having held positions across Queensland and the Northern Territory of Regional 
Manager Business Banking, Head of Commercial and Agribusiness and Regional General Manager Retail Banking. Mr 
Dangerﬁ eld is the Chairman of the Group Board Remuneration Committee, a member of the Audit Committee, a member of 
the Risk Committee and is an independent Director. Mr Dangerﬁ eld served as a Director of Money Place Holdings Pty Ltd until 
January 2018. Mr Dangerﬁ eld is currently a Director of the Bundaberg Friendly Society Medical Institute which operates the 
Friendly Society Private Hospital and Pharmacies in Bundaberg and he is Chairman of the Institutes Audit and Risk Committee 
and Chairman of the Institutes Remuneration Committee.

Mr Gregory N Kenny GAICD, GradDipFin

Mr Kenny was appointed to the Board on 19 November 2013. Mr Kenny has had a long and successful career with Westpac 
Banking Corporation and St George Bank Ltd, and prior to that with Bank of New York and Bank of America in Australia. At St 
George Bank he held the positions of Managing Director (NSW and ACT), General Manager Corporate and Business Bank and 
General Manager Group Treasury and Capital Markets. Mr Kenny served as a Director of MoneyPlace Holdings Pty Ltd until 
January 2018. Mr Kenny is the Chairman of the Risk Committee, a member of the Audit Committee, a member of the Group 
Board Remuneration Committee and is an independent Director.

Mr Martin J Barrett BA(ECON), MBA

Mr Barrett commenced as Chief Executive Oﬃ  cer of Wide Bay Australia Ltd (now Auswide Bank Ltd) on 4 February 2013, and 
was subsequently appointed Managing Director on 19 September 2013. Mr Barrett has extensive experience in the banking 
sector, having previously held the positions of Managing Director (Queensland, Western Australia and National Motor Finance 
Business) and General Manager NSW/ACT Corporate & Business Bank at St George Bank Ltd. Prior to working at St George 
Bank, Mr Barrett held senior roles at regional ﬁ nancial institutions in the United Kingdom and at National Australia Bank. Mr 
Barrett is currently a Non-Executive Director of Impact Community Services, and served as a Director of MoneyPlace Holdings 
Pty Ltd until January 2018. Mr Barrett is an Executive Director.

Ms Sandra C Birkensleigh BCom, CA, GAICD, ICCP (Fellow)

Ms Birkensleigh was appointed to the Board on 2 February 2015. Ms Birkensleigh was previously a partner at 
PricewaterhouseCoopers for 16 years until 2013. During her career her predominant industry focus has been Financial 
Services (Banking and Wealth Management). Ms Birkensleigh has also advised on risk management in other sectors such as 
retail and consumer goods, retail and wholesale electricity companies, resources and the education sector. Ms Birkensleigh 
is currently a Non-Executive Director of MLC Insurance Limited, the National Disability Insurance Agency, Horizon Oil Limited, 
7-11 Holdings and its subsidiaries and the Sunshine Coast Children’s Therapy Centre. She is an independent member of 
the Audit Committee of the Reserve Bank of Australia, and a Council Member of the University of the Sunshine Coast. Ms 
Birkensleigh is the Chairperson of the Audit Committee, a member of the Group Board Remuneration Committee, a member of 
the Risk Committee and is an independent Director.

Company secretary

Mr William R Schafer BCom, CA

Mr Schafer was appointed Company Secretary in August 2001. He has extensive experience in public accounting and 
management. He is an Associate of the Institute of Chartered Accountants.

Directors’ meetings

During the ﬁ nancial year, 11 meetings of the Directors, 5 meetings of the Audit Committee, 8 meetings of the Remuneration 
Committee and 5 meetings of the Risk Committee were held, in respect of which each Director attended the following number:

P|34  AUSWIDE BANK ANNUAL REPORT 2019

BOARD

AUDIT

REMUNERATION

RISK

Held

Attended

Held

Attended

JS Humphrey

B Dangerﬁ eld

GN Kenny

MJ Barrett

SC Birkensleigh

11

11

11

11

11

11

11

10

11

11

5

5

5

5

5

5

5

4

5*

5

Held

n/a

8

8

8

8

Attended

n/a

8

7

1*

8

Held

n/a

5

5

5

5

Attended

n/a

5

5

5*

5

*Mr Barrett who is not a member of the Audit, Risk or Remuneration Committees, attended the Audit, Risk and Remuneration 
Committee meetings by invitation.

Directors’ shareholdings

The Directors currently hold shares of the Company in their own name or a related body corporate as follows:

JS Humphrey

MJ Barrett

B Dangerﬁ eld

GN Kenny

Related party disclosure

Ordinary Shares

31,551

173,773

43,291

15,000

No persons or entities related to key management personnel provided services to the Company during the year.

AUSWIDE BANK ANNUAL REPORT 2019    P|35

Remuneration report

The Board Remuneration Committee consists of independent Directors Mr Barry Dangerﬁ eld, Mr Greg Kenny and Ms Sandra 
Birkensleigh. Mr Barry Dangerﬁ eld is Chairman of the Committee.

The objective of the Board Remuneration Policy is to maintain behaviour that supports the sustained ﬁ nancial performance 
and security of Auswide Bank Ltd and to reward eﬀ orts which increase shareholder and customer value. This objective is 
upheld by:

•  appropriately balanced measures of performance weighted towards long-term shareholder interests;

•  variable performance based pay for the Executive Management Team involving a long-term incentive plan subject to an 

extended period of performance assessment;

•  recognition and reward for strong performance;

•  a considered balance between the capacity to pay and the need to pay to attract and retain capable staﬀ  at all levels;

•  the exercise of Board discretion as an ultimate means to mitigate unintended consequences of variable pay and to preserve 

the interests of the shareholders; and

•  short-term and long-term incentive performance criteria are structured within the overall risk management framework of the 

Company.

Remuneration of Non-Executive Directors

The fees payable for Non-Executive Directors are determined with reference to industry standards, the size of the Company, 
performance and proﬁ tability. The Directors’ fees are approved by the shareholders at the Annual General Meeting in the 
aggregate and the individual allocation is approved by the Board. The Company’s Non-Executive Directors receive only fees 
(including superannuation) for their services. They are not entitled to receive any beneﬁ t on retirement or resignation (other 
than superannuation) and do not participate in any share based remuneration.

Remuneration of Executive Directors and Senior Executives

Remuneration of the Managing Director for 2018/19 was subject to review and recommendation of the Remuneration 
Committee and ratiﬁ cation by the Board. Remuneration of the Executive Management Team for 2018/19 was subject to 
ratiﬁ cation by the Remuneration Committee. The Remuneration Policy for executives uses a range of components to focus the 
Managing Director and the Executive Management Team toward achieving Auswide Bank’s strategy and business objectives. 
Auswide Bank’s overall philosophy is to adopt, where possible, a Total Target Reward methodology which links remuneration 
directly to the performance and behaviour of an individual with Auswide Bank’s results.

The Total Target Reward framework is designed to:

•  reward those who deliver the highest relative performance through the Company’s incentive programs;

•  attract, recognise, motivate and retain high performers;

•  provide competitive, fair and consistent rewards, beneﬁ ts and conditions; and

•  align the interests of senior executives and shareholders through ownership of Company shares.

In setting an individual’s Total Target Reward, the Committee considers:

•  input from the Company’s Managing Director on the Total Target Reward for the Executive Management Team who report 

directly to the Managing Director;

•  market data from comparable roles in the ﬁ nancial services industry;

•  the performance of both the individual and Auswide Bank Ltd over the last year; and

•  general remuneration market environment and trends.

Each individual’s actual remuneration will reﬂ ect:

•  the degree of individual achievement in meeting key performance measures under the performance management 

framework;

•  parameters approved by the Board based on the Company’s ﬁ nancial and risk performance and other qualitative factors;

•  Auswide Bank Ltd’s share price performance and relative shareholder returns; and

•  the timing and level of deferral in relation to any vesting conditions applicable.

Components of the Total Target Reward include:

•  Fixed Annual Remuneration (FAR) provided as cash and beneﬁ ts (including employer superannuation and fringe beneﬁ ts);

•  cash based short-term incentives reﬂ ecting both individual and business performance for the current year that supports the 

longer term objectives of Auswide Bank; and

•  equity based long-term incentives provided to drive management decisions focused on the long-term prosperity of Auswide 

Bank through the use of challenging performance hurdles.

P|36    AUSWIDE BANK ANNUAL REPORT 2019

Short Term Incentives (STI)

Payment of STIs is conditional upon the achievement of key performance measures tailored to the respective role. The 
performance measures and objectives are selected to provide a robust link between executive reward and the key business 
drivers of long term shareholder value. The KPls are measured relating to Company and personal performance accountabilities 
and include ﬁ nancial, strategic, operational and customer/stakeholder measures. These measures are chosen and weighted to 
best align the individual’s reward to the KPls of the Company and its overall performance.

The ﬁ nancial performance objectives are proﬁ t before and after income tax compared to budgeted amounts and management 
of costs in line with divisional organisational budgets. These measures reasonably capture the eﬀ ects of a number of material 
risks and minimise actions that promote short-term results at the expense of longer-term business growth and success.The 
non-ﬁ nancial objectives vary with position and responsibility and include measures such as achieving strategic outcomes, 
compliance and support of the Company’s risk management policies and compliance culture, customer satisfaction, 
communication and staﬀ  development.

Performance based payments were made to the Executive Management Team under the STI scheme as an incentive payment 
to recognise and reward the achievement of KPI targets relating to the ﬁ nancial year ended 30 June 2018. Cash payments 
were granted on the 20 September 2018, and allocated to the Executive Management Team as follows;

Mr MJ Barrett (Managing Director)

Mr WR Schafer (Chief Financial Oﬃ  cer)

Mr SM Caville (Chief Information Oﬃ  cer)

Mr D Hearne (Chief Customer Oﬃ  cer)

Mrs GM Job (Chief People and Property Oﬃ  cer)

Mr CA Lonergan (Chief Risk Oﬃ  cer)

Mr MS Rasmussen (Chief Operating Oﬃ  cer)

$93,000

$38,089

$19,314

$37,637

$20,199

$20,225

$22,802

The payment of STIs is at the complete discretion of the Board and can be adjusted downwards to zero, if necessary, to 
protect the ﬁ nancial soundness of the Company and taking into account a qualitative overlay that reﬂ ects Auswide Bank’s 
management of business risks, shareholder expectations and quality of the ﬁ nancial results.

Executive Long Term Incentive Plan (ELTIP)

The ELTIP was established by the Board to encourage the Executive Management Team to drive the long-term prosperity of 
Auswide Bank and have a greater involvement in the achievement of the Company’s objectives.

Under the ELTIP an oﬀ er may be made to the members of the Executive Management Team every year as determined by 
the Board. The maximum value of the oﬀ er is determined as a percentage of the FAR of each member of the Executive 
Management Team. The maximum percentages used are up to 50.0% for the Managing Director and up to 30.0% for 
Executive Managers.

In order for the shares to vest, certain performance criteria must be satisﬁ ed within a predetermined performance period. 
KPI targets were considered by the Remuneration Committee to be appropriate measures of performance, as they had been 
speciﬁ cally chosen for each executive with the aim of achieving the strategy and business objectives of the Company. The 
KPI targets for the Managing Director were assessed by the Remuneration Committee. The KPI targets for the other senior 
executives were assessed by the Managing Director and then ratiﬁ ed by the Remuneration Committee.

Actual and potential ELTIP allocations

Share based payment arrangements aﬀ ecting remuneration of key management personnel in the current year or future 
ﬁ nancial years are detailed in the following table.

KMP

Maximum value

Vesting date

No of shares

Vested in 
the 18/19 
ﬁ nancial year

Not yet 
assessed for 
vesting

No of shares

No of shares

2014 oﬀ er - June 2014

Barrett, MJ

2015 oﬀ er - June 2015

Barrett, MJ

July 2014 - June 2018

4,433

1/07/2018

4,433

July 2015 - June 2019

5,608

5,608

1/07/2018

1/07/2019

5,608

-

-

-

5,608

AUSWIDE BANK ANNUAL REPORT 2019    P|37

Remuneration Report (continued)

KMP

Maximum value

Vesting date

No of shares

2016 oﬀ er - September 2016

July 2016 - June 2020

Vested in 
the 18/19 
ﬁ nancial year

Not yet 
assessed for 
vesting

No of shares

No of shares

Barrett, MJ

Schafer, WR

Caville, SM

Job, GM

Lonergan, CA

Rasmussen, MS

4,762

4,762

4,762

998

998

998

865

865

865

815

815

815

971

971

971

998

998

998

1/07/2018

1/07/2019

1/07/2020

1/07/2018

1/07/2019

1/07/2020

1/07/2018

1/07/2019

1/07/2020

1/07/2018

1/07/2019

1/07/2020

1/07/2018

1/07/2019

1/07/2020

1/07/2018

1/07/2019

1/07/2020

2017 oﬀ er - September 2017

July 2017 - June 2021

Barrett, MJ

Schafer, WR

Caville, SM

Hearne, D

Job, GM

Lonergan, CA

Rasmussen, MS

P|38    AUSWIDE BANK ANNUAL REPORT 2019

2,446

2,446

2,446

1,044

1,044

1,044

1,044

1,044

1,044

1,247

1,247

1,247

1,044

1,044

1,044

1,044

1,044

1,044

1,044

1,044

1,044

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

1/07/2019

1/07/2020

1/07/2021

4,762

-

-

998

-

-

865

-

-

815

-

-

971

-

-

998

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

4,762

4,762

-

998

998

-

865

865

-

815

815

-

971

971

-

998

998

2,446

2,446

2,446

1,044

1,044

1,044

1,044

1,044

1,044

1,247

1,247

1,247

1,044

1,044

1,044

1,044

1,044

1,044

1,044

1,044

1,044

KMP

Maximum value

Vesting date

No of shares

2018 oﬀ er - September 2018

July 2018 - June 2022

Vested in 
the 18/19 
ﬁ nancial year

Not yet 
assessed for 
vesting

No of shares

No of shares

Barrett, MJ

Schafer, WR

Caville, SM

Hearne, D

Job, GM

Lonergan, CA

Rasmussen, MS

5,811

5,811

5,812

1,220

1,220

1,221

1,220

1,220

1,221

1,312

1,312

1,313

1,220

1,200

1,221

1,220

1,220

1,221

1,220

1,220

1,221

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

1/07/2020

1/07/2021

1/07/2022

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

5,811

5,811

5,812

1,220

1,220

1,221

1,220

1,220

1,221

1,312

1,312

1,313

1,220

1,200

1,221

1,220

1,220

1,221

1,220

1,220

1,221

Vesting of shares to key management personnel is at the complete discretion of the Board and can be adjusted downwards, to 
zero if necessary, to protect the ﬁ nancial soundness of the Company and taking into account a qualitative overlay that reﬂ ects 
Auswide Bank’s management of business risks, shareholder expectations and quality of the ﬁ nancial results.

Details of the nature and amount of each major element of the remuneration of each Director and each of the named Oﬃ  cers 
of the Company receiving the highest remuneration and the key management personnel are:

2019

Short-term employee beneﬁ ts

Post 
employment
beneﬁ ts

Cash salary 
and fees
$

Cash
bonus
$

Non-
monetary
$

Super-
annuation
$

Peformance 

Fixed

based

Other 
long term 
beneﬁ ts
$

Share 
based 
payments
$

Peformance 

based

Total
$

Speciﬁ ed Directors

Humphrey, JS Chairman 
(non-exec)

Birkensleigh, S Director 
(non-exec)

Dangerﬁ eld, B Director
(non-exec)

Kenny, GN Director
(non-exec)

Barrett, MJ Managing 
Director

Total remuneration - 
Speciﬁ ed Directors

149,224

93,265

93,265

93,265

-

-

-

-

571,027

93,000

1,000,046

93,000

-

-

-

-

-

-

14,176

8,860

8,860

8,860

-

-

-

-

-

-

-

-

163,400

102,125

102,125

102,125

20,531

12,919

86,598

784,075

61,287

12,919

86,598

1,253,850

AUSWIDE BANK ANNUAL REPORT 2019    P|39

Remuneration Report (continued)

2019

Short-term employee beneﬁ ts

Post 
employment
beneﬁ ts

Cash salary 
and fees
$

Cash
bonus
$

Non-
monetary
$

Super-
annuation
$

Peformance 

Fixed

based

Other 
long term 
beneﬁ ts
$

Share 
based 
payments
$

Peformance 

based

Total
$

Other Key  Management Personnel

Schafer, WR Chief 
Financial Oﬃ  cer

Caville, SM Chief 
Information Oﬃ  cer

Hearne, D Chief 
Customer Oﬃ  cer

Job, GM Chief People 
and Property Oﬃ  cer

Lonergan, CA Chief Risk 
Oﬃ  cer

Rasmussen, MS Chief 
Operating Oﬃ  cer

Total remuneration - 
Speciﬁ ed Executives

2018

Speciﬁ ed Directors

Humphrey, JS Chairman 
(non-exec)

Birkensleigh, S Director 
(non-exec)

Dangerﬁ eld, B Director
(non-exec)

Kenny, GN Director
(non-exec)

Barrett, MJ Managing 
Director

Total remuneration - 
Speciﬁ ed Directors

328,137

38,089

191,762

19,314

299,771

37,637

191,845

20,199

199,022

20,225

224,367

22,802

1,434,904

158,266

146,119

91,324

91,324

91,324

-

-

-

-

552,052

37,500

972,143

37,500

Other Key Management Personnel

Schafer, WR Chief 
Financial Oﬃ  cer

Caville, SM Chief 
Information Oﬃ  cer

Hearne, D Chief 
Customer Oﬃ  cer

Job, GM Chief People 
and Property Oﬃ  cer

Lonergan, CA Chief Risk 
Oﬃ  cer

Rasmussen, MS Chief 
Operating Oﬃ  cer

Total remuneration - 
Speciﬁ ed Executives

317,891

23,400

183,942

13,525

268,427

20,250

184,466

13,563

191,560

15,524

227,541

16,003

1,373,827

102,265

P|40    AUSWIDE BANK ANNUAL REPORT 2019

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

20,531

8,945

5,838

401,540

19,112

1,960

5,060

237,208

20,531

5,355

-

363,294

19,152

7,930

4,768

243,894

19,365

4,351

5,680

248,643

20,531

4,727

5,838

278,265

119,222

33,268

27,184

1,772,844

13,881

8,676

8,676

8,676

-

-

-

-

-

-

-

-

160,000

100,000

100,000

100,000

20,049

11,187

55,006

675,794

59,958

11,187

55,006

1,135,794

20,049

7,872

18,454

4,688

20,049

5,061

18,492

5,546

18,697

3,817

20,049

4,409

115,790

31,393

-

-

-

-

-

-

-

369,212

220,609

313,787

222,067

229,598

268,002

1,623,275

Employment contracts

All named Key Management Personnel and the Managing Director have employment contracts. Major provisions of those 
agreements are summarised to follow:

Current personnel

Managing Director - M J Barrett

•  Original contract dated - 4 February 2013

•  Amended contract dated - 15 July 2016, 31 May 2019

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or M J Barrett may terminate this agreement by providing six months written notice or provide payment in 

lieu of the notice period.

•  Payment of six months redundancy pay on termination of employment if position is made redundant.

•  Short Term Incentive (STI) - Payment under the STI scheme up to a maximum of $180,000 per year (or such other amount 
determined by the Board), depending on satisfaction of KPls as in place from time to time assessed and determined in the 
sole and absolute discretion of the Board.

•  Long Term Incentive (LTI) - Grant of performance rights under the LTI plan up to a maximum value of $120,000 (or such 
other amount determined by the Board). Awards made under the LTIP are at the absolute and sole discretion of the Board.

Chief Financial Oﬃ  cer & Company Secretary - W R Schafer

•  Original contract dated - 28 May 2007

•  Amended contract dated - 6 December 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or W R Schafer may terminate this agreement by providing four months written notice or provide payment 

in lieu of the notice period.

•  Payment on early termination due to a takeover and not being oﬀ ered ongoing employment in Bundaberg in an equivalent 
position, equal to six months salary plus two weeks salary per year of service with a minimum payment of 20 weeks and a 
maximum payment of 104 weeks.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. STI up 
to 15.0% of base salary to the 30th June each year on satisfaction of the KPIs as in place from time to time assessed and 
determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) - The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI up to a maximum value of $30,000 or such other amount determined 
by the Board Remuneration Committee. Awards made under the LTI are at the absolute and sole discretion of the Board. The 
right to participate in the LTI on an ongoing basis is subject to the discretion of the Board. The granting of an award to an 
individual under the LTI in one year does not guarantee that similar awards will be made in the future.

Chief Risk Oﬃ  cer - C A Lonergan

•  Original Contract dated - 10 February 2014

•  Amended contracts dated - 1 July 2014, 9 December 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or C A Lonergan may terminate this agreement by providing three months written notice or provide 

payment in lieu of the notice period.

•  Payment of six months redundancy pay on termination of employment if position is made redundant.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. STI up 
to 15.0% of base salary to the 30th June each year on satisfaction of the KPIs as in place from time to time assessed and 
determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) - The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI up to a maximum value of $30,000 or such other amount determined 
by the Board Remuneration Committee. Awards made under the LTI are at the absolute and sole discretion of the Board. The 
right to participate in the LTI on an ongoing basis is subject to the discretion of the Board. The granting of an award to an 
individual under the LTI in one year does not guarantee that similar awards will be made in the future.

AUSWIDE BANK ANNUAL REPORT 2019    P|41

Remuneration Report (continued)

Chief Information Oﬃ  cer - S M Caville

•  Original contract dated - 1 November 2010

•  Amended contract dated - 8 December 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or S M Caville may terminate this agreement by providing four months written notice or provide payment 

in lieu of the notice period.

•  Payment on early termination due to a takeover and not being oﬀ ered ongoing employment in Bundaberg in an equivalent 
position, equal to six months salary plus two weeks salary per year of service with a minimum payment of 20 weeks and a 
maximum payment of 104 weeks.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. STI up 
to 15.0% of base salary to the 30th June each year on satisfaction of the KPIs as in place from time to time assessed and 
determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) - The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI up to a maximum value of $30,000 or such other amount determined 
by the Board Remuneration Committee. Awards made under the LTI are at the absolute and sole discretion of the Board. The 
right to participate in the LTI on an ongoing basis is subject to the discretion of the Board. The granting of an award to an 
individual under the LTI in one year does not guarantee that similar awards will be made in the future.

Chief Operating Oﬃ  cer - M S Rasmussen

•  Original contract dated - 3 February 2014

•  Amended contracts dated - 29 January 2015, 12 December 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or M S Rasmussen may terminate this agreement by providing three months written notice or provide 

payment in lieu of the notice period.

•  Payment of six months redundancy pay on termination of employment if position is made redundant.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. STI up 
to 15.0% of base salary to the 30th June each year on satisfaction of the KPIs as in place from time to time assessed and 
determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) - The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI up to a maximum value of $30,000 or such other amount determined 
by the Board Remuneration Committee. Awards made under the LTI are at the absolute and sole discretion of the Board. The 
right to participate in the LTI on an ongoing basis is subject to the discretion of the Board. The granting of an award to an 
individual under the LTI in one year does not guarantee that similar awards will be made in the future.

Chief Customer Oﬃ  cer - D Hearne

•  Contract dated - 20 June 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or D Hearne may terminate this agreement by providing four months written notice or provide payment in 

lieu of the notice period.

•  Payment of six months redundancy pay on termination of employment if position is made redundant.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. The STI 
will be calculated up to 25.0% of base salary as at the 30th June each year and on satisfaction of the KPIs as in place from 
time to time assessed and determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) -The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI will be calculated up to a maximum value of 15.0% of base salary as at 
the 30th June each year (or such other amount determined by the Board Remuneration Committee). Awards made under 
the LTI are at the absolute and sole discretion of the Board. The right to participate in the LTI on an ongoing basis is subject 
to the discretion of the Board. The granting of an award to an individual under the LTI in one year does not guarantee that 
similar awards will be made in the future.

P|42   AUSWIDE BANK ANNUAL REPORT 2019

Chief People and Property Oﬃ  cer - G M Job

•  Original contract dated - 4 June 2007

•  Amended contract dated - 6 December 2016

•  Term of agreement - no ﬁ xed term

•  Auswide Bank Ltd or G M Job may terminate this agreement by providing three months written notice or provide payment in 

lieu of the notice period.

•  Payment on early termination due to a takeover and not being oﬀ ered ongoing employment in Bundaberg in an equivalent 
position, equal to four months salary plus two weeks salary per year of service with a minimum payment of 16 weeks and a 
maximum payment of 104 weeks.

•  Short Term Incentive (STI) - Payment under the STI Scheme will be subject to the Company’s performance as well as the 

individual’s own performance in accordance with KPIs determined by the Company and advised on an annual basis. STI up 
to 15.0% of base salary to the 30th June each year on satisfaction of the KPIs as in place from time to time assessed and 
determined in the sole and absolute discretion of the Board Remuneration Committee.

•  Long Term Incentive (LTI) - The grant of performance rights, under the terms of Auswide Performance Rights Plan Rules, is 
subject to the Company’s performance and the individual’s own performance in accordance with KPIs agreed between the 
individual and the Company on an annual basis. LTI up to a maximum value of $30,000 or such other amount determined 
by the Board Remuneration Committee. Awards made under the LTI are at the absolute and sole discretion of the Board. The 
right to participate in the LTI on an ongoing basis is subject to the discretion of the Board. The granting of an award to an 
individual under the LTI in one year does not guarantee that similar awards will be made in the future.

Consequences of performance on shareholder wealth

The tables below set out summary information about the Consolidated Entity’s earnings from continuing and discontinued 
operations and movements in shareholder wealth for the ﬁ ve years to 30 June 2019:

Net proﬁ t before tax

Net proﬁ t after tax

Share price at start of year

Share price at end of year

Interim dividend

Final dividend

Basic earnings per share

Diluted earnings per share

30 June

2019

$'000

24,638

17,201

30 June

30 June

30 June

30 June

2018

$'000

25,158

17,886

2017

$'000

21,870

15,149

2016

$'000

17,606

11,699

2015

$'000

19,028

13,262

30 June

30 June

30 June

30 June

30 June

2019

$5.63

$5.13

16.00 cps

18.50 cps

40.81 cps

40.81 cps

2018

$5.14

$5.63

16.00 cps

18.00 cps

42.83 cps

42.83 cps

2017

$5.08

$5.14

14.00 cps

17.00 cps

37.35 cps

37.35 cps

2016

$5.05

$5.08

14.00 cps

16.00 cps

31.20 cps

31.20 cps

2015

$5.50

$5.05

14.00 cps

16.00 cps

36.07 cps

36.07 cps

Dividends franked to 100% at 30% corporate income tax rate.

Loans to key management personnel

The following table outlines the aggregate of loans to key management personnel. Details are provided on an individual basis 
for each of the key management personnel whose indebtedness exceeded $100,000 at any time during this reporting period.

Loans have been made in accordance with the normal terms and conditions oﬀ ered by the Company and charged at 153 basis 
points below the owner occupied standard variable interest rate or 20 basis points below the standard ﬁ xed rate on applicable 
loan types, available to the general public at any time. Similar rates are, however, available to the general public, therefore this 
interest rate would approximate an arm’s length interest rate oﬀ ered by the Company.

Loans are also made in accordance with the Staﬀ  Share Plan approved by shareholders in 1992. The loans are repayable 
over 5 years at 0% interest, with the loans being secured by a lien over the relevant shares. Such loans are only available to 
employees of the Company and there is no applicable arm’s length interest to take into account.

AUSWIDE BANK ANNUAL REPORT 2019    P|43

Remuneration Report (continued)

Loans for the year ended 30 
June 2019

Directors

Executives

Total: Key management 
personnel

Balance
30 June
2018

(1,846,339)

(172,494)

(2,018,833)

Loans for the year ended 30 
June 2018

Directors

Executives

Total: Key management 
personnel

Balance
30 June 2017
$

(1,806,591)

(589,242)

(2,395,833)

Interest 
charged
$

68,040

30,207

98,247

Interest 
charged
$

64,387

7,079

71,466

Balance
30 June
2019

(1,762,889)

(1,913,024)

(3,675,913)

Number in 
Group
30 June
2019

1

6

7

Balance
30 June
2018
$

Number in 
Group
30 June
2018

Write-oﬀ 
$

-

-

-

Write-oﬀ 
$

-

-

-

(1,846,339)

(172,494)

(2,018,833)

1

4

5

Individuals with loans above 
$100,000 in reporting period

Balance
30 June
2018
$

Interest* 
charged
$

Write-oﬀ 
$

Balance
30 June
2019
$

Highest in 
period
$

Directors

MJ Barrett

Executives

WR Schafer

D Hearne

(1,846,339)

68,040

(66,842)

-

4,355

26,606

-

-

-

(1,762,889)

(1,846,339)

(388,483)

(396,092)

(1,411,469)

(1,425,000)

Does not include SM Caville, GM Job, CA Lonergan or MS Rasmussen as their loans were less than $100,000.

* Actual interest charged is aﬀ ected by the use of the Company’s oﬀ set account.

Equity holdings and transactions

The following table is in respect of ordinary shares held directly, indirectly or beneﬁ cially by key management personnel.

Balance
30 June 2018

Received as 
remuneration

Options 
exercised

Net change 
other

Balance
30 June 2019

Directors

JS Humphrey

B Dangerﬁ eld

GN Kenny

MJ Barrett

Executives

WR Schafer

SM Caville

GM Job

CA Lonergan

MS Rasmussen

Total

31,551

43,291

15,000

158,970

42,000

44,240

112,464

12,000

-

-

-

-

14,803

998

865

815

971

998

459,516

19,450

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(8,000)

-

5,104

1,029

3,500

1,633

31,551

43,291

15,000

173,773

34,998

45,105

118,383

14,000

4,498

480,599

P|44    AUSWIDE BANK ANNUAL REPORT 2019

Indemnities and insurance premiums for oﬃ  cers and auditors

During the ﬁ nancial year the Company has paid premiums to cover Directors and oﬃ  cers for losses arising from claims or 
allegations made against them for wrongful acts committed or alleged to have been committed by them in their capacities 
as Directors or oﬃ  cers of the Company. The policy will also reimburse the Company where it is permitted by law to indemnify 
Insured Persons in relation to such claims or allegations. Cover is provided for the costs of defending such claims or 
allegations. During the reporting period and subsequent to 30 June 2019, no amounts have been paid pursuant to the policy.

Non-audit services

During the year, Deloitte Touche Tohmatsu, the Company’s Auditor, performed certain other services in addition to their 
statutory duties.

The Board has considered the non-audit services provided during the year by the Auditor, and in accordance with advice 
provided by the Board Audit Committee, is satisﬁ ed that the provision of those non-audit services during the year by the 
Auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for 
the following reasons:

•  All non-audit services were subject to the Corporate Governance procedures adopted by the Company and have been 
reviewed by the Board Audit Committee to ensure they do not impact the integrity and objectivity of the Auditor, and

•  The non-audit services provided do not undermine the general principles relating to auditor independence as set out in 

APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, 
as they did not involve reviewing or auditing the Auditor’s own work, acting in a management or decision making capacity 
for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

A copy of the Auditor’s Independence Declaration, as required under Section 307C of the Corporations Act 2001, is included 
in the Directors’ Statutory Report.

Non-audit services paid to Deloitte Touche Tohmatsu are as follows:

Services provided in connection with:

Tax advisory services

Other services

2019
$

64,449

112,344

176,793

2018
$

88,841

87,166

176,007

This Report is signed for and on behalf of the Board of Directors in accordance with a resolution of the Board of Directors.

JS Humphrey 

Director   

Brisbane
22 August 2019

SC Birkensleigh

Director

AUSWIDE BANK ANNUAL REPORT 2019    P|45

 
 
 
 
 
 
30 JUNE 2019

Liability limited by a scheme approved under Professional Standards Legislation
Member of Deloitte Asia Paciﬁ c Limited and the Deloitte Network.

P|46   AUSWIDE BANK ANNUAL REPORT 2019

FOR THE YEAR ENDED 30 JUNE 2019

Notes

2.1

2.1

2.2

Interest revenue

Interest expense

Net interest revenue

Other non-interest income

Employee beneﬁ ts expense

Depreciation expense

Amortisation expense

Occupancy expense

Impairment losses on ﬁ nancial instruments

4.5.5

Fees and commissions

General and administration expenses

Other expenses

Proﬁ t before income tax expense

Income tax expense

Proﬁ t for the year from continuing operations

Proﬁ t/(loss) for the year from discontinued 
operations

2.3

5.4

                 Consolidated

                      Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

136,352

128,933

136,352

128,933

(73,167)

(67,913)

(73,167)

(67,913)

63,185

9,464

20,327

1,920

685

2,361

1,143

9,884

61,020

9,348

19,427

1,992

690

2,320

1,320

8,847

63,185

9,464

20,327

1,920

685

2,361

1,143

9,884

61,020

9,348

19,427

1,992

690

2,320

1,320

8,847

10,905

10,671

10,905

10,671

786

24,638

7,437

17,201

702

24,399

7,355

17,044

786

24,638

7,437

17,201

702

24,399

7,355

17,044

-

611

-

2,301

Proﬁ t for the year

17,201

17,655

17,201

19,345

Other comprehensive income, net of income tax

Items that may be reclassiﬁ ed to proﬁ t or loss

Revaluation of cash ﬂ ow hedge to fair value

Revaluation of FVTOCI investments to fair value

Income tax relating to these items

Items that will not be reclassiﬁ ed to proﬁ t or loss

Revaluation of land and buildings to fair value

3.5.3

Income tax relating to this item

Other comprehensive income/(loss) for the year, 
net of income tax

(221)

(265)

(221)

(265)

(2)

67

-

-

(3)

80

1,446

(434)

(2)

67

-

-

(156)

824

(156)

(3)

80

1,446

(434)

824

Total comprehensive income for the year

17,045

18,479

17,045

20,169

Proﬁ t for the year attributable to:

Owners of the Company

Non-controlling interests

Total comprehensive income attributable to:

Owners of the Company

Non-controlling interests

Earnings per share

From continuing and discontinued operations

Basic (cents per share)

Diluted (cents per share)

From continuing operations

Basic (cents per share)

Diluted (cents per share)

5.2

5.2

2.4

2.4

2.4

2.4

17,201

-

17,201

17,886

(231)

17,655

17,201

19,345

-

-

17,201

19,345

17,045

18,710

17,045

20,169

-

(231)

-

-

17,045

18,479

17,045

20,169

40.81

40.81

40.81

40.81

42.83

42.83

40.81

40.81

The above consolidated statement of proﬁ t or loss and other comprehensive income should be read in conjunction with the accompanying notes.

AUSWIDE BANK ANNUAL REPORT 2019    P|47

AS AT 30 JUNE 2019

ASSETS

Cash and cash equivalents

Due from other ﬁ nancial institutions

Other ﬁ nancial assets

Current income tax assets

Loans and advances

Other investments

Property, plant and equipment

Other intangible assets

Deferred tax assets

Other assets

Goodwill

Total assets

LIABILITIES

Deposits and short term borrowings

Payables and other liabilities

Loans under management

Deferred tax liabilities

Provisions

Subordinated capital notes

Total liabilities

Net assets

EQUITY

Contributed equity

Reserves

Retained proﬁ ts

Total equity

Notes

4.1.1

4.1.2

4.1.3

4.1.4

4.1.5

3.1

3.2

2.3.5

6.5

3.3

4.1.6

4.1.7

4.1.4

2.3.5

6.4

4.1.8

3.4

3.5

           Consolidated

            Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

104,389

20,994

86,361

15,389

104,389

20,994

86,361

15,389

317,059

255,050

349,445

287,436

1,575

(721)

1,575

(1,182)

3,086,158

2,919,303

3,086,324

2,919,446

1,321

14,363

1,763

4,952

4,465

1,144

15,576

1,956

4,573

4,621

1,321

14,363

1,763

4,952

4,466

1,144

15,576

1,956

4,573

4,622

46,363

46,363

46,363

46,363

3,603,402

3,349,615

3,635,955

3,381,684

2,802,605

2,446,825

2,802,608

2,446,860

39,093

26,068

39,090

26,061

490,412

607,166

522,798

639,552

1,786

3,009

1,891

2,923

1,786

3,009

1,891

2,923

28,000

28,000

28,000

28,000

3,364,905

3,112,873

3,397,291

3,145,287

238,497

236,742

238,664

236,397

191,936

191,612

192,021

191,746

15,143

31,418

15,232

29,898

15,251

31,392

15,232

29,419

238,497

236,742

238,664

236,397

The above consolidated statement of ﬁ nancial position should be read in conjunction with the accompanying notes.

P|48    AUSWIDE BANK ANNUAL REPORT 2019

FOR THE YEAR ENDED 30 JUNE 2019

Cash ﬂ ows from operating activities

Interest received

Other non-interest income received

Interest paid

Income tax paid

Cash paid to suppliers and employees (inclusive of 
goods and services tax)

          Consolidated

          Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

Notes

136,446

128,674

136,446

128,674

14,605

17,721

14,605

19,089

(70,785)

(66,757)

(70,785)

(66,757)

(10,227)

(8,472)

(10,227)

(6,754)

(34,394)

(32,831)

(34,388)

(32,441)

Net cash provided by / (used in) operating activities 6.1

35,645

38,335

35,651

41,811

Cash ﬂ ows from investing activities

Net movement in investment securities

Net movement in amounts due from other ﬁ nancial 
institutions

Net movement in loans and advances

Net movement in other investments

Proceeds from sale of property, plant and equipment

Payments for non current assets

Net cash inﬂ ow/ (outﬂ ow) from discontinued 
operations

(61,483)

37,651

(61,483)

35,651

(5,605)

(3,626)

(5,605)

(3,626)

(168,924)

(141,788)

(168,948)

(141,762)

(177)

4

(75)

-

(177)

4,008

4

-

(1,219)

(1,679)

(1,219)

(1,679)

-

6,660

-

-

Net cash provided by / (used in) investing activities

(237,404)

(102,857)

(237,428)

(107,408)

Cash ﬂ ows from ﬁ nancing activities

Net movement in deposits and short term borrowings

351,670

137,263

351,638

135,324

Net movement in amounts due to other ﬁ nancial 
institutions and other liabilities

Proceeds from share issue

Dividends paid

Movement in share capital due to employee incentive 
scheme

(117,883)

(99,656)

(117,776)

(97,845)

275

291

275

291

(14,324)

(6,946)

(14,332)

(6,954)

49

(134)

-

-

Net cash provided by / (used in) ﬁ nancing activities

219,787

30,818

219,805

30,816

Net movement in cash and cash equivalents

18,028

(33,704)

18,028

(34,781)

Cash and cash equivalents at the beginning of the 
ﬁ nancial year

Cash and cash equivalents at end of the ﬁ nancial 
year

86,361

120,065

86,361

121,142

4.1.1

104,389

86,361

104,389

86,361

Consolidated Statement

For the purposes of the consolidated statement of cash ﬂ ows, cash includes cash on hand and deposits on call.

The cash at the end of the year can be agreed directly to the consolidated statement of ﬁ nancial position.

The above consolidated statement of cash ﬂ ows should be read in conjunction with the accompanying notes.

AUSWIDE BANK ANNUAL REPORT 2019    P|49

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P|54    AUSWIDE BANK ANNUAL REPORT 2019

AUSWIDE BANK ANNUAL REPORT 2019    P|55

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1. General information

1.1 

Reporting entity

Auswide Bank Ltd (the Company) is a for-proﬁ t listed public company, incorporated and domiciled in Australia. The 
consolidated ﬁ nancial statements of Auswide Bank Ltd for the year ended 30 June 2019 comprises Auswide Bank Ltd and its 
subsidiaries (the Group or the Consolidated Entity).

1.2 

Statement of compliance

The ﬁ nancial statements are general purpose ﬁ nancial statements that have been prepared in accordance with the 
requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations, and comply with other 
requirements of the law.

The ﬁ nancial statements comply with all International Financial Reporting Standards (IFRS) in their entirety.

1.3 

Basis of preparation

These ﬁ nancial statements have been prepared on an accrual basis and are based on historical cost, except for land and 
buildings, hedging instruments, ﬁ nancial instruments held at fair value through proﬁ t or loss or other comprehensive income 
that have been measured at fair value.

The accounting policies and methods of computation in the preparation of these ﬁ nancial statements are consistent with 
those adopted and disclosed in the ﬁ nancial statements for the year ended 30 June 2018, unless otherwise stated.

These ﬁ nancial statements have been prepared in Australian Dollars (AUD) which is the functional and presentation currency 
of the Company.

1.4 

Basis of consolidation

The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of the Company, being the parent entity and 
entities controlled by the Company.

Control is achieved when the Company:

•  has power over the investee;

•  is exposed, or has rights, to variable returns from its involvement with the investee; and

•  has the ability to use its power to aﬀ ect its returns.

The Company has power when it has rights that give it the ability to direct the activities that signiﬁ cantly aﬀ ect the 
investee’s returns. The Group not only has to consider its holdings and rights, but also the holdings and rights of other 
shareholders in order to determine whether it has the necessary power for consolidation purposes. The existence and eﬀ ect 
of potential voting rights where the Group has the practical ability to exercise them is considered when assessing whether 
the Group controls another entity.

The Company reassesses whether it has control of an investee if facts and circumstances indicate changes to the 
aforementioned elements have occurred. A list of the controlled entities is provided in Section 5.1.1 - Controlled entities.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. Subsidiaries are fully 
consolidated from the date control is transferred to the Group. They are de-consolidated from the date that control ceases. 
Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully 
eliminated on consolidation. When necessary, adjustments are made to the ﬁ nancial statements of subsidiaries to bring their 
accounting policies into line with the Group’s accounting policies.

Equity interests in a subsidiary not attributable, directly or indirectly, to the consolidated entity are presented as non-
controlling interests. The consolidated entity initially recognises non-controlling interests that are present ownership 
interests in subsidiaries, and are entitled to a proportionate share of the subsidiary’s net assets on liquidation, at either fair 
value or at the non-controlling interests’ proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, 
non-controlling interests are attributed their share of proﬁ ts or loss and each component of other comprehensive income. 
Non-controlling interests are shown separately within the equity section of the Statement of Financial Position and 
Statement of Proﬁ t or Loss and Other Comprehensive Income.

1.5 

Rounding of amounts 

The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors’ Reports) 
Instrument 2016/191, dated 24 March 2016, and in accordance with that Corporations Instrument amounts in the 
Directors’ Report and the ﬁ nancial statements are rounded oﬀ  to the nearest thousand dollars, unless otherwise indicated.

P|56    AUSWIDE BANK ANNUAL REPORT 2019

1.6 

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is 
not recoverable from the Australian Taxation Oﬃ  ce. In these circumstances, the GST is recognised as part of the cost of 
acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position 
are shown inclusive of GST.

Cash ﬂ ows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component of 
investing and ﬁ nancing activities, which are disclosed as operating cash ﬂ ows.

1.7 

Application of new and revised Accounting Standards 

1.7.1  

Standards and interpretations that are mandatorily eﬀ ective for the current year

New and revised standards and amendments to standards eﬀ ective for the current ﬁ nancial year which have been applied in 
the preparation of these ﬁ nancial statements that are relevant to the Group include:

•  AASB 9 Financial Instruments (AASB 9)

•  AASB 15 Revenue from Contracts with Customers (AASB 15)

Other standards

In addition to the above, the Group has applied a number of amendments to AASB Standards and Interpretations issued 
by the Australian Accounting Standards Board (AASB) that are eﬀ ective for periods that begin on or after 1 January 2018. 
Their adoption has not had any material impact on the disclosures or on the amounts reported in these ﬁ nancial statements.

AASB 9 Financial Instruments

In the current year, the Group has applied AASB 9 (as revised) and the related consequential amendments to other 
Accounting Standards for the ﬁ rst time. AASB 9 introduces new requirements for:

(1) 

(2) 

(3) 

the classiﬁ cation and measurement of ﬁ nancial assets and liabilities;

impairment of ﬁ nancial assets; and

general hedge accounting.

The classiﬁ cation and measurement, and impairment requirements are applied retrospectively by adjusting opening retained 
earnings at 1 July 2018. The Group has elected not to restate comparative ﬁ gures on adoption of the new standard.

Details of these new requirements as well as their impact on the Group’s consolidated ﬁ nancial statements are described 
below.

Classiﬁ cation and measurement

All recognised ﬁ nancial assets that are within the scope of AASB 9 are required to be subsequently measured at amortised 
cost or fair value on the basis of the entity’s business model for managing the ﬁ nancial assets and the contractual cash ﬂ ow 
characteristics of the ﬁ nancial assets.

Speciﬁ cally:

•  debt investments that are held within a business model whose objective is to collect the contractual cash ﬂ ows, and that 
have contractual cash ﬂ ows that are solely payments of principal and interest on the principal amount outstanding, are 
subsequently measured at amortised cost;

•  debt investments that are held within a business model whose objective is both to collect the contractual cash ﬂ ows and 

to sell the debt instruments, and that have contractual cash ﬂ ows that are solely payments of principal and interest on the 
principal amount outstanding, are subsequently measured at fair value through other comprehensive income (FVTOCI); 
and

•  all other debt investments and equity investments are subsequently measured at fair value through proﬁ t or loss (FVTPL).

However, at initial recognition of a ﬁ nancial asset:

•  the Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held 
for trading nor contingent consideration recognised by an acquirer in a business combination to which AASB 3 Business 
Combinations applies in other comprehensive income; and

•  the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at 

FVTPL if doing so eliminates or signiﬁ cantly reduces an accounting mismatch.

Equity instruments designated at FVTOCI are subsequently measured at fair value with gains and losses arising from 
changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve. The 
cumulative gain or loss is not reclassiﬁ ed to proﬁ t or loss on disposal of the equity investments, instead, it is transferred to 
retained earnings. Dividends on investments in equity instruments are recognised in proﬁ t or loss in accordance with AASB 
9.

In the current year, the Group has not designated any debt investments that meet the amortised cost or FVTOCI criteria as 
measured at FVTPL.

When a debt investment measured at FVTOCI is derecognised, the cumulative gain or loss previously recognised in other 
comprehensive income is reclassiﬁ ed from equity to proﬁ t or loss as a reclassiﬁ cation adjustment. In contrast, for an equity 

AUSWIDE BANK ANNUAL REPORT 2019    P|57

1. 

1.7 

General information (continued)

Application of new and revised Accounting Standards (continued)

investment designated as measured at FVTOCI, the cumulative gain or loss previously recognised in other comprehensive 
income is not subsequently reclassiﬁ ed to proﬁ t or loss.

Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to impairment.

The Directors of the Company reviewed and assessed the Group’s existing ﬁ nancial assets as at 1 July 2018 based on the 
facts and circumstances that existed at that date and concluded that the initial application of AASB 9 has had the following 
impact on the Group’s ﬁ nancial assets in regards to their classiﬁ cation and measurement:

•  the Group’s external Residential Mortgage Backed Securities (RMBS) investments within ﬁ nancial assets that were 

classiﬁ ed as available-for-sale ﬁ nancial assets under AASB 139 have been classiﬁ ed as ﬁ nancial assets at FVTOCI. This 
is because they are held within a business model whose objective is to collect the contractual cash ﬂ ows and to sell the 
debt instruments, and they have contractual cash ﬂ ows that are solely payments of principal and interest on the principal 
amount outstanding. The change in fair value on these investments continues to be accumulated in the investment 
revaluation reserve until they are derecognised or reclassiﬁ ed. The change in classiﬁ cation of these investments at 1 July 
2018, has resulted in the fair value gain amounting to $0.102m, previously recognised in equity being reclassiﬁ ed to other 
comprehensive income;

•  the Group’s other investments in equity instruments (neither held for trading nor a contingent consideration arising 

from a business combination) that were previously classiﬁ ed as available-for-sale ﬁ nancial assets and were measured at 
cost under AASB 139 have been designated as at FVTOCI. The change in fair value on these equity instruments will be 
accumulated in the investment revaluation reserve. No adjustment has been made within the ﬁ nancial statements due to 
immateriality;

•  ﬁ nancial assets classiﬁ ed as held-to-maturity and loans and receivables under AASB 139 that were measured at 

amortised cost continue to be measured at amortised cost under AASB 9 as they are held within a business model to 
collect contractual cash ﬂ ows and these cash ﬂ ows consist solely of payments of principal and interest on the principal 
amount outstanding; and

•  ﬁ nancial assets that were measured at FVTPL under the available-for-sale category under AASB 139 continue to be 

measured as such under AASB 9.

P|58    AUSWIDE BANK ANNUAL REPORT 2019

The table below illustrates the classiﬁ cation and measurement of ﬁ nancial assets and ﬁ nancial liabilities for the consolidated 
entity under AASB 9 and AASB 139 at the date of initial application, 1 July 2018. Disclosures on a Company basis have not 
been separately disclosed as the amounts do not diﬀ er materially from those of the Consolidated entity.

Type of ﬁ nancial instrument

AASB 139 
measurement category

AASB 9 
measurement 
category

AASB 139 
carrying 
amount

Additional 
loss 
allowance

AASB 9 
carrying 
amount

$’000

$’000

$’000

Financial assets

Cash and cash equivalents

Loans and receivables

Amortised cost

86,361

Due from other ﬁ nancial 
institutions

Other ﬁ nancial assets consisting of:

Loans and receivables

Amortised cost

15,389

- Certiﬁ cates of deposit

Held-to-maturity

Amortised cost

- External RMBS investments

Available-for-sale

FVTOCI

210,178

1,147

25,886

Available-for-sale

FVTPL

Loans and receivables

Amortised cost

17,082

FVTPL

FVTPL

61

-

-

-

-

-

-

-

86,361

15,389

210,178

1,147

25,886

17,082

61

Loans and receivables

Amortised cost

2,919,303

1,280

2,918,023

Cost

FVTOCI

793

-

793

- Investments in Managed
   Investment Schemes (MIS)

- Notes - securitisation
   program and other

Derivative assets

Loans and advances

Other investments

Unlisted shares

Financial liabilities

Deposits and short term 
borrowings

Payables and other liabilities

Financial liabilities at 
amortised cost

Financial liabilities at 
amortised cost

Financial liabilities 
at amortised cost

Financial liabilities 
at amortised cost

Derivative liabilities

FVTPL

FVTPL

Loans under management

Subordinated capital notes

Financial liabilities at 
amortised cost

Financial liabilities at 
amortised cost

Financial liabilities 
at amortised cost

Financial liabilities 
at amortised cost

2,446,825

N/A

2,446,825

26,013

55

607,166

N/A

N/A

N/A

26,013

55

607,166

28,000

N/A

28,000

Impairment of ﬁ nancial assets

AASB 9 requires impairment to be measured using an Expected Credit Loss (ECL) model as opposed to AASB 139’s incurred 
credit loss model. The expected credit loss model requires the Group to account for expected credit losses and changes in 
those expected credit losses at each reporting date to reﬂ ect changes in credit risk since initial recognition of the ﬁ nancial 
assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.

Speciﬁ cally, AASB 9 requires the Group to recognise a loss allowance for expected credit losses on:

(i) 

(ii) 

(iii) 

(iv) 

debt investments subsequently measured at amortised cost or at FVTOCI;

lease receivables;

contract assets; and

loan commitments and ﬁ nancial guarantee contracts to which the impairment requirements of  
AASB 9 apply.

AASB 9 requires the Group to measure the loss allowance for a ﬁ nancial instrument at an amount equal to the lifetime ECL if 
the credit risk on that ﬁ nancial instrument has increased signiﬁ cantly since initial recognition, or if the ﬁ nancial instrument is a 
purchased or originated credit-impaired ﬁ nancial asset. On the other hand, if the credit risk on a ﬁ nancial instrument has not 
increased signiﬁ cantly since initial recognition (except for purchased or originated credit-impaired ﬁ nancial assets), the Group 
is required to measure the loss allowance for that ﬁ nancial instrument at an amount equal to a 12 month ECL.

As at 1 July 2018, the Directors of the Company reviewed and assessed the Group’s existing ﬁ nancial assets and ﬁ nancial 
guarantee contracts for impairment using reasonable and supportable information that is available without undue cost or 
eﬀ ort in accordance with the requirements of AASB 9 to determine the credit risk of the respective items at the date they were 
initially recognised, and compared that to the credit risk as at 1 July 2018. The result of the assessment on a consolidated 
basis is as follows:

AUSWIDE BANK ANNUAL REPORT 2019    P|59

 
 
 
 
 
 
 
1. 

General information (continued)

1.7  

Application of new and revised Accounting Standards (continued)

Items existing as at 1 July 18 that 
are subject to the impairment 
provisions of AASB 9

Credit risk attributes at 1 July 18

Cash and cash equivalents, Due 
from other ﬁ nancial institutions

Other ﬁ nancial assets including;

Certiﬁ cates of deposit, External 
RMBS investments and Notes – 
securitisation program and other

Loans and advances

Management believes that cash and cash equivalents 
and due from other ﬁ nancial institutions are subject 
to a very low credit risk at initial recognition with 
negligible default probability. As a result, the 
corresponding ECL on these ﬁ nancial assets is 
immaterial.

Management believes that certiﬁ cates of deposit , 
external RMBS investments and notes – securitisation 
program and other are subject to a very low credit risk 
at initial recognition with negligible default probability. 
As a result, the corresponding ECL on these ﬁ nancial 
assets is immaterial.

Management have developed a model to assess 
the credit risk of each loan. A lifetime credit risk is 
recognised on loans considered to have experienced 
a signiﬁ cant increase in credit risk. A 12 month ECL is 
recognised on those loans on which credit risk has not 
increased since initial recognition.

Cumulative additional 
loss allowance 
recognised on 1 July 18

$’000

-

-

1,210

In addition to the items noted above, the following items that are not currently recognised on the consolidated Statement of 
Financial Position have been assessed for impairment;

Items existing as at 1 July 
2018

Credit risk attributes at 1 July 2018

Loans approved not 
advanced (LANA)

Bank guarantees

Management have developed a model to assess the credit risk 
of LANA. A 12 month ECL is recognised in these exposures, as 
credit risk has been assessed as not having increased since 
initial recognition.

Management have assessed bank guarantees as having a low 
credit risk and a negligible probability of default. As a result the 
corresponding ECL on these investments is immaterial.

Cumulative additional 
loss allowance 
recognised on 1 July 
2018

$’000

70

-

The additional credit loss allowance of $1.280m as at 1 July 2018 has been recognised against opening retained earnings, net 
of its related deferred tax impact of $0.384m resulting in a net decrease in retained earnings of $0.896m on 1 July 2018.

P|60    AUSWIDE BANK ANNUAL REPORT 2019

Disclosure relating to initial application of classiﬁ cation and measurement requirements of AASB 9

The following table is a reconciliation of the carrying amounts in the Group’s Statement of Financial Position from AASB 
139 to AASB 9 as at 1 July 2018. Disclosures in relation to the Company level Statement of Financial Position have not been 
separately disclosed as the amounts do not diﬀ er materially from those of the Consolidated entity.

Consolidated entity

Investments in Managed 
Investment Schemes

AASB 139 
carrying 
amount

30 Jun 18

$’000

Reclassiﬁ cation

Remeasurement

AASB 9 
carrying 
amount

Retained 
earnings 
impact

1 Jul 18

1 Jul 18

$’000

$’000

$’000

$’000

Available-for-sale under AASB 139

25,886

(25,886)

Reclassiﬁ cation to FVTPL under 
AASB 9

Investment in unlisted shares

At cost under AASB 139

Reclassiﬁ cation to FVTOCI under 
AASB 9

Loans and advances

-

25,886

793

-

(793)

793

Amortised cost under AASB 139

2,919,303

Remeasurement based on 
Expected Credit Loss (ECL) under 
AASB 9

Deferred tax assets

Opening balance

Tax eﬀ ect of remeasurement of 
ECL

-

2,919,303

4,573

-

4,573

-

-

-

-

-

-

-

-

-

-

-

-

25,886

-

793

2,919,303

-

-

-

-

-

(1,280)

(1,280)

(1,280)

(1,280)

2,918,023

(1,280)

-

384

384

4,573

384

4,957

-

384

384

AASB 15 Revenue from Contracts with Customers

The Group has applied AASB 15 for the ﬁ rst time in the current period. AASB 15 introduces a ﬁ ve-step approach to revenue 
recognition and more prescriptive guidance has been added to deal with speciﬁ c scenarios. Details of these new requirements 
as well as their impact on the Group’s consolidated ﬁ nancial statements are described below.

The Group has applied AASB 15 in accordance with the fully retrospective transitional approach without using the practical 
expedients for completed contracts in AASB 15.C5(a), and (b), or for modiﬁ ed contracts in AASB 15.C5(c) but using the 
expedient in AASB 15.C5(d), allowing both non-disclosure of the amount of the transaction price allocated to the remaining 
performance obligations, and an explanation of when it expects to recognise that amount as revenue for all reporting periods 
presented before the date of initial application, i.e. 1 January 2018.

Apart from providing more extensive disclosures on the Group’s revenue transactions, the application of AASB 15 has not had 
a signiﬁ cant impact on the ﬁ nancial position and/or ﬁ nancial performance of the Group. Signiﬁ cant revenue streams of the 
Group falling within the scope of AASB 15 are explained below.

Fees and commissions

The Group charges various fees and commissions to its customers from time to time from loan initiation to ﬁ nal settlement. 
Revenue is recognised when services promised under the contract are rendered and performance obligations are satisﬁ ed. 
There has been no adjustment to the current revenue recognition methodology of the Group as a result of the adoption of 
AASB 15. The accounting policy related to fees and commissions are disclosed in Section 2.2 - Other non-interest income.

1.7.2  

Standards and Interpretations on issue not yet adopted 

Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2019 
reporting period are set out below and have not been early adopted by the Group.

AUSWIDE BANK ANNUAL REPORT 2019    P|61

1. 

General information (continued)

1.7  

Application of new and revised Accounting Standards (continued) 

Standard/Interpretation

Eﬀ ective for annual reporting periods 
beginning on or after

Expected to be initially applied in the 
ﬁ nancial year ending

AASB 16 Leases (AASB 16)

1 January 2019

30 June 2020

AASB 16 Leases

AASB 16 replaces AASB 117, Leases and is eﬀ ective for annual periods beginning on or after 1 January 2019. The new 
standard is aimed at a more transparent representation of the true ﬁ nancial position of an entity by fully reﬂ ecting its liabilities 
as the leases represent committed future expenditures. The Standard introduces an on balance sheet lease accounting model 
where a right-of-use asset (representing the right to use the underlying asset) and a lease liability (representing the obligation 
to make lease payments) are recognised. The asset is depreciated over the term of the lease and the liability is reduced by the 
actual lease payments. Interest on the outstanding liability is recognised as an expense in the Statement of Proﬁ t or Loss and 
Other Comprehensive Income. The Group incurs costs for leases relating to oﬃ  ce space in Brisbane and regional Queensland.

The new standard will have the following impact on the Group’s ﬁ nancial statements:

•  the Group will recognise new right-of-use assets and liabilities relating to operating leases of oﬃ  ce premises and vehicles in 

the Statement of Financial Position;

•  the recognition of operating lease expense will be replaced with a depreciation charge for right-of-use assets and interest 

expense on lease liabilities in the Statement of Proﬁ t or Loss and Other Comprehensive Income; and

•  cash payments of the lease liability will be classiﬁ ed into a principal portion and interest portion and presented in the 

Statement of Cash Flows under ﬁ nancing and operating activities respectively.

As at 30 June 2019, the minimum lease payments under non-cancellable operating leases amounted to $5.586m. The Group 
will adopt the standard for the year ended 30 June 2020, and has chosen the ‘modiﬁ ed’ retrospective approach whereby 
comparative ﬁ nancial statements will not be restated. The Group has estimated the cumulative eﬀ ect arising as a result of 
adoption of AASB 16 which will be recognised as a one oﬀ  adjustment to opening retained earnings of $0.846m. The right-of-
use asset and lease liability that will be recognised on transition is estimated at $2.840m and $3.687m respectively.

The Group estimates that as result of adoption of AASB 16, depreciation expense on right-of-use assets amounting to 
$1.171m and interest expense on lease liability amounting to $0.162m will be recognised in the ﬁ nancial statements for the 
year ending 30 June 2020.

1.8 

Reclassiﬁ cation of comparative ﬁ gures

Certain accounts in the Statement of Financial Position for the year ended 30 June 2018, which are included in the 2019 
ﬁ nancial statements for comparative purposes, have been reclassiﬁ ed to conform to the nature of accounts. The signiﬁ cant 
reclassiﬁ cations are as follows;

Statement of Financial Position

Before reclassiﬁ cation

Reclassiﬁ cation

After reclassiﬁ cation

Assets

Accrued receivables

Other ﬁ nancial assets

Loans and advances

Other assets

Liabilities

$’000

5,298

254,293

2,910,847

8,475

$’000

(5,298)

757

8,456

(3,854)

$’000

-

255,050

2,919,303

4,621

Payables and other liabilities

26,007

61

26,068

The reclassiﬁ cations have been made because, in the opinion of management, the new classiﬁ cations are more appropriate to 
the Company’s business.

P|62    AUSWIDE BANK ANNUAL REPORT 2019

 
2. 

2.1 

Financial performance

Interest revenue and interest expense 

The following tables show the average balance for each of the major categories of interest bearing assets and liabilities, the 
amount of interest revenue or expense and the average interest rate from continuing operations. Month end averages are used 
as they are representative of the entity’s operations during the year. Disclosures on a Company basis have not been separately 
disclosed as the amounts do not diﬀ er materially from those of the Consolidated entity.

Consolidated entity

Interest revenue 2019

Deposits with other ﬁ nancial 
institutions

Investment securities

Loans and advances

Other

Interest expense 2019

Deposits from other ﬁ nancial 
institutions

Customer deposits

Negotiable certiﬁ cates of deposit 
(NCDs)

Floating rate notes (FRNs)

Subordinated capital notes

Net interest revenue 2019

Interest revenue 2018

Deposits with other ﬁ nancial 
institutions

Investment securities

Loans and advances

Other

Interest expense 2018

Deposits from other ﬁ nancial 
institutions

Customer deposits

Negotiable certiﬁ cates of deposit 
(NCDs)

Floating rate notes (FRNs)

Subordinated capital notes

Net interest revenue 2018

Average balance

Interest

Average interest rate 

$’000

$’000

56,502

223,722

3,017,419

76,103

3,373,746

550,996

2,203,601

297,275

105,154

28,000

3,185,026

62,816

204,856

2,841,792

47,780

3,157,244

622,330

2,025,886

205,623

80,769

28,000

2,962,608

897

5,430

126,533

3,492

136,352

17,798

43,478

7,039

3,054

1,798

73,167

63,185

967

4,680

121,086

2,200

128,933

19,886

39,412

4,713

2,142

1,760

67,913

61,020

%

1.59

2.43

4.19

4.59

4.04

3.23

1.97

2.37

2.90

6.42

2.30

1.54

2.28

4.26

4.60

4.08

3.20

1.95

2.29

2.65

6.29

2.29

AUSWIDE BANK ANNUAL REPORT 2019    P|63

2. 

Financial performance (continued)

2.1  

Interest revenue and interest expense (continued)

The following tables show the net interest margin, and are derived by dividing the diﬀ erence between interest revenue and 
interest expenditure by the average balance of interest earning assets.

Consolidated entity

Interest margin and interest spread 2019

Interest revenue

Interest expense

Net interest spread

Average Balance

Interest Average Interest 
Rate

$’000

$’000

3,373,746

3,185,026

136,352

73,167

Beneﬁ t of net interest-free assets, liabilities and equity

Net interest margin - on average interest earning assets

3,373,746

63,185

Interest margin and interest spread 2018

Interest revenue

Interest expense

Net interest spread

3,157,244

2,962,608

128,933

67,913

Beneﬁ t of net interest-free assets, liabilities and equity

Net interest margin - on average interest earning assets

3,157,244

61,020

%

4.04

2.30

1.74

0.13

1.87

4.08

2.29

1.79

0.14

1.93

Accounting policies

Interest income and interest expense

Interest income and expense for all ﬁ nancial instruments except for those classiﬁ ed as held for trading and those measured or 
designated at FVTPL are recognised in net interest income as interest income and interest expense in the proﬁ t or loss account 
using the eﬀ ective interest method.

The eﬀ ective interest rate (EIR) is the rate that discounts estimated future cash ﬂ ows of a ﬁ nancial instrument over its expected 
life or, where appropriate, a shorter period, to the net carrying amount of the ﬁ nancial asset or ﬁ nancial liability. The future cash 
ﬂ ows are estimated taking into account the contractual terms of the instrument.

The calculation of the EIR includes all fees paid or received between parties to the contract that are incremental and directly 
attributable to the speciﬁ c lending arrangement, transaction costs, and all other premiums or discounts. For ﬁ nancial assets at 
FVTPL transaction costs are recognised in proﬁ t or loss at initial recognition.

The interest income/ interest expense is calculated by applying the EIR to the gross carrying amount of non-credit impaired 
ﬁ nancial assets (i.e. the amortised cost of the ﬁ nancial asset before adjusting for any expected credit loss allowance), or to 
the amortised cost of ﬁ nancial liabilities. For credit-impaired ﬁ nancial assets the interest income is calculated by applying 
the EIR to the amortised cost of the credit-impaired ﬁ nancial assets (i.e. the gross carrying amount less the allowance for 
expected credit losses (ECLs)). For ﬁ nancial assets originated or purchased credit-impaired (POCI) the EIR reﬂ ects the ECL in 
determining the future cash ﬂ ows expected to be received from the ﬁ nancial asset.

2.2 

Other non-interest income

Other non-interest income

Fees and commissions

Other income

                      Consolidated

                      Company

2019

$’000

8,959

505

9,464

2018

$’000

8,874

474

9,348

2019

$’000

8,959

505

9,464

2018

$’000

8,874

474

9,348

P|64    AUSWIDE BANK ANNUAL REPORT 2019

Accounting policies

Other non-interest income

Fee and commission income and expense include fees other than those that are an integral part of EIR (see above). The fees 
included in this part of the Group’s Consolidated Statement of Proﬁ t or Loss and Other Comprehensive Income include among 
other things fees charged for servicing a loan, non-utilisation fees relating to loan commitments when it is unlikely that these 
will result in a speciﬁ c lending arrangement and loan syndication fees.

Income from these sources is measured based on the consideration speciﬁ ed in a contract with a customer and excludes 
amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to 
a customer which is typically at the time when the underlying transaction to which the fee and commission relates is executed 
as speciﬁ ed in the contract.

2.3  

Income taxes 

2.3.1  

Components of income tax expense

Current income tax

Deferred income tax

Income tax expense reported in proﬁ t or 
loss

Accounting policies

Taxation

                      Consolidated

                   Company

2019

$’000

7,465

(28)

7,437

2018

$’000

6,732

623

7,355

2019

$’000

7,465

(28)

7,437

2018

$’000

6,732

623

7,355

The income tax expense for the period is the tax payable on the current period’s taxable income based on the applicable 
income tax rate adjusted for changes in deferred tax assets and liabilities attributable to temporary diﬀ erences between the 
tax base of assets and liabilities and their carrying amounts in the ﬁ nancial statements, and to unused tax losses.

The income tax expense is determined using the tax laws enacted or substantively enacted at the end of the reporting period. 
Provisions are established where appropriate on the basis of amounts expected to be paid to the tax authorities.

A deferred income tax loss is recognised in full, using the liability method, on temporary diﬀ erences, between the carrying 
amounts of assets and liabilities in the consolidated ﬁ nancial statements and their respective tax bases. However, deferred tax 
liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for 
if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of 
the transaction aﬀ ects neither accounting nor taxable proﬁ t or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of 
the reporting period and are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is 
credited to proﬁ t or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax 
is adjusted directly against equity.

Deferred tax assets are only recognised for deductible temporary diﬀ erences and unused tax losses if it is probable that 
future taxable proﬁ ts will be available against which deductible temporary diﬀ erences and losses can be utilised. The amount 
of beneﬁ ts brought to account or which may be realised in the future is based on the assumption that no adverse change 
will occur in income taxation legislation and the anticipation that the economic entity will derive suﬃ  cient future assessable 
income to enable the beneﬁ t to be realised and comply with the conditions of deductibility imposed by the law.

Current and deferred tax are recognised in proﬁ t or loss, except when they relate to items that are recognised in other 
comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other 
comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from the initial accounting 
for a business combination, the tax eﬀ ect is included in the accounting for the business combination.

AUSWIDE BANK ANNUAL REPORT 2019    P|65

2. 

2.3 

Financial performance (continued)

Income taxes (continued)

Tax consolidation legislation

The Company and its wholly-owned Australian resident entities (with the exception of Auswide Performance Rights Pty Ltd) 
formed an income tax consolidated Group under the Australian Consolidation System as of the ﬁ nancial year ended 30 June 
2008. Auswide Bank Ltd is the head entity in the tax consolidated Group, and as a consequence recognises current and 
deferred tax amounts relating to transactions, events and balances of the wholly-owned Australian controlled entities in 
this Group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts 
arising in relation to its own transactions, events and balances. The tax consolidated Group has not entered into a tax sharing 
agreement.

2.3.2  

Numerical reconciliation of income tax expense to prima facie tax payable

Tax on proﬁ t before income tax at 30% (2018: 30%)

Tax eﬀ ect of permanent diﬀ erences

Add non-deductible expenses:

Depreciation of buildings

Less:

Tax oﬀ set for franked dividends

Other items - net

Income tax expense

2.3.3  

Income tax recognised in other comprehensive income

Current income tax

Other

Deferred income tax

Arising on items that may be reclassiﬁ ed to proﬁ t or 
loss:

Fair value remeasurement of FVTOCI (AASB 139: 
available-for-sale) ﬁ nancial assets

Fair value remeasurement of hedging instruments 
entered into for cash ﬂ ow hedges

Arising on items that will not be reclassiﬁ ed to proﬁ t 
or loss:

Fair value remeasurement of land and buildings

Total income tax recognised directly in other 
comprehensive income

                 Consolidated

                          Company

2019

$’000

7,392

58

1

(14)

7,437

2018

$’000

7,320

49

-

(14)

7,355

2019

$’000

7,392

58

1

(14)

7,437

2018

$’000

7,320

49

-

(14)

7,355

                 Consolidated

                          Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

-

-

(1)

(66)

(67)

-

-

(67)

-

-

-

(80)

(80)

434

434

354

-

-

(1)

(66)

(67)

-

-

(67)

-

-

-

(80)

(80)

434

434

354

P|66    AUSWIDE BANK ANNUAL REPORT 2019

 
2.3.4  

Current tax assets and liabilities

Current tax assets/ (liabilities)

Current income tax assets/ (liabilities)

2.3.5  

Deferred tax balances

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Employee leave provisions

Expected credit losses

Property, plant and equipment

Capital losses available

Project acquisition costs

Premium on loans purchased 

Subordinated capital notes prepaid expenses

Other items

Deferred tax liabilities

Asset revaluation reserve

Prepayments

Investment revaluation reserve (AASB139: available-for-sale 
reserve)

Cash ﬂ ow hedging reserve

                 Consolidated

                          Company

2019

$’000

1,575

1,575

2018

$’000

(721)

(721)

2019

$’000

1,575

1,575

2018

$’000

(1,182)

(1,182)

                 Consolidated

                          Company

2019

$’000

4,952

(1,786)

3,166

2018

$’000

4,573

(1,891)

2,682

2019

$’000

4,952

(1,786)

3,166

2018

$’000

4,573

(1,891)

2,682

                 Consolidated

                          Company

2019

$’000

891

1,396

858

1,466

91

122

39

89

2018

$’000

865

959

819

1,466

179

124

34

127

2019

$’000

891

1,396

858

1,466

91

122

39

89

2018

$’000

865

959

819

1,466

179

124

34

127

4,952

4,573

4,952

4,573

                 Consolidated

                          Company

2019

$’000

1,867

99

43

(223)

1,786

2018

$’000

1,867

137

44

(157)

1,891

2019

$’000

1,867

99

43

(223)

1,786

2018

$’000

1,867

137

44

(157)

1,891

In respect of each temporary diﬀ erence the adjustment was charged to income, except for the revaluations of the external 
RMBS investments which were charged to the investment revaluation reserve in equity, the revaluations of hedging instruments 
entered into for cash ﬂ ow hedges which were charged to the cash ﬂ ow hedge reserve in equity, and the revaluations of land 
and buildings which were charged to the asset revaluation reserve in equity.

AUSWIDE BANK ANNUAL REPORT 2019    P|67

2. 

2.3 

Financial performance (continued)

Income taxes (continued)

Movement in deferred tax balances

                 Consolidated

                          Company

Notes

1.7

5.3

Balance at beginning of year

Deferred income tax income/ (expense) 
recognised directly in proﬁ t or loss

Deferred tax recognised in other 
comprehensive income

Deferred tax arising on:

First time adoption of AASB 9

Disposal of MoneyPlace

Prior period adjustments

Balance at end of year

2.4  

Earnings per share

Basic and diluted earnings per share

From continuing operations

From discontinued operations

Total basic and diluted earnings per share

2019

$’000

2,682

28

67

384

-

5

3,166

2018

$’000

2,309

(640)

(354)

-

1,367

-

2,682

2019

$’000

2,682

28

67

384

-

5

2018

$’000

3,676

(640)

(354)

-

-

-

3,166

2,682

2019

2018

Cents per 
share

Cents per 
share

40.81

-

40.81

40.81

2.02

42.83

The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share 
are calculated as follows:

Proﬁ t for the year attributable to owners of the Company

Earnings used in the calculation of basic and diluted earnings per share

Proﬁ t for the year from discontinued operations used in the calculation of basic and 
diluted earnings per share from discontinued operations

Earnings used in the calculation of basic and diluted earnings per share from continuing 
operations

Weighted average number of ordinary shares for the purposes of basic and diluted 
earnings per share

2019

$’000

17,201

17,201

2018

$’000

17,886

17,886

-

(842)

17,201

17,044

2019

2018

Shares No.

Shares No.

42,154,629

41,771,336

2.5  

Business and geographical segment information

The Group only has one major business and operating segment being ‘Retail Banking’. The principal activities of the Group 
are conﬁ ned to the raising of funds and the provision of ﬁ nance for housing, consumer lending and business banking. For the 
purpose of performance evaluation, risk management and resource allocation, the decisions are based predominantly on the 
key performance indicators at the Group level.

The Group operates in one geographical segment which is the Commonwealth of Australia.

P|68    AUSWIDE BANK ANNUAL REPORT 2019

3. 

3.1 

Investments and ﬁ nancing

Property, plant and equipment

Carrying amounts of:

Freehold land and buildings

Plant and equipment

Freehold land and buildings

At independent valuation - June 2018

Provision for depreciation

Movement in carrying amount

Opening net book amount

Revaluation increase

Depreciation charge

Carrying amount at end of year

Plant and equipment

At cost

Provision for depreciation

Movement in carrying amount

Opening net book amount

Additions

Disposals

Depreciation charge

Carrying amount at end of year

                 Consolidated

                          Company

2019

$’000

9,477

4,886

14,363

2018

$’000

9,676

5,900

15,576

2019

$’000

9,477

4,886

14,363

                 Consolidated

                          Company

2019

$’000

9,690

(213)

9,477

2018

$’000

9,690

(14)

9,676

2019

$’000

9,690

(213)

9,477

                 Consolidated

                          Company

2019

$’000

9,676

-

(199)

9,477

2018

$’000

8,399

1,446

(169)

9,676

2019

$’000

9,676

-

(199)

9,477

                 Consolidated

                          Company

2019

$’000

27,990

(23,104)

4,886

2018

$’000

28,581

(22,681)

5,900

2019

$’000

27,990

(23,104)

4,886

                 Consolidated

                          Company

2019

$’000

5,900

726

(20)

(1,720)

4,886

2018

$’000

6,207

1,620

(103)

(1,824)

5,900

2019

$’000

5,900

726

(20)

(1,720)

4,886

2018

$’000

9,676

5,900

15,576

2018

$’000

9,690

(14)

9,676

2018

$’000

8,399

1,446

(169)

9,676

2018

$’000

28,581

(22,681)

5,900

2018

$’000

6,207

1,620

(103)

(1,824)

5,900

All land and buildings were revalued as at 4 June 2018 by certiﬁ ed practicing valuers Henry Brown of Taylor Byrne Pty Ltd. 
The valuations were assessed to fair market values based on comparable sales in regional Queensland and by capitalisation 
of assessed net income. The Company’s policy is to engage external experts to comprehensively revalue freehold land and 
buildings every three years with an assessment performed by the Board of Directors in intervening years.

AUSWIDE BANK ANNUAL REPORT 2019    P|69

3. 

Investments and ﬁ nancing (continued)

3.1  

Property, plant and equipment (continued)

Accounting policies

Property, plant and equipment

Freehold land and buildings are stated in the Consolidated Statement of Financial Position at their revalued amounts, being the 
fair value at the date of revaluation, less any subsequent depreciation for buildings and subsequent accumulated impairment 
losses. Freehold land is not depreciated. Revalued amounts are based on periodic, but at least triennial, valuations by external 
independent valuers.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the 
net amount is restated to the revalued amount of the asset.

The carrying amount of plant and equipment is reviewed annually by the Directors to ensure it is not in excess of the 
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash ﬂ ows that 
will be received from the asset’s employment and subsequent disposal. The expected net cash ﬂ ows have been discounted to 
their present values in determining recoverable amounts.

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when 
it is probable that future economic beneﬁ ts associated with the item will ﬂ ow to the Group and the cost of the item can be 
measured reliably. All other repairs and maintenance are charged to proﬁ t or loss during the ﬁ nancial period in which they are 
incurred.

Any revaluation increase arising on the revaluation of freehold land and buildings is recognised in other comprehensive income 
and accumulated within equity, except to the extent that it reverses a revaluation decrease for the same asset previously 
recognised in proﬁ t or loss, in which case the increase is credited to proﬁ t or loss to the extent of the decrease previously 
expensed. A decrease in the carrying amount arising on the revaluation of such land and buildings is recognised in proﬁ t or 
loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation 
of that asset.

The depreciable amount of all ﬁ xed assets including building and capitalised lease assets, but excluding freehold land, is 
depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held 
ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the 
estimated useful lives of the improvements.

The depreciation periods used for each class of depreciable assets are:

•  Buildings - 40 years

•  Plant and equipment - 4 to 6 years

•  Leasehold improvements - 4 to 6 years or the term of the lease, whichever is the lesser.

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater 
than its estimated recoverable amount.

An item of property, plant and equipment is derecognised upon disposal or when no future economic beneﬁ ts are expected to 
arise from the continued use of the asset. Gains and losses on disposals are determined by comparing the proceeds with the 
carrying amount. These gains and losses are included in proﬁ t or loss. When revalued assets are sold, amounts included in the 
revaluation reserve relating to that asset are transferred to retained earnings.

P|70    AUSWIDE BANK ANNUAL REPORT 2019

3.2  

Other intangible assets 

Carrying amounts of:

Software

Software

At cost

Provision for amortisation

Movement in carrying amount

Balance at beginning of year

Additions

Disposals

Amortisation 

Balance at end of year

Accounting policies

Intangible assets

                     Consolidated

                                    Company

2019

$’000

1,763

1,763

2018

$’000

1,956

1,956

2019

$’000

1,763

1,763

                      Consolidated

                     Company

2019

$’000

9,630

(7,867)

1,763

1,956

492

-

(685)

1,763

2018

$’000

9,138

(7,182)

1,956

7,935

587

(5,876)

(690)

1,956

2019

$’000

9,630

(7,867)

1,763

1,956

492

-

(685)

1,763

2018

$’000

1,956

1,956

2018

$’000

9,138

(7,182)

1,956

2,564

82

-

(690)

1,956

Purchased items of computer software which are not integral to the computer hardware owned by the Group are classiﬁ ed as 
intangible assets. Intangible assets are stated in the Statement of Financial Position at cost less any accumulated depreciation 
and impairment.

Computer software has a ﬁ nite life and accordingly is amortised on a straight line basis over the expected useful life of the 
software. Amortisation periods ranging from 4 to 6 years are applied.

An intangible asset is derecognised on disposal, or when no future economic beneﬁ ts are expected from use or disposal. 
Gains or losses arising from derecognition are measured as the diﬀ erence between the net disposal proceeds and the carrying 
amount of the assets and are taken to proﬁ t or loss at the date of derecognition.

No internally generated intangible assets are recognised by the Group.

Impairment testing is performed annually for intangible assets with indeﬁ nite lives and intangible assets not yet available for 
use.

3.3  

Goodwill

Notes

Movements in goodwill

Balance at beginning of the year

Derecognised on disposal of subsidiary

Balance at end of year

Representing goodwill arising on the 
acquisition of:

Queensland Professional Credit Union Ltd 
(YCU)

Mackay Permanent Building Society Ltd 
(MPBS)

MoneyPlace Holdings Pty Ltd

3.3.1

3.3.2

5.4

                 Consolidated                        

                   Company

2019

$’000

46,363

-

46,363

2018

$’000

48,975

(2,612)

46,363

2019

$’000

2018

$’000

46,363

46,363

-

-

46,363

46,363

4,306

4,306

4,306

4,306

42,057

42,057

42,057

42,057

-

-

-

-

46,363

46,363

46,363

46,363

AUSWIDE BANK ANNUAL REPORT 2019    P|71

3. 

Investments and ﬁ nancing (continued)

3.3  

Goodwill (continued)

3.3.1  

Queensland Professional Credit Union Ltd (YCU)

On 19 May 2016, the Group acquired 100% of the shares of Queensland Professional Credit Union Ltd trading as Your Credit 
Union (YCU), via a court approved Scheme of Arrangement which involved the demutualisation of YCU and resulted in Auswide 
Bank Ltd obtaining control of YCU. All of YCU’s assets, liabilities and obligations, whether actual or contingent were transferred 
to Auswide Bank Ltd. In addition, all duties, obligations, immunities, rights and privileges which apply to YCU, had YCU 
continued in existence, apply to Auswide Bank Ltd as a continuation of, and the same legal entity as YCU.

The ﬁ nancial accounting for this business combination was prepared in accordance with Australian Accounting Standards and 
recognises the acquisition date as 19 May 2016.

3.3.2   Mackay Permanent Building Society Ltd (MPBS)

Pursuant to a bidder’s statement lodged with the Australian Securities and Investments Commission on 15 November 2007, 
the Company issued an oﬀ -market takeover oﬀ er for 100% of the ordinary shares in Mackay Permanent Building Society Ltd 
(MPBS).

On 11 January 2008 the Company announced the fulﬁ lment of conditions pertaining to the oﬀ -market takeover oﬀ er set out in 
the bidder’s statement and gave notice that the oﬀ er was unconditional eﬀ ective 10 January 2008.

In accordance with APRA’s approval for the transfer of business the ﬁ nancial and accounting records of the entities were 
merged on 1 June 2008.

The ﬁ nancial accounting for this business combination was prepared in accordance with Australian Accounting Standards and 
recognises the acquisition date as 10 January 2008.

Accounting policies

Goodwill

Goodwill acquired in a business combination is initially measured at cost, being the excess of the cost of the business 
combination over the Group’s interest in the net fair value of the identiﬁ able assets, liabilities and contingent liabilities 
recognised at the date of the acquisition.

Goodwill is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-
generating units) that is expected to beneﬁ t from the synergies of the business combination.

A cash-generating unit or groups of cash-generating units to which goodwill has been allocated are tested for impairment 
annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. If the recoverable 
amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated ﬁ rst to reduce the 
carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying 
amount of each asset in the unit. Any impairment loss on goodwill is recognised directly in proﬁ t or loss. An impairment loss 
recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the 
proﬁ t or loss on disposal.

Impairment testing for goodwill is performed annually, or earlier if there is an impairment indicator.

Key estimates and judgements

The cash-generating unit selected for impairment testing of goodwill was the Auswide Bank Ltd parent entity, as it is 
impractical to identify a separate MPBS cash-generating unit, or YCU cash-generating unit, within the Company and 
Consolidated entities.

A separate cash-generating unit was identiﬁ ed as a result of the acquisition of MoneyPlace. Upon the acquisition, an 
independent valuation was procured and goodwill was assessed as part of this process. On disposal goodwill was 
subsequently derecognised.

The goodwill disclosed in the Statement of Financial Position at 30 June 2019 was supported by the impairment testing and no 
impairment adjustment was required. 

Impairment testing of goodwill was carried out by comparing the carrying amount of the cash generating unit to the 
recoverable amount. The recoverable amount is determined based on fair value less cost to sell, using an earnings 
multiple applicable to the type of business. The category of this fair value is Level 3 as deﬁ ned in Section 4.6 - Fair value 
measurements.

Earnings multiples relating to Group’s banking business are sourced from publicly available data associated with Australian 
businesses displaying similar characteristics to those of Auswide Bank Ltd, and are applied, together with a control premium, 
to current earnings. The key assumption is Price-Earnings (P/E) multiple observed for these businesses, which for the banking 
businesses were in the range of 9.5x-15.1x.

P|72    AUSWIDE BANK ANNUAL REPORT 2019

3.4  

Contributed equity

Disclosures on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from those of the 
Consolidated entity.

Consolidated  entity

Fully paid ordinary shares

Balance at beginning of year 

Issued during the year

Staﬀ  share plan

Dividend reinvestment plan

Share issue costs

Gain/ (loss) in share capital on disposal of 
treasury shares

Treasury shares

2019

Notes

Shares No.

2019

Shares
$’000

2018

Shares No.

2018

Shares
$’000

42,108,972

191,612

40,686,033

184,752

3.4.1

3.4.2

53,745

275

59,666

-

-

-

-

-

(29)

1,383,041

-

-

291

6,914

(211)

-

Movement in treasury shares

3.4.3

10,205

78

(19,768)

(134)

Balance at end of year

42,172,922

191,936

42,108,972

191,612

Eﬀ ective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised 
capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

All ordinary shares have equal voting, dividend and capital repayment rights.

3.4.1  

Staﬀ  Share Plan

On 19 October 2018, 53,745 ordinary shares were issued pursuant to the Company’s staﬀ  share plan. Shares were issued at a 
price of 90% of the weighted average price of the Company’s shares traded on the Australian Securities Exchange for the 10 
days prior to the issue of the invitation to subscribe for the shares.

The members of the Company approved a staﬀ  share plan in 1992 enabling the staﬀ  to participate to a maximum of 10% 
of the shares of the Company. The share plan is available to all employees under the terms and conditions as decided from 
time to time by the Directors, but in particular, limits the maximum loan to each participating employee to 40% of their gross 
annual income. The plan requires employees to provide a deposit of 10% with the balance able to be repaid over a period of 
ﬁ ve years at no interest.

                      Consolidated                        

                      Company

2019

2018

2019

2018

Shares No.

Shares No.

Shares No.

Shares No.

2,974,418

2,920,673

2,974,418

2,920,673

53,745

$’000

299

275

59,666

$’000

323

291

53,745

$’000

299

275

59,666

$’000

323

291

The total number of shares issued to 
employees since the inception of the staﬀ  
share plan

The total number of shares issued to 
employees during the ﬁ nancial year

The total market value at date of issue, 19 
October 2018 (17 October 2017)

The total amount paid or payable for the 
shares at that date

3.4.2  

Dividend Reinvestment Plan (DRP)

The Board of Directors resolved to suspend the Dividend Reinvestment Plan (DRP) in respect of the ﬁ nal dividend for the 
2017/18 ﬁ nancial year, payable on 21 September 2018.

The Board of Directors resolved to suspend the DRP for the interim dividend payable on 25 March 2019 for the 2018/19 
ﬁ nancial year.

3.4.3  

Treasury shares

As at the reporting date Auswide Performance Rights Pty Ltd holds 9,563 shares ($55,942) for the purpose of facilitating the 
Executive LTI scheme.

AUSWIDE BANK ANNUAL REPORT 2019    P|73

3. 

Investments and ﬁ nancing (continued)

3.5  

Reserves

Available-for-sale reserve

Investment revaluation reserve

Asset revaluation reserve

Cash ﬂ ow hedge reserve

Share based payment reserve

Statutory reserve

General reserve

Doubtful debts reserve

3.5.1  

Available-for-sale reserve

Available-for-sale reserve

Balance at beginning of year

Notes

3.5.1

3.5.2

3.5.3

3.5.4

3.5.5

3.5.6

3.5.7

3.5.8

                 Consolidated                        

                   Company

2019

$’000

-

101

4,357

(521)

308

2,676

5,834

2,388

2018

$’000

102

-

4,357

(366)

241

2,676

5,834

2,388

2019

$’000

-

101

4,357

(521)

416

2,676

5,834

2,388

2018

$’000

102

-

4,357

(366)

241

2,676

5,834

2,388

15,143

15,232

15,251

15,232

Adjustment on adoption of AASB 9 (net of tax)

Increase/(decrease) due to revaluation of external RMBS 
investments to mark-to-market

Balance at end of year

102

(102)

-

-

105

-

(3)

102

102

(102)

-

-

105

-

(3)

102

The available-for-sale reserve was a former classiﬁ cation under AASB 139. The previous balance of this reserve represented 
the excess of the mark-to-market valuation over the original cost of the external RMBS investments.

3.5.2  

Investment revaluation reserve

Investment revaluation reserve

Adjustment on adoption of AASB 9 (net of tax)

Increase/(decrease) due to mark-to-market of external 
RMBS investments

Deferred tax liability adjustment on revaluation of external 
RMBS investments

Balance at end of year

102

(2)

1

101

-

-

-

-

102

(2)

1

101

-

-

-

-

The investment revaluation reserve materialised as a result of the adoption of AASB 9. The balance of this reserve represents 
the excess of the mark-to-market valuation over the original cost of the external RMBS investments.

3.5.3  

Asset revaluation reserve

Asset revaluation reserve

Balance at beginning of year

Increase/(decrease) due to revaluation on land and 
buildings

Deferred tax liability adjustment on revaluation on land 
and buildings

Balance at end of year

4,357

-

-

4,357

3,345

1,446

(434)

4,357

4,357

-

-

4,357

3,345

1,446

(434)

4,357

The balance of this reserve represents the excess of the independent valuation over the original cost of the land and buildings.

P|74    AUSWIDE BANK ANNUAL REPORT 2019

3.5.4  

Cash ﬂ ow hedge reserve

Cash ﬂ ow hedge reserve

Balance at beginning of year

Gain/(loss) arising on changes in fair value of interest rate 
swaps entered into for cash ﬂ ow hedges

Interest rate swaps

Income tax related to gains/losses recognised in other 
comprehensive income

Balance at end of year

                 Consolidated                        

                  Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

(366)

(181)

(366)

(181)

(221)

66

(521)

(265)

80

(366)

(221)

66

(521)

(265)

80

(366)

The cash ﬂ ow hedging reserve represents the cumulative eﬀ ective portion of gains or losses arising on changes in fair value 
of hedging instruments entered into for cash ﬂ ow hedges. The cumulative gain or loss arising on changes in fair value of the 
hedging instruments that are recognised and accumulated under the heading of cash ﬂ ow hedging reserve will be reclassiﬁ ed 
to proﬁ t or loss only when the hedged transaction aﬀ ects the proﬁ t or loss, or is included as a basis adjustment to the non-
ﬁ nancial hedged item, consistent with the relevant accounting policy.

There were no cumulative gains/losses arising on changes in fair value of hedging instruments reclassiﬁ ed from equity into 
proﬁ t or loss during the year.

3.5.5  

Share based payments reserve

Share based payments reserve

Balance at beginning of year

Expensed during the year

Vested during the year

Balance at end of year

                 Consolidated                        

                  Company

2019

$’000

241

175

(108)

308

2018

$’000

(189)

375

55

241

2019

$’000

2018

$’000

241

175

-

416

-

241

-

241

The share based payments reserve relates to shares available for long term incentive (LTI) based payments to employees.

3.5.6  

Statutory reserve

This is a statutory reserve created on a distribution from the Queensland Building Society Fund.

3.5.7   General reserve

A special reserve was established upon the Company issuing ﬁ xed share capital in 1992. The special reserve represented 
accumulated members’ proﬁ ts at that date and was transferred to the general reserve over a period of 10 years being ﬁ nalised 
in 2001/2002.

3.5.8  

Doubtful debts reserve

Under APRA Prudential Standard 220, the Company is required to hold a general reserve for credit losses. The current reserve 
has been assessed and meets the requirements of Auswide Bank’s impairment policy.

AUSWIDE BANK ANNUAL REPORT 2019    P|75

3. 

Investments and ﬁ nancing (continued)

3.6  

Dividends Paid

Dividends paid during the year

Interim for current year

Final for previous year

                 Consolidated                        

                   Company

2019

$’000

6,749

7,583

14,332

2018

$’000

6,740

6,917

13,657

2019

$’000

6,749

7,583

14,332

2018

$’000

6,740

6,917

13,657

Dividends paid are fully franked on ordinary shares.

Dividends are provided for as declared or paid. Subsequent to the reporting date, the Board declared a dividend of 18.5 cents 
per ordinary share ($7.804m), for the six months to 30 June 2019, payable on 20 September 2019.

The ﬁ nal dividend for the six months to 30 June 2018 ($7.583m) was paid on 21 September 2018, and was disclosed in the 
2017/18 ﬁ nancial accounts.

The tax rate at which the dividends have been franked is 30% (2018: 30%).

The amount of franking credits available for the subsequent ﬁ nancial year are:

Balance as at the end of the ﬁ nancial year

Credits/(debits) that will arise from the payment of income 
tax payable per the ﬁ nancial statements

Debits that will arise from the payment of the proposed 
dividend

Dividends - cents per share

Dividend proposed

Fully franked dividend on ordinary shares

Interim dividend paid during the year

Fully franked dividend on ordinary shares

Final dividend paid for the previous year

Fully franked dividend on ordinary shares

                 Consolidated                        

                   Company

2019

$’000

30,025

2018

$’000

26,266

2019

$’000

30,025

(1,575)

721

(1,575)

2018

$’000

26,266

1,182

(3,344)

(3,250)

(3,344)

(3,250)

25,106

23,737

25,106

24,198

18.5

16.0

18.0

18.0

16.0

17.0

18.5

16.0

18.0

18.0

16.0

17.0

P|76    AUSWIDE BANK ANNUAL REPORT 2019

 
4. 

Financial assets, liabilities and related ﬁ nancial risk management

4.1  

Categories of ﬁ nancial instruments 

Notes

Classiﬁ cation

                 Consolidated                        

                   Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

Financial assets

Cash and cash equivalents

4.1.1

4.1.2

4.1.3

Due from other ﬁ nancial 
institutions

Other ﬁ nancial assets;

- Certiﬁ cates of deposit

- External RMBS investments

- Investments in Managed 
   Investment Schemes 

- Notes – securitisation 
   program and other

- Derivative assets

- Interest receivable

Loans and advances

4.1.4

Amortised 
cost

Amortised 
cost

Amortised 
cost

FVTOCI

104,389

86,361

104,389

86,361

20,994

15,389

20,994

15,389

256,156

210,178

256,156

210,178

533

1,147

533

1,147

FVTPL

44,569

25,886

44,569

25,886

Amortised 
cost

FVTPL

Amortised 
cost

Amortised 
cost

14,624

17,082

47,010

49,468

589

588

61

696

589

588

61

696

3,086,158

2,919,303

3,086,324

2,919,446

Other investments;

- Unlisted shares

Total ﬁ nancial assets

Financial liabilities

4.1.5

FVTOCI

918

793

918

793

3,529,518

3,276,896

3,562,070

3,309,425

Deposits and other short term 
borrowings

Payables and other liabilities

4.1.6

4.1.7

- Payables and creditors

- Derivative liabilities

Loans under management

4.1.4

Subordinated capital notes

4.1.8

Amortised 
cost

Amortised 
cost

FVTPL

Amortised 
cost

Amortised 
cost

2,802,605

2,446,825

2,802,608

2,446,860

37,761

26,013

37,758

26,006

1,332

55

1,332

55

490,412

607,166

522,798

639,552

28,000

28,000

28,000

28,000

Total ﬁ nancial liabilities

3,360,110

3,108,059

3,392,496

3,140,473

Accounting policies

Financial instruments

Financial assets and ﬁ nancial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the 
contractual provisions of the instrument.

Recognised ﬁ nancial assets and ﬁ nancial liabilities are initially measured at fair value. Transaction costs that are directly 
attributable to the acquisition or issue of ﬁ nancial assets and ﬁ nancial liabilities (other than ﬁ nancial assets and ﬁ nancial 
liabilities at FVTPL) are added to, or deducted from, the fair value on recognition. Transaction costs directly attributable to the 
acquisition of ﬁ nancial assets or ﬁ nancial liabilities at FVTPL are recognised immediately in proﬁ t or loss.

AUSWIDE BANK ANNUAL REPORT 2019    P|77

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.1  

Categories of ﬁ nancial instruments (continued)

If the transaction price diﬀ ers from fair value at initial recognition, the Group will account for such diﬀ erences as follows:

•  if fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation 
technique that uses only data from observable markets, then the diﬀ erence is recognised in proﬁ t or loss on initial 
recognition (i.e. day 1 proﬁ t or loss); and

•  in all other cases, the fair value will be adjusted to bring it in line with the transaction price (i.e. day 1 proﬁ t or loss will be 

deferred by including it in the initial carrying amount of the asset or liability).

After initial recognition, the deferred gain or loss will be released to proﬁ t or loss on a rational basis, only to the extent that it 
arises from a change in a factor (including time) that market participants would take into account when pricing the asset or 
liability.

Financial assets

Financial assets are recognised on the trade date when the purchase is under a contract whose terms require delivery of the 
ﬁ nancial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, 
plus transaction costs, except for those ﬁ nancial assets classiﬁ ed as at FVTPL. Transaction costs directly attributable to the 
acquisition of ﬁ nancial assets classiﬁ ed as at FVTPL are recognised immediately in proﬁ t or loss.

All recognised ﬁ nancial assets that are within the scope of AASB 9 are required to be subsequently measured at amortised 
cost or fair value on the basis of the entity’s business model for managing the ﬁ nancial assets and the contractual cash ﬂ ow 
characteristics of the ﬁ nancial assets.

Speciﬁ cally:

•  debt instruments that are held within a business model whose objective is to collect the contractual cash ﬂ ows, and that 

have contractual cash ﬂ ows that are solely payments of principal and interest on the principal amount outstanding (SPPI), 
are subsequently measured at amortised cost;

•  debt instruments that are held within a business model whose objective is both to collect the contractual cash ﬂ ows and to 
sell the debt instruments, and that have contractual cash ﬂ ows that are SPPI, are subsequently measured at FVTOCI; and

•  all other debt instruments (e.g. debt instruments managed on a fair value basis, or held for sale) and equity investments are 

subsequently measured at FVTPL.

However, the Group may make the following irrevocable election/ designation at initial recognition of a ﬁ nancial asset on an 
asset-by-asset basis:

•  the Group may irrevocably elect to present subsequent changes in fair value of an equity investment that is neither held for 
trading nor contingent consideration recognised by an acquirer in a business combination to which AASB 3 applies, in OCI; 
and

•  the Group may irrevocably designate a debt instrument that meets the amortised cost or FVTOCI criteria as measured at 

FVTPL if doing so eliminates or signiﬁ cantly reduces an accounting mismatch (referred to as the fair value option).

Debt instruments at amortised cost or at FVTOCI

The Group assesses the classiﬁ cation and measurement of a ﬁ nancial asset based on the contractual cash ﬂ ow characteristics 
of the asset and the Group’s business model for managing the asset.

For an asset to be classiﬁ ed and measured at amortised cost or at FVTOCI, its contractual terms should give rise to cash ﬂ ows 
that are solely payments of principal and interest on the principal outstanding (SPPI). For the purpose of SPPI test, principal is 
the fair value of the ﬁ nancial asset at initial recognition. That principal amount may change over the life of the ﬁ nancial asset 
(e.g. if there are repayments of principal). Interest consists of consideration for the time value of money, for the credit risk 
associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, 
as well as a proﬁ t margin. The SPPI assessment is made in the currency in which the ﬁ nancial asset is denominated.

Contractual cash ﬂ ows that are SPPI are consistent with a basic lending arrangement. Contractual terms that introduce 
exposure to risks or volatility in the contractual cash ﬂ ows that are unrelated to a basic lending arrangement, such as exposure 
to changes in equity prices or commodity prices, do not give rise to contractual cash ﬂ ows that are SPPI. An originated or an 
acquired ﬁ nancial asset can be a basic lending arrangement irrespective of whether it is a loan in its legal form.

An assessment of business models for managing ﬁ nancial assets is fundamental to the classiﬁ cation of a ﬁ nancial asset. The 
Group determines the business models at a level that reﬂ ects how groups of ﬁ nancial assets are managed together to achieve 
a particular business objective. The Group’s business model does not depend on management’s intentions for an individual 
instrument, therefore the business model assessment is performed at a higher level of aggregation.

When a debt instrument measured at FVTOCI is derecognised, the cumulative gain/loss previously recognised in OCI is 
reclassiﬁ ed from equity to proﬁ t or loss.

P|78    AUSWIDE BANK ANNUAL REPORT 2019

Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to impairment.

Financial assets at FVTPL

Financial assets at FVTPL are:

•  assets with contractual cash ﬂ ows that are not SPPI; or/and

•  assets that are held in a business model other than held to collect contractual cash ﬂ ows or held to collect and sell; or

•  assets designated at FVTPL using the fair value option.

Such assets are measured at fair value, with any gains/losses arising on remeasurement recognised in proﬁ t or loss.

Equity investments

On initial recognition, the Group classiﬁ es the investment in equity instruments either at FVTPL if it is held for trading or at 
FVTOCI if designated as measured at FVTOCI. When an equity investment designated as measured at FVTOCI is derecognised, 
the cumulative gain/loss previously recognised in OCI is not subsequently reclassiﬁ ed to proﬁ t or loss but transferred within 
equity.

Derecognition of ﬁ nancial assets

The Group derecognises a ﬁ nancial asset only when the contractual rights to the asset’s cash ﬂ ows expire (including expiry 
arising from a modiﬁ cation with substantially diﬀ erent terms), or when the ﬁ nancial asset and substantially all the risks and 
rewards of ownership of the asset are transferred to another entity. If the Group neither transfers nor retains substantially all 
the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in 
the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards 
of ownership of a transferred ﬁ nancial asset, the Group continues to recognise the ﬁ nancial asset and also recognises a 
collateralised borrowing for the proceeds received.

On derecognition of a ﬁ nancial asset in its entirety, the diﬀ erence between the asset’s carrying amount and the sum of the 
consideration received and receivable and the cumulative gain/loss that had been recognised in OCI and accumulated in 
equity is recognised in proﬁ t or loss, with the exception of equity investment designated as measured at FVTOCI, where the 
cumulative gain/loss previously recognised in OCI is not subsequently reclassiﬁ ed to proﬁ t or loss.

Reclassiﬁ cations

If the business model under which the Group holds ﬁ nancial assets changes, the ﬁ nancial assets aﬀ ected are reclassiﬁ ed. The 
classiﬁ cation and measurement requirements related to the new category apply prospectively from the ﬁ rst day of the ﬁ rst 
reporting period following the change in business model that results in reclassifying the Group’s ﬁ nancial assets. During the 
current ﬁ nancial year and previous accounting period there was no change in the business model under which the Group holds 
ﬁ nancial assets and therefore no reclassiﬁ cations were made.

Financial liabilities

A ﬁ nancial liability is a contractual obligation to deliver cash or another ﬁ nancial asset or to exchange ﬁ nancial assets or 
ﬁ nancial liabilities with another entity under conditions that are potentially unfavourable to the Group or a contract that will 
or may be settled in the Group’s own equity instruments and is a non-derivative contract for which the Group is or may be 
obliged to deliver a variable number of its own equity instruments, or a derivative contract over own equity that will or may 
be settled other than by the exchange of a ﬁ xed amount of cash (or another ﬁ nancial asset) for a ﬁ xed number of the Group’s 
own equity instruments.

Financial liabilities are classiﬁ ed as either ﬁ nancial liabilities at FVTPL or other ﬁ nancial liabilities. The Group does not have any 
ﬁ nancial liabilities which are classiﬁ ed at FVTPL.

Other ﬁ nancial liabilities, including deposits and borrowings, are initially measured at fair value, net of transaction costs. Other 
ﬁ nancial liabilities are subsequently measured at amortised cost using the eﬀ ective interest method.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of 
its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs. 
Repurchase of the Group’s own equity instruments is recognised and deducted directly in equity. No gain/loss is recognised in 
proﬁ t or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

4.1.1   Cash and cash equivalents

For the purposes of the consolidated Statement of Cash Flows, cash and cash equivalents include cash on hand and in banks. 
Cash and cash equivalents at the end of the reporting period as shown in the consolidated Statement of Cash Flows can be 
reconciled to the related items in the consolidated Statement of Financial Position as follows:

AUSWIDE BANK ANNUAL REPORT 2019    P|79

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.1  

Categories of ﬁ nancial instruments (continued)

Cash at bank and in hand

Deposits on call

4.1.2  

Due from other ﬁ nancial institutions

Deposits with Special Service Providers (SSPs)

Subordinated loans

                 Consolidated                        

                   Company

2019

$’000

39,689

64,700

104,389

2018

$’000

35,801

50,560

86,361

2019

$’000

39,689

64,700

104,389

2018

$’000

35,801

50,560

86,361

                 Consolidated                        

                   Company

2019

$’000

20,994

-

20,994

2018

$’000

15,264

125

15,389

2019

$’000

20,994

-

20,994

2018

$’000

15,264

125

15,389

In accordance with our undertakings with the RBA and APRA the Deposits with Special Service Providers represents the 
mandated prudential funds held with Australian Settlements Limited (ASL).

4.1.3   Other ﬁ nancial assets

Certiﬁ cates of deposit

External RMBS investments

Investments in Managed Investment Schemes (MIS)

Notes - securitisation program and other

Derivative assets

Interest receivable

                 Consolidated                        

                   Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

256,156

210,178

256,156

210,178

533

44,569

14,624

589

588

1,147

25,886

17,082

61

696

533

44,569

47,010

589

588

1,147

25,886

49,468

61

696

317,059

255,050

349,445

287,436

Cash held within securitised trusts at 30 June 2019 of $14.624m (2018: $17.082m) is restricted for use only by the trusts.

4.1.4  

Loans and advances

Term loans

Continuing credit loans

Interest receivable

Deferred mortgage broker commissions

Loans to controlled entities

Expected credit loss

Total loans and advances

                 Consolidated                        

                   Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

2,963,721

2,782,321

2,963,722

2,782,322

117,371

131,723

117,371

131,723

4,603

4,954

-

4,154

4,302

-

4,603

4,954

165

4,154

4,302

142

3,090,649

2,922,500

3,090,815

2,922,643

(4,491)

(3,197)

(4,491)

(3,197)

3,086,158

2,919,303

3,086,324

2,919,446

For details on ECL recognised against loans and advances see Section 4.5 - Credit risk management.

The Group has entered into securitisation transactions on residential mortgage loans that do not qualify for derecognition. 
The special purpose entities established for the securitisations are considered to be controlled in accordance with Australian 
Accounting Standards and Australian Accounting Interpretations. The Company is entitled to any residual income of the 

P|80    AUSWIDE BANK ANNUAL REPORT 2019

securitisation program after all payments due to investors and costs of the program have been met; to this extent the 
economic entity retains credit and liquidity risk.

The impact on the Group is an increase in liabilities - Loans under management - of $490.412m (2018: $607.166m). Class 
B notes of $32.386m (2018: $32.386m) which are owned by the Company and which represent the Group’s exposure on the 
securitised mortgages have been eliminated from the consolidated ﬁ gures.

4.1.5   Other investments

This represents investments in equity securities which have been classiﬁ ed fair value through other comprehensive income.

Unlisted shares

Equity accounted investment

4.1.6  

Deposits and short term borrowings

Call deposits

Term deposits

Negotiable certiﬁ cates of deposit (NCDs)

Floating rate notes (FRNs)

4.1.7  

Payables and other liabilities

Trade creditors

Derivative liabilities

Accrued interest payable

Other creditors

4.1.8  

Subordinated capital notes

Inscribed debenture stock

                 Consolidated                        

                   Company

2019

$’000

918

403

1,321

2018

$’000

793

351

1,144

2019

$’000

918

403

1,321

2018

$’000

793

351

1,144

                 Consolidated                        

                   Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

880,811

752,954

880,814

752,989

1,492,106

1,355,032

1,492,106

1,355,032

311,188

118,500

257,839

81,000

311,188

118,500

257,839

81,000

2,802,605

2,446,825

2,802,608

2,446,860

                 Consolidated                        

                   Company

2019

$’000

7,272

1,332

15,140

15,349

39,093

2018

$’000

2,579

55

12,758

10,676

26,068

2019

$’000

7,269

1,332

15,140

15,349

39,090

2018

$’000

2,572

55

12,758

10,676

26,061

                 Consolidated                        

                   Company

2019

$’000

28,000

28,000

2018

$’000

28,000

28,000

2019

$’000

28,000

28,000

2018

$’000

28,000

28,000

Subordinated capital notes are inscribed debenture stock which are issued for a period of ten years non call ﬁ ve years, at 
which time they can be redeemed. Interest is repriced quarterly at a set margin above the 90 day bank bill swap rate (BBSW).

Subordinated capital notes of $15.000m were redeemed and replaced by a new $15.000m issue on 12 June 2019. The new 
notes were issued at a margin of 320 bps over the BBSW.

The Group did not have any defaults of principal or interest or other breaches with respect to its subordinated liabilities during 
the years ended 30 June 2018 and 2019.

4.2  

Capital risk management

The Board and Management of Auswide Bank Ltd are responsible for instituting a Risk Management Framework (RMF) 
including policies and processes to reduce such risks to prudent levels at both a Company and Group level. The Board has 
established the following committees and delegated responsibilities to develop and monitor risk within their relevant areas and 
consistent with the Group wide Risk Management Framework:

AUSWIDE BANK ANNUAL REPORT 2019    P|81

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.2  

Capital risk management (continued)

The Board Risk Committee;

•  assists the Board in the eﬀ ective management of its responsibilities to set and oversee the risk proﬁ le and the risk 

management framework of Auswide Bank;

•  ensures management have appropriate risk systems and practices to eﬀ ectively operate within the Board approved risk 

proﬁ le for Auswide Bank; and

•  deals with, and where applicable resolve, determine and recommend, all matters falling within the scope of its purpose and 
duties as set out in the Charter and other matters that may be delegated by the Board to the Committee from time to time.

The Board Audit Committee;

•  overviews the management of the ﬁ nancial reporting and disclosure practices;

•  overviews the internal audit functions;

•  reviews compliance with APRA reporting and other statutory requirements;

•  oversight of ﬁ nancial accounts;

•  addresses changes in accounting principles and the application in interim and annual reports;

•  reviews reports from the External Auditors; and

•  reviews reports from the Internal Auditor, the Internal Audit program and any Management responses to issues raised.

The Asset and Liability Management Committee (ALCO);

•  reviews the balance sheet and recommends changes with regard to capital management, funding and securitisation 

activities (including product related issues); and

•  reviews measures of liquidity and capital adequacy position against the policy and guidelines established in the Board policy.

APRA’s Prudential Standard APS 110 Capital Adequacy aims to ensure the Authorised Deposit-taking Institutions (ADI’s) 
maintain adequate capital, on both an individual and group basis, to act as a buﬀ er against the risks associated with the 
Group’s activities. APRA requires capital to be allocated against credit, market and operational risk, and the Group has adopted 
the ‘standard model’ approach to measure the capital adequacy ratio.

The Board of Directors takes responsibility to ensure the Company and Group maintain a level and quality of capital 
commensurate with the type, amount and concentration of risks to which the company and consolidated group are exposed 
from their activities. The Board has regard to prospective changes in the risk proﬁ le and capital holdings.

The Company’s management prepares a three year capital plan and monitors actual risk-based capital ratios on a monthly 
basis to ensure the capital ratio complies with Board targets. During the 2019 and 2018 ﬁ nancial years the capital adequacy 
ratios of both the Group and Company were maintained above the target ratio.

The capital adequacy calculations at 30 June 2019 and 30 June 2018 have been prepared in accordance with the revised 
prudential standards incorporating the Basel III principles.

APRA Prudential Standards and Guidance Notes for ADIs provide guidelines for the calculation of capital and speciﬁ c 
parameters relating to Tier 1, Common Equity Tier 1 and Total Capital. Tier 1 capital comprises the highest quality 
components of capital and includes ordinary share capital, general reserves and retained earnings less speciﬁ c deductions. 
Tier 2 capital comprises other capital components including general reserve for credit losses and cumulative subordinated debt.

Consistent with Basel III, the approach to capital assessment provides for a quantitative measure of the capital adequacy and 
focuses on:

•  credit risk arising from on-balance sheet and oﬀ -balance sheet exposures;

•  market risk arising from trading activities;

•  operational risk associated with banking activities;

•  securitisation risks; and

•  the amount, form and quality of capital held to act as a buﬀ er against these and other exposures.

P|82    AUSWIDE BANK ANNUAL REPORT 2019

Details of the capital adequacy ratio on a Company and consolidated basis are set out in following table:

Total risk weighted assets

Capital base

Risk-based capital ratio

                 Consolidated                        

                   Company

2019

$’000

2018

$’000

2019

$’000

2018

$’000

1,498,370

1,375,364

1,498,133

1,374,572

206,639

13.79% 

204,827

14.89% 

206,801

13.80% 

204,339

14.87% 

The loan portfolio of the Company does not include any loan which represents 10% or more of capital. 

The APS 330 Pillar III Disclosures inclusive of the Capital Disclosure Template, Regulatory Capital reconciliation and the 
Capital Instruments Disclosures are available in the Prudential Disclosures section of the company’s website at www.
auswidebank.com.au.

4.3  

Market risk management

Market risk is the risk that changes in market prices, such as interest rates, will aﬀ ect Auswide Bank Ltd’s income or the worth 
of its holdings of ﬁ nancial instruments. The Board’s objective is to manage market risk exposures while optimising the return 
on risk.

4.3.1  

Interest rate risk

Interest rate risk is the potential for loss of earnings to Auswide Bank Ltd due to adverse movements in interest rates.

The Asset and Liability Management Committee (ALCO) is responsible for the analysis and management of interest rate risk 
inherent in the balance sheet through balance sheet and ﬁ nancial derivative alternatives. These risks are quantiﬁ ed in the 
Visual Risk Report. The ALCO’s functions and roles include:

(i) 
directives;

review measures of proﬁ tability, particularly net interest and fee income including strategies and  

(ii) 

(iii) 

review management interest rate view as well as asset and liability repricing data;

receive and review reports from management concerning the organisation’s credit risk;

(iv) 
established in Board policy;

receive and review management reports on interest rate risk against guidelines and limits  

(v) 
attached to these products in co-operation with the Product Pricing sub-committee;

consider and approve pricing on interest bearing assets and liabilities as well as fee revenue   

(vi) 
policies;

oversee lending and depositing activities, including the provision of discretion pursuant to Board  

(vii) 

receive and review reports from management regarding signiﬁ cant asset and liability exposure;

(viii) 
securitisation transactions;

oversee securitisation activities for the organisation, including recommendations for future  

(ix) 
and

(x) 

review and maintain liquidity and capital management plans, including contingency measures;  

make recommendations to the Board on changes to the following policies;

•  Lending;

•  Term Deposits; and

•  Finance related policies (including capital and liquidity).

AUSWIDE BANK ANNUAL REPORT 2019    P|83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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At the reporting date, if interest rates had been 2.0% higher or lower and all other variables were held constant, the Group’s 
net proﬁ t before tax would increase by $11.559m or decrease by $14.178m (2018: decrease by $8.404m or increase by 
$7.336m). This is mainly due to the Company’s exposures to variable rate loans, and deposit and securitisation liabilities.

The sensitivity analysis was derived from the Visual Risk Report which calculates risk associated with movements in interest 
rates through the input of parameters for all ﬁ nancial assets and liabilities. The parameters used were consistent with those 
adopted for the prior year.

Derivatives

Derivatives are utilised to manage interest rate risk, along with balance sheet management. Net Interest Impact, Net Present 
Value and Value at Risk are key interest rate risk measures that are monitored to maintain ratios and risk within policy limits.

Each of the securitisation trusts has an Interest Rate Swap in place to hedge against ﬁ xed rate loans held in the trust. The 
mark-to-market values at the end of the year were as follows:

Wide Bay Trust No. 5

WB Trust 2008-1

WB Trust 2009-1

WB Trust 2014-1

WB Trust 2010-1

ABA Trust 2017-1

2019

$’000

(145)

1,548

54

73

34

(61)

2018

$’000

9

850

31

156

42

17

Auswide Bank enters into interest rate swaps from time to time and has International Swaps and Derivatives (ISDAs) in place 
with the ANZ and Wesptac Banks. Auswide Bank currently has six interest rate swaps, two with ANZ and four with Westpac 
Bank. These are designated as eﬀ ective hedges and are accounted for as cash ﬂ ow hedges.

Assets and liabilities arising from the mark-to-market valuation of interest rate swaps are $0.589m and $1.332m 
respectively (2018: $61,343 and $54,714).

Accounting policies

Cash ﬂ ow hedges

The Group designates certain hedging instruments, which include interest rate swaps, as cash ﬂ ow hedges.

At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and 
the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. 
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument 
is highly eﬀ ective in oﬀ setting changes in cash ﬂ ows of the hedged item attributable to the hedged risk.

The eﬀ ective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated 
and qualify as cash ﬂ ow hedges is recognised in the cash ﬂ ow hedging reserve, a separate component of OCI, limited to the 
cumulative change in fair value of the hedged item from inception of the hedge less any amounts recycled to proﬁ t or loss.

Amounts previously recognised in OCI and accumulated in equity are reclassiﬁ ed to proﬁ t or loss in the periods when 
the hedged item aﬀ ects proﬁ t or loss, in the same line as the recognised hedged item. If the Group no longer expects the 
transaction to occur that amount is immediately reclassiﬁ ed to proﬁ t or loss.

The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the 
qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, 
terminated or exercised, or where the occurrence of the designated hedged forecast transaction is no longer considered to 
be highly probable. The discontinuation is accounted for prospectively. Any gain/loss recognised in OCI and accumulated 
in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in proﬁ t 
or loss. When a forecast transaction is no longer expected to occur, the gain/loss accumulated in equity is reclassiﬁ ed and 
recognised immediately in proﬁ t or loss.

AUSWIDE BANK ANNUAL REPORT 2019    P|85

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.4  

Liquidity risk management

Liquidity risk refers to the possibility that the Group will be unable to meet its ﬁ nancial obligations as they fall due.

The Board of Directors have approved an appropriate liquidity risk management framework for the management of the 
Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by 
maintaining adequate reserves, credit facilities and reserve borrowing facilities, and daily monitoring and forecasting cash 
ﬂ ows.

Liquidity is monitored by management and a projection of near future liquidity (30 days) is calculated daily. This information is 
used by management to manage expected liquidity requirements.

An additional reserve equivalent to a minimum of 6% of the Company’s liability base assessed on a quarterly basis is set aside 
and isolated as additional liquidity available in a crisis situation via the RBA repurchase facility (Repo).

The undrawn limits on the securitisation warehouses were as follows:

Securitisation trust

Wide Bay Trust No. 5

ABA Trust No. 7

Total

Concentration risk

2019

$’000

38,058

31,237

69,295

2018

$’000

25,360

27,032

52,392

The Company’s deposit portfolio does not include any deposit which represents 10% or more of total liabilities.

P|86    AUSWIDE BANK ANNUAL REPORT 2019

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AUSWIDE BANK ANNUAL REPORT 2019    P|89

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.5  

Credit risk management

Credit risk is the risk that a customer or counterparty will default on its contractual obligations resulting in ﬁ nancial loss to 
the Group. The Group’s main income generating activity is lending to customers and therefore credit risk is a principal risk. 
Credit risk mainly arises from loans and advances, debt investments, lease receivables, contract assets, loan commitments and 
ﬁ nancial guarantees. The Group considers all elements of credit risk exposure such a counterparty default risk, geographical 
risk and sector risk for risk management purposes.

Under the direction of the Board of Directors, management has developed risk management policies and procedures to 
establish and monitor the credit risk of the Company. The risk management procedures deﬁ ne the credit principles, lending 
policies and the decision making processes which control the credit risk of the Company.

Credit risk exists predominantly on the Group’s loan portfolio. Other assets that are subject to credit risk include cash and 
cash equivalents, amounts due from other ﬁ nancial institutions, receivables, certiﬁ cates of deposit, securitisation notes and 
deposits, loan commitments and bank guarantees.

The loan portfolio consists of mortgage lending, personal lending and commercial lending. Loan commitments and bank 
guarantees are oﬀ  balance sheet exposures of the loan portfolio, which are also subject to credit risk. These groupings, by 
product type, have been assessed as reﬂ ecting similar performance behaviours, based on the Group’s analysis of its loan 
portfolio.

Credit risk on mortgage lending is minimised by the availability and application of insurances including lenders’ mortgage 
insurance, property insurance and mortgage protection insurance. Credit risk in the mortgage loan portfolio is managed by 
generally protecting all loans in excess of 80% LVR with one of the recognised mortgage insurers and securing the loans by 
ﬁ rst mortgages on residential property.

The company has a diversiﬁ ed branch network consisting of 21 branches and agencies across Queensland, and a business 
centre in Brisbane city. The Company also employs Business Development Managers in Sydney and Melbourne to conduct 
interstate business. All regional loan staﬀ  and panel valuers are locally based ensuring an in depth knowledge of the local 
economy and developments in the real estate market.

The Board of Directors and management receive reports on a monthly basis to monitor and supervise the past due loans in the 
portfolio, as well as economic forecasts, and ensures credit procedures are adhered to on a timely and accurate basis.

The Group’s maximum exposure to credit risk at balance date in relation to each class of ﬁ nancial asset is the carrying amount 
of those assets as recognised on the balance sheet. In relation to oﬀ  balance sheet loan commitments, the maximum exposure 
to credit risk is the maximum committed amount as per terms of the agreement. The maximum credit risk exposure does not 
take into account the value of any security held or the value of any mortgage or other insurance to mitigate the risk exposure.

The Group minimises concentrations of credit risk in relation to loans receivable by undertaking transactions with a large 
number of customers principally within the states of Queensland, New South Wales and Victoria. Diversiﬁ cation of the 
mortgage portfolio assists in minimising credit risk by reducing security concentrations in particular geographic locations.

Credit risk on personal lending is minimised by the availability of consumer credit insurance, as well as the lending policies and 
processes in place.

Commercial lending credit risk is minimised requiring collateral as security, which is mostly residential property, in addition to 
the use of bank guarantees in some circumstances. The risk management policies and decision making procedures also aid in 
minimising credit risk on commercial exposures.

Oﬀ  balance sheet loan commitments and bank guarantees are also subject to credit risk, which is minimised by following credit 
guidelines for issuing credit, as well as monitoring and following review processes for exposures in relation to bank guarantees 
and undrawn credit.

Credit risk on cash, cash equivalents and amounts due from other ﬁ nancial institutions have been assessed as low risk with a 
negligible probability of default, due to amounts being invested with investment grade credit institutions with a no loss history.

Credit risk on certiﬁ cates of deposit is assessed as low and probability of default negligible. Risk is minimised by using clearly 
deﬁ ned policies for investment grade rated credit institutions, combined with the current economic outlook and on the basis of 
no prior losses in the Group’s history on these investments.

External securitised notes are subject to low credit risk and negligible probability of default due to securitisation trusts having 
a structure that utilises an excess income reserve to absorb any losses, reducing the risk of note balances being aﬀ ected. The 
securitisation deposits are made with investment grade rated credit institutions.

4.5.1  

Sources of credit risk

Key sources of credit risk for the Group predominantly emanate from its business activities including loans and advances to 
customers, debt investments, loan commitments etc. The Group monitors and manages credit risk by class of ﬁ nancial

P|90    AUSWIDE BANK ANNUAL REPORT 2019

instrument. The table below outlines such classes of ﬁ nancial instruments identiﬁ ed, their relevant ﬁ nancial statement line 
item, maximum exposure to credit risk at the reporting date and expected credit loss recognised.

Disclosures on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from those of the 
Consolidated entity.

Consolidated entity
Class of ﬁ nancial instrument

Cash and cash equivalents

Due from other ﬁ nancial institutions

Certiﬁ cates of deposit

External RMBS investments

Notes – securitisation program and other

Interest receivable

Loans and advances

Total

Oﬀ -balance sheet exposures

Loans approved not advanced (LANA)

Bank guarantees

Total

Accounting policies

Impairment of ﬁ nancial assets

Notes

Financial statement line

Maximum 
exposure to 
credit risk

Expected credit 
loss

$’000

$’000

Cash and cash 
equivalents

Due from other ﬁ nancial 
institutions

Other ﬁ nancial assets

Other ﬁ nancial assets

Other ﬁ nancial assets

Other ﬁ nancial assets

Loans and advances

4.1.1

4.1.2

4.1.3

4.1.3

4.1.3

4.1.3

4.1.4

6.3

6.3

104,389

20,994

256,156

533

14,624

588

-

-

-

-

-

-

3,315,110

3,712,394

4,437

4,437

66,874

1,405

68,279

54

-

54

The Group recognises loss allowances for ECLs on the following ﬁ nancial instruments that are not measured at FVTPL:

•  loans and advances; and

•  issued loan commitments and loans approved and not yet advanced.

ECLs are required to be measured through a loss allowance at an amount equal to:

•  12-month ECL, i.e. lifetime ECL that result from those default events on the ﬁ nancial instrument that are possible within 12 

months after the reporting date, (referred to as stage 1); or

•  lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of the ﬁ nancial instrument, (referred to 

as stage 2 and stage 3).

A loss allowance for full lifetime ECL is required for a ﬁ nancial instrument if the credit risk on that ﬁ nancial instrument has 
increased signiﬁ cantly since initial recognition. For all other ﬁ nancial instruments, ECLs are measured at an amount equal to 
the 12-month ECL.

Deﬁ nition of default

The Group considers the following as constituting an event of default:

•  the borrower is past due more than 90 days on any material credit obligation to the Group; or

•  the borrower is unlikely to pay its credit obligations to the Group in full.

The deﬁ nition of default is appropriately tailored to reﬂ ect diﬀ erent characteristics of diﬀ erent types of assets. Overdrafts are 
considered as being past due once the customer has breached an advised limit or has been advised of a limit smaller than the 
current amount outstanding.

When assessing if the borrower is unlikely to pay its credit obligation, the Group takes into account both qualitative and 
quantitative indicators. The information assessed depends on the type of the asset, for example in corporate lending a 
qualitative indicator used is the breach of covenants, which is not relevant for retail lending. Quantitative indicators, such as 
overdue status and non-payment on another obligation of the same counterparty are key inputs in this analysis.

AUSWIDE BANK ANNUAL REPORT 2019    P|91

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued)

4.5  

Credit risk management (continued)

Write oﬀ 

Loans and advances and debt securities are written oﬀ  when the Group has no reasonable expectations of recovering the 
ﬁ nancial asset (either in its entirety or a portion of it). This is the case when the Group determines that the borrower does 
not have assets or sources of income that could generate suﬃ  cient cash ﬂ ows to repay the amounts subject to the write-
oﬀ . A write-oﬀ  constitutes a derecognition event. The Group may apply enforcement activities to ﬁ nancial assets written oﬀ . 
Recoveries resulting from the Group’s enforcement activities will result in impairment gains.

Key estimates and judgements

Signiﬁ cant increase in credit risk

ECL are measured as an allowance equal to 12-month ECL for stage 1 assets, or lifetime ECL assets for stage 2 or stage 
3 assets. An asset moves to stage 2 when its credit risk has increased signiﬁ cantly since initial recognition. AASB 9 
does not deﬁ ne what constitutes a signiﬁ cant increase in credit risk. In assessing whether the credit risk of an asset has 
signiﬁ cantly increased the Group takes into account qualitative and quantitative reasonable and supportable forward looking 
information.

Models and assumptions used

The Group uses various models and assumptions in measuring fair value of ﬁ nancial assets as well as in estimating ECL. 
Judgement is applied in identifying the most appropriate model for each type of asset, as well as for determining the 
assumptions used in these models, including assumptions that relate to key drivers of credit risk.

Forward looking scenarios

When measuring ECL the Group uses reasonable and supportable forward looking information, which is based on 
assumptions for the future movement of diﬀ erent economic drivers and how these drivers will aﬀ ect each other.

Probability of default (PD)

PD constitutes a key input in measuring ECL. PD is an estimate of the likelihood of default over a given time horizon, the 
calculation of which includes historical data, assumptions and expectations of future conditions.

Loss Given Default (LGD)

LGD is an estimate of the loss arising on default. It is based on the diﬀ erence between the contractual cash ﬂ ows due 
and those that the lender would expect to receive, taking into account cash ﬂ ows from collateral and integral credit 
enhancements.

4.5.2   Measurement of Expected Credit Loss (ECL) 

The key inputs used for measuring ECL are:

•  probability of default (PD);

•  loss given default (LGD); and

•  exposure at default (EAD).

These ﬁ gures are derived from internally developed statistical models and other historical data and they are adjusted to 
reﬂ ect probability-weighted forward-looking information.

PD is an estimate of the likelihood of default over a given time horizon. It is estimated as at a point in time. The Group 
has developed a PD model for loans and advances based on the likelihood of a default event occurring within the next 12 
months, based on the current status of each loan. A lifetime PD is also computed where appropriate. Historical data on loan 
behaviours is captured to enable projections on loans going into default. This provides statistical data that is used in the PD 
model for calculating the probability of default.

LGD is an estimate of the loss arising on default. The Group has developed a single LGD model, which includes judgements 
and estimates based on industry statistics and historical performance of the Bank’s portfolio. Given the Group’s loan 
portfolio, market data on LGDs of other institutions has also been applied in management’s assessment of LGD.

EAD is an estimate of the exposure at a future default date, taking into account expected changes in the exposure after 
the reporting date, including repayments and principal and interest, and expected drawdowns on committed facilities. The 
Group has developed a single EAD model to cover all applicable loan exposures.

The Group measures ECL considering the risk of default over the maximum contractual period (including extension options) 
over which the entity is exposed to credit risk and not a longer period. The risk of default is assessed by considering 
historical data as well as forward looking information through a macroeconomic overlay and management judgement.

The Group’s risk function constantly monitors the ongoing appropriateness of the ECL model and related criteria, where any 
proposed amendments will be reviewed and approved by the Group’s management committees.

P|92    AUSWIDE BANK ANNUAL REPORT 2019

Incorporation of forward looking information

The Group uses forward-looking information that is available without undue cost or eﬀ ort in its assessment of signiﬁ cant 
increase of credit risk as well as in its measurement of ECL. The Group uses this information to generate a ‘base case’ scenario 
of future forecast of relevant economic variables along with a representative range of other possible forecast scenarios.

The Group applies probabilities to the forecast scenarios identiﬁ ed. The base case scenario is the single most-likely outcome 
and consists of information used by the Group for strategic planning and budgeting.

The Group has identiﬁ ed and documented key drivers of credit risk and credit losses for each lending portfolio using a 
statistical analysis of historical data and has estimated relationships between macro-economic variables, credit risk and credit 
losses.

The principal macroeconomic indicators included in the economic scenarios used at 1 July 2018 and 30 June 2019 are GDP, 
GDP index, GDP index change and unemployment. Management have derived that GDP has economic correlations to inﬂ ation 
and unemployment, which generally have a corresponding impact on loan performance. Scenarios are compiled using APRA 
quarterly statistics and ADI Performance Statistics for losses data, ABS statistics for GDP, CPI (as proxy for GDP index) and 
unemployment rates, along with forecast reports from the market.

The base case scenario is derived from forecasted changes to GDP, CPI and unemployment rates, using management’s 
judgement. Adjustments to these forecasts are made to develop a further two scenarios for less likely but plausible economic 
expectations. A weighting is applied to each scenario, based on management’s judgement as to the probability of each 
scenario occurring. These economic forecasts are then applied to a statistical model to determine the macroeconomic eﬀ ects 
on the expected loss allowance on the lending portfolios.

The incorporation of forward looking information on the assessment of ECL on other assets required to be assessed for 
impairment is a qualitative approach. A range of economic outlooks, from an economist, the RBA and OECD, have been 
considered in making an assessment of whether there are economic forecasts that would indicate a potential impairment on 
the assets being assessed.

Signiﬁ cant increase in credit risk

The Group monitors all ﬁ nancial assets that are subject to impairment requirements to assess whether there has been a 
signiﬁ cant increase in credit risk since initial recognition. If there has been a signiﬁ cant increase in credit risk the Group will 
measure the expected loss allowance based on lifetime rather than 12-month ECL.

The Group has used the assumption that 30 days past due represents signiﬁ cant increase in credit risk. The Group considers 
90 days past due as representative of a default having occurred and a loan being credit impaired.

The Group has identiﬁ ed the following three stages in which ﬁ nancial instruments have been classiﬁ ed in regards to credit risk;

•  stage 1 - performing exposure on which loss allowance is recognised as 12 month expected credit loss;

•  stage 2 - where credit risk has increased signiﬁ cantly and impairment loss is recognised as lifetime expected credit loss; and

•  stage 3 - assets are credit impaired and impairment loss is recognised as lifetime expected credit loss. Interest is accrued on 

a net basis, on the amortised cost of the loans after the ECL is deducted.

AUSWIDE BANK ANNUAL REPORT 2019    P|93

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AUSWIDE BANK ANNUAL REPORT 2019    P|95

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4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued) 

4.5  

Credit risk management (continued) 

4.5.3   Movement in gross carrying amounts 

The following tables show movements in gross carrying amounts of ﬁ nancial assets subject to impairment requirements. 
Disclosures on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from those of the 
Consolidated entity.

Stage 1

Stage 2

Stage 3

Total

Consolidated entity

12-month ECL

Lifetime ECL

Lifetime ECL

$’000

$’000

$’000

$’000

Loans and advances at amortised cost* 

Gross carrying amount as at 1 July 2018

2,822,007

73,538

18,499

2,914,044

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

134,593

(133,250)

(1,343)

(180,769)

199,788

(19,019)

(16,153)

(10,115)

26,268

-

-

-

Financial assets that have been derecognised 
during the period including write-oﬀ s

(357,587)

(4,138)

(5,716)

(367,441)

New ﬁ nancial assets originated

579,400

-

-

579,400

Adjustments for repayments and interest

69,262

(108,566)

(5,607)

(44,911)

Net carrying amount as at 30 June 2019 

3,050,753

17,257

13,082

3,081,092

* Excludes interest receivable and deferred mortgage brokers commissions.

There has been no signiﬁ cant movement in carrying amount of other ﬁ nancial assets the general business operations of the 
Group and therefore the movement has not been disclosed.

4.5.4   Movement in expected credit losses

The following tables show movements in expected credit loss ﬁ nancial assets subject to impairment requirements. Disclosures 
on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from those of the Consolidated 
entity.

Consolidated entity

12-month ECL

Lifetime ECL

Lifetime ECL

Stage 1

Stage 2

Stage 3

Total

$’000

$’000

$’000

$’000

Loans and advances at amortised cost*

Loss allowance as at 1 July 2018

Transfer to stage 1

Transfer to stage 2

Transfer to stage 3

Financial assets derecognised during the 
period including write-oﬀ s

New ﬁ nancial assets originated

Changes in model risk assessment

Loss allowance as at 30 June 2019 

1,940

1,043

(2,877)

(675)

(488)

376

2,913

2,232

619

(903)

3,844

(926)

(188)

-

(1,712)

734

1,873

(140)

(967)

1,601

(943)

-

101

1,525

4,432

-

-

-

(1,619)

376

1,302

4,491

* Excludes interest receivable and deferred mortgage brokers commissions.

No ECL is recognised on any other ﬁ nancial asset, as this has been assessed as immaterial in both the current and 
comparative periods.

P|96    AUSWIDE BANK ANNUAL REPORT 2019

 
4.5.5  

Summary of movements in expected credit loss by ﬁ nancial instrument

The following table summarises the movement in expected credit loss by ﬁ nancial instruments for the reporting period. 
Disclosures on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from those of the 
Consolidated entity. 

Consolidated entity

Expected credit loss

Loss allowance as at beginning of year

Adjustment on adoption of AASB 9

Loss allowance recognised/ (reversed) during the year

Bad debts written oﬀ  

Loss allowance as at 30 June 2019

Consolidated entity

Expected credit loss

Loss allowance as at beginning of year

Loss allowance recognised/ (reversed) during the year

Bad debts written oﬀ  

Loss allowance at 30 June 2018

4.5.6  

Credit risk concentrations

Loans and 
advances

$’000

3,197

1,210

1,159

(1,129)

4,437

Loans and 
advances

$’000

4,314

1,320

(2,437)

3,197

LANA

$’000

-

70

(16)

-

54

LANA

$’000

-

-

-

-

Total

$’000

3,197

1,280

1,143

(1,129)

4,491

Total

$’000

4,314

1,320

(2,437)

3,197

An analysis of the Group’s credit risk concentrations on loans and advances is provided in the following table. The amounts 
in the table represent gross carrying amounts, with the exception of loan commitments, which are recorded as the amount 
committed. Disclosures on a Company basis have not been separately disclosed as the amounts do not diﬀ er materially from 
those of the Consolidated entity.

Consolidated entity

Loans and advances at amortised cost*

Concentration by sector

Mortgage lending

Personal lending

Commercial lending

Total

* Excludes interest receivable and deferred mortgage brokers commissions.

2019

$’000

2018

$’000

2,996,371

17,536

67,185

3,081,092

2,842,893

17,592

53,559

2,914,044

AUSWIDE BANK ANNUAL REPORT 2019    P|97

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued) 

4.5  

Credit risk management (continued) 

Consolidated entity

Loans and advances at amortised cost*
Concentration by region

Queensland

New South Wales

Victoria

South Australia

Western Australia

Tasmania

Northern Territory

Total

2019

$’000

2,342,240

351,170

245,124

29,342

77,708

9,603

25,905

2018

$’000

2,244,506

309,759

235,497

28,066

66,266

6,009

23,941

3,081,092

2,914,044

* Excludes interest receivable and deferred mortgage brokers commissions.

LANA of $66.874m (2018: $104.447m) is an additional exposure under AASB 9 not recognised on the balance sheet, but is 
immaterial to the concentrations in the above tables.

4.5.7  

Speciﬁ c provision

The Group has complied with the provisioning requirements under the APRA prudential standard APS220 Credit Quality and 
includes a speciﬁ c provision amounting to $2.012m determined in accordance with the aforementioned prudential standard.

4.5.8  

Financial instruments classiﬁ ed at FVTPL

The maximum exposure to credit risk of the notes held in MISs designated at FVTPL is their carrying invested amount, which 
was $44.569m at 30 June 2019 (2018: $25.886m). The change in fair value due to credit risk for the MISs designated at 
FVTPL is $0.588m for the year (2018: $0) and $0.558m on a cumulative basis as at 30 June 2019 (2018: $0). The Group 
uses the performance of the portfolio to determine the change in fair value attributable to changes in credit risk of its MISs 
designated at FVTPL.

4.5.9  

Equity instruments classiﬁ ed at FVTOCI

The maximum exposure to credit risk of the equity instrument designated at FVTOCI is their carrying amount.

4.5.10   Analysis of ﬁ nancial instrument by days past due status

Under the Group’s monitoring procedures a signiﬁ cant increase in credit risk is identiﬁ ed before the exposure has defaulted 
and at the latest when the exposure becomes 30 days past due. The table below provides an analysis of the gross carrying 
amount of loans and advances by past due status, that are over 30 days past due.

P|98    AUSWIDE BANK ANNUAL REPORT 2019

 
30 days and less than 60 days

60 days and less than 90 days

90 days and less than 182 days

182 days and less than 273 days

273 days and less than 365 days

365 days and over

                             Consolidated

                        Company

2019

$’000

4,638

3,229

2,175

1,941

718

1,601

2018

$’000

4,682

-

1,682

1,994

1,874

3,826

2019

$’000

4,638

3,229

2,175

1,941

718

1,601

2018

$’000

4,682

-

1,682

1,994

1,874

3,826

14,302

14,058

14,302

14,058

4.5.11   Collateral held as security and other credit enhancements

Mortgage lending

The Group holds residential properties as collateral for the mortgage loans it grants to its customers. The Group monitors its 
exposure to retail mortgage lending using the LVR (loan to value ratio), which is calculated as the ratio of the gross amount 
of the loan to the value of the collateral. The valuation of the collateral excludes any adjustments for obtaining and selling the 
collateral. The value of the collateral for residential mortgage loans is typically based on the collateral value at origination. 
For credit-impaired loans the value of collateral is based on the most recent appraisals. Subsequent appraisals are performed 
on securities held for credit-impaired loans, to more closely monitor the Group’s exposure. The Group will take possession 
of security property in line with its MIP (mortgagee in possession) policy and any loss resulting from subsequent sale will be 
recorded as an expense, resulting in a reduction in any provision that was held for that exposure. There are also procedures 
in place for the recovery of bad debts written oﬀ ; debt recovery processes are performed internally as well as through the use 
of third parties. The table below shows the exposures from mortgage loans by ranges of LVR. Disclosures on a Company basis 
have not been separately disclosed as the amounts do not diﬀ er materially from those of the Consolidated entity.

AUSWIDE BANK ANNUAL REPORT 2019    P|99

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued) 

4.5  

Credit risk management (continued) 

Consolidated entity 

Mortgage lending LVR ratio

Less than 50%

51-70%

71-90%

91-100%

More than 100%

Total

Personal lending

Gross carrying amount

Expected credit loss

2019

$’000

401,837

861,832

2018

$’000

374,332

792,631

1,472,048

1,433,078

227,859

200,873

32,795

41,979

2,996,371

2,842,893

2019

$’000

795

820

969

78

1,448

4,110

2018

$’000

397

964

1,262

235

1,394

4,252

The Group’s personal lending portfolio consists of secured and unsecured term loans and unsecured credit cards. For 
loans with a purpose of purchasing vehicles and the like, the vehicle can be used as security for a secured personal loan, if 
acceptable under the applicable lending policy. The personal lending portfolio exhibits similar traits and behaviours regardless 
of whether the loan is secured or unsecured.

Commercial lending

The Group requests collateral, which is usually in the form of residential property, as security for corporate lending. Bank 
guarantees are also used at times, which utilise cash, residential or commercial mortgages as security. The table below shows 
the exposures from commercial loans by ranges of LVR. Disclosures on a Company basis have not been separately disclosed as 
the amounts do not diﬀ er materially from those of the Consolidated entity.

Gross carrying amount

Expected credit loss

Consolidated entity 

Commercial lending LVR ratio

Less than 50%

51-70%

71-90%

91-100%

More than 100%

Total

Other ﬁ nancial assets

2019

$’000

17,366

24,108

12,910

4,003

8,798

2018

$’000

15,728

20,222

9,721

3,146

4,742

2019

$’000

2018

$’000

43

91

46

90

17

12

15

7

23

4

61

67,185

53,559

287

The Group holds other ﬁ nancial assets at amortised cost with a carrying amount of $369.751m and at FVTOCI with a carrying 
amount of $1.451m. These are high quality investments and as per policy the Group only invests in certain types of ﬁ nancial 
assets which are investment grade and of lower credit risk.

4.6  

Fair value measurements 

Some of the Group’s ﬁ nancial assets and ﬁ nancial liabilities are measured at fair value at the end of each reporting period.

The following table provides an analysis of ﬁ nancial instruments that are measured subsequent to initial recognition at fair 
value, grouped by fair value hierarchy level.

P|100    AUSWIDE BANK ANNUAL REPORT 2019

4.6.1  

Financial instruments measured at fair value on recurring basis

Consolidated entity
30 June 2019

Level 1

$’000

Level 2

$’000

Level 3

$’000

Total

$’000

Financial assets mandatorily measured at FVTPL

Investments in Managed Investment Schemes

Derivative assets

Investments at FVTOCI - (debt and equity instruments)

External RMBS investments

Equity instruments designated at FVTOCI

Unlisted shares

Total assets

Financial liabilities mandatorily measured at FVTPL

Derivative liabilities

Total liabilities

Consolidated entity
30 June 2018

Financial assets mandatorily measured at FVTPL

Investments in Managed Investment Schemes

Derivative assets

Investments at FVTOCI - (debt and equity instruments)

External RMBS investments

Equity instruments designated at FVTOCI

Unlisted shares

Total assets

Financial liabilities mandatorily measured at FVTPL

Derivative liabilities

Total liabilities

-

-

-

-

-

-

-

Level 1

$’000

-

-

-

-

-

-

-

-

589

533

44,569

44,569

-

-

589

533

-

918

918

1,122

45,487

46,609

1,332

1,332

Level 2

$’000

-

61

1,147

-

-

Level 3

$’000

1,332

1,332

Total

$’000

25,886

25,886

-

-

61

1,147

-

793

793

1,208

26,679

27,887

55

55

-

-

55

55

AUSWIDE BANK ANNUAL REPORT 2019    P|101

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued) 

4.6  

Fair value measurements (continued)

Company
30 June 2019

Level 1

$’000

Level 2

$’000

Level 3

$’000

Total

$’000

Financial assets mandatorily measured at FVTPL

Investments in Managed Investment Schemes

Derivative assets

Investments at FVTOCI - (debt and equity instruments)

External RMBS investments

Equity instruments designated at FVTOCI

Unlisted shares

Total assets

Financial liabilities mandatorily measured at FVTPL

Derivative liabilities

Total liabilities

Company
30 June 2018

Financial assets mandatorily measured at FVTPL

Investments in Managed Investment Schemes

Derivative assets

Investments at FVTOCI - (debt and equity instruments)

External RMBS investments

Equity instruments designated at FVTOCI

Unlisted shares

Total assets

Financial liabilities mandatorily measured at FVTPL

Derivative liabilities

Total liabilities

-

-

-

-

-

-

-

Level 1

$’000

-

-

-

-

-

-

-

-

589

533

44,569

44,569

-

-

589

533

-

918

918

1,122

45,487

46,609

1,332

1,332

Level 2

$’000

-

61

1,147

-

-

Level 3

$’000

1,332

1,332

Total

$’000

25,886

25,886

-

-

61

1,147

-

793

793

1,208

26,679

27,887

55

55

-

-

55

55

There have been no transfers of between level 1 and level 2 categories of ﬁ nancial instruments.

Accounting policies

Fair value measurements

The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on 
the requirements of the applicable Accounting Standard.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly (i.e. unforced) 
transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine 
fair value. Adjustments to market values may be made having regard to characteristics of the speciﬁ c asset or liability. The fair 
values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. 

P|102    AUSWIDE BANK ANNUAL REPORT 2019

These valuation techniques maximise, to the extent possible, the use of observable market data.

To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market 
with greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous 
market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the 
asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).

For non-ﬁ nancial assets, the fair value measurement also takes into account a market participant’s ability to use the asset 
in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. In 
measuring fair value, the Group uses valuation techniques that maximise the use of observable inputs and minimise the use of 
unobservable inputs.

Assets and liabilities measured at fair value are classiﬁ ed, into three levels, using a fair value hierarchy that reﬂ ects the 
signiﬁ cance of the inputs used in making the measurements. Classiﬁ cations are received at each reporting date and 
transfers between levels are determined based on a reassessment of the lowest level input that is signiﬁ cant to the fair value 
measurement. The categories are as follows:

•  level 1 - measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the 

entity can access at the measurement date,

•  level 2 - measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or 

liability, either directly or indirectly, and

•  level 3 - measurement based on unobservable inputs for the asset or liability.

The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation 
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all signiﬁ cant 
inputs required to measure fair value are observable, the asset or liability is included in level 2. If one or more signiﬁ cant inputs 
are not based on observable market data, the asset or liability is included in level 3.

4.6.2  

Reconciliation of Level 3 fair value measurements of ﬁ nancial assets and ﬁ nancial liabilities

Consolidated entity

Balance at beginning of year

Total gains or losses:

- in proﬁ t or loss

- in other comprehensive income

Purchases

Disposals

Balance at end of year

Company

Balance at beginning of year

Total gains or losses:

- in proﬁ t or loss

- in other comprehensive income

Purchases

Disposals

Balance at end of year

                  FVTOCI

FVTPL

                   Unlisted shares

Managed investment schemes

2019

$'000

793

-

-

125

-

918

2018

$'000

793

-

-

-

793

2019

$'000

25,886

2,320

-

27,150

(10,787)

44,569

2018

$'000

14,042

1,294

-

10,550

-

25,886

                   FVTOCI

FVTPL

                   Unlisted shares

Managed investment schemes

2019

$'000

793

-

-

125

-

918

2018

$'000

793

-

-

-

-

793

2019

$'000

25,886

2,320

-

27,150

(10,787)

44,569

2018

$'000

14,042

1,294

-

10,550

-

25,886

AUSWIDE BANK ANNUAL REPORT 2019    P|103

4. 

Financial assets, liabilities and related ﬁ nancial risk management (continued) 

4.6  

Fair value measurements (continued)

4.6.3  

Financial instruments not measured at fair value

The following table provides an analysis of ﬁ nancial assets and liabilities that are not measured at fair value.

Consolidated entity
30 June 2019

Financial assets

Level 1

$’000

Level 2

$’000

Level 3

$’000

Total fair 
value

Total carrying 
amount

$’000

$’000

Cash and cash equivalents

104,389

Due from other ﬁ nancial institutions

20,994

-

-

-

-

-

-

-

-

104,389

104,389

20,994

20,994

271,368

271,368

3,093,625

3,093,625

3,086,158

3,093,625

3,490,376

3,482,909

271,368

-

396,751

Other ﬁ nancial assets

Loans and advances

Total ﬁ nancial assets

Financial liabilities

Deposits and short-term borrowings

Payables and other liabilities

Loans under management

Subordinated capital notes

Total ﬁ nancial liabilities

-

-

-

-

-

2,794,520

-

2,794,520

2,802,605

-

37,761

37,761

37,761

490,412

28,000

-

-

490,412

490,412

28,000

28,000

3,312,932

37,761

3,350,693

3,358,778

Consolidated entity
30 June 2018

Level 1

$’000

Level 2

$’000

Level 3

$’000

Total fair 
value

Total carrying 
amount

$’000

$’000

Financial assets

Cash and cash equivalents

Due from other ﬁ nancial institutions

Other ﬁ nancial assets

Loans and advances

Total ﬁ nancial assets

Financial liabilities

Deposits and short-term borrowings

Payables and other liabilities

Loans under management

Subordinated capital notes

Total ﬁ nancial liabilities

86,361

15,389

227,956

-

329,706

-

-

-

-

-

-

-

-

86,361

15,389

86,361

15,389

227,956

227,956

2,934,628

2,934,628

2,919,303

2,934,628

3,264,334

3,249,009

-

-

-

-

-

2,298,306

-

2,298,306

2,446,825

-

26,013

26,013

26,013

607,166

28,000

-

-

607,166

607,166

28,000

28,000

2,933,472

26,013

2,959,485

3,108,004

P|104    AUSWIDE BANK ANNUAL REPORT 2019

4.6.4  

Summary of valuation methodologies applied in determining fair value of ﬁ nancial instruments

Each valuation technique requires inputs that reﬂ ect the assumptions that buyers and sellers would use when pricing the 
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priorities to those 
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed 
using market data (such as publicly available information on actual transactions) and that reﬂ ect the assumptions that buyers 
and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market 
data is not available and therefore are developed using the best information available about such assumptions are considered 
unobservable.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is ether not 
available or when the valuation is determined to be signiﬁ cant. External valuers are selected based on market knowledge and 
reputation.

The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment 
arrangements) may be valued, where there is no observable market price in relation to the transfer of such ﬁ nancial 
instrument, by reference to observable market information where such instruments are held in assets. Where this information 
is not available, other valuation techniques are adopted and where signiﬁ cant, are detailed in the respective note to the 
ﬁ nancial statements.

The Group selects a valuation technique that is appropriate in the circumstances and for which suﬃ  cient data is available to 
measure fair value. The availability of suﬃ  cient and relevant data primarily depends on the speciﬁ c characteristics of the asset 
or liability being measured. The valuation techniques selected by the economic entity are consistent with one or more of the 
following valuation approaches:

•  market approach - valuation techniques that use prices and other relevant information generated by market transactions for 

identical or similar assets or liabilities;

•  income approach - valuation techniques that convert estimated future cash ﬂ ows or income and expenses into a single 

discounted present value; and

•  cost approach - valuation techniques that reﬂ ect the current replacement cost of an asset at its current service capacity.

AUSWIDE BANK ANNUAL REPORT 2019    P|105

5. 

Group structure and related parties

5.1  

Subsidiaries, associates and other related parties

Balances and transactions between the Company and its subsidiaries which are related parties of the Company, have been 
eliminated on consolidation and are not disclosed in this note.

Place of 
incorporation 
and operation

Proportion of 
ownership and 
voting power held 
by the Company

Contribution to 
consolidated 
operating proﬁ t 
after income tax

Investment 
carrying value

2019

%

2018

%

2019

$’000

2018

$’000

2019

$’000

2018

$’000

5.1.1  

Controlled entities

Name

Controlled entities

Mortgage Risk Management 
Pty Ltd

Australia

-

100.0

Widcap Securities Pty Ltd

Australia

100.0

100.0

Auswide Performance Rights 
Pty Ltd

MoneyPlace Holdings Pty 
Ltd (MoneyPlace)

Australia

100.0

100.0

Australia

-

-

-

-

-

-

-

-

-

842

-

-

-

-

-

-

-

-

Mortgage Risk Management Pty Ltd (MRM)

MRM was a wholly owned subsidiary of Auswide Bank Ltd, and is no longer actively trading. MRM was deregistered eﬀ ective 15 
April 2019, pursuant to section 601AA(4) of the Corporations Act 2001.

Widcap Securities Pty Ltd

Widcap Securities Pty Ltd is a wholly owned subsidiary which acts as the manager and custodian for Auswide Bank’s public 
external RMBS and Warehouse Securitisation programs.

Auswide Performance Rights Pty Ltd

Auswide Performance Rights Pty Ltd is the trustee company for the Auswide Performance Rights Plan, set up to assist in the 
retention and motivation of executives, senior managers and qualifying employees.

MoneyPlace Holdings Pty Ltd (MoneyPlace)

In January 2018, the Group announced that it had entered into an agreement to divest its equity stake in P2P lender 
MoneyPlace. This transaction was completed on 22 January 2018. Further information in relation to this entity can be found in 
Sections 5.3 - Disposal of a subsidiary and 5.4 - Discontinued operation.

5.1.2   Warehouse and securitisation trusts

Auswide Bank has an external securitisation program which is comprised of the following trusts. These trusts are fully 
consolidated at the reporting date.

•  Wide Bay Trust No. 5

•  Wide Bay Trust No. 6

•  WB Trust 2008-1

•  WB Trust 2009-1

•  WB Trust 2010-1

•  WB Trust 2014-1

•  ABA Trust 2017-1

•  ABA Trust No. 7

P|106    AUSWIDE BANK ANNUAL REPORT 2019

5.1.3  

Details of material associates

Details of each of the Group’s material associates at the end of the reporting period are as follows:

Name of associate

Principal 
activity

Place of incorporation 
and operation

Proportion of ownership interest and voting 
power held by the Group

Finance Advice Matters 
Group Pty Ltd (FAMG)

Financial 
Planning

Australia

2019

25.0%

2018

25.0%

Financial Advice Matters Group Pty Ltd (FAMG) is accounted for using the equity method in these consolidated ﬁ nancial 
statements.

Accounting policies

Investment in associates

An associate is an entity over which the Group has signiﬁ cant inﬂ uence. Signiﬁ cant inﬂ uence is the power to participate in the 
ﬁ nancial and operating policy decisions of the investee but is not control or joint control over those policies.

An investment in an associate is accounted for using the equity method of accounting from the date on which the investee 
becomes an associate. The ﬁ nancial statements of the associate are used by the Group to apply the equity method. The 
reporting dates and accounting policies of the associate have been aligned to that of the Group where necessary.

Investments in an associate are carried in the consolidated and parent entity Statement of Financial Position at cost plus post-
acquisition changes in the Group’s share of net assets of the associate, less any impairment in value. The consolidated and 
parent entity proﬁ t or loss reﬂ ects the Group’s share of the results of operations of the associate.

Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes 
and discloses this, when applicable, in the consolidated and parent entity statement of changes in equity.

Summarised ﬁ nancial information in respect of FAMG is set out below. The summarised ﬁ nancial information below represents 
amounts shown in the FAMG’s ﬁ nancial statements prepared in accordance with AASBs.

Share of associate’s balance sheet:

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Net assets

Share of associate’s revenue and proﬁ t:

Revenue

Proﬁ t / (loss) before income tax

Income tax

Proﬁ t / (loss) after income tax

Total comprehensive income for the year

Dividends received from associate during the year

The above ﬁ gures were based on the audited accounts of FAMG as at 30 June 2019.

2019

$’000

471

529

(190)

(54)

756

2019

$’000

1,157

136

(39)

97

97

38

2018

$’000

405

527

(178)

(59)

695

2018

$’000

1,203

102

(28)

74

74

-

AUSWIDE BANK ANNUAL REPORT 2019    P|107

5. 

Group structure and related parties (continued)

5.2  

Non-controlling interest

Reconciliation of non-controlling interest in controlled entities:

Consolidated entity

Balance at beginning of year

Share of operating proﬁ t/(loss) for the year

Deconsolidation of non-controlling interest on the disposal of 
MoneyPlace

Balance at end of year

2019

$’000

-

-

-

-

2018

$’000

1,291

(231)

(1,060)

-

5.3  

Disposal of a subsidiary

In January 2018 the Group announced that it had entered into an agreement to divest its 62.4% equity stake in P2P lender 
MoneyPlace. This transaction was completed on 22 January 2018.

Consideration received

The total consideration received upon the divestment was $6.805m.

Assets and liabilities over which control is lost as a result of this divestment

Cash

Other assets

Software development

Other intangibles

Goodwill

Deferred income tax liabilities

Loans

Payables and other liabilities

Net assets disposed of

Gain on disposal of a subsidiary

Consideration received

Net assets disposed of

Non-controlling interests

Gain on disposal

2018

$’000

145

175

5,668

208

2,612

(1,298)

(85)

(723)

6,702

2018

$’000

6,805

(6,702)

1,084

1,187

The gain on disposal is included in the proﬁ t for the year from discontinued operations, see Section 5.4 -Discontinued 
operation for further explanation.

Net cash inﬂ ow on disposal of a subsidiary

Consideration received in cash and cash equivalents

Less: cash and cash equivalent balances disposed of

P|108   AUSWIDE BANK ANNUAL REPORT 2019

2018

$’000

6,805

(145)

6,660

5.4  

Discontinued operation

The results of the discontinued operations included in the proﬁ t (loss) are set out below.

Consolidated

Company

Proﬁ t for the year from discontinued operations

Revenue 

Expenses

Proﬁ t/(loss) before income tax

Income tax beneﬁ t/ expense

Gain on disposal of MoneyPlace

Proﬁ t for the year from discontinued operations

Cash ﬂ ows from discontinued operations

Net cash inﬂ ows/(outﬂ ows) from operating activities

Net cash inﬂ ows/(outﬂ ows) from investing activities

Net cash inﬂ ows/(outﬂ ows) from ﬁ nancing activities

Net increase in cash generated by the subsidiary

5.5  

Key management personnel disclosures 

5.5.1  

Details of key management personnel

2018

$’000

280

(966)

(686)

110

(576)

1,187

611

(505)

(356)

285

(576)

2018

$’000

-

-

-

-

2,301

2,301

-

-

-

-

Key management personnel have been taken to comprise the Directors and members of Executive Management who are 
collectively responsible for the day-to-day ﬁ nancial and operational management of the Group and the Company.

The following were key management personnel for the entire reporting period unless otherwise stated.

Directors

JS Humphrey 

MJ Barrett 

B Dangerﬁ eld 

GN Kenny 

SC Birkensleigh 
Executives

WR Schafer 

SM Caville 

D Hearne  

GM Job 

CA Lonergan 

MS Rasmussen 

Chairman - Non-executive Director

Managing Director

Director - Non-executive

Director - Non-executive

Director - Non-executive

Chief Financial Oﬃ  cer, Company Secretary

Chief Information Oﬃ  cer

Chief Customer Oﬃ  cer

Chief People and Property Oﬃ  cer

Chief Risk Oﬃ  cer

Chief Operating Oﬃ  cer

Each of the key management personnel, relatives of key management personnel and related business entities which hold 
share capital and/or deposits with the Company do so on the same conditions as those applying to all other members of the 
Company.

AUSWIDE BANK ANNUAL REPORT 2019    P|109

 
 
 
 
 
 
 
 
 
 
 
 
5. 

Group structure and related parties (continued)

5.5  

Key management personnel disclosures (continued)

5.5.2  

Key management personnel compensation

The aggregate compensation made to directors and other members of key management personnel of the Company and the 
Group is set out below.

Short-term beneﬁ ts

Cash salary and fees

Cash bonus

Post employment beneﬁ ts

Superannuation

Share based payments

Other long term beneﬁ ts

                       Consolidated

                      Company

2019

$'000

2,435

251

181

114

46

3,027

2018

$'000

2,346

140

176

55

43

2,760

2019

$'000

2,435

251

181

114

46

3,027

2018

$'000

2,346

140

176

55

43

2,760

Remuneration is calculated based on the period each employee was classiﬁ ed as key management personnel. Remuneration to 
Directors was approved at the previous Annual General Meeting of the Company.

5.5.3  

Other transactions with key management personnel

Interest on loans to key management personnel has been paid on terms and conditions no more favourable than those 
available on similar transactions to members of the general public.

The Group’s policy for receiving deposits from other related parties and in respect of other related party transactions is that all 
transactions are approved and deposits are accepted on the same terms and conditions that apply to members of the general 
public for each type of deposit.

Dividends of $161,305 (2018: $148,507) were paid to key management personnel and associates. These were made on terms 
no more favourable than those made on dividend payments to other shareholders.

There were no other transactions in which key management personnel provided services to the Company.

P|110    AUSWIDE BANK ANNUAL REPORT 2019

6. 

Other ﬁ nancial information

6.1  

Cash ﬂ ow statement reconciliation

Reconciliation of proﬁ t from ordinary activities after tax to the net cash ﬂ ows from operations:

                       Consolidated

                      Company

Proﬁ t after tax from continuing operations

Depreciation and amortisation

Bad debts expense

(Proﬁ t)/loss on disposal of non-current assets

Movement in assets

Accrued interest on investments

Prepayments and other receivables

Deferred tax asset

Movement in liabilities

Creditors and accruals

Deferred tax payable

Income tax payable

Employee beneﬁ t provisions

Other provisions

Reserves

2019

$'000

17,201

2,601

1,143

16

102

5,133

5

11,604

356

(2,757)

87

87

67

Net cash generated from operating activities

35,645

Accounting policies

Cash and cash equivalents

2018

$'000

17,886

2,659

1,320

(1,188)

(341)

7,722

683

11,339

(1,056)

(501)

83

82

(353)

38,335

2019

$'000

17,201

2,601

1,143

16

102

5,133

5

12,071

(105)

(2,757)

87

87

67

35,651

2018

$'000

19,345

2,659

1,320

104

(341)

7,521

683

10,354

311

(40)

83

165

(353)

41,811

Cash and cash equivalents includes cash on hand, deposits held at call with banks and other short-term highly liquid 
investments with original maturities of three months or less.

6.2  

Expenditure commitments

Capital expenditure commitments

Capital expenditure contracted for within one year

Lease expenditure commitments (as Lessee)

Non-cancellable operating leases

Up to 1 year

From 1 to 2 years

From 2 to 5 years

                       Consolidated

                      Company

2019

$'000

563

563

2,172

1,347

2,067

5,586

2018

$'000

227

227

2,092

1,143

949

4,184

2019

$'000

563

563

2,172

1,347

2,067

5,586

2018

$'000

227

227

2,092

1,143

949

4,184

 Non-cancellable operating leases relate to vehicles and leases of branches across Queensland.

AUSWIDE BANK ANNUAL REPORT 2019    P|111

6. 

Other ﬁ nancial information (continued)

6.2  

Expenditure commitments (continued)

Accounting policies

Leases

Lease payments for operating leases, where substantially all the risks and beneﬁ ts remain with the lessor, are charged as 
expenses in the periods in which they are incurred.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct 
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and 
recognised on a straight-line basis over the lease term.

6.3  

Contingent liabilities and credit commitments

Approved but undrawn loans

Approved but undrawn credit limits

Bank guarantees

6.4  

Provisions

Employee entitlements

Balance at beginning of year

Provided for during the year

Used during the year

Balance at end of year

Maturity analysis

Current provision

Non-current provision

Other provisions

Total provisions

                       Consolidated

                      Company

2019

$'000

66,874

85,096

1,405

2018

$'000

104,447

90,479

985

2019

$'000

66,874

85,096

1,405

2018

$'000

104,447

90,479

985

153,375

195,911

153,375

195,911

                       Consolidated

                      Company

2019

$'000

2,883

265

(179)

2,969

2,643

326

2,969

40

3,009

2018

$'000

2,800

238

(155)

2,883

2,547

336

2,883

40

2,923

2019

$'000

2,883

265

(179)

2,969

2,643

326

2,969

40

3,009

2018

$'000

2,718

320

(155)

2,883

2,547

336

2,883

40

2,923

P|112    AUSWIDE BANK ANNUAL REPORT 2019

Accounting policies

Employee provisions

Provision is made for the liability for employee beneﬁ ts arising from services rendered by employees to the end of the reporting 
period.

Short-term employee beneﬁ ts 

Liabilities for wages, salaries, sick leave and bonuses, that are expected to be settled wholly within twelve months of the end 
of the reporting period are recognised in the Statement of Financial Position in respect of employee services provided to the 
end of the reporting period and are measured at the amounts expected to be paid when the liability is settled, plus related on-
costs.

Long-term employee beneﬁ ts 

Liabilities for long service leave and annual leave are not expected to be settled within twelve months of the end of the 
reporting period. They are recognised as provisions for employee beneﬁ ts and are measured at the present value of the 
expected future payments to be made in respect of services provided to the end of the reporting period. Consideration is given 
to expected future salary and wage increases and periods of service.

Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current 
liabilities in the Statement of Financial Position if the entity does not have an unconditional right to defer settlement for at least 
twelve months after the end of the reporting period.

Superannuation

Contributions are made by the Group to an employees’ superannuation fund and are charged as an expense when incurred. 
The Group has no legal obligation to cover any shortfall in the fund’s obligation to provide beneﬁ ts to employees on retirement.

6.5  

Other non-ﬁ nancial assets

Prepayments

Other

6.6  

Remuneration of auditors

                       Consolidated

                      Company

2019

$'000

3,787

678

4,465

2018

$'000

4,173

448

4,621

2019

$'000

3,788

678

4,466

2018

$'000

4,174

448

4,622

Amounts received or due and receivable by the auditors of Auswide Bank Ltd, Deloitte Touche Tohmatsu Limited, are as follows:

Audit and review of ﬁ nancial statements

Other assurance services

Total audit and assurance services

Tax advisory services

Other services

Total non-audit services

Total auditors' remuneration

                       Consolidated

                      Company

2019

$'000

380,390

3,285

383,675

64,449

112,344

176,793

560,468

2018

$'000

342,436

14,000

356,436

88,841

87,166

176,007

532,443

2019

$'000

380,390

3,285

383,675

64,449

112,344

176,793

560,468

2018

$'000

342,436

14,000

356,436

88,841

87,166

176,007

532,443

6.7  

Events subsequent to balance date

The ﬁ nancial statements were approved by the Board of Directors on the date the directors’ declaration was signed.

AUSWIDE BANK ANNUAL REPORT 2019    P|113

In accordance with a resolution of the Directors of Auswide Bank Ltd (‘the Company’), we declare that:

(a) 

(b) 

(c) 

the ﬁ nancial statements comprising of the consolidated statement of proﬁ t or loss and other comprehensive  
income, consolidated statement of ﬁ nancial position, consolidated statement of cash ﬂ ows, consolidated statement  
of changes in equity and accompanying notes, and the remuneration disclosures that are contained in the  
remuneration report are in accordance with the Corporations Act 2001, and:

(i) 

(ii) 

give a true and fair view of the ﬁ nancial position of the company and consolidated entity as at 30 June  
2019 and of the performance for the year ended on that date; and

comply with Australian Accounting Standards (including the Australia Accounting Interpretations) and  
the Corporations Regulations 2001;

the ﬁ nancial report complies with International Financial Reporting Standards (IFRS) as disclosed in section 1.2 -  
Statement of compliance; and

in the Directors’ opinion there are reasonable grounds to believe that the Company and its subsidiaries will be able  
to pay its debts as and when they become due and payable.

The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Managing 
Director and Chief Financial Oﬃ  cer for the ﬁ nancial year ended 30 June 2019.

The declaration is made in accordance with a resolution of the Board of Directors made pursuant to Section 295(5) of the 
Corporations Act 2001, and is signed for and on behalf of the Directors by:

SC Birkensleigh

Director

JS Humphrey 

Director   

Brisbane
22 August 2019 

P|114    AUSWIDE BANK ANNUAL REPORT 2019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUSWIDE BANK ANNUAL REPORT 2019    P|115

P|116    AUSWIDE BANK ANNUAL REPORT 2019

AUSWIDE BANK ANNUAL REPORT 2019    P|117

P|118    AUSWIDE BANK ANNUAL REPORT 2019

AUSWIDE BANK ANNUAL REPORT 2019    P|119

Auswide Bank Ltd maintains corporate governance policies and practices which follow the recommendations outlined by the 
Australian Securities Exchange (ASX) and which comply with the Corporations Act 2001, the ASX Listing Rules and APRA 
Prudential Standards CPS 510 Governance.

The Board of Directors of Auswide Bank Ltd has adopted a Corporate Governance Statement which sets out the Company’s 
compliance with the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles 
and Recommendations. The Corporate Governance Statement is available under the Governance section of the Company’s 
website located at www.auswidebankltd.com.au.

The Governance section also details other relevant corporate governance information, including the Board and Committee 
Charters, policies and codes of conduct. The following is a summary of Auswide Bank’s compliance with the principles 
outlined in ASX’s Corporate Governance Principles and Recommendations (3rd edition):

Principle 1: Lay solid foundations for management and oversight

The Board Charter, together with the Corporate Governance Statement set out the roles and responsibilities of the Board 
and separate functions of management and delegated responsibilities. The Corporate Governance Statement also details 
checks undertaken and provision of material information to shareholders prior to recommendation and appointment of 
Directors.

In accordance with the regulatory standards, the Board has established a Group Board Remuneration Committee which 
carries out a performance evaluation of the Managing Director and review of the performance evaluations of other senior 
executives, which is provided to the Board following a report of discussions between the Chairman of the Committee and the 
Managing Director. A performance evaluation of the Board, the Board Committees and each individual Director’s contribution 
to the Board is performed annually as outlined in the Corporate Governance Statement.

Auswide Bank recognises that a gender balanced diverse and inclusive workforce with a wide array of perceptions resulting 
from such diversity, promotes innovation and a positive and successful business environment. Auswide Bank’s Diversity 
Policy is available in the Corporate Governance section of its website at www.auswidebankltd.com.au. The measurable 
objectives and Auswide Bank’s progress in achieving them, are outlined in the Corporate Governance Statement.

Auswide Bank is in compliance with Principle 1 and full details are available in the Corporate Governance Statement, Board 
Charter, Remuneration Committee Charter, together with other policies and codes located in the Governance section at 
www.auswidebankltd.com.au.

Principle 2: Structure the board to add value

Auswide Bank’s Board Charter outlines the structure of the board and its composition, together with the Board Renewal 
policy. Details of Directors’ skills, knowledge, experience, independence and diversity are discussed in the Corporate 
Governance Statement and in the Directors’ Statutory Report of this Annual Report.

The Board does not have a separate formal Nomination Committee, with the full Board addressing such issues that would be 
otherwise considered by the Nomination Committee. These matters include Board succession issues and ensuring that the 
Board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its 
duties and responsibilities eﬀ ectively.

Auswide Bank is in compliance with Principle 2 and full details are available in the Corporate Governance Statement and 
Board Charter, together with other charters, policies and codes located in the Governance section at 
www.auswidebankltd.com.au. The Directors’ Statutory Report of this Annual Report also provides details relevant to this 
principle.

Principle 3: Act ethically and responsibly

Auswide Bank promotes and supports a culture of honest and ethical behaviour. The standards of behaviour expected of all 
Directors, management and employees are detailed in the bank’s Codes of Conduct.

Auswide Bank is in compliance with Principle 3 and full details are available in the following Codes of Conduct - ‘Corporate 
Code of Conduct’ and ‘Code of Conduct for Directors and Key Executives’ located in the Governance section at
www.auswidebankltd.com.au.

Principle 4: Safeguard integrity in corporate reporting

The Audit Committee has a documented Charter, approved by the Board. The Audit Committee’s focus is on the issues 
relevant to verifying and safeguarding the integrity of Auswide Bank’s ﬁ nancial operations and reporting structure. The 
names and qualiﬁ cations of the members of the Audit Committee, the number of meetings held and the number of meetings 
attended are set out in the Directors’ Statutory Report.

P|120    AUSWIDE BANK ANNUAL REPORT 2019

Declarations have been signed by the Managing Director and Chief Financial Oﬃ  cer before approval by the Board of Auswide 
Bank’s ﬁ nancial statements for the ﬁ nancial period as detailed in the Corporate Governance Statement.

Auswide Bank is in compliance with Principle 4 and full details are outlined in the Board Audit Committee Charter, Corporate 
Governance Statement and ‘Appointment of External Auditors and Rotation of External Partners’ statement located in the 
Governance section at www.auswidebankltd.com.au. The Directors’ Statutory Report also provides details relevant to this 
principle.

Principle 5: Make timely and balanced disclosure 

Auswide Bank is committed to the promotion of investor conﬁ dence by providing equal, timely, balanced and meaningful 
disclosure to the market. The Company’s Continuous Disclosure Policy outlines its processes for complying with its 
continuous disclosure obligations under the Listing Rules.

Auswide Bank is in compliance with Principle 5 and full details are outlined in the Continuous Disclosure Policy and 
Corporate Governance Statement located in the Governance section at www.auswidebankltd.com.au.

Principle 6: Respect the rights of security holders

Auswide Bank believes it is important for its shareholders to make informed decisions about their investment in the company 
and aims to provide shareholders with access to quality information and encourage two-way communication.

Auswide Bank is in compliance with Principle 6 and full details are outlined in the Governance section at
www.auswidebankltd.com.au, including the Corporate Governance Statement.

Principle 7: Recognise and manage risk

The Risk Committee has a documented Charter, approved by the Board. The Risk Committee has the responsibility to set and 
oversee the risk proﬁ le and the risk management framework of the Company, and to ensure management have appropriate 
risk systems and practices to eﬀ ectively operate within the Board approved risk proﬁ le. The Risk Committee reviews the 
Group’s Risk Management Framework at least annually to satisfy itself that the framework continues to be sound.

The names and qualiﬁ cations of the members of the Risk Committee, the number of meetings held and the number of 
meetings attended are set out in the Directors’ Statutory Report.

Auswide Bank is in compliance with Principle 7 and full details are outlined in the Board Risk Committee Charter and 
Corporate Governance Statement located in the Governance section at www.auswidebankltd.com.au, together with the 
Charter for Corporate Social Responsibility located in the Social Responsibility section at www.auswidebankltd.com.au. The 
Directors’ Statutory Report of this Annual Report also provides details relevant to this principle.

Principle 8: Remunerate fairly and responsibly

The Remuneration Committee has a documented Charter, approved by the Board. The Remuneration Committee’s primary 
function is to assist the Board in fulﬁ lling its responsibilities to shareholders and regulators in relation to remuneration, by 
ensuring that Auswide Bank has clear remuneration policies and practices that fairly and responsibly reward individuals 
having regard to performance, the Group’s Risk Management Framework, the law and the highest standards of governance.

The names and qualiﬁ cations of the members of the Remuneration Committee, the number of meetings held and the number 
of meetings attended are set out in the Directors’ Statutory Report. Further information in relation to the Company’s policies 
and practices regarding the remuneration of Non-Executive Directors, Executive Directors, and other Senior Executives can 
be found in the Remuneration Report section of the Directors’ Statutory Report, together with employment contract details 
of the Managing Director and Key Management Personnel.

Auswide Bank is in compliance with Principle 8 and full details are outlined in the Board Remuneration Committee Charter 
and Corporate Governance Statement located in the Governance section at www.auswidebankltd.com.au. The Directors’ 
Statutory Report of this Annual Report also provides details relevant to this principle.

AUSWIDE BANK ANNUAL REPORT 2019    P|121

A. 

Registered oﬃ  ce

The registered oﬃ  ce and principal place of business of Auswide Bank Ltd is:

Level 3 Auswide Bank Head Oﬃ  ce
16-20 Barolin Street
Bundaberg QLD 4670
Australia

Ph 07 4150 4000 
Fax 07 4152 3566
Email auswide@auswidebank.com.au
Website www.auswidebank.com.au

B. 

Secretary

The Secretary is:

William (Bill) Ray Schafer BCom CA

C. 

Auditor

The principal auditors are: 

Deloitte Touche Tohmatsu
Level 23 Riverside Centre
123 Eagle Street
Brisbane QLD 4000 

Ph 07 3308 7000
Fax 07 3308 7001
Website www.deloitte.com.au

D. 

2019 Annual General Meeting

The 2019 Annual General Meeting is to be held on Wednesday 27 November 2019 at 11.00am EST 

Auswide Bank Ltd
Level 3, 16 - 20 Barolin St
Bundaberg, Queensland.

Voting rights of shareholders

A shareholder is entitled to exercise one vote in respect of each fully paid ordinary permanent share held in accordance with 
the provisions of the Constitution.

Key dates 

Annual General Meeting 

Full year results and ﬁ nal dividend announcement 
Ex dividend date 
Record date 
Participation in DRP (ﬁ nal date for receipt of application) 
Dividend payment  

Half year results and interim dividend announcement   
Ex dividend date 
Record date 
Participation in DRP (ﬁ nal date for receipt of application) 
Dividend payment  

27 November 2019

26 August 2019
09 September 2019
10 September 2019
Suspended
20 September 2019

15 February 2019
28 February 2019
01 March 2019
Suspended
25 March 2019

P|122    AUSWIDE BANK ANNUAL REPORT 2019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
E. 

Securities information

Share Register

The register of holders of Permanent Ordinary shares is kept at the oﬃ  ce of: 

Computershare Investor Services Pty Limited
Level 1 
200 Mary Street
Brisbane QLD 4100 

Ph 1300 552 270
Fax 07 3237 2152
Online Contact www-au.computershare.co/Investor/Contact
Website www.computershare.com.au

Issued shares

The Company’s securities listed on the Australian Stock Exchange (ASX) as at 13 September 2019 are:

Class of security

Permanent ordinary shares

Distribution of shareholdings

Permanent ordinary shares

13 September 2019

Range

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 and over

Total

Less than marketable parcel of $500

ASX Code

ABA

Number

42,182,485

No. of shareholders

3,728

2,032

650

551

52

7,013

180

AUSWIDE BANK ANNUAL REPORT 2019    P|123

Top 20 shareholders

Permanent ordinary shares

13 September 2019

Name

National Nominees Limited

Citicorp Nominees Pty Limited

Ronald Ernest Hancock & Lorraine Pearl Hancock

JP Morgan Nominees Australia Limited

Ronald Ernest Hancock

HSBC Custody Nominees (Australia) Limited

GDC & DMC Super Pty Ltd ATF Graham Cockerill S/F A/c

Kathy Sawyer

Ron Hancock Super Pty Ltd ATF The Hancock Superfund A/c

Cloud 7 Nominees Pty Ltd ATF Peter Sawyer Famacct No2 A/c

JW & GJ Kennedy Super Pty Ltd

Ronald  Ernest  Hancock  &  Lorraine  Pearl  Hancock  ATF  The 
Hancock Family A/c

Hestearn Pty Ltd

Sawfam Pty Ltd ATF Sawyer Super Fund No2 A/c

Noela Olsen

Delma Cran

Lohse Holdings Pty Ltd ATF Peter Lohse Super Fund A/c

Horrie Pty Ltd ATF Horrie Superannuation A/c

Charles Geoﬀ rey Morris & Ann Lois Morris ATF Morris Family A/c

Warambul Super Co Pty Ltd ATF Warambul Super Fund A/c

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

No. of shares

% of total

3,310,395

1,388,061

890,750

883,155

706,816

444,498

435,065

432,719

337,056

328,486

324,321

320,000

308,543

296,362

267,520

264,074

250,000

244,995

231,256

226,873

7.85

3.29

2.11

2.09

1.68

1.05

1.03

1.03

0.80

0.78

0.77

0.76

0.73

0.70

0.63

0.63

0.59

0.58

0.55

0.54

Top 20 holders of fully paid ordinary shares

11,890,945

28.19

Substantial shareholders

The following organisations have disclosed a substantial shareholding notice to the ASX.

Name

National Nominees Ltd ACF Australian Ethical Investments Limited(1)

RE Hancock (associated entities + associates)(2)

No. of shares

% of total

2,906,102

2,182,863

6.91

5.42

(1) Substantial shareholder notice dated 06/10/2017. 

(2) Substantial shareholder notice dated 19/05/2016.

On-market buyback

There is no on-market buy back.

Dividend reinvestment plan

The Board of Directors resolved to suspend the dividend reinvestment plan for the ﬁ nal dividend payable for the half year 
ended 30 June 2019, due to the strength of the capital position.

Shareholder online investor centre

We encourage shareholders to take advantage of the Computershare Investor Centre website available at
www.computershare.com.au where you can register and:

•  View your shareholding, dividend and transaction history online

•  Update your registered address, TFN and dividend instructions

•  Elect to receive eCommunications about your shareholding

•  Retrieve copies of dividend payment statements.

Alternatively, please contact Computershare Investor Services Pty Limited directly on 1300 552 270.

P|124    AUSWIDE BANK ANNUAL REPORT 2019

Annual report mailing

The Company’s Annual Report is available online at www.auswidebank.com.au under Shareholder Information. The default 
option for receiving Annual Reports is via this website. You have the choice of receiving an email when the Annual Report 
becomes available online or electing to receive a printed Annual Report by mail. To change your Annual Report elections 
online visit www.computershare.com.au/easyupdate/aba

If you do not have internet access call 1300 308 185 and follow the voice instructions.

AUSWIDE BANK ANNUAL REPORT 2019    P|125

For your reference, this glossary provides deﬁ nitions for some of the terms used in ﬁ nancial reporting, particularly by ﬁ nancial 
institutions listed on the ASX.  Not all terms may have been used in the Annual Report and Financial Statements.

ADI

AGM

APRA

ASIC

Asset

ASX

Bad Debt

Basel

Basis Point

An Authorised Deposit-taking Institution is a corporation authorised under the Banking Act 1959 
and includes banks, building societies and credit unions regulated by APRA.

Annual General Meeting.

Australian Prudential Regulation Authority.

Australian Securities and Investments Commission.

A resource which has economic value and can be converted to cash. Assets for an ADI include its 
loans because income is derived from the loan fees and interest payments generated.

Australian Securities Exchange Limited (ABN 98 008 624 691).

The amount that is written oﬀ  as a loss and classiﬁ ed as an expense, usually as a result of a poor-
performing loan.

The Basel Accords are the recommendations on banking laws and regulations issued by the Basel 
Committee on Banking Supervision, which has the purpose of improving the consistency of capital 
regulations internationally.

One hundredth of one percent or 0.01 percent. The term is used in money and securities markets to 
deﬁ ne diﬀ erences in interest rates or yields.

Capital Adequacy Ratio

A ratio of an ADI's capital to its risk, obtained by dividing total capital by risk-weighted assets. This 
ratio shows an ADI's capacity to meet the payment terms of liabilities and other risks.

Cost-to-income Ratio

Credit Rating

Dividend

Dividend Payout Ratio

Obtained by dividing operating cost by operating income, this ratio shows a company's costs in 
relation to its income. A lower ratio can be an indication that a company is better at controlling its 
costs.

An analysis of a company's ability to repay debt or other obligations.

A portion of a company's proﬁ ts that may be paid regularly by the company to its shareholders.

The amount of dividends paid to shareholders relative to the amount of total net income of a 
company, represented as a percentage.

Dividend Yield

Computed by dividing the annual dividend by the share price.

DRP

Earnings per Share

Ex-Dividend Date

Liability

Liquidity

Market Capitalisation

NCD

Net Interest Income

A Dividend Reinvestment Plan allows shareholders to reinvest some or all of their dividends into 
additional shares.

The amount of company earnings per each outstanding share of issued ordinary shares.

The date used to determine a shareholder's entitlement to a dividend.

A company's debts or obligations that arise during the course of business operations. Liabilities for 
ADIs include interest-bearing deposits.

For an ADI, liquidity is a measure of the ability of the ADI to fund growth and repay debts when they 
fall due, including the paying of depositors.

The total value of a company's shares calculated by multiplying the shares outstanding by the price 
per share.

A Negotiable Certiﬁ cate of Deposit is a short term security typically issued by an ADI to a larger 
institutional investor in order to raise funds.

The diﬀ erence between the revenue that is generated from an ADI's assets, and the expenses 
associated with paying out its liabilities.

Net Interest Margin (NIM)

The diﬀ erence between the interest income generated by an ADI and the amount of interest the ADI 
pays out to their depositors, divided by the amount of their interest-earning assets.

Net Proﬁ t After Tax (NPAT)

Total revenue minus total expenses, with tax that will need to be paid factored in.

Net Tangible Asset Backing per 
Share

An indication of the company's net worth, calculated by dividing the underlying value of the company 
(total assets minus total liabilities) by the number of shares on issue.

Non Interest Income

Income derived primarily from fees and commissions, rather than income from interest-earning 
assets.

Price-to-Earnings Ratio (P/E 
Ratio)

A measure of the price paid for a share relative to the annual income or proﬁ t earned by the 
company per share.

Record Date

The date used to identify shares traded and registered up until Ex-Dividend Date.

Return on Average Ordinary Equity

A measurement of how well a company uses the funds provided by its shareholders, represented by 
a ratio of the company's proﬁ t to shareholder's equity.

Return on Net Tangible Assets 
(RONTA)

Computed by dividing Net Proﬁ t After Tax by average Net Tangible Assets. Net Tangible Assets 
equals net assets less goodwill. RONTA is equivalent to Return on Tangible Equity.

RMBS

Residential mortgage-backed securities are a type of bond backed by residential mortgages on 
residential, rather than commercial, real estate.

P|126    AUSWIDE BANK ANNUAL REPORT 2019

Securitisation

SSP

Subordinated Capital Notes

Tier 1 Capital

Tier 2 Capital

Underlying NPAT

Refers to setting aside a group of income-generating assets, such as loans, into a pool against which 
securities are issued. Securitisation is performed by an ADI in order to raise new funds.

Special Service Provider such as an authorised settlement clearing house.

Subordinated notes or subordinated debentures, are a type of capital represented by debt 
instruments. Subordinated notes have a claim against the borrowing institution that legally follows 
the claims of depositors. Subordinated notes or debentures come ahead of stockholders.

Describes the capital adequacy of an ADI. Tier 1 Capital is core capital and includes equity capital 
and disclosed reserves.

Describes the capital adequacy of an ADI. Tier 2 Capital is secondary capital that includes items such 
as undisclosed reserves, general loss reserves, subordinated term debt and more.

The actual reﬂ ection of a company's proﬁ t. One-oﬀ  items may be removed from the statutory proﬁ t 
for the company to arrive at this proﬁ t ﬁ gure.

AUSWIDE BANK ANNUAL REPORT 2019    P|127

AUSWIDE BANK LTD
ABN 40 087 652 060

Australian Financial Services &
Australian Credit Licence 239686

Head Oﬃ  ce

Auswide Bank 
16 - 20 Barolin Street
PO Box 1063
Bundaberg QLD 4670

T 07 4150 4000 
F 07 4152 3499
E auswide@auswidebank.com.au

1300 138 831

auswidebank.com.au
(Retail Website)

auswidebankltd.com.au
(Corporate Website)