building customer
connections
full annual report09
Contents
2
Financial Calendar
2009/10
3 Our Vision
4 Chairman’s Report
5 Managing Director’s
Report
7
The Year in Review
10 Community Bank®
Network
14 Sustainability
16 Community Enterprise
Foundation™
18 Engagement
20 Our Executives
22 Online Shareholder
Services
Financial Calendar
2009/10
2009
30 September
Distribution of final dividend
12 October
Bendigo Step Up Preference Share dividend
26 October
Annual General Meeting
02 November
Bendigo Reset Preference Share dividend
15 December
Bendigo Preference Share dividend
Proposed 2010
11 January
Bendigo Step Up Preference Share dividend
15 February
Announcement of interim results and interim dividend
26 February
Ex-dividend date
04 March
15 March
31 March
12 April
03 May
15 June
12 July
Interim dividend record date
Bendigo Preference Share dividend
Distribution of interim dividend
Bendigo Step Up Preference Share dividend
Bendigo Reset Preference Share dividend
Bendigo Preference Share dividend
Bendigo Step Up Preference Share dividend
16 August
Announcement of final results and final dividend
27 August
Final ex-dividend date
02 September
Final dividend record date
15 September
Bendigo Preference Share dividend
30 September
Distribution of final dividend
11 October
Bendigo Step Up Preference Share dividend
25 October
Annual General Meeting
01 November
Bendigo Reset Preference Share dividend
15 December
Bendigo Preference Share dividend
Annual Review 09 e-book
Go to www.bendigoadelaide.com.au and
view our fully interactive e-book featuring
video stories and hyperlinks.
Contents
Bendigo and Adelaide Bank Limited
ABN 11 068 049 178
Registered Head Office
The Bendigo Centre
PO Box 480
Bendigo VIC
Australia 3552
Telephone: 1300 361 911 (local call)
Facsimile: 03 5485 7668
Email: share.register@bendigobank.com.au
In this report, the expression “the bank”, “the
Company” or “the Group” refers to Bendigo and
Adelaide Bank Limited and its controlled entities.
Customer Inquiries
Customer Help Centre
(Head Office inquiries)
1300 361 911 (local call)
Mondays to Fridays
8.30am – 7.30pm
Australian Eastern Standard Time/
Australian Eastern Daylight Time (AEST/AEDT)
Bendigo OnCall
(Bendigo Bank customer inquiries)
1300 366 666 (local call)
8.00am – 8.00pm weekdays
9.00am – 4.00pm Saturdays
10.00am – 4.00pm Sundays
(AEST/AEDT)
Adelaide Direct
13 22 20 (within SA) or
1300 65 22 20 (outside SA)
8.00am – 8.00pm weekdays
9.00am – 6.00pm Saturdays
10.00am – 6.00pm Sundays
Australian Central Standard Time/
Australian Central Daylight Time (ACST/ACDT)
24-hour Banking
Phone Bank
Bendigo Phone Banking – 1300 366 666 (local call)
Adelaide Express Line – 08 8300 7000
or 1300 300 893 (outside metropolitan SA)
e-banking
www.bendigobank.com.au
www.adelaidebank.com.au
Shareholder Inquiries
Share Registry
1800 646 042
Company Website
www.bendigoadelaide.com.au
full annual report09
At Bendigo and Adelaide Bank
we aim to be Australia’s leading
customer-connected banking
group…
That’s our vision, but why?
How do you “connect” with a customer? Why is that important?
Does it grow your business and improve shareholder returns?
Lots of people shop purely for the cheapest price, although
many people look for something more. They value good service;
they expect their bank to be fair and honest; they want their
bank to act in their best interests; and they want to feel
appreciated for their business. If a bank can do all those things
and put something back into their community, then all the better.
Those customers are likely to trust that bank, remain loyal and
do more business with it. They are also likely to recommend
“my bank” to others.
That’s what we mean by “connected”.
We are doing many things to forge those connections.
We stress to staff the values and behaviours Bendigo and
Adelaide Bank expects. Our leaders model those behaviours.
Staff are trained to ask customers what they are trying to
achieve and then recommend the best financial products to help
them. We’re opening more branches and installing more ATMs
to give customers more service points. Our internet banking is
good but is being further improved. We try to ensure branches
and call centres are well staffed and that our adviser partners
get good service so their customers are happy.
Doing all these things well means we are likely to be trusted
with more business by customers and partners pleased with
our service. But it is what we do in their communities that has
reinforced we are a different bank – one of more value. This
report tells some of those stories, because we consider them so
important to our future.
We have established corporate values of teamwork, integrity,
performance, engagement, leadership and passion. These are
our touchstones in improving outcomes for our customers, their
communities and our shareholders.
We believe in what we do and we are proud of our bank.
Our new
branding
Drawing from the heritage logos
of both Bendigo Bank and
Adelaide Bank, we have created
a new corporate identity and
consistent branding across our
business divisions.
Corporate
Retail Banking
Wealth
Margin Lending
Third Party Mortgages
3 FullFinancialReport09
FullAnnualReport09 3
Report from Chairman
Dear Shareholder
2008/09 has been an extraordinary
year for Bendigo and Adelaide Bank.
> On 9 July 2008, we celebrated the
150th anniversary of the foundation
of the first Bendigo Building Society.
150 years is a very long time in
financial services and the business
has changed and adapted many
times as it steadily grew through
various crises, recessions and
depressions;
> On 11 December 2008,
we opened The Bendigo Centre,
an uncompromisingly modern
$100 million building in the
centre of Bendigo, built to provide
more than 1000 staff with an
open-planned, light-filled work space
for the next 50 years;
But for us, too, there has been a heavy
cost. Interest margins shrank as we
restructured our balance sheet. Bad
debts increased as some customers
struggled to cope with the economic
downturn and the excesses of the
boom caught up with us all. So profits
are down and dividends reduced.
Funding remains the biggest issue for
all banks.
But now we look forward with
confidence. Markets remain fragile
and for the time-being dependent on
government support. But we continue
to attract customers and open new
branches. Our credit quality remains
sound and our capital position strong.
Rob Hunt’s time as chief executive
commenced just before the collapse
of Pyramid Building Society. Out of
that crisis we emerged stronger, better
equipped to serve our customers and
the communities in which they live. We
are determined to do the same with
this crisis, and look forward to capturing
appropriate opportunities being
presented by the turmoil.
Yours faithfully
Robert Johanson
> We farewelled Rob Hunt after
35 years as an employee and
21 years as chief executive.
Rob has been crucial in the
development of the organisation,
from a one-branch building society
when he joined, to a national
bank. Our distinctive identity as
Australia’s leading customer-
connected bank is more attributable
to him than anyone else. He made
an extraordinary contribution and
we thank him for it;
> We welcomed Mike Hirst as the new
chief executive, to lead the bank
into the next stage of development;
and
> We have dealt with the global
financial crisis of 2009.
This has been the most serious
financial crisis since the 1930s. It has
fundamentally changed the nature
of banking for at least a generation.
Much of the world’s banking system
has been nationalised. Economies have
struggled to cope and will take many
years to recover and repay the debts
now being incurred.
Australia has been relatively
unaffected, in part because of
early and decisive action by strong
regulators and government. But even
here, many competitors have been
taken over or collapsed and public
debt markets were, for a time, frozen.
Every Australian bank has relied on
government guarantees to borrow from
the wholesale markets – every bank
that is except Bendigo and Adelaide
Bank and our 60 per cent subsidiary
Rural Bank, our joint venture with Elders
Limited.
4 FullAnnualReport09
Report from Managing Director
Further opportunities will emerge.
Peer banks St George and BankWest
have been subsumed into major banks,
overseas banks have pulled back from
the Australian market, credit unions are
merging and some firms (particularly
mortgage brokers) have departed from
the financial services market.
Although consumers have tended to
seek out large banks during the GFC,
experience tells us many will look to
alternatives as nervousness dissipates
and customers turn to brands they
trust. As the only regional bank with
truly national branch coverage, our retail
bank is well placed to be the logical
alternative to the big four.
• Our customer and community focus
means we are highly differentiated.
• Our brand awareness is growing.
We have the highest customer
advocacy of any bank with a world-
class Net Promoter Score of +33.
Continued overleaf
The bank has emerged from the worst
of the global financial crisis (GFC)
in good shape to take advantage of
opportunities sure to emerge from
the disruption caused to the finance
industry.
Our retail brand is strongly
differentiated, we enjoy high levels
of customer trust and advocacy, our
balance sheet is robust, credit quality
is sound and demand for our customer
and community style of banking is
undiminished. We provide customers
with a national branch network,
extended trading hours, 24/7 electronic
banking options, a wide product range
and advice not tainted by commissions.
They can choose to deal with us directly
or through their broker or adviser.
We therefore offer consumers a logical
first alternative to the major banks.
That position has been further
enhanced through an erosion of
competition in large part prompted by
the GFC.
But while the GFC will provide us with
opportunities, it also disrupted our
earnings progress.
Our profit after tax before significant
items was down by 26 per cent,
to $173.2 million, cash earnings
per share (63 cents) and dividends
(43 cents) were well below the previous
year. These falls were largely due to a
slowing economy, higher funding costs
and an unprecedented drop in official
interest rates.
Having restructured our balance sheet
to provide secure funding, and taken a
consequent one-off hit to earnings, we
are now in the process of structuring
the business to grow by:
> Clearly articulating our vision to
be Australia’s leading customer-
connected bank.
> Simplifying our business structure.
> Re-branding our Group to better
leverage our distinct point of
difference.
> Raising $300 million in capital
to enable us to secure growth
opportunities.
> Containing our cost base.
The GFC has magnified and accelerated
change in the financial services
industry and we have already taken
some opportunities to expand.
In the past year we opened 22 new
branches and brought 24 former
Adelaide Bank branches into our
national Bendigo Bank retail network.
Macquarie’s $1.5 billion margin lending
portfolio was purchased. We increased
our stake in (formerly Elders) Rural
Bank from 50 to 60 per cent,
bought out our joint venture partner
in Tasmanian Banking Services to
strengthen Bendigo’s offering in that
State, increased our stake in IOOF
Holdings Limited and negotiated with
Customers Ltd to boost our branded
ATM network.
FullAnnualReport09 5
> We are well connected with and
relevant to our communities.
> Customers trust us. Our Sandhurst
Trustees mortgage funds remained
open throughout the GFC when
many competitor funds were closed.
> We expect to open 20-plus
branches each year and continue
to attract more than 10,000 new
customers each month.
Our other businesses, too, are well
positioned.
> The mortgage origination industry
was badly hit by the GFC, with
90 per cent of new mortgages
being written by the big four banks.
But the broker industry says there
is a need for a fifth financier to
promote competition and our
Adelaide Bank brand is a logical
contender. We continued to provide
(admittedly limited) funding to our
mortgage broker/manager partners
even as competitors withdrew from
the market. As funding capacity
rebuilds, we will gradually increase
our support.
> Our purchase of Macquarie’s margin
loan portfolio ranks us as the
third-biggest provider of customer
funding for this important asset
class, now re-emerging as share
markets recover.
> Our wealth management offering
is being consolidated under the
banner of Sandhurst Trustees,
a renowned fixed income specialist.
Already, there are clear signs of
improvement in our business and
earnings capacity. Our portfolios are
growing in line with improving market
sentiment and our interest margin
has fully recovered from the lows
experienced during the reshaping of our
balance sheet. As capacity recovers,
we are gradually increasing funding
flows to third party mortgages and
our wealth management and margin
revenues will grow as markets recover.
We are a bank with sound credit
quality, a low-risk balance sheet and
a high-quality capital base. While the
GFC has eroded customer trust in
financial institutions, I do not think that
is true of Bendigo and Adelaide Bank.
We have enshrined in this newly merged
bank a set of values that will act as a
foundation stone for our staff dealings
with each other and with customers,
partners and communities.
Our vision is to be Australia’s leading
customer-connected bank, because we
know that strong connections equal
strong business.
It’s important to note that our vision
and values come from our staff.
Achieving our goal and working to
this set of standards is what our
staff believe is important and this is
reflected in the way we go about doing
business.
I would like to thank all of our staff
for the tremendous effort they put in
over the past year; for their continued
willingness to go the extra mile and
for their ongoing commitment to see
everyone involved with our business
succeed.
If there is one thing the GFC taught us,
it is the important role played by banks
– and particularly those that have
not lost touch with their grass roots.
Our bank is strongly supported at that
level and is in a good position to grow
shareholder earnings in a sustainable
way while continuing to meet – and at
times exceed – the expectations of our
customers.
We are a bank different from the herd.
Leveraging that difference will produce
our growth.
Mike Hirst
$28.5bil
Retail deposits
Strong growth of 20.8% was recorded
1.4mil
Customers
The bank attracts more than 10,000
new customers every month
$173.2mil
08/09 net profit after tax
before significant items
Down by 25.8%
62.9c
Cash earnings per share
Decline of 43.4% with a dividend payout
ratio per ordinary share of 68.4%
6 FullAnnualReport09
The Year in Review
Credit
Credit quality remains generally sound,
and reflects the low-risk nature of our
lending book. At 30 June 2009, gross
impaired loans were just 0.49 per cent
of total assets. A total of $20.2 million
was raised in specific and collective
provisions relating to loans to investors
in Great Southern managed investment
schemes.
Funding and capital
After restructuring the balance sheet,
retail deposits comprise nearly
90 per cent of on-balance sheet funding,
with growth of 20 per cent – almost
$5 billion – over the 12 months.
The $300 million equity raising
completed post balance date increased
total capital to 12.11 per cent and Tier
1 capital to 8.63 per cent on a 30 June
2009 pro-forma basis.
Merger implementation
We are on track to achieve forecast
merger synergies of $60-65 million, with
80 per cent due by 1 December 2009
and the balance a year later.
Towards a more flexible
cost base
Demand for our banking models,
distribution channels and products is
strong and we can expect growth as our
funding capacity and markets recover.
But in the short term, uncertainty
remains, and we need to manage our
costs according to the income we
receive. We therefore took some hard
but necessary decisions.
• No increases for salaried
employees. (However, the scheduled
pay increase for employees covered
by the Collective Agreement will
proceed in December 2009.)
• No “at risk” payments in September
2009 for the 08/09 financial year.
• Close management of operating
expenses.
• Encouragement for all employees to
take their accrued annual and long
service leave.
• Almost two-thirds of our staff
– including all Executives –
volunteered to participate in the
unpaid leave program, committing
to take leave during the 09/10
financial year. This indicates the
strength of staff engagement.
Directors have agreed to
donate equivalent fees to the
bank scholarship program for
disadvantaged youth.
$9.1bil
in loans approved,
an increase of 3.3%
$300mil
Equity raising completed to assist
in further growth of the bank
$60-65mil
Merger synergies
80% due December 2009
and the balance a year later
0.49%
Gross impaired loans
to total assets
Compared with 07/08
figure of 0.12%
FullAnnualReport09 7
Payment systems
We grew our ATM network to
789 machines. Access to Bendigo
Bank-branded ATMs is all-the-more
important because of the introduction
in March 2009 of direct charging of
usage fees by the ATM owner. This
has resulted in a significant increase
in Bendigo customers using our own
network ahead of others. Our expansion
will be accelerated under an agreement
with Customers Limited to brand
more machines over the next five years.
Credit card accounts and receivables
grew moderately as the economy
slowed.
Business banking
Business lending increased by
6.7 per cent, to $6.13 billion,
an excellent result in a slowing
economy. Our debtor finance company
significantly improved its performance
with a 300 per cent increase in net
profit before tax.
We became a major sponsor of the
Victorian Government’s “Energise
Enterprise” promotion of small
business through more than
400 events at venues throughout
Victoria.
Review of Business
Divisions
Retail Banking
Our Bendigo Bank-branded retail
business continues to expand
rapidly on the back of high customer
satisfaction and advocacy ratings. More
than 10,000 new customers joined us
each month, a trend evident for more
than seven years. We opened 22 new
branches and merged the 24 former
Adelaide Bank branches into our
national network.
The strength of the franchise came
to the fore during the GFC when we
were able to raise huge amounts of
deposits to replace scarce wholesale
funding. Yearly growth in retail deposits
was 20.8 per cent; in a deteriorating
economy residential lending fell by
4.2 per cent but gains were made in
business loans.
With more than 95 per cent of
transactions now electronic, we are
gradually reshaping and up-skilling
our branch network to concentrate
on providing customers with better
advice on banking, wealth creation and
insurance. Bendigo Financial Planning
was one of the first planning groups
to adopt a true fee-for-service model
(rather than commissions). We think
a growing number of customers will
appreciate a planning service that tells
them how much they will pay and what
they will receive for it.
Insurance had a strong year,
successfully integrating the Bendigo
and Adelaide Bank operations as well
as increasing our service, advice and
product offering throughout the branch
network.
Sandhurst Trustees’ trustee services
division achieved significant growth in
revenues from personal estates and
funeral bonds. Corporate Trusts’ fee
income fell, largely in line with the
reduction in its clients’ assets under
management.
$47.1bil
Total Assets
A fall of 1.9%
$635mil
Net interest income
An increase of 6.3%
$38.9bil
Total loan balances
A fall of 3.3%
1.7mil
Deposit accounts
A rise of 7.1%
8 FullAnnualReport09
Managed funds
Portfolio Funding
This business buys loans from
companies that need cash. It was a
challenging year because of the global
financial crisis. We had little funding
available for new business, so we
concentrated on managing existing
portfolios and improving margins.
At year end, the number of active
partners had reduced to eight from a
peak of 25.
Third party mortgages
Mortgage businesses were challenged
as funding dried up during the global
financial crisis.
Our third party mortgage business
responded quickly and prudently to
ensure we were well placed to fund
our partners’ demands as conditions
stabilised. Margins were managed
appropriately, funding rebalanced
and credit policy adjusted to a more
conservative setting. Our business is
therefore well positioned to deliver the
balance sheet-funded, service-oriented
banking alternative increasingly
demanded.
As stock markets fell, investors avoided
managed funds. Our focus on customer
service helped to soften the impact on
our business.
The introduction of the government
guarantee on bank deposits led to
investors withdrawing money from
mortgage funds and depositing them
with banks.
In response, 70 mortgage fund
providers froze customer redemptions
– but not ours. Existing customers of
Sandhurst Select Mortgage Fund and
the AMF Yield Trust could still access
their investments. That’s because we
have a prudent investment mandate
and appropriate liquidity facilities
provided by the bank.
We also launched a new Cash
Management Account in November
2008 to enable customers to access
the government guarantee. With
our conservative approach and
strong balance sheet, our managed
funds business is well placed to
seize opportunities presented by its
expanding retail customer base and
partner-advised channels.
Margin Lending
(Leveraged Equities)
A fall of 27 per cent in the All Ordinaries
Index was always going to be a great
stress test for our business model and
credit quality. They passed with flying
colours, resulting in no significant write-
offs or specific provisions. We believe
we struck a good balance of customer
service and risk management.
The acquisition of the Macquarie
margin lending portfolio during the year
was a compelling strategic fit of a low-
risk business. With integration of the
portfolio well on track, and completion
planned this calendar year, we expect
to fully deliver the value expected of the
acquisition.
As markets recover, we look to
consolidate and capitalise on our
prominent position in the market.
190
Company branches
Two new company branches opened
in 08/09 and 24 Adelaide Bank
branches were integrated into our
national Bendigo Bank network
236
Community Bank® branches
20 new Community Bank®
branches opened in 08/09
789
ATMs
On average, we add 80 to 100 new
ATMs to the network each year
92
Public Agents
the number of public agents fell in
08/09 as two of our agents became
Community Bank® branches
FullAnnualReport09 9
Community Bank® Network
Teamwork. We are one team with one vision.
We work together, encourage diversity and
respect the unique contribution of each
individual.
$30.4mil
Donations to local groups and
projects since the inception of
the Community Bank® network
$10.7mil
Dividends paid to local
shareholders since the Community
Bank®network was established
740,161
Community Bank® accounts
$14.9bil
Total business of
Community Bank®network
1620
Community Bank®
company directors
1103
Community Bank®
branch staff
10 FullAnnualReport09
Community Bank® Network
Despite the global financial crisis,
our grassroots banking movement
has marched steadily on. Twenty new
Community Bank® branches joined our
national network. Around 120,000 new
customers switched to our community
style of banking and 70 communities
started campaigning to open their
own local Community Bank® branch.
Those statistics are impressive, but
it’s the story behind them that is really
important.
The story is that of everyday people,
who understand that the role of a bank
is to feed into prosperity, rather than
profit from it. That lesson was forgotten
by many bankers across the globe with
devastating consequences, but it is
well understood by the residents of the
236 towns and suburbs that host a
Community Bank® branch. They see the
fruits of their investment daily in locally
owned and operated banking.
Since the Community Bank® model
was launched in 1998, more than
$30 million has been distributed to
community projects and groups, and
almost $11 million in dividends paid to
local shareholders. But again, the real
stories lie behind the numbers, with new
community centres built, fire trucks
purchased, more local nurses employed
and new walking tracks and swimming
pools established.
As a direct result of these Community
Bank® branches, more money was
retained and spent locally. More jobs
were created, 1100 just in the branches
alone. And then there’s the flow-on or
multiplier effect of those wages being
spent, supporting local business across
Australia.
Our franchised Community Bank®
branches have not escaped the fallout
from the global turmoil. They share
margin income with the bank, so their
income was impacted as margins fell.
But like Bendigo and Adelaide Bank, they
have not needed government help to get
through this crisis. And every day we are
reminded, banks that are relevant and
connected locally will be valued by their
customers and communities.
Community Success Stories
The Community Bank® success
story has been replicated in scores
of Australian cities and towns.
By taking control of their own financial
destiny these communities have been
empowered to support local groups
and projects that would have otherwise
struggled for funding. Here’s some
of our Community Bank® branches’
achievements this year.
Hospice bank lifeline
Paradise Point Community Bank®
Branch QLD - opened 2001
After reading about the desperate
plight of an Arundel facility caring
for terminally ill patients, the
Paradise Point Community Bank®
Branch donated $54,000 to the
Hopewell Hospice. Donations to
the not-for-profit organisation had
plummeted by 30 per cent since the
start of the year, and the facility faced
closure within weeks if funds were not
found. The branch has been a long-term
supporter of the Arundel facility.
Bus set to make life easier
Coleambally Community Bank® Branch
NSW – opened 1999
Since the branch’s inception just over
10 years ago, more than $400,000 in
profits has been channelled back into
community projects. During March, the
branch announced the purchase of
a community bus. The 36-seater bus
is wholly funded by the Coleambally
Community Bank® Branch. Ongoing
profits from the branch will assist in
funding the day-to-day running costs of
the vehicle.
Community banking on it
North Epping Community Bank® Branch
NSW – opened 2003
North Epping Community Bank®
Branch celebrated its fifth birthday in
July by distributing $50,000 worth of
grants to 13 community groups. In
the five years the branch has been
operating it has provided $100,000 in
sponsorship and financial support to
more than 20 community groups.
Bank donation helps Gosnells
light up oval
Gosnells Community Bank® Branch WA
– opened 2002
The Gosnells Football Club is closer
to its goal of raising $50,000 for
lights, thanks to a boost from the
Gosnells Community Bank®Branch.
The Gosnells branch donated $6000 to
the club to go towards new lights for the
oval. The lights will benefit the whole
community, with other sporting groups
having use of the oval throughout the
year.
Community Bank® bus for senior
residents
Tongala Community Bank® Branch VIC
– opened 2000
Tongala’s senior citizens will not miss
out on a single community event in
coming years thanks to the purchase
of a community bus. The Aged Care
Bus has been funded by the Tongala
Community Bank®Branch and is one of
the many major projects funded by the
branch. Ongoing profits from Bendigo
Bank Telco will assist in funding the
day-to-day running costs of the vehicle.
The bus will be run throughout Tongala
in conjunction with the Tongala Aged
Care Complex.
Shade and sand for kids
Diamond Creek Community Bank®
Branch VIC – opened 2004
After more than six years of fundraising
for a sandpit and shade sail, the Ness
Reserve Preschool parents’ committee
received a very welcome $24,000 grant
from the Diamond Creek Community
Bank®Branch.
1
2
3
4
5
From top to bottom 1 The Coleambally Community Bank® Branch assists in the ongoing funding of its
local community bus. 2 Young footballers are better positioned for victory after a $6000 donation form the
Gosnells Community Bank® Branch. 3 The Tongala Community Bank® Branch has helped purchase an
aged care bus for its local senior citizens. 4 Sun smart children are happy children thanks to the Diamond
Creek Community Bank® Branch. 5 Coleraine & District Community Bank® Branch has donated special
medical equipment to its local hospital.
FullAnnualReport09 11
Engagement. We listen, understand, then
deliver. We build our success through the
success of others.
Bank donates special monitor
for vital signs
Coleraine & District Community Bank®
Branch VIC – opened 2003
Coleraine and District Hospital patients
will benefit from a vital signs monitor
donated by the town’s own Community
Bank®branch. The $4600 Weelch
Allyn monitor is the first of a number of
purchases to be made from $14,000
set aside by the bank to help local
organistions. The device will be used on
neo-natal and adult patients.
Brand new pitch a big hit
Mareeba Community Bank® Branch QLD
– opened 2005
Junior cricketers at Mareeba can
now play on their very own new pitch
– all thanks to the generous support of
the local community and a $1500 grant
from the Mareeba Community Bank®
Branch. The new pitch will allow the
team to play competitive matches on
their home turf.
Program to support young
Bellarine leaders
Bellarine Peninsula Community Bank®
Branch VIC – opened 1999
A Victorian State Government grant
of $225,000 into a youth leadership
program in Portarlington, Drysdale and
Clifton Springs has been further boosted
12 FullAnnualReport09
by a $225,000 contribution by the
Bellarine Peninsula Community Bank®
Branch. The program is designed to
deliver skills to young people and is to
be carried out over four years.
A bank that lives up to its name
North Richmond Community Bank®
Branch NSW – opened 2002
This year the North Richmond
Community Bank® Branch distributed
almost $80,000 to 20 local community
groups and organisations. Bridges
Disability Services received $25,000
towards a new bus, allowing carers
to engage clients in interesting and
fun activities. The branch also placed
$200,000 with Community Enterprise
Foundation™. The money will
eventually be used to establish a day
care facility for young people living with
a disability.
Spreading the joy
Bayswater and Noranda Community
Bank® branches WA – opened 2000
and 2004
Bayswater and Noranda Community
Bank® branches gave $140,000 to
local community projects at their first
community grants presentation in
2008. The Bayswater Amazon Dragon
Boat Racing team was one of the many
groups to be given money to buy a fitted-
out boat trailer.
Bank’s school grant
Margate Community Bank® Branch QLD –
opened 2004
Margate Community Bank® Branch
Manager was greeted with open arms
and beaming smiles when he presented
Woody Point Special School staff with a
cheque for $15,000 – the branch’s first
major community donation. This money
will buy the school, which services severely
disabled children, learning aids including
an electronic whiteboard and a hydraulic
change table.
All aboard new school bus
Braidwood Community Bank® Branch
NSW – opened 2002
Braidwood Central School’s new bus was
officially handed over after a massive
fundraising campaign which included
a $15,000 donation by the Braidwood
Community Bank® Branch.
New outdoor bike track unveiled
San Remo Community Bank® Branch VIC
– opened 2003
Phillip Island Playgroup unveiled its new
outdoor bike track recently, a facility funded
in full through the Community Grants
Program, an initiative of the San Remo
District Community Bank® Branch. The
soft-fall, rubberised track navigates the
perimeter of the playgroup playground
providing a fantastic circuit on which the
children can ride, walk and enjoy other
outdoor activities with their parents.
Chemistry of gold
Harbord Community Bank® Branch
NSW – opened 2002
Sixteen-year-old Freshwater High
School student Frank Jia was among
four Australian chemistry buffs who
competed in the International Science
Olympiads during July. The competition
is funded by government, Science and
Research, Merck Sharp and Dohme and
Monash University, but Frank received
an extra bonus, $3000 provided by the
Harbord Community Bank® Branch.
Bank gives out $140,000
Oak Flats and Shellharbour Community
Bank® Branches NSW – opened 2000
and 2006
Sporting clubs, schools, fire brigades
and scouts benefited from $140,000
in funding from Oak Flats and
Shellharbour Community Bank®
branches during October. The two
branches have given the money to
55 community groups, including
$10,000 to the Shellharbour Beacon
Foundation, $4000 to the Oak Flats
Rural Fire Brigade and $1000 to Port
Kembla Palliative Care. The $140,000
contribution brings the total return to
the community to $430,000.
New toys to tempt
East Ivanhoe Community Bank®
Branch VIC – opened 2001
The Banyule Toy Library has expanded
its treasure trove with $5000 worth
of new toys, games and puzzles. The
spending spree was funded, in part,
by the East Ivanhoe Community Bank®
Branch, which contributed $2500 under
its 2008 community grants program.
School gains a $10,000 sporting
boost
Warburton, Yarra Junction District
and Woori Yallock Community Bank®
branches VIC
– opened 2000, 2008 and 2003
Upper Yarra Secondary College got a
kick out of the $10,000 it received
during June. The school received
more than 30 new sleeping bags and
a new canoe trailer as part of a joint
sponsorship effort between Warburton,
Yarra Junction District and the Woori
Yallock Community Bank® branches.
Woori Yallock and Warburton jointly
funded the SES purchase of the
essential maintenance and repairs
equipment. Costing almost $1000
each, the two new toolboxes are
important for crew safety.
Dancing on
Windsor Community Bank® Branch VIC
– opened 2002
Prahran dance school Patrick Studios
Australia has welcomed news that the
local Community Bank® branch will
step in to provide $2000 for dancers
struggling with tuition fees. Windsor
Community Bank® Branch gave four
students $500 each. The branch has
given $95,000 to the local community
this financial year.
Donations aid tanker refit
Ferntree Gully and Rowville Community
Bank® Branches VIC – opened 2000
and 2001
Ferntree Gully has rallied behind local
CFA volunteers following the loss of
their tanker. The branches presented
the Upper Ferntree Gully Fire Brigade
captain with a cheque for $3000
to purchase equipment for their
replacement tanker, after their truck
was destroyed in a fire.
1
2
3
4
5
From top to bottom: 1 Mareeba Community Bank® Branch has shown its support for junior cricketers with a $1500 donation. 2 Bellarine Peninsula
Community Bank® Branch has invested in its local youth through a leadership program. 3 A new bus funded by the North Richmond Community Bank®
Branch has opened up a world of opportunities for local disabled people in its community. 4 The Bayswater Amazon Dragon Boat Racing team can now
compete in races around the state following the donation of a new boat trailer from the Bayswater and Noranda Community Bank® branches.
5 New education aids funded by the Margate Community Bank® Branch are assisting severely disabled children to learn.
FullAnnualReport09 13
Sustainability
Performance. We strive for sustainable
success. We seek and provide feedback
and find a better way.
• The building incorporates under-floor
displacement air conditioning which
uses considerably less energy than
a traditional system.
• Solar panels reduce the amount of
power used for heating water.
The bank is now looking at making a
similar investment in South Australia,
with initial design concepts for a new
Green Star office in Pirie Street in
Adelaide currently under review.
Solar Cities
Renewable energy solutions
Bendigo and Adelaide Bank is part
of the Central Victorian Greenhouse
Alliance, which comprises of
14 local governments, businesses and
community organisations. The alliance
is playing a key role in creating
sustainable, climate-aware communities
and profitable, climate-friendly
economies.
This will be furthered through a number
of community education and innovative
initiatives, including the construction of
two solar parks in Bendigo and Ballarat
that will offer renewable energy to local
green energy customers.
Generation Green™
Through Generation Green™, Bendigo and
Adelaide Bank can play a role in addressing
environmental issues by providing
customers and communities with simple and
practical solutions that add up to a cleaner,
greener and more sustainable future.
Ban the Bulb
Illuminating a brighter future for all
Generation Green™ launched the Ban the
Bulb campaign in 2007. The project was
enormously successful with eight Victorian
communities getting involved.
The project called on community based
volunteers from organisations such as the
Country Fire Authority and State Emergency
Service and paid them to replace light bulbs
free of charge to the home owner.
The energy efficient bulbs are funded
through Generation Green™ and its
partnerships with energy providers,
the private sector and state government.
More than 60,000 incandescent bulbs were
changed for new energy efficient ones in
around 4000 homes. The project raised
more than $160,000 for the volunteer
groups, and will reduce greenhouse gas
emissions by about 60,000* tonnes over
the lifetime of the bulbs. Participating
householders should also see their energy
bills fall by as much as $100 a year.
Sustainability
Bendigo and Adelaide Bank acknowledges
it has an obligation to customers,
shareholders, staff, partners and the
communities in which it participates, to
operate in a way that minimises its impact
on the environment.
We recognise that our day-to-day
business activities have an impact on
the environment and we understand our
environmental reputation will play a key
role in the bank’s future success.
The Bendigo Centre
Building a green future
At Bendigo and Adelaide Bank we
have embraced the task of building a
sustainable community by investing in one
of regional Australia’s first Five Star Green
Star designed buildings.
The six-storey office building
accommodates almost 1000 staff and is
a landmark redevelopment in Bendigo’s
city centre. It incorporates new retail
stores, cafes and community meeting
spaces.
Key features of The Bendigo Centre
include;
• The building uses half the energy of a
typical office building.
• Recycling Water Treatment Plant saves
20,000 litres of waste water a day.
14 FullAnnualReport09
Performance. We strive for sustainable
success. We seek and provide feedback
and find a better way.
This year, the project will engage
more than 50 communities across
Victoria. With the co-operation of local
community groups, we aim to exchange
300,000 light bulbs in 20,000 homes
and small businesses, saving about
150,000* tonnes in emissions. In
addition, the campaign will raise more
than $600,000 for the participating
community groups.
*Greenhouse gas abatement numbers per
globe reflect two separate schemes which apply
different abatement calculations.
Generation Green™ Loans
Borrowing to invest in our future
Bendigo and Adelaide Bank encourages
its customers to live in environmentally
friendly homes. To help customers
achieve this, we offer Generation
Green™ Home Loans and Personal
Loans.
Generation Green™ Home Loans are
at a 0.50% reduction on the bank’s
current residential variable rate with
no monthly service fee. Generation
Green™ Secured and Unsecured
Personal loans are at a 1.00% discount
to standard personal loan rates.
The loans are available to people
building green homes, or for home
owners updating their existing
residence with products like solar hot
water systems, insulation or a water
tank.
Carbon Offsets
Sowing seeds for clean air
Bendigo and Adelaide Bank understands
that living carbon neutral is challenging.
However, the task is more achievable when
you offset your emissions by purchasing a
Generation Green™ Carbon Offset product.
When you commit to carbon offsetting,
we revegetate cleared land with local native
species. Over a period of about 30 years
this vegetation absorbs the equivalent
amount of greenhouse emissions you wish
to offset for a one year period. Further
offsets can be purchased for subsequent
years to continue to offset emissions.
Since 2005, the bank has purchased its
own Generation Green™ Carbon Offsets to
balance the emissions we produce from our
air and road travel. This year, we acquired
almost 5500 tonnes of carbon offsets to
counter our 2007/08 travel emissions.
Paper Recycling
Saving trees and preserving our land
The invention of email has seen the humble
office move a step closer towards the
idealised paper-free workplace. However,
in reality paper is still a necessary and
practical tool for every business.
In an effort to reduce the impact of our
paper consumption on the environment,
we recycle whenever we can, with each
workstation complete with its own paper
recycling bin.
This year, we recycled more than 230 tonnes
of paper and cardboard waste from our
main offices and larger branches. This is
an increase of almost 30 tonnes on the
previous year.
Leadership. We all lead
by example. We show
initiative, are accountable
and empower others.
1
2
3
4
5
From top to bottom: 1 Sunshades on the exterior of our head office building act as a “second skin” cutting out heat and reducing demand on air
conditioning. Double glazed windows minimise heat absorption in summer and insulate the building from the cold in winter. 2 The building incorporates one
of the first large-scale applications of under-floor displacement air conditioning to be seen in Australia. The system uses considerably less energy than a
traditional system, while solar panels further reduce black power used. 3 An SES volunteer helping to make a change for the better in Maldon. 4 Staff are
encouraged to recycle with a paper recycling bin at each workstation. 5 Central Victorian Solar Cities supporters at the launch of the Bendigo Solar Park.
FullAnnualReport09 15
Community Enterprise Foundation™
Passion. We believe in what we do
and are proud of our bank.
Community Enterprise
Foundation™
Community Enterprise Foundation™
is the philanthropic arm of Bendigo
and Adelaide Bank. Since 2005, the
foundation has worked closely with
the bank’s network of community
and charitable partners to distribute
$12.25 million back into more than
1750 charitable projects and programs
in communities across Australia.
The foundation has played a central role
in mobilising the generosity of thousands
of Australians who have chosen to
support those in need through a series
of appeals run through the bank’s retail
network.
We do this by collecting donations in
a tax-effective way from individuals,
businesses and governments. Bendigo
and Adelaide Bank and the foundation’s
trustee, Sandhurst Trustees, are
two companies which have already
committed to make ongoing donations
to a variety of charitable projects and
causes.
This year, the foundation worked with
70 community partners to distribute
more than $3.9 million to almost
700 projects. In addition to this, the
foundation worked with the broader bank
network to raise more than $180,000
for flood-affected communities in North
Queensland and more than $8 million to
support those communities devastated
by the Black Saturday bushfires in
Victoria.
16 FullAnnualReport09
Lifesaving technology in Toora
Bushfire Appeal
Heart-starting initiative
After the death of an elderly patron, the
Royal Standard Hotel, Toora Community
Bank® Branch and local service clubs
teamed up to purchase two defibrillators for
the small Gippsland community in Victoria.
Training was provided for more than
30 residents by the local doctor and
paramedics and one defibrillator is now
stationed at the hotel, with the other
located at the doctor’s surgery.
Community Emergency
Response Team
First at an emergency and saving lives
Tongala in North East Victoria had seen
many of its community members suffer
cardiac arrests, with the chances of
survival diminished due to poor access to
ambulance services.
Community Enterprise Foundation™,
the Tongala Community Bank® Branch
and Bendigo Bank Telco provided funding
in 2007 to establish a Rural Ambulance
Victoria Community Emergency Response
Team.
The team is made up of 12 local volunteers
who are trained by Ambulance Victoria and
provide first aid to local residents in an
emergency.
This year, the team was called upon to deal
with two heart attack victims at the same
time. While the first patient was stabilised,
the second stopped breathing. Calling
upon their new skills, the team successfully
revived the second patient until paramedics
arrived. Both patients have now made a full
recovery.
The events of the 2009 Victorian
bushfires left a lasting impression upon
the psyche of our nation. Many Victorians
faced the full front of the fires, losing
property and treasured possessions.
Some lost family, friends, neighbours and
loved ones.
Throughout this time our nation rallied.
We were generous with our time, our
compassion and our financial resources,
as well as in our love and support for
those whose lives so profoundly changed
during the time of the fires and in the
weeks that followed.
In the aftermath, the Community
Enterprise Foundation™ accepted
$8 million from more than 32,000
generous individual donors, businesses
and community groups across Australia.
The funds have been administered by
the foundation, which is working with the
bank’s community partners to identify
groups and programs in need of support.
A week after the fires hit, more than
$250,000 was immediately released to
those most in need. Money went towards
food and shelter for fire victims and
emergency workers, counselling services,
back-to-school packs for children and
animal welfare programs.
A further $350,000, including $200,000
from Elders staff and customers, is now
being used by Conservation Volunteers
Australia to replace the thousands of
kilometres of fencing destroyed by the
fires.
Banking services returned to
Kinglake
Hardest hit lend helping hand
Valley Community Financial Services
Limited operates the Hurstbridge
& Districts and Diamond Creek
Community Bank® branches.
Thanks to the support of its customers
and the local community, the company
has been providing ongoing financial
assistance to the Country Fire Authority,
donating thousands of dollars in branch
profits to the firefighters who protect
Kinglake, St Andrews, Strathewen,
Hurstbridge and Diamond Creek – some
of the towns that were hardest hit by
the Black Saturday bushfires.
Since Black Saturday, the company has
donated more than $200,000 to the
Community Enterprise Foundation™ as
its contribution to help bushfire-affected
communities. A further $80,000 was
given to establish an Information Centre
to assist locals immediately after the
fires, and in July a branch was opened
in Kinglake to return banking services
to the community.
The Community Bank®company is now
looking at other ways it can help the
Kinglake community rebuild and recover
and eventually establish its very own
Community Bank®branch.
Partnership secures $4 million for
fire fund
Helping communities rebuild and
recover
The Victorian State Government,
Bendigo and Adelaide Bank and
Community Enterprise Foundation™
partnered in April to set up a
$4 million fund to help rebuild
community infrastructure and provide
jobs in Victoria’s bushfire-affected
communities.
The Bushfire Recovery Community
Infrastructure Program will provide
grants of up to $300,000 to regional,
rural and interface council-and-
community projects, and is equally
funded by the Victorian Government and
the foundation.
The funding will enable councils and
local groups to immediately undertake
vital activities in rebuilding and helping
their communities recover from the
bushfires. Assistance will go to
projects that replace lost or damaged
facilities, improve existing community
infrastructure, contribute to economic
development and demonstrate wide
community use and benefit.
This program is essential in helping
communities to rebuild, because
infrastructure forms the basis from
which all future community prosperity
can be generated.
North Queensland
Flood Appeal
North Queensland residents endured
some of the worst flooding the state
has ever experienced, when Cyclone
Ellie hit the region in February 2009.
The freakish weather event turned the
lives of many people upside down, with
hundreds of locals displaced from their
homes and forced to endure extreme
hardship.
The impact of the floods was truly
devastating, but within days of the
cyclone hitting, Community Enterprise
Foundation™ launched the North
Queensland Flood Appeal.
Bendigo and Adelaide Bank offered
to match community donations
dollar-for-dollar up to $50,000,
a challenge that was quickly met by the
community with money rushing in. More
than $180,000 was raised to assist
locals with the clean-up and recovery
process.
1
2
3
4
5
From top to bottom: 1 Hurstbridge & Districts and Diamond Creek Community Bank® Chairman Barry Henwood opens the Kinglake sub branch with
Bendigo and Adelaide Bank Managing Director Mike Hirst. 2 Kinglake locals show their community spirit. 3 The people of Toora gathered at the local pub to
familiarise themselves with the new life-saving defibrillator (Photograph supplied by The Foster Mirror). 4 Conservation Volunteers Australia are working to
replace fencing lost in bushfires around Redesdale. 5 The Tongala Community Emergency Response Team celebrate being named Community Group of the
Year by their local council (Photograph supplied by Kyabram Free Press).
FullAnnualReport09 17
Engagement
Integrity. We build a culture of trust.
We are open, honest and fair.
Sponsorships and
Scholarships
Bendigo and Adelaide Bank has long
considered philanthropic contributions
as an important part of its continued
support of Australian communities.
The bank partners with a variety of
community, sports, business, education
and arts organisations through
sponsorship and scholarship programs.
These programs not only offer financial
assistance, but provide access to our
network of partners and skilled staff
through in-kind work.
Board Scholarship
Helping country kids pursue their
academic dreams in the city
As part of the bank’s commitment to
help build stronger communities, we
established the Board Scholarship Fund
three years ago.
Each year grants are awarded to
outstanding, but disadvantaged
students, usually from a rural area, who
have been offered a full-time place at an
Australian university or college campus.
The scholarship aims to support
first-year students who, due to social or
financial circumstances, would not have
been able to further their education.
In 2009, seven students were awarded
a scholarship. Those students are
now studying to become doctors,
dentists, scientists and communications
professionals.
18 FullAnnualReport09
Bendigo and Adelaide Bank Court
Lead On
Supporting affordable housing solutions
Many cities across Australia are
experiencing severe shortages of
affordable inner-city housing.
We have contributed $700,000 towards
the development of Bendigo and
Adelaide Bank Court in Adelaide to
help provide a home for some of the
city’s low-income earners. There are
16 units, each with its own kitchen,
bathroom and living area.
The project was brought to fruition
through an innovative partnering model
that forged a union between the bank,
South Australian State Government,
Unity Housing Company and Adelaide
City Council.
Bendigo and Adelaide Bank Award
Creating opportunities for young artists
The bank’s sponsorship of the
Helpmann Academy for the Visual
and Performing Arts continues to help
foster emerging artists. The Bendigo
and Adelaide Bank Award is now the
top prize for an arts graduate in South
Australia.
Staff in Adelaide have been particularly
supportive of the program, with the
walls of the Pirie Street offices adorned
with works by Helpmann artists.
Bendigo and Adelaide Bank recognises
and values the contribution young people
make to a community. However, we see a
need to better engage youth in civic and
business life.
Through Lead On we aim to promote the
development of our young people and
foster in them a sense of community and
an appreciation of the positive impact
they can have on their district’s prospects.
Lead On started in Bendigo in 1999 and
operates in seven locations nationwide
including Bendigo, Ballarat, Echuca/
Moama, Scenic Rim, Townsville, Logan
and Bayswater.
Community Door
Opening doors for youth in our community
Lead On is partnering with Community
Bank® branches to pilot a new program
called Community Door. The initiative
aims to get young people involved in,
and contributing to, the decision-making
structures within their community by
becoming active participants on a
Community Bank® board.
The youth are given guidance by
community mentors, providing Community
Bank® staff and boards with a framework
to engage, involve and encourage the
active participation of young people.
It’s hoped the Community Door program
will open up a range of experiences and
options for both young people and the
communities they become involved in.
Money Matters
Strathfieldsaye Playing Fields
Educating young people to manage
their money
The Money Matters project is educating
young people about microfinance and
financial planning, so they are better
prepared for the transition into the
workforce.
Partnering with Community Bank®
branches, Lead On invites young people
to participate in practical and activity
based learning through discussion
groups with people from the finance
industry in their local community.
Community Telco
Community Telco Australia is an
initiative of Bendigo and Adelaide Bank
which has been created to improve
the prospects of communities and to
minimise the capital drain they face
from the purchase of essential services
such as telecommunications. The
primary objective behind this strategy
is the long-term sustainability of those
communities who choose to partner
with the bank.
There are nine Community Telco
companies operating throughout
Australia including Ballarat Community
Telco, Bendigo Community Telco,
Bendigo Bank Telco, Geelong
Community Telco, Hunter and Coast
Community Telco, Oxley Community
Telco, South East Qld Community Telco,
Suncoast Community Telco and Tastel
Community Telco.
Working together to achieve great things
Strathfieldsaye, on the outskirts of
Bendigo, is one of the fastest-growing
suburbs in the region. In 2005, the
emerging community launched the
Strathfieldsaye and Districts Community
Enterprise, to raise money to establish a
sporting complex.
The enterprise partnered with Bendigo
and Adelaide Bank, Bendigo Community
Telco and the City of Greater Bendigo and
income was generated by the community
that committed to use the services these
business partners provide. In return, the
businesses paid a commission to the
enterprise. More than $240,000 was
raised and the new Strathfieldsaye playing
fields were launched in May.
Our Staff
Bendigo and Adelaide Bank and our
Community Bank® partners employ about
5500 people at more than 430 locations
across Australia. Every day our staff
work to ensure we are Australia’s leading
customer connected bank.
Bank Traineeship Program
Practical learning for students
Many of our staff chose to get involved
with the communities in which they live
and work by volunteering or partnering
with local organisations.
For the second year, branches across the
Mornington Peninsula have participated
in the School Based Traineeship Program,
providing secondary school students with
an insight into the finance and banking
industry.
Branch staff mentor the students,
providing them with hands-on experience
as they attain a nationally recognised
Certificate III in Financial Services.
1
2
3
4
5
From top to bottom: 1 Board Scholarship recipients Joshua Carter, Jaye Cook, The University of Melbourne’s Vice Chancellor Professor Glyn Davis, Bendigo
and Adelaide Bank Chairman Robert Johanson, Jeffrey Tho and Callum Lynch. 2 Bendigo and Adelaide Bank Executive Director Jamie McPhee with South
Australian Housing Minister Jennifer Rankine and Chairman of Unity Housing Matthew Adcock at the launch of Bendigo and Adelaide Bank Court.
3 Sophie Crawford-Smith from Lead On is eager to make her money matter by improving her financial literacy. 4 The turning of the first sod at the
Strathfieldsaye Playing Fields. 5 Mornington Pennisula students graduating from the bank traineeship program.
FullAnnualReport09 19
Our Executives
Executive Structure
A new Executive structure, implemented in August 2009, reflects our strategy and is flexible and dynamic to
capitalise on opportunities as they emerge.
The new structure starts with the “single purpose” – or reason for being – for each area. We think of our business as a
continuum. First we build a strategy and the brands to communicate our offering (Customer and Community). We then engage
with and provide service to those customers, partners and communities attracted to our brand proposition (Banking and
Wealth). We provide the people, technology, innovation and services needed to deliver services to those customers (Corporate
Resources). We manage risk – a fundamental of banking (Risk). And we devise financial strategies to drive efficiencies and report
on our progress (Finance and Treasury). The Executive comprises the heads of those five divisions, plus a head of Retail and
head of our other operating businesses.
Mike Hirst
Managing Director
Mike Hirst joined Bendigo
Bank in 2001 to establish
the Wealth Management
business. He then ran
the bank’s Strategy and
Solutions areas before
taking on the role of Chief
Operating Officer.
He then became Chief
Executive, Retail Bank, and
was responsible for the
retail distribution network,
treasury and all retail
product areas of the bank.
In July 2009, Mike took
over as Managing Director
of Bendigo and Adelaide
Bank.
Prior to joining the bank
he spent more than two
decades working in senior
executive and management
positions with leading
Australian financial
institutions.
Russell Jenkins
Customer and
Community
Russell Jenkins started
at the then Bendigo
Building Society in 1992 as
Assistant General Manager
Corporate Services.
In 1994, he was appointed
Chief Manager in charge
of Group Planning and
Development.
In 1998, Russell headed
the introduction and
subsequent roll out of
the Community Bank®
concept, with branch
numbers growing to
more than 230 under his
guidance.
He has worked in a variety
of roles including Chief
General Manager of Retail
and Distribution and now
heads up the group’s
Customer and Community
arm.
Jamie McPhee
Banking and Wealth
Marnie Baker
Corporate Resources
Jamie McPhee worked at
Adelaide Bank for 20 years,
starting in Treasury before
moving into various roles
which involved running the
bank’s business units.
In 2003, he was appointed
Chief General Manager
Operations and in 2005 he
became Chief Operating
Officer, responsible for all
bank operations of the
group.
Jamie became Group
Managing Director of
Adelaide Bank in 2006.
Following the 2007 merger
with Bendigo Bank, he was
appointed as an Executive
Director and Chief
Executive, Wholesale Bank.
He is now responsible for
the Banking and Wealth
functions of the business
and remains an Executive
Director of the bank.
Marnie Baker joined Sandhurst
Trustees in 1989 which became
part of the then Bendigo
Building Society in 1991.
Since that time Marnie has held
a number of senior positions
within the bank including areas
such as Treasury, Structured
Finance, Capital Planning and
Balance Sheet Management
and more recently as the Chief
General Manager Solutions/
Products.
Marnie was elevated to a
member of the bank’s executive
in 2000 and is currently an
Executive Director of Sandhurst
Trustees Limited, Bendigo
Financial Planning Limited,
Victorian Securities Corporation
Limited and Oxford Funding Pty
Ltd and a Director of Australian
Friendly Society Limited.
Marnie now oversees the
Corporate Resources Division
responsible for the technology,
people, legal, project
management and corporate
service functions of the bank.
20 FullAnnualReport09
Tim Piper
Risk
David Hughes
Finance and Treasury
Richard Fennell
Finance and Treasury
Dennis Bice
Retail
Tim Piper joined Adelaide
Bank in 2005 as the
General Manager of
Credit Risk. He spent a
short time leading the
Shared Services division
and was responsible for
Wholesale Mortgages as
Chief General Manager,
Wholesale Mortgages.
His career in finance
spans nearly 30 years
during which time he has
had direct experience with
most facets of banking,
from personal finance,
through to middle and large
commercial lending, and
credit risk.
Tim is now in charge of
Risk for the business.
David Hughes joined
Adelaide Bank in 2007 as
Chief General Manager,
Finance and Information
Services. Soon after,
he was appointed Chief
Financial Officer of the
newly-merged Bendigo and
Adelaide Bank.
David’s value to the
organisation cannot be
underestimated.
His experience, skills and
guidance have come to the
fore in the past financial
year, as he calmly guided
the bank through the global
financial crisis.
David leaves this position
in October 2009.
Richard joined Adelaide
Bank in 2007 after an
18-year career in finance
and consulting, including
roles as partner with
PricewaterhouseCoopers
in Australia and Hong Kong
and as an executive with
IBM’s Business Consulting
Services.
Richard has led the
strategy function at the
bank with responsibility for
Mergers and Acquisitions,
Strategic Projects, the
Programme Management
Office and the integration
of the Bendigo and
Adelaide Bank businesses.
Richard takes over Finance
and Treasury in October
2009.
Dennis joined the former
Eaglehawk Star Building
Society in 1975 and has
spent more than 35 years
focussing on retail banking.
He has a keen
understanding of our
customers and their needs
and has been involved with
some of the group’s key
mergers and acquisitions
including IOOF, First
Australian Building Society
and Adelaide Bank.
Dennis’ most recent role
as Chief Manager Retail
and Distribution saw him
oversee the bank’s retail
strategy and his new role
leading Retail sees him
focus on the national
retail network, specialised
lending and agencies.
Anthony Baum
Wealth and Third Party
Banking
Anthony Baum joined
Adelaide Bank in 2000 and
has more than 18 years
experience in the Australia
and European banking
sector.
Prior to his current role,
Anthony worked at BNP
Paribas in London and
has previously held
the positions of Group
Treasurer, Chief General
Manager Financial Markets
and Chief General Manager
Wealth Management.
He now oversees Wealth
and Third Party Banking.
FullAnnualReport09 21
Online Shareholder Services
Online
Bendigo and Adelaide Bank’s new company website provides
shareholders with access to quick, relevant information by
text and email.
To benefit from our e-Shareholder service you need
to register your mobile number and email address at
www.bendigoadelaide.com.au
Once you become an e-Shareholder you can:
Follow the price of your shares (20-minute delay)
e-Shareholder Register
Get dividend information
View important dates
Check the details of your shareholding
Download shareholder forms
Read shareholder publications
Keep up-to-date via company announcements, webcasts
and online videos and;
Email us your comments and feedback
Visit www.bendigoadelaide.com.au and register your details,
including your email address and mobile number.
Once you’re registered you will receive alerts to view
shareholder publications, including our Annual Report,
online. We’ll also keep you informed about major company
announcements and upcoming webcasts.
Share Registry
Telephone: (03) 5485 6392
or 1800 646 042
Fax: (03) 5485 7645
Email: share.register@bendigobank.com.au
The website complements our retail banking customer site
www.bendigobank.com.au where you can bank online and
view information on our products, services, branch and ATM
locations.
Mail: Share Registry
Bendigo and Adelaide Bank Limited
PO Box 480,
BENDIGO VIC 3552
22 FullAnnualReport09
Full Financial Report
For the 12 month period ending
30 June 2009
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
TABLE OF CONTENTS
Corporate Governance - Overview
Five Year History
Five Year Comparison
Directors’ Report
Remuneration Report (Audited) FY2009
Income Statement
Balance Sheet
Statement of Recognised Income and
Expenses
Cash Flow Statement
Notes to the Financial Statements
Corporate information
Summary of significant accounting policies
Segment information
Profit
Underlying profit
Income tax expense
Average balance sheet and related interest
Capital management
Earnings per ordinary share
1
2
3
4
5
6
7
8
9
10 Dividends
11 Return on average ordinary equity
12 Net tangible assets per ordinary share
13 Cash flow statement reconciliation
14 Cash and cash equivalents
15 Financial assets held for trading
16 Financial assets available for sale - securities
17 Financial assets available for sale - share
investments
18 Financial assets held to maturity
19
Loans and other receivables
Impairment of loans and advances
20
21 Particulars in relation to controlled entities
22
Investments in joint ventures using the equity
method
Property, plant and equipment
Assets held for sale
23
24
Page
25
36
37
38
42
73
74
75
76
77
77
77
97
100
102
102
106
108
110
112
113
114
114
115
115
115
116
116
117
118
119
121
123
124
25
26
27
Investment property
Intangible assets and goodwill
Impairment testing of goodwill and intangibles
with indefinite lives
28 Other assets
29 Deposits
30 Other payables
31
Provisions
32 Reset preference shares
Subordinated debt
33
34
Issued capital
35 Retained earnings and reserves
36 Minority interest
37
38
39
40 Director and executive disclosures
41 Related party disclosures
42 Risk management
43
44 Derivative Financial Instruments
45 Commitments and contingencies
46
Employee benefits
Share based payment plans
Auditor’s remuneration
Financial instruments
47
48
49
Standby arrangements and uncommitted credit
facilities
Fiduciary activities
Events after balance sheet date
Business combinations
Directors’ Declaration
Independent Audit Report
Additional information
Page
124
125
127
129
129
129
130
131
131
132
133
135
135
136
140
141
147
151
162
166
168
172
172
173
173
176
177
179
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
CORPORATE GOVERNANCE - OVERVIEW
Bendigo and Adelaide Bank is committed to high standards of corporate governance. The Board believes that Bendigo and
Adelaide Bank’s commitment to ethical corporate dealings in the conduct of its business has been an important element of
its success during its 151-year history. This commitment applies to the dealings by Bendigo and Adelaide Bank with its
shareholders, customers, employees, suppliers, regulators and the community. It is also reflected in Bendigo and Adelaide
Bank’s corporate values.
1. The Board
1.a Role
The Board provides direction to the Bank by approving and
monitoring the Bank’s strategy and financial objectives.
Available from our website, the Board charter sets out the
Board’s detailed responsibilities, including its responsibilities
in
remuneration,
governance, audit, risk, IT strategy and credit matters.
Except in relation to any matters reserved to the Board
under the charter, the day-to-day management of Bendigo
and Adelaide Bank and its operations is delegated to
management.
to committees, nomination,
relation
1.b Composition
The Constitution provides that the number of directors is to
be decided by the Board, being not fewer than three and not
more than twelve. The Board currently consists of eight non-
executive directors, the Managing Director and an executive
director. The roles of the Chairman and Managing Director
are separated. Information on each of the directors is set out
on pages 26 to 28.
The Board believes that the exercise of independent
judgment by directors is an important feature of corporate
governance.
The Board has decided that the majority of directors are to
be independent. Available from our website, the Board
Independence Policy sets out the test for the purpose of
assessing the independence of non-executive directors. An
independent director is a director who is free from any
business or other association – including those arising out of
a substantial shareholding, involvement in past management
or as a supplier, customer or advisor - that could materially
interfere with the exercise of their independent judgment. In
deciding materiality, the quantitative materiality thresholds in
Accounting Standard AASB 1031 are taken into account, as
well as qualitative materiality factors.
Directors must disclose any material personal interest in
accordance with the Corporations Act. Directors must also
comply with the constraints on their participation and voting
in relation to matters in which they may have an interest in
accordance with the Corporations Act.
Each director may from time to time have personal dealings
with Bendigo and Adelaide Bank. Each director may be
involved in other companies or professional firms who may
from time to time have dealings with Bendigo and Adelaide
Bank. Full details of related party dealings are set out in
notes
financial
the Bendigo and Adelaide Bank
statements as required by law.
The Board has assessed each non-executive director as
independent. In making that assessment, the Board has
taken into account the relationships set out on pages 26 to
28 and the following.
No director is, or is associated directly with, a substantial
to
shareholder of Bendigo and Adelaide Bank.
No director, except as previously disclosed, has ever
been employed by the Bendigo and Adelaide Bank or
any of its subsidiaries.
No director
is, or
is associated directly with, a
professional adviser, consultant, supplier, customer or
other contractor of Bendigo and Adelaide Bank that is a
material adviser, consultant, supplier, customer or other
contractor under accounting standards.
No director has any other connection (eg family ties or
cross-directorships) with Bendigo and Adelaide Bank
which affect independence.
No related party dealing referable to any director is
material under accounting standards.
The Board does not consider that the term of service on the
Board should be considered as a factor affecting a director’s
ability to exercise unfettered and independent judgement.
1.c Appointment
The policy of Bendigo and Adelaide Bank is to appoint
directors with appropriate skills, knowledge and experience
to contribute to the effectiveness of the Board and to provide
leadership and contribute to the success of Bendigo and
Adelaide Bank. The policy and procedure for the selection
and appointment of new directors is available from the
website.
1.d Performance
The Board charter provides for an annual evaluation of the
Board, individual directors and Board Committees. An
evaluation took place in the reporting period. The evaluation
of individual directors and the Board was conducted by the
Chairman. The Board (in the absence of the Chairman)
undertook an evaluation of the Chairman. The Chairman of
each Board Committee conducted a performance evaluation
of the Committee and the results were discussed in a Board
the performance evaluation
Information on
meeting.
procedure is available from the website.
1.e Remuneration
The Remuneration report in the Directors’ Report includes a
discussion of non-executive directors’ remuneration.
1.f Procedures
The Board charter (available from the website) sets out
relevant Board procedural matters. This includes procedures
in relation to a conflict of interest and also provision for
access to independent professional advice at the expense of
Bendigo and Adelaide Bank.
25
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
THE BOARD
Current
NAME, AGE, QUALIFICATIONS AND
INDEPENDENCE STATUS
SKILLS, EXPERIENCE, EXPERTISE, RELATIONSHIPS
Robert Johanson
Chairman
(58 years)
BA, LLM (Melb)
MBA (Harvard)
Independent Director
TERM OF OFFICE
Director for 22 years and appointed as
Chairman during 2006. Previously
Deputy Chairman for 5 years.
SPECIAL RESPONSIBILITIES
Committees
Governance & HR (Chair)
IT Strategy
Mike Hirst
Managing Director (appointed on 3
July 2009)
(51 years)
BCom (Melb)
Executive Director and Chief Executive
Officer
TERM OF OFFICE
Employee since 2001 and appointed
CEO and Managing Director in July
2009.
SPECIAL RESPONSIBILITIES
Committees
IT Strategy
Credit
Risk
Rob Hunt AM
Managing Director
(Retired on 3 July 2009)
(58 years)
FAICD
Doctor of University (honoris causa) La
Trobe University, 1999
Former Executive Director and Chief
Executive Officer
TERM OF OFFICE
Employee since 1973 and appointed
CEO in 1988.
Appointed to Board in 1990.
SPECIAL RESPONSIBILITIES
Committees
IT Strategy
Governance & HR
Risk
Group and joint venture company directorships
Community Telco Australia Pty Ltd (ceased September 2008)
Rural Bank Ltd
Homesafe Solutions Pty Ltd (Chair)
Mr Johanson has expertise in corporate strategy, capital and risk management. He
has provided independent corporate advice in respect to capital market transactions
to a wide range of public and private companies. Mr Johanson is a member of the
Council of the University of Melbourne, a member of its Finance Committee and
Chairman of the Investment Committee. He is a director of the Robert Salzer
Foundation Ltd and a member of the Takeovers Panel.
Mr Johanson is a director of Grant Samuel Group Pty Ltd (and subsidiaries). Grant
Samuel provides professional advisory services to the Group on normal commercial
terms and conditions. The services provided during the 2009 financial year included
services in relation to corporate matters including alliance and joint venture
activities, strategic developments and the Adelaide accommodation project.
A protocol, approved by the Board, has been established for the engagement of
Grant Samuel by the Bank which includes arrangements for dealing with conflicts of
interest.
Group and joint venture company directorships
Rural Bank Limited
Sandhurst Trustees Limited
Prior to his appointment as Managing Director, Mr Hirst held the position of Chief
Executive Retail Bank and was responsible for the Bank’s retail business, group
solutions and treasury. He previously held the positions of Chief Operating Officer,
responsible for the group’s retail banking business and product and service delivery,
and Chief General Manager Strategy & Solutions responsible for product
development & management and strategy. He joined the Bank in July 2001.
Prior to joining the Bank he had worked for 11 years in senior executive and
management positions with Colonial Ltd. During this time, his roles were General
Manager Treasury, Treasurer Australian Financial Services, Head of Funding and
Interest Rate Management, Head of Funding and Risk Management, Head of
Financial Markets, Head of Marketing & Sales Treasury and Head of Finance &
Operations Treasury. He also worked with Chase AMP Bank for 3 years and with
Westpac for 7 years in branch banking and finance and planning roles.
Mike has extensive experience in banking, treasury, funds management and
financial markets. He previously held directorships with Colonial First State
Investment Managers, Barwon Health and Austraclear Ltd. He is a director of
Treasury Corporation of Victoria and many of the group’s subsidiary companies.
Group and joint venture company directorships
Community Telco Australia Pty Ltd (Chair)
Community Sector Enterprises Pty Ltd
Mr Hunt was also chair of a number of subsidiary companies involved in community
engagement activities.
Mr Hunt has led the Bank’s development from a provincial building society to a
nationally represented, uniquely positioned and diverse banking and financial
services group.
Mr Hunt is the architect of the Bank’s Community Banking™ and other alliance
arrangements. He is also Chairman of Bendigo Community Telco Ltd and a
member of the Community Bank® Strategic Advisory Board. He is a former
Councillor of the ABA, a former member of the BCA and a former member of the
Prime Minister’s Community Business Partnership and Victorian Government’s
Innovation Economy Advisory Board.
Mr Hunt will now undertake an advisory role at the bank in relation to community
engagement activities, reporting to the managing director.
26
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
NAME, AGE, QUALIFICATIONS AND
INDEPENDENCE STATUS
SKILLS, EXPERIENCE, EXPERTISE, RELATIONSHIPS
Kevin Abrahamson
(64 years)
BSc (Hons)
MA
MBA
FAICD, FFin, FAIM
Independent Director
TERM OF OFFICE
Appointed to Board in November 2007
Appointed to Adelaide Bank Board in
2000
SPECIAL RESPONSIBILITIES
Committees
Audit
IT Strategy
Jenny Dawson
(44 years)
B Bus (Acc)
FCA, MAICD
Independent Director
TERM OF OFFICE
Director for 10 years.
*Seeking election at 2009 AGM
SPECIAL RESPONSIBILITIES
Committees
Audit (Chair)
Credit
Jamie McPhee
(44 years)
BEng (Hons)
MBA
FAICD, SF Fin
Executive Director
TERM OF OFFICE
Appointed to Board in November 2007
Appointed to Adelaide Bank Board in
2006
SPECIAL RESPONSIBILITIES
Committees
Risk
Credit
IT Strategy
Terry O’Dwyer
(59 years)
B Com
Dip Adv Acc
FCA, FAICD
Independent Director
TERM OF OFFICE
Director for 9 years.
SPECIAL RESPONSIBILITIES
Committees
Audit
Risk
IT Strategy (Chair)
Group and joint venture company directorships
Sunstate Lenders Mortgage Insurance Pty Ltd
Mr Abrahamson is an Australian finance sector specialist and consultant who joined
the Adelaide Bank Board in 2000. As a specialist in the area of corporate strategy
and information technology, he has worked as a consultant to the financial sector
since 1997 as the head of KD Abrahamson Consultants.
From 1988 to 1997, he held the position of General Manager, Group Services with
Advance Bank and St George Bank. Mr Abrahamson was also a director of
Fiducian Portfolio Services Limited between 2000 and 2004.
Group and joint venture company directorships
Adelaide Managed Funds Limited (Chair) (ceased August 2009)
Community Sector Banking Pty Ltd
Community Sector Enterprises Pty Ltd
Ms Dawson spent 10 years with Arthur Andersen in the audit and IT controls
division. Ms Dawson has experience in the areas of financial reporting and audit, IT
internal control reviews, internal audit and risk management. Ms Dawson is a
director of Coliban Region Water Corporation and a member of the Victorian
Regional Development Advisory Committee.
Group and joint venture company directorships
Adelaide Managed Funds Limited (ceased August 2009)
Leveraged Equities Limited
Rural Bank Limited
Mr McPhee is the chief executive responsible for the group’s retail, wealth and
partner advised businesses. He previously held the role of Chief Executive Partner
Advised Bank. Mr McPhee joined Adelaide Bank in 1988 within the Treasury
function, and was appointed Group Managing Director of Adelaide Bank in
December 2006. Mr McPhee began his financial services career in the dealing room
of merchant bank Wallace Smith Trust Company based in London. He returned to
Adelaide in 1988 and joined The Co-operative Building Society of South Australia
Limited (which later became Adelaide Bank). He was appointed Chief Manager of
Treasury at the time of the merger between The Co-operative Building Society of
South Australia Limited and the Hindmarsh Building Society in January 1992 and in
1993 was promoted to the organisation’s executive committee.
Mr McPhee was the Treasurer of The Co-operative Building Society of South
Australia Limited during its conversion to Adelaide Bank on 1 January 1994. In
2003, he was appointed Chief General Manager of Operations and in 2005 was
appointed Chief Operating Officer, responsible for all bank operations in the group.
Group and joint venture company directorships
Sunstate Lenders Mortgage Insurance Pty Ltd
Mr O’Dwyer is the former chairman and managing partner of BDO Kendalls
(Chartered Accountants). He was a partner in the firm for 28 years and headed its
corporate finance division prior to being appointed its independent chairman.
Mr O’Dwyer is chairman of Metal Storm Ltd, Roamfree Ltd and a director of
Queensland Theatre Company Ltd, Backwell Lombard Capital Pty Ltd and
Retravision Southern Ltd. He has previously chaired MFS Limited and Brumby’s
Bakeries Holdings Ltd and has had service on other public company board’s and
government business enterprises.
Mr O’Dwyer was a director of First Australian Building Society Limited which was
acquired by Bendigo and Adelaide Bank in 2000.
27
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
NAME, AGE, QUALIFICATIONS AND
INDEPENDENCE STATUS
SKILLS, EXPERIENCE, EXPERTISE, RELATIONSHIPS
Kevin Osborn
Deputy Chairman
(58 years)
FAICD, FPNA
Independent Director
TERM OF OFFICE
Appointed to Board in November 2007
Appointed to Adelaide Bank Board in
2003
SPECIAL RESPONSIBILITIES
Committees
Credit (Chair)
Audit
Risk
Deborah Radford
(53 years)
B.Ec
G. Dip Finance & Investment
Independent Director
TERM OF OFFICE
Director for 4 years.
*Seeking election at 2009 AGM
SPECIAL RESPONSIBILITIES
Committees
Audit
IT Strategy
Credit
Kevin Roache
(69 years)
LLB, B Com, ASCPA, FAICD
Barrister & Solicitor of the
Supreme Court of Victoria
Independent Director
TERM OF OFFICE
Director for 18 years.
SPECIAL RESPONSIBILITIES
Committees
Credit
Risk
Governance & HR
Tony Robinson
(51 years)
B Com (Melb)
ASA
MBA (Melb)
Independent Director
TERM OF OFFICE
Director for 4 years.
*Seeking election at 2009 AGM
SPECIAL RESPONSIBILITIES
Committees
Risk (Chair)
Governance & HR
Group and joint venture company directorships
Nil
Mr Osborn was appointed to the Adelaide Bank Board in 2003. He was formerly the
Chief Executive of Bank One in Australia (now part of JP Morgan Chase). Mr
Osborn is a director of the Economic Development Board of South Australia, and
was formerly a director of the American Chamber of Commerce in Australia.
He is a director of ABB Grain Limited, the SA Government Projects Co-ordination
Board, and chairs the Adelaide Desalination Project Committee. Mr Osborn is a
Fellow of the National Institute of Accountants and a Foundation Fellow of the
Australian Institute of Company Directors. The Board has approved a protocol that
sets out arrangements for dealing with potential conflicts of interest connected with
the financial services activities of ABB Grain Limited.
Group and joint venture company directorships
Nil
Ms Radford has 15 years experience in the banking industry with both international
and local Banks. Following seven years with the Victorian State Treasury, she ran
her own consulting business between 2001 and 2007 advising the government on
commercial transactions. Ms Radford is a Director of Forestry Tasmania and City
West Water.
Group and joint venture company directorships
Nil
Mr Roache has extensive experience in advising clients on business and taxation
issues. Mr Roache is a director of Geelong Community Enterprise Ltd, a former
President of the Geelong Business Club, member of the Finance Committee of
Geelong Chamber of Commerce, treasurer of Committee for Geelong, a former
Chairman of Barwon Health Geelong and has been a board member of many
community and charitable organisations.
Mr Roache was the Chairman of Capital Building Society, the business of which
was integrated into Bendigo and Adelaide Bank in 1992. Mr Roache is the chairman
of partners in Coulter Roache Lawyers which provides legal services to the Group
on normal commercial terms and conditions.
Group and joint venture company directorships
Nil
Mr Robinson is the managing director of Centre Point Alliance Limited. Mr Robinson
was employed as the executive director and chief executive officer of IOOF
Holdings Ltd (“IOOF”) from 2007 until April 2009. Mr Robinson was previously the
managing director and chief executive officer of OAMPS Limited and a director of
VECCI. Mr Robinson’s other previous management positions include joint
managing director of Falkiners Stockbroking, managing director of WealthPoint,
chief financial officer of Link Telecommunications and general manager corporate
services at Mayne Nickless.
The Group has entered into certain commercial arrangements with subsidiaries of
IOOF. The arrangements relate to the provision of investment management and
promotion services. Details of these services, and the fees paid in connection with
these services, are disclosed at Note 40 of the full Financial Statements.
The Board has approved a protocol that sets out arrangements for dealing with
potential conflicts of interest connected with the financial services activities of IOOF
Holdings Limited and its subsidiaries.
28
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
2. Board committees
2.a Composition and responsibilities
To help it discharge specific aspects of its responsibility, the Board has established the following Committees.
COMMITTEE
COMPOSITION –
REQUIREMENTS
MEMBERS
RESPONSIBILITIES
Audit
At least 3 members.
All independent directors.
An independent chair, who is
not chairman of the Board.
Ms Dawson (Chair)
Mr Abrahamson
Mr O’Dwyer
Mr Osborn
Ms Radford
The role of the Committee is to provide
assistance to the Board in relation to the
following.
External audit function (including prudential
audit requirements).
Internal audit function.
Statutory financial and APRA reporting.
Internal control framework.
Governance &
HR
At least 3 members.
A majority of independent
directors.
An independent chair.
Mr Johanson (Chair)
Mr Roache
Mr Robinson
Mr Hunt (ceased July
2009)
The role of the Committee is to provide
assistance to the Board in relation to the
following.
Board composition and succession
planning.
Risk
At least 3 members.
A majority of independent
directors.
An independent chair.
Credit
At least 3 members.
A majority of independent
directors.
An independent chair.
IT Strategy
At least 3 members.
A majority of independent
directors.
An independent chair.
Board performance and Board and
executive remuneration policy.
Corporate governance matters generally.
Key human resources policies.
The role of the Committee is to provide
assistance to the Board in relation to oversight
of risk and includes the establishment,
implementation, review and monitoring of risk
management systems and policies for the
following.
Balance sheet and off-balance sheet risk,
including trading.
Operational risk, including regulatory
compliance and business continuity.
The role of the Committee is to provide
assistance to the Board in relation to oversight
of the establishment, implementation, review
and monitoring of credit risk management
systems and policies, taking into account the
risk appetite of the Group (comprising the Bank
and its subsidiaries), the overall business
strategy and management expertise.
The role of the Committee is to provide
oversight of IT strategic planning and to make
sure frameworks are in place for the efficient
and effective management of the IT investment
and the continuing alignment with business
strategy and plans.
Mr Robinson (Chair)
Mr McPhee
Mr O’Dwyer
Mr Osborn
Mr Roache
Mr Hunt (ceased July
2009)
Mr Hirst
Mr Osborn (Chair)
Ms Dawson
Mr McPhee
Ms Radford
Mr Roache
Mr Hirst
Mr O’Dwyer (Chair)
Mr Abrahamson
Mr Johanson
Mr McPhee
Ms Radford
Mr Hunt (ceased July
2009)
Mr Hirst
29
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
2b. Procedures
Membership of all Committees is reviewed annually. Each
Committee is governed by a charter which identifies the
Committee’s role and responsibilities. A Committee may
consult a professional adviser or expert, at the cost of the
Bank, if the Committee considers it necessary to carry out its
duties and responsibilities. A Committee may meet with
employees and
the presence of
third parties without
management. The minutes of each Committee meeting are
tabled and discussed at the next meeting of the Board.
3. Risk management
The management of risk is an essential element of the
Group’s strategy and operations. The risk management
strategy is based on risk principles approved by the Board.
The Board is responsible for overseeing the establishment,
implementation, review and monitoring of risk management
systems, policies and internal controls to manage the Bank’s
material risks. It has established an integrated framework of
committee, policies and controls to identify, assess, monitor
and manage risk. Executive management is responsible for
implementing the policies and controls.
The Bank has established a system of regular reporting from
independent risk, audit and credit functions to the executive
and the board committees on the implementation and
effectiveness of the risk management systems, policies and
internal controls designed to manage the material business
risks outlined below.
The key risk management responsibilities of the risk, credit
and audit committees are outlined at Section 2.a.
The key risks and responsibilities for the Group are:
Credit risk: The risk of financial loss due to the
unwillingness or inability of a counterparty to fully meet
their contractual debts and obligations. The Credit
Committee is responsible for setting policies in relation
to credit practices and procedures within the group and
monitoring adherence to these policies. The Executive
Credit Committee supports the Board Credit Committee
responsibilities in respect to credit risk management.
Credit support, analysis and reporting are managed by
the Group Credit Risk business unit (which includes
retail and wholesale).
Interest rate risk: The risk of volatility in earnings due to
adverse movements in interest rates. Interest rate risk
is primarily monitored through the Risk Committee and
the Asset Liability Management Committee and
managed through the Group Treasury.
Liquidity risk: The risk of the inability to access funds
which may lead to an inability to meet obligations in an
orderly manner as they arise or forgone investment
opportunities. Liquidity risk is primarily monitored by the
Risk Committee and the Asset Liability Management
Committee and managed through the Liquidity and
Balance Sheet Management Unit within Group
Treasury.
Currency risk: The risk of loss of earnings due to
adverse movements in exchange rates. Currency risk is
primarily monitored by the Risk Committee and the
Asset Liability Management Committee and managed
through
the Financial Markets Unit within Group
Treasury.
Operational risk: The risk of
from
inadequate or failed internal processes, people and
systems or from external events including legal and
reputation risk but excluding strategic risk.
loss resulting
Operational Risk is primarily monitored by the Risk
Committee and the Executive Committee and managed
through the Group Operational Risk business unit.
incorporating operational risk, regulatory compliance,
fraud prevention and detection, anti-money laundering
and business continuity. The Audit Committee has
primary responsibility for the oversight of financial
reporting risk
Operational risk is governed by the Group Operational
Risk Framework. The framework is in line with Basel II
(operational risk management) and
the Australian
Standard – AS/NZS 4360:2004 (risk management).
Integration risk: The risks associated with merging the
operations of Adelaide Bank into the Group and
achieving the merger benefits contained in the merger
“Scheme Book”. Many integration tasks have been
completed with the remaining activities being overseen
by business unit specific Steering Committees. These
Steering Committees have responsibility for business
and technology changes required to complete the
integration.
In addition, Group Assurance is the independent internal
audit and credit risk review function that, on a risk basis,
assesses the adequacy and effectiveness of the Bank’s
processes for controlling its activities and managing its risks.
The General Manager Group Assurance has a direct
reporting line to the Audit Committee and an administrative
reporting line to the Chief General Manager, Corporate
Resources. The General Manager Group Assurance has
direct access to the Managing Director, the Chair of the
Audit Committee and the Chairman of the Board.
Group Assurance also has direct access to any member of
staff and access to any information relevant to its work.
Reports on
the outcome of assurance programs are
provided to the Audit Committee with those relating to credit
risk also provided to the Credit Committee. The strategic
plan for the function covering internal audit and credit risk
review is approved and monitored by the Audit Committee.
The Group Assurance function is also independent of the
external auditor. External audit considers risk management
in order to assess and understand the Group’s business and
financial risks as well as the effectiveness of internal
controls which may have a significant impact on the financial
statements.
The Managing Director and Chief Financial Officer provide
an annual sign-off to the Board on the matters summarised
below for the Bank and the consolidated entity for the
reporting period. The statements are made on the basis that
they provide a reasonable, but not absolute, level of
assurance and do not imply a guarantee against adverse
events or circumstances that may arise in future periods.
Whether the financial reports present a true and fair
view, in all material respects, of the Group’s financial
position and performance and are in accordance with
the Corporations Act and comply with the Corporations
Regulations 2001 and Accounting Standards.
the
Whether
financial records of
maintained in accordance with the Corporations Act.
Whether the financial reports are founded on a sound
system of risk management and internal control and that
the system is operating effectively in all material
respects in relation to financial reporting risks.
the Group are
To support this sign off the Bank has implemented due
diligence, verification and certification processes throughout
the business to provide assurance to the Managing Director,
Chief Financial Officer and the Board, both in respect to the
financial statements and the system of risk management
and internal control.
30
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
This process, known as the risk declaration, is conducted on
a six-monthly basis in conjunction with the Bank’s half year
and year end reporting obligations. Further information on
the Bank’s risk management framework, including risk
management
control
arrangements, is presented in the full financial statements at
Note 42.
responsibilities,
reporting
and
4. External auditor
The Audit Committee is responsible for recommending to
the Board the appointment of the external auditor and a
policy in relation to auditor independence, rotation and the
provision of non-audit services by the external auditor, and
for monitoring compliance with the policy.
The policy on audit independence sets out the factors
regarded as compromising auditor independence. It includes
a requirement for the engagement of the auditor for any non-
audit services to be approved by the Audit Committee before
the engagement, so that the Audit Committee can consider
any impact on the independence of the auditor. The policy
also provides for the Audit Committee to receive the annual
and half-year independence declaration from the auditor. As
required by the Corporations Act, the Audit Committee
provides an annual statement to the Board as to whether the
Audit Committee is satisfied that the provision of non-audit
services is compatible with the independence of the auditor
and the reasons for being so satisfied.
The Directors’ Report includes a statement about whether
the directors are satisfied that the provision of non-audit
services is compatible with the independence of the auditor
and the reasons for being so satisfied. In addition, while not
required by the Corporations Act, the policy requires the
Audit Committee to provide the same statement for the half-
year and for the directors to consider it with the auditor’s
half-year independence declaration.
The policy provides that a person who plays a significant
role in the audit must rotate if they have acted in that role for
five successive years or, if they were to act, they would have
played a significant role for more than five out of seven
successive financial years, with a two-year cooling-off
period.
The Corporations Act provides for members to submit
written questions to the Bank for the auditor about the
content of the auditor’s report to be considered at the annual
general meeting, or the conduct of the audit of the annual
financial report to be considered at the annual general
meeting, no later than the fifth business day before the day
on which the annual general meeting is held.
required
is required
the meeting
to make sure
The external audit engagement partner from Ernst & Young
is
that a suitably qualified
representative attends the annual general meeting. The
Chairman of
to provide an
opportunity for the members as a whole at the meeting to
ask the auditor’s representative questions relevant to the
conduct of the audit, the preparation and conduct of the
auditor’s report, the accounting policies adopted by the Bank
in relation to the preparation of the financial statements and
the independence of the auditor in relation to the conduct of
the audit. The Chairman is also required to allow a
reasonable opportunity for the representative of the auditor
to answer written questions submitted before the meeting.
5. Continuous disclosure and communications
The Bendigo and Adelaide Bank Board recognises the
importance of making sure that the Bank’s shareholders,
and the broader investment market, are kept informed about
the Bank’s activities and that the Bank meets its continuous
disclosure obligations.
5.a Continuous disclosure
The Bank has a continuous disclosure policy to assist the
Bank in making sure that all price sensitive information is
disclosed to Australian Securities Exchange (“ASX”) under
the continuous disclosure requirements of ASX Listing Rules
and the Corporations Act.
The Board meeting agenda includes continuous disclosure
as a standing item for Board consideration. The Managing
Director, Chairman and executive officers are responsible for
identifying matters or transactions arising between Board
meetings which require disclosure in accordance with the
ASX Listing Rules.
All announcements to be lodged with ASX must first be
approved by an authorised officer, generally the Managing
Director, before release.
The company secretary is responsible for coordinating
communications with ASX and for having systems in place to
ensure that information is not released to external parties
until confirmation of lodgement is received from ASX.
5.b Communications
The Bank has also established a communications policy
which provides clear authorities and protocols
for all
in
communications with parties external
particular, investors, ASX, regulatory authorities, media and
brokers.
Bendigo and Adelaide Bank communicates with
shareholders by the following means.
ASX announcements
Shareholder updates
Annual reporting (as well as the full financial
the Bank,
its
to
statements, it includes annual reviews)
Annual general meetings
Shareholder question sheet included with annual
general meeting notice
The following material is made available on the Bendigo and
Adelaide Bank website.
Shareholder updates (commencing 2001)
Full
financial statements
(commencing 2000),
shareholder reviews (commencing 2007), and
concise reports (2000 – 2006)
Media releases (for the past four years)
Notices of meeting (commencing 2001)
Webcasting of
results presentation
(following
preliminary final announcement) Webcasting of
annual general meeting
Any material provided in briefings with analysts,
stockbrokers and institutional investors (following
its release to the market).
In addition, there is a link from the Bendigo and Adelaide
Bank website
to
announcements that Bendigo and Adelaide Bank has made
to ASX.
the ASX website
for access
to
6. Corporate conduct
6a. Code of Conduct and Reporting of Concerns policy
Bendigo and Adelaide Bank’s corporate values provide a
framework to guide interactions within the Group, with
customers, shareholders, suppliers and the community. The
values are teamwork, integrity, performance, engagement,
leadership and passion.
31
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
7. Executives
7.a Performance
The Remuneration Report in the Directors’ Report includes a
discussion of
the annual performance assessment
arrangements for executive management, including the
managing director.
7.b Remuneration, contracts with executives
The Remuneration Report in the Directors’ Report includes a
discussion of executive (including the managing director)
remuneration and contracts.
These values have been incorporated in a Code of Conduct
that has been endorsed by the Bank Executive Committee
and adopted by the Board. The Code of Conduct sets out
the Group’s mission statement, being to focus on building
and improving the prospects of customers, communities and
partnerships in order to develop sustainable earnings and
growth for the business, and thus provide increasing wealth
for shareholders. Engagement with communities is central to
the Group’s strategy and stands Bendigo and Adelaide Bank
apart.
The Code of Conduct provides guidelines for directors and
staff, so that there is a common understanding of the values
and expected standards of behaviour, including in relation to
conflicts of interest, staff trading and confidentiality.
The Group’s Reporting of Concerns policy provides a
reference point for reporting concerns, including on an
anonymous basis. This includes a concern, a grievance,
and report of a suspected breach of law or Group policy
(including any breach of the Code of Conduct). The
Reporting of Concerns policy also explains the protection
provided for employees who raise concerns in good faith.
The Group’s Code of Conduct and Reporting of Concerns
policy apply to all Group members.
6.b Regulatory compliance
Bendigo and Adelaide Bank has always placed importance
on being law-abiding, and has a long history of dealing fairly
and ethically with its customers. The Code of Conduct
requires all employees and directors to comply with laws
and policies, and requires directors and officers to promote
compliance.
the Group Operational Risk
Management Framework and the regulatory compliance
to
policy set out specific
compliance with regulatory obligations and management of
regulatory compliance risk. The Board is responsible for
overseeing regulatory compliance and is assisted by the
Risk Committee.
responsibilities
In addition,
relation
in
6.c Share trading policy
The staff trading policy imposes restrictions on trading in the
company’s shares and securities by directors, members of
the Executive Committee and other designated employees
(who may have access to price sensitive information). A
black-out period is imposed for the 10 weeks leading up to
each of the half-year and full-year announcements to ASX.
The policy also imposes obligations on these employees
and officers in relation to notifying the Bank before and after
trading. The notifications are reported to the Board. In
addition, all employees and directors are prohibited from
trading if in possession of price sensitive information.
The policy prohibits directors, members of the Executive
Committee and other designated employees from using their
Bendigo and Adelaide Bank securities as part of a margin
loan portfolio. This prohibition does not apply to shares
issued under the group’s loan based share plans as
described in Note 38.
The policy also prohibits
instruments granted under the Executive Incentive Plan.
the hedging of unvested
32
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
The following is a guide to the above discussion in this report about how Bendigo and Adelaide Bank practices meet the
ASX Corporate Governance Council Corporate Governance Principles and Recommendations (and Guides to reporting)
(August 2007). The documents referred to below are available from the Bendigo and Adelaide Bank website
(www.bendigobank.com.au) in the corporate governance section of “About us”.
PRINCIPLE
RECOMMENDATION
1. Lay solid foundations for
management and oversight
1.1 Companies should establish the functions
reserved to the board and those delegated to
senior executives and disclose those functions.
2. Structure the board to add
value
1.2 Companies should disclose the process for
evaluating the performance of senior executives.
Recommendation 1.3: Companies should provide
the information indicated in the Guide to reporting
on Principle 1.
2.1 A majority of the board should be
independent directors.
2.2 The chair should be an independent director.
2.3 The roles of chair and chief executive officer
should not be exercised by the same individual.
2.4 The board should establish a nomination
committee.
2.5 Companies should disclose the process for
evaluating the performance of the board, its
committees and individual directors.
2.6 Companies should provide the information
indicated in the Guide to reporting on Principle 2.
3. Promote ethical and
responsible decision-making
3.1 Companies should establish a code of
conduct and disclose the code or a summary of
the code as to:
the practices necessary to maintain
confidence in the company’s integrity
The practices necessary to take into
account their legal obligations and the
reasonable expectations of their
stakeholders
the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices.
3.2 Companies should establish a policy
concerning trading in company securities by
directors, senior executives and employees and
disclose the policy or a summary of that policy.
3.3 Companies should provide the information
indicated in the Guide to reporting on Principle 3.
33
BENDIGO AND ADELAIDE BANK
PRACTICE
Status: Adopted
Annual report: Section 1.a
Documents on website:
Constitution, Board charter
Status: Adopted
Annual report: Section 7.a
Status: Adopted
Annual report: section 7.a
Directors’ Report p.50
Status: Adopted
Annual report: Section 1.b
Documents on website:
Independence Policy
Status: Adopted
Annual report: Section 1.b
Status: Adopted
Annual report: Section 1.b
Status: Adopted
Annual report: Section 2.a
Status: Adopted
Annual report: Section 1.d
Documents on website:
Performance Evaluation Policy
Status: Adopted
Annual report: Section 1.b, 1.f, 2.a,
and see Directors’ Report p.26 to
p.28 for director details and p.68 for
director attendances at Committee
meetings
Documents on website:
Constitution, Board charter,
Governance & HR Committee
charter, Committee procedural
rules, Appointment of non-executive
directors
Status: Adopted
Annual report: Section 6.a
Status: Adopted
Annual report: Section 6.c
Documents on website:
Staff Trading Policy
Status: Adopted
Annual report: Section 6
Documents on website: Code of
conduct, Reporting of concerns,
Staff Trading Policy
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Status: Adopted
Annual report: Section 2.a
Status: Adopted
Annual report: Section 2.a
Status: Adopted
Annual report: Section 2
Status: Adopted
Annual report: Section 1.b, 2.a and
see Directors’ Report p.68 for
director attendances at Committee
meetings
Documents on website:
Audit Committee charter,
Committee procedural rules,
Selection and appointment of
external auditor engagement
partners; rotation of external audit
partners, Risk management system
description
Status: Adopted
Annual report: Section 5
Documents on website:
Continuous Disclosure Policy
Status: Adopted
Annual report: Section 5
Documents on website: Continuous
disclosure policy, Communications
policy
Status: Adopted
Annual report: Section 5
Documents on website:
Communications policy
Status: Adopted
Annual report: Section 5
Documents on website:
Communications policy
Status: Adopted
Annual report: Section 3
Documents on website:
Risk Management Principles &
Systems Description - Summary
Status: Adopted
Annual report: Section 3
4. Safeguard integrity in
financial reporting
4.1 The board should establish an audit
committee.
4.2 The audit committee should be structured so
that it:
consists only of non-executive directors
consists of a majority of independent
directors
is chaired by an independent chair, who is
not chair of the board
has at least three members.
4.3 The audit committee should have a formal
charter.
4.4 Companies should provide the information
indicated in the Guide to reporting on Principle 4.
5. Make timely and balanced
disclosure
6. Respect the rights of
shareholders
5.1 Companies should establish written policies
and procedures designed to ensure compliance
with ASX Listing Rule disclosure requirements
and to ensure accountability at a senior executive
level for that compliance and disclose those
policies or a summary of those policies.
5.2 Companies should provide the information
indicated in the Guide to reporting on Principle 5.
6.1 Companies should design a communications
policy for promoting effective communication with
shareholders and encouraging their participation
at general meetings and disclose their policy or a
summary of that policy.
6.2 Companies should provide the information
indicated in the Guide to reporting on Principle 6.
7. Recognise and manage risk
7.1 Companies should establish policies for the
oversight and management of material business
risks and disclose a summary of those policies.
7.2 The Board should require management to
design and implement the risk management and
internal control system to manage the company’s
material business risks and report on whether
those risks are being managed effectively. The
board should disclose that management has
reported to it as to the effectiveness of the
company’s management of its material business
risks.
34
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
7.3 The Board should disclose whether it has
received assurance from the chief executive
officer (or equivalent) and the chief financial
officer (or equivalent) that the declaration
provided in accordance with section 295A of the
Corporations Act1 is founded on a sound system
of risk management and internal control and that
the system is operating effectively in all material
respects in relation to financial reporting risks.
7.4 Companies should provide the information
indicated in the Guide to reporting on Principle 7.
8. Remunerate fairly and
responsibly
8.1 The Board should establish a remuneration
committee.
Status: Adopted
Annual report: Section 3
Status: Adopted
Annual report: Section 3
Documents on website: Risk
Committee, Credit Committee, IT
Committee Overview, Risk
management system description
Status: Adopted
Annual report: Section 2.a
8.2 Companies should clearly distinguish the
structure of non-executive directors remuneration
from that of executive directors and senior
executives.
Status: Adopted
Annual report: Section 1.e, and
Directors’ Report under the heading
“Remuneration Report”
8.3 Companies should provide the information
indicated in the Guide to reporting on Principle 8.
Status: Adopted
Annual report: Section 1.e and 2.a,
and see Directors’ Report p.68 for
committee attendance p.45 and
p.64 for remuneration policies
Documents on website:
Governance & HR Committee
charter, Remuneration policy –
executives and non-executive
directors; Employee Share
Ownership Plan
1 Section 295A CA provides for the CEO and CFO to give a declaration that financial records have been properly maintained, financial
statements comply with accounting standards and financial statements give a true and fair view.
35
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
FIVE YEAR HISTORY
The Bendigo and Adelaide Bank Group
Financial Performance for the year ended 30 June
Interest income
Interest expense
Net interest income
Other income
Bad & doubtful debts expense (net of bad debts recovered)
Other expenses
Profit before income tax expense
Income tax expense
Net (profit)/loss attributable to minority interest
Profit after income tax expense
Adjustments
Cash basis earnings
Financial Position at 30 June
Total assets
Net loans and other receivables
Cash and cash equivalents
Financial assets and derivatives
Other assets
Equity
Deposits and Notes payable
Reset preference share
Subordinated debt
Other liabilities
Share Information
Net tangible assets per ordinary share
Earnings per ordinary share - cents
Cash basis earnings per ordinary share - cents
Dividends per ordinary share:
Interim - cents
Final - cents
Total - cents
Ratios
Profit after tax before significant items return on average assets
Return on average assets
Cash basis return on average ordinary equity
Return on average ordinary equity
1 Figures fo r 2008 include the merger with A delaide B ank effective 30 No vember 2007.
2 Figures fo r 2005 include the acquisitio n o f Oxfo rd Funding P ty Ltd effective 1 M ay 2005.
2 0 0 9
$m
3,154.7
2,519.7
635.0
238.7
80.3
674.1
119.3
(35.5)
-
83.8
98.4
182.2
47,114.2
38,740.9
1,148.0
4,360.3
2,268.3
3,118.7
2 0 0 8 ( 1 )
$m
2,695.6
2,098.1
597.5
272.4
23.1
560.5
286.3
(87.3)
(0.7)
198.3
41.3
239.6
2 0 0 7
$ m
1,058.6
701.5
357.1
205.1
8.2
376.1
177.9
(56.2)
0.1
121.8
(3.3)
118.5
2 0 0 6
$ m
907.4
592.4
315.0
201.8
7.0
344.1
165.7
(49.0)
-
116.7
(14.2)
102.5
2 0 0 5 ( 2 )
$ m
815.0
528.9
286.1
172.9
13.6
309.9
135.5
(41.2)
0.4
94.7
(3.0)
91.7
48,049.0
40,105.0
1,608.6
3,647.8
2,113.9
3,297.9
17,001.6
13,773.3
329.1
2,249.0
650.2
1,015.0
15,196.1
12,376.0
479.8
1,854.3
486.0
899.5
13,858.6
11,337.4
442.0
1,615.7
463.5
720.7
41,854.3
42,697.1
15,146.6
13,525.8
12,513.5
89.5
598.7
1,453.0
89.5
675.8
1,288.7
$4.31
25.6
62.9
28.0
15.0
43.0
0.36%
0.18%
5.82%
2.37%
$5.60
87.7
111.1
28.0
37.0
65.0
0.72%
0.61%
12.29%
9.70%
-
307.2
532.8
$5.40
81.9
82.9
24.0
34.0
58.0
-
307.1
463.7
$4.78
81.5
73.2
22.0
30.0
52.0
-
262.1
362.3
$4.21
67.5
65.5
19.0
26.0
45.0
0.80%
0.76%
15.38%
15.18%
0.75%
0.80%
14.51%
16.16%
0.73%
0.75%
13.54%
13.98%
36
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
FIVE YEAR COMPARISON
The Bendigo and Adelaide Bank Group
Financial Performance for the year ended 30 June
Key Trading Indicators
Retail deposits - branch sourced
Number of depositors' accounts - branch sourced
Total loans approved
Number of loans approved
Liquid assets and cash equivalents
Total assets
Liquid assets & cash equiv as proportion of total assets
Number of branches (1)
Average deposit holdings per branch
Number of staff (excluding Community Banks)
Assets per staff member(4)
Staff per million dollars of assets (4)
Dissection of Loans by Security (5)
Residential loans
($'000)
Commercial loans
Margin lending
Unsecured loans
Other
Gross loans
Dissection of Loans by Security (5)
Residential loans
(%)
Commercial loans
Margin lending
Unsecured loans
Other
Total
Asset Quality
Impaired loans
Specific provisions
Net impaired loans
Net impaired loans % of gross loans
Specific provision for impairment
Specific provision % of gross loans less unearned
income
Collective provision
General reserve for credit losses (general provision)
Collective provision (net of tax effect) & GRCL (general provn)
as a % of risk-weighted assets
Loan write-offs as % of average total assets
2 0 0 9
2 0 0 8 ( 2 )
2 0 0 7
2 0 0 6
2 0 0 5 ( 3 )
20,799.9
1,754,849
9,137.4
130,670
5,508.3
47,114.2
11.69
426
48.8
3,598
13.095
0.08
28,569.4
6,133.6
3,329.9
707.1
183.1
14,986.8
11,641.3
10,771.4
9,259.8
1,638,443
1,418,088
1,309,957
1,201,627
8,845.2
81,853
5,256.4
7,018.0
73,236
2,578.1
6,189.6
66,227
2,334.1
5,872.6
65,498
2,057.7
48,049.0
17,001.6
15,196.1
13,858.6
10.94
404
37.1
3,478
13.815
0.07
29,840.4
5,712.3
3,773.8
737.9
193.9
15.16
357
32.6
2,428
7.002
0.14
10,193.3
2,905.0
90.5
472.4
182.9
15.36
335
32.2
2,343
6.486
0.15
9,233.0
2,561.9
-
413.1
228.6
14.85
302
30.7
2,214
5.990
0.17
8,588.0
2,207.2
-
488.3
164.4
38,923.1
40,258.3
13,844.1
12,436.6
11,447.9
73.40
15.76
8.56
1.82
0.46
74.12
14.19
9.37
1.83
0.49
73.63
20.98
0.65
3.41
1.33
74.24
20.60
-
3.32
1.84
75.02
19.28
-
4.27
1.43
100.00
100.00
100.00
100.00
100.00
223.6
(66.9)
156.7
0.40
67.7
0.18
44.3
86.1
0.54
0.04
59.4
(21.6)
37.8
0.09
22.1
0.06
36.8
76.2
0.51
0.03
18.2
(8.4)
9.8
0.07
8.4
0.06
11.4
45.3
0.55
0.04
14.9
(9.0)
5.9
0.05
9.1
0.07
8.8
40.6
0.55
0.04
16.7
(8.6)
8.1
0.07
8.6
0.08
-
60.3
0.55
0.06
($m)
($m)
($m)
($m)
(%)
($m)
(FTE)
($m)
($m)
($m)
($m)
(%)
($m)
(%)
($m)
($m)
(%)
(%)
1 Includes Co mmunity B ank branches.
2 Includes staff increases fro m the merger with A delaide B ank.
3 Includes staff increases fro m the acquisitio n o f Oxfo rd Funding P ty Ltd.
4 These ratio s do no t take into acco unt o ff-balance sheet assets under management, which to talled $ 2.4 billio n at 30 June 2009 (2008: $ 4.8 billio n).
5 Fo r the purpo ses o f this dissectio n, o verdrafts and perso nal lo ans secured by residential and co mmercial pro perty mo rtgages
are included in residential and co mmercial lo an catego ries respectively.
37
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTORS’ REPORT
Your Board of Directors has pleasure in presenting the 145th Financial Report of Bendigo and Adelaide Bank Limited and its
controlled entities for the year ended 30 June 2009.
DIRECTORS
The names and details of the company's directors in office during the financial year and until the date of this report are as
follows. Directors were in office for this entire period unless otherwise stated.
Current
Robert Johanson (Chairman)
Rob Hunt (Managing Director) (1)
Mike Hirst (Managing Director) (1)
Kevin Osborn (Deputy Chairman)
Kevin Abrahamson
Jenny Dawson
Jamie McPhee
Terry O’Dwyer
Deborah Radford
Kevin Roache
Tony Robinson
(1) Mr Hunt retired from the role of Managing Director (and as a director) on 3 July 2009 and Mr Hirst was appointed to the role
of Managing Director on 3 July 2009.
Particulars of the skills, experience, expertise and responsibilities of the Directors at the date of this report are set out in the
Corporate Governance section of this Report.
Share Issues
The following share classes were issued during the financial year:
Ordinary shares
Ordinary shares issued under a Share Placement and Share Purchase Plan
Ordinary shares issued under the Dividend Reinvestment Plan
Ordinary shares issued in lieu of dividends under the Bonus Share Scheme
Ordinary shares issued under the Share Grant Scheme
Ordinary shares issued upon conversion of Tranched Convertible Preference Shares
Total ordinary shares issued
No.
of shares
19,067,229
6,011,055
592,310
764,504
7,130,155
33,565,253
Share Options and Rights
Unissued Shares:
As at the date of this report, there were 1,862,764 unissued ordinary shares under options and 399,453 rights to
unissued ordinary shares. Refer to notes 38 and 40 of the financial statements for further details of the rights and
options outstanding. The Board may decide how to treat the Participant’s Options or Performance Rights to make
sure the Participant is neither advantaged nor disadvantaged as a result of any share issues or reconstructions.
Shares issued as a result of the exercise of options:
During the financial year, 19,043 performance rights vested (2008: 9,462) and automatically exercised to acquire
ordinary shares in the Company at a nil exercise price. Also during the year 120,349 options to acquire ordinary
shares in the Company vested. These options had not been exercised as at the date of this report.
38
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Ordinary Share Dividends Paid or Recommended
Dividends paid:
Final dividend 2008 of 34.0¢ per share, paid September 2008
Interim dividend 2009 of 28.0¢ per share, paid March 2009
Dividend recommended:
Final dividend 2009 of 15.0¢ per share, declared by the directors on 10 August 2009, payable 30
September 2009
All dividends were fully franked
Shareholders electing to receive dividends in the form of shares received the following ordinary
shares, paid in full:
September 2008
March 2009
In addition, shareholders electing to receive bonus shares in lieu of dividends received the following
ordinary shares, paid in full:
September 2008
March 2009
Preference Share Dividends Paid or Recommended
Dividends paid:
161.60 cents per share paid on 15 September 2008(2007: 142.66 cents)
152.98 cents per share paid on 15 December 2008 (2007: 147.76 cents)
104.89 cents per share paid on 17 March 2009 (2008: 154.28 cents)
79.12 cents per share paid on 15 June 2009 (2008: 162.85 cents)
Dividend announced:
A dividend of 84.6¢ per security for the period 15 June 2009 to 14 September 2009 (inclusive),
announced on 16 June 2009, payable 15 September 2009
All dividends were fully franked
Step-up Preference Share Dividends Paid or Recommended
Dividend paid:
168.00 cents per share paid on 10 July 2008 (2007: Nil)
167.00 cents per share paid on 10 October 2008 (2007: Nil)
138.00 cents per share paid on 12 January 2009 (2008: 152.00)
98.00 cents per share paid on 14 April 2009 (2008: 155.00)
Dividend announced:
A dividend of 86.0¢ per security for the period 10 April 2009 to 9 July 2009 (inclusive), announced on
17 April 2009, payable 10 July 2009
All dividends were fully franked
Convertible Preference Shares Paid
Dividend paid:
0.0448 cents per share paid on 6 Feb 2009 (2008: Nil)
0.0867 cents per share paid on 6 March 2009 (2008: Nil)
0.1345 cents per share paid on 7 April 2009 (2008: Nil)
$98.8 million
$81.8 million
$45.1 million
2,472,153
3,538,902
262,362
329,948
$1.5 million
$1.4 million
$0.9 million
$0.7 million
$0.8 million
$1.7 million
$1.6 million
$1.4 million
$1.0 million
$0.9 million
$0.1 million
$0.2 million
$0.1 million
39
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Operating and Financial Review
Principal Activities
The principal activities of the Company and its controlled entities during the financial year were the provision of a range of
banking and other financial services, including retail banking, mortgage distribution through third-parties, business lending,
margin lending, business banking and commercial finance, invoice discounting, funds management, treasury and foreign
exchange services (including trade finance), superannuation, financial advisory and trustee services. There was no significant
change in the nature of the activities of the economic entity during the year.
Consolidated Result
The consolidated profit after providing for income tax of the economic entity amounted to $83.8 million (2008 - $198.3 million).
Review of Operations and Operating Results
An operational and financial review, including information on the operations, financial position and business strategies and
prospects of the economic entity is set out in the Report by Chairman and Managing Director. Certain information in respect to
business strategies and prospects has not been disclosed where the disclosure is likely to result in unreasonable prejudice to
the Company or its controlled entities.
40
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Significant Changes in the State of Affairs
The following significant change in the state of affairs of the chief entity occurred during the financial year:
In September 2008, 2,472,153 shares were allotted at an issue price of $11.01 to those shareholders participating in the
Dividend Reinvestment Plan, increasing share capital by $27.2 million.
In December 2008, 19,067,229 shares were allotted at an issue price of $10.00 to ordinary shareholders under a Share
Placement and Share Purchase Plan, increasing ordinary share capital by $190.7 million.
On 8 January 2009, Bendigo and Adelaide Bank Limited purchased a $1.5 billion margin lending portfolio from Macquarie
Group Limited for $52 million.
In January 2009, 764,504 shares were allotted at an issue price of $10.78 to employees of Bendigo and Adelaide Bank Limited
under the Share Grant Scheme, increasing ordinary share capital by $8.2 million.
In February 2009, 2,130,339 preference shares were converted at an issue price of $9.39, increasing ordinary share capital by
$20.0 million.
In March 2009, 3,343,355 preference shares were converted at an issue price of $5.98, increasing ordinary share capital by
$20.0 million.
In March 2009, 3,538,902 shares were allotted at an issue price of $6.13 to those shareholders participating in the Dividend
Reinvestment Plan, increasing share capital by $21.7 million.
In April 2009, 1,656,461 preference shares were converted at an issue price of $7.24, increasing ordinary share capital by
$12.0 million.
During the financial year, as part of the acquisition of the Macquarie Group margin lending portfolio, the Bank issued 4,766,270
Tranched Convertible Preference Shares, at an issue price of $10.91. The TCS were mandatorily converted to 7,130,155
ordinary shares within the financial year, increasing ordinary share capital by $52 million.
During the financial year, share issue costs of $2.2 million were incurred, reducing share capital.
In the opinion of the directors, there were no other significant changes in the state of affairs of the economic entity that
occurred during the financial year under review not otherwise disclosed in this report or the financial statements.
Significant After Balance Date Events
On 3 July 2009 Mr Hunt retired from the role of Managing Director and Mr Hirst was appointed to the role of Managing
Director.
On 10 August 2009 the Bank declared a final dividend for ordinary shares, on 16 June 2009 announced a dividend for
preference shares and on 17 April 2009 announced a dividend for Step up preference shares, details of which are shown
above.
On 10 August 2009 the Bank announced it intention to raise up to $300 million of capital (44,444,445 ordinary fully paid
shares) pursuant to an entitlement offer and placement offer as described in the prospectus lodged with the ASX on 10 August
2009. A maximum of 18,757,475 shares will be issued under the placement offer and a maximum of 25,686,970 shares will be
issued under the entitlement offer. The shares will be issued at $6.75 per share. On 21 August 2009 the Bank announced that
it had completed the issue of 18,757,475 shares under the placement offer.
On 10 August 2009 the Bank also announced that it had completed the purchase of Tasmanian Perpetual Trustees Limited’s
50 per cent share of the joint venture company, Tasmanian Banking Services Limited, taking the Bank’s holding to 100 per
cent.
On the 24 August 2009, Slater and Gordon lodged a statement of claim in the Federal Court of Australia against Sandhurst
Trustees Limited. The legal claim concerns Sandhurst’s role as debenture trustee for failed property developer Fincorp Pty Ltd.
The position of Sandhurst has been reviewed by the Bendigo and Adelaide Bank, and the Bank does not believe that
Sandhurst has been negligent, fraudulent or in breach of its duty. Sandhurst will strongly defend itself against these claims.
The Bank does not consider the legal claim to be materially adverse and will continue to monitor its proceedings.
Except as referred to in the Report by Chairman and Managing Director, above, or dealt with elsewhere in the consolidated
financial report, there were no matters or circumstances which arose since the end of the financial year to the date of this
report which significantly affected or may significantly affect the operations of the economic entity, the results of those
operations, or the state of affairs of the economic entity in subsequent financial years.
Likely Developments and Results
Disclosure of information relating to major developments in the operations of the Group and the expected results of those
operations in future financial years, which, in the opinion of the directors, will not unreasonably prejudice the interests of the
Group, is contained in the Report by Chairman and Managing Director accompanying this Full Financial Report.
41
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
REMUNERATION REPORT (AUDITED) FY2009
The Directors of the Company present the Remuneration Report prepared in accordance with section 300A of the
Corporations Act for the Company and the consolidated entity (“Group”) for the year ended 30 June 2009. The information
provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act.
This report describes the remuneration arrangements established by the Company for our Non-Executive Directors and Senior
Executives as well as the equity participation arrangements for our general staff.
There have been a number of recent developments in relation to the regulation of director and executive remuneration. The
Australian Prudential Regulation Authority is developing a framework for the remuneration of executives of financial
institutions. The Productivity Commission is concurrently reviewing the Australian regulatory framework around executive
remuneration. The Federal Government has also announced proposed changes to the taxation arrangements for employee
share schemes as well as its intention to regulate the payment of termination benefits to executives. The Federal Government
has also announced an inquiry into Australia’s future tax system. The Board will closely monitor these developments including
any implications for the group’s remuneration structures.
REMUNERATION SNAPSHOT
Table 1 - Senior Executive remuneration snapshot
SENIOR EXECUTIVES
Throughout this Remuneration Report, we use the term Senior Executives to refer to:
the 5 most highly remunerated Company/Group executives; and
all other Executives who fall within the definition of key management personnel of the Group (being those persons with
authority and responsibility for planning, directing and controlling the activities of the Group) (KMP) including the
Managing Director (Mr Rob Hunt) and Executive Director (Mr Jamie McPhee).
References to “Managing Director” in this report are references to Mr Rob Hunt who was the Managing Director of the
Company during the 2009 financial year.
2009 Financial Year
Rob Hunt 1
Jamie McPhee 2
Mike Hirst 3, 1
Marnie Baker 3
Anthony Baum 2, 4
Richard Fennell 2,
Greg Gillett 3
David Hughes 2,
Russell Jenkins 3
Craig Langford 3
Tim Piper 2, 5
Philip Riquier 2
Andrew Watts 6
2008 Financial Year
(comparative
information only)
Richard Hasseldine
Vicky Kelly
Managing Director & Chief Executive Officer
Executive Director & Chief Executive Wholesale Bank
Chief Executive Retail Bank (previously Chief Operating Officer)
Chief General Manager Solutions and Product (previously CGM Solutions)
Chief General Manager Wealth & Partner Advised
Chief General Manager Strategy
Chief General Manager Brand Development & Positioning (previously CGM Strategy and Human
Resources)
Chief Financial Officer
Chief General Manager Retail (previously CGM Retail & Distribution)
Chief General Manager People & Corporate Services (previously Chief Financial Officer)
Chief General Manager Chief Risk Officer
Chief General Manager Business Partners
Chief Information Officer
1 Mr Hunt retired as Managing Director on 3 July 2009 and Mr Hirst was appointed as Managing
Director on 3 July 2009
2 Former Adelaide Bank Ltd executive appointed to position on 30 November 2007
3 Appointed to new positions on 30 November 2007
4 Appointed to new position on 25 August 2008 (previously was Chief General Manager Wealth)
5 Appointed to new position on 25 August 2008 (previously was Chief General Manager
Wholesale Mortgages)
6 Appointed 27 August 2007
Chief General Manager Group Delivery (ceased Senior Executive role on 30 November 2007)
Chief Information Officer (ceased Senior Executive role on 27 August 2007).
SENIOR EXECUTIVE CHANGES
The following Senior Executive structure has been announced since the end of the financial year:
Mike Hirst
Jamie McPhee
Marnie Baker
Anthony Baum
Dennis Bice
David Hughes
Russell Jenkins
Tim Piper
Managing Director and Chief Executive Officer
Chief Executive Banking and Wealth
Chief General Manager Corporate Resources
General Manager Wealth and 3rd Party Banking
General Manager Retail Banking
Chief Financial Officer
Chief General Manager Customer and Community
Chief Risk Officer
42
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
ISSUE
SUMMARY
DISCUSSION
IN REPORT
Key changes
for 2009
The Company’s remuneration structure remained unchanged for the year.
The Board will continue to monitor regulatory and market developments that
impact remuneration arrangements for non-executive directors and senior
executives.
Mike Hirst commenced as managing director and chief executive officer on 3
July 2009. His remuneration arrangements were released to the ASX on 15
May 2009 and are also summarised in this report.
Remuneration
Strategy
To attract, retain and motivate Senior Executives to manage and lead the
business successfully including driving organisational growth and
performance in line with the Company’s strategy and business objectives.
i.
Fixed
Remuneration
ii. Short-term
incentive
iii. Long-term
incentive
Service Agreements
Fixed remuneration is set taking into account market relativities and having
regard to the Senior Executive’s direct accountability and responsibility for
operational management, strategic direction, decision making and their
demonstrated leadership.
Senior Executive remuneration arrangements include an annual (cash)
incentive component. Payment of the annual at-risk component is dependent
on (in the first instance) the achievement of targeted financial performance
and then (at the discretion of the Board and Managing Director) the
achievement of position objectives set at the start of the year and the level of
performance achieved by the Senior Executive in discharging their role.
Senior Executive remuneration arrangements include participation in the
Executive Incentive Plan (“Plan”) established in 2006. The Plan gives Senior
Executives the opportunity to participate in grants of Performance Rights and
Options to acquire shares in the Company subject to the achievement of
performance conditions over a 3 year performance period set by the Board.
The Plan will be replaced by a new arrangement involving grants of
performance shares under the Employee Salary Sacrifice, Deferred Share
and Performance Share Plan for the 2010 financial year.
The remuneration and other terms of employment for Senior Executives are
formalised in employment agreements. The employment agreements also
deal with Senior Executive duties, conflicts of interest, confidentiality,
termination rights, notice periods, post-employment restraints and
entitlements upon termination.
Remuneration paid
Details of Senior Executive remuneration for the 2009 financial year are
presented at Table 7.
Linking remuneration
and company
performance
The remuneration structure for Senior Executives is designed to provide the
desired flexibility and reward structure to support the Company’s short term
performance targets and continued investment in its strategy and business
objectives that have a medium to longer term maturity profile.
Senior executive remuneration is linked to the overall performance of the
Group. This report describes the Company’s progress and financial
performance for the year and explains how the performance impacted senior
executive rewards under the Group’s short term incentive and long term
incentive arrangements.
Page 45
Page 48
Pages
49 & 50
Pages
51 & 52
Page 63
Pages
56 - 58
Page 54
43
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Table 2 - Non-Executive Director remuneration snapshot
NON-EXECUTIVE DIRECTORS
2009 Financial Year
Robert Johanson (Chairman)
Kevin Osborn (Deputy Chairman) 1
Kevin Abrahamson 1
Jennifer Dawson
Terry O’Dwyer
Deborah Radford
Kevin Roache
Tony Robinson
2008 Financial Year (comparative information only)
Neal Axelby 2
Roger Cook 1 3
Donald Erskine 2
Dr Adele Lloyd 1 4
1 Appointed on 30 November 2007
2 Resigned on 30 November 2007
3 Resigned on 17 December 2007
4 Resigned on 30 June 2008
ISSUE
SUMMARY
Remuneration
strategy
Base Fee
To attract and retain appropriately qualified and experienced directors.
The Non-Executive Director annual base fee was last increased effective from
1 July 2008. The chairman receives twice the annual base fee in recognition
of the additional time commitment. The base fee is reviewed annually with
reference to survey data and peer analysis. The fee payments will remain
unchanged for the 2010 financial year. The Directors have agreed to donate
4% of their annual fee payment to a charitable cause (refer also Table 13).
Non-Executive Directors do not receive additional fees for committee
memberships. The Board may determine additional fees for subsidiary and
joint venture appointments.
DISCUSSION
IN REPORT
Page 64
Pages
64 & 65
Not at risk
The focus of the Board is to build sustainable shareholder value by taking a
longer-term strategic perspective. Non-Executive Director fees are not linked
to the short-term results of the Company. Non-Executive Director
remuneration comprises a fixed annual fee plus superannuation contributions.
Page 64
Non-Executive Directors do not receive bonuses or incentive payments or
participate in the Company’s employee equity plans.
Alignment with
shareholders
interests
A Non-Executive Director may enter into a salary-sacrifice arrangement under
which the director may acquire shares rather than receiving cash. A new Non-
Executive Director Fee Sacrifice Plan was approved by shareholders at the
2008 Annual General Meeting.
Page 65
Remuneration paid
Details of Non-Executive Director remuneration for the 2009 financial year are
presented at Table 15.
Page 66
44
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
GOVERNANCE
The Board Governance & HR Committee (the “Committee”) provides assistance to the Board in relation to the Company’s
remuneration arrangements. The committee has responsibility for director (including the managing director) remuneration
arrangements and monitors developments in remuneration arrangements and practices for directors and senior executives
particularly in the banking and finance sector. The committee approves the remuneration policy for senior executives and non-
executive directors and makes recommendations to the Board in relation to:
The annual remuneration package for the managing director;
Equity schemes for senior executives and general employees; and
Monitors the tracking of performance against board approved hurdles for the executive incentive plan.
The Committee may consult a professional adviser or expert, at the cost of the Company, if the Committee considers it
necessary to carry out its duties and responsibilities.
The current members of the Committee are independent non-executive directors. Members of the Committee are:
Robert Johanson (Chairman)
Tony Robinson
Kevin Roache
Further details of the Committee’s role and responsibilities relating to remuneration are outlined in the Corporate Governance
Overview in this annual report. The Committee charter is available from the Company’s website.
SENIOR EXECUTIVE REMUNERATION
Board policy on Senior Executive remuneration
The Board’s policy on Senior Executive remuneration is designed to attract, retain and motivate Senior Executives to manage
and lead the business successfully including driving organisational growth and performance in line with the Group’s strategy
and business objectives. More specifically, the remuneration policy aims to:
motivate executive management to manage and lead the business successfully and to drive strong long-term
organisational growth in line with the strategy and business objectives;
drive successful organisational performance by incorporating an annual performance incentive and establish longer-term
performance objectives;
further drive longer-term organisational performance through an equity-based reward structure;
make sure that there is transparency and fairness in executive remuneration policy and practices;
deliver a balanced solution addressing all elements of total pay – base pay, incentive pay (cash and shares), and
benefits;
contribute to appropriate attraction and retention strategies for Senior Executives.
make sure appropriate superannuation arrangements are in place for Senior Executives; and
The key aspects of the Company’s remuneration strategy for Senior Executives (including all Senior Executives and the
Company Secretary) are set out in the diagram and commentary below.
Summary of Senior Executive remuneration strategy
Objectives of
Remuneration
Strategy
Drive strong organisational
growth and performance in
line with the strategy and
business objectives
Flexibility to support
strategy and business
objectives
Attract and retain
key executives
Remunerate on basis of leadership
and performance and commensurate
with roles and responsibilities
Remuneration set by
reference to market and peers
Fixed
Remuneration
At-risk
STI
At-risk
LTI
Fixed salary set by reference to
benchmark information relative to
role, responsibilities, experience
and expertise.
STI targets linked to company
performance and (at Board and
Managing Director’s discretion)
consideration of individual and
business unit performance.
LTI performance targets are set by
reference to Company and market
relative performance over a 3 year
period linked to sustainable
shareholder value creation.
45
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Summary of Senior Executive remuneration strategy (continued)
The Company has pursued a long term strategy focussed on the interests and prospects of its customers, communities and
partners, and building sustainable shareholder value. The Company’s strategy is built on the vision of being Australia’s leading
customer connected banking group.
The strategy is supported by a strategically focussed investment program and commitment to our corporate and social
responsibilities. The Company has undertaken a significant investment program to expand its customer base, product range
and distribution capability through mergers and acquisitions, joint ventures, Community Bank® and alliance activities and
investments into community enhancement initiatives. These investments have a medium to longer-term maturity profile with
the objective of generating sustainable improvement in shareholder value.
Through its strategy the Company has built a brand that is well recognised, respected and sought after. With continued
commitment to the strategy, the maturity of investments to date and further investment, the Company expects to grow both
earnings and profits into the future and deliver sustainable returns to our shareholders.
The Board and Managing Director have sought to maintain a remuneration framework that provides the desired flexibility and
reward structure to support this strategy whilst recognising the need to provide remuneration arrangements which are aligned
with shareholder interests and commensurate with Senior Executive roles, responsibilities and market relativities.
This has been reflected in the Company’s short and long term incentive remuneration arrangements for Senior Executives.
The arrangements have been designed to balance the reward for annual performance and provide sufficient flexibility to allow
rewards to be tailored to recognise the development of business opportunities that present themselves during a year or
investments that stretch across more than one reporting period.
Specific arrangements for former Managing Director (Mr Hunt)
The Board set a specific targeted long term incentive arrangement for Mr Hunt for the 2009 financial year following the merger
and the announcement of his retirement from the role of Managing Director. Mr Hunt’s long term incentive arrangements were
designed to focus on the integration of Adelaide Bank given the importance of the integration process on realising merger
synergies and developing business opportunities. The Board restructured the former Managing Director’s long term incentive
component as a cash incentive focusing on the following areas:
1.
Integration of the Adelaide Bank businesses;
2. Realisation of synergies and business opportunities from the merger; and
3. Continued development of the Adelaide Bank businesses.
The amount of the above cash incentive equates to the value of the previous LTI component (being approximately 30% of the
former Managing Director’s annual remuneration package). The Board has assessed the achievement of the areas listed
above and awarded 100% of the incentive component to the former Managing Director. Further details of the incentive
payment are presented at Table 7 of this report. There have been no grants of performance rights or options to the former
Managing Director under the Executive Incentive Plan in the 2009 financial year.
Specific arrangements for new Managing Director (Mr Hirst)
The Company announced on 23 March 2009 the appointment of Mike Hirst as Managing Director and Chief Executive Officer
of the Bank effective 3 July 2009. Following is a summary of the key contractual terms:
The appointment is for a fixed term of 5 years, subject to provisions summarised at Table 12 for ending the agreement. At the
conclusion of the 5 year period the appointment will continue unless the parties agree otherwise. The fixed remuneration
package is calculated on a total cost basis and includes a cash component, non-cash benefits, any fringe benefit charges and
superannuation
Having regard to current market conditions, at the request of Mr Hirst, his 2008/2009 fixed remuneration package will remain
unchanged for the 2009/2010 financial year, namely:
$796,572 fixed remuneration package.
Eligibility for an STI of up to $548,100 awarded at the discretion of the Board subject to meeting performance targets.
The following has been agreed for 2010/2011:
$1,250,000 fixed remuneration package.
Eligibility for an STI of up to $300,000 awarded at the discretion of the Board subject to meeting performance targets.
At the end of the periods for which the package and STI are fixed, the package and STI will be reviewed annually.
Mr Hirst has not yet been granted a long term incentive since assuming the role of Managing Director due to proposed
legislative changes impacting on traditional forms of long term incentive schemes. The Board will seek shareholder approval at
the 2009 Annual General Meeting for a long term incentive (“LTI”) for the initial five year contract period. The LTI will involve an
entitlement to performance shares in five equal annual tranches, subject to satisfaction of hurdles including continuing service
and relative TSR performance of the Company over a 5 year period. The performance shares will be issued under the
Employee Salary Sacrifice, Deferred Share and Performance Share Plan (“DSP”).
46
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
The performance shares will be issued at market price to the value of $5 million (i.e. representing an annualised amount over
each of the five years of $1 million). The shares will be held by a Trustee of the DSP. At the end of each financial year during
the five year contract period the following will apply, subject to Board discretion:
-
-
10% may be vested.
10% may be vested dependent on the satisfaction of performance criteria. The performance criteria will be the
Company’s TSR performance measured against a peer group (with 65% vesting for performance between the 50th
and 75th percentile; 100% vesting for performance over 75th percentile) tested from the commencement of the
contract to the end of the relevant financial year for each tranche. Any unvested shares will be rolled over into the
following year’s tranche.
The LTI will be reviewed at the end of the initial five year contract period. Details of the long term incentive will be provided in
the 2009 Notice of Annual General Meeting.
Other Policies
Hedging Restriction (LTI)
The Company’s Executive Incentive Plan (“Plan”) Rules prohibit hedging of unvested instruments. A Plan participant may not
enter into a transaction designed to remove the “at-risk” element of an entitlement under the Plan before it vests. Plan
participants may only enter into a transaction designed to remove the “at risk” element of an entitlement under the Plan after it
vests and if the Board has not decided to restrict or prohibit the participant from doing this. If a Plan participant enters into such
a transaction, they must tell the Company Secretary and provide any details requested.
At the end of each financial year, the Company requires formal confirmation from each participant in the Plan that this policy
has been adhered to. The above restrictions are also contained in the Staff Trading Policy.
Margin Loan Facility Restriction
The Staff Trading Policy also prohibits designated officers, including Non-Executive Directors and Senior Executives, from
using the Company’s securities as collateral in any margin loan arrangements. The restriction was adopted by the Board on 28
April 2008.
Comparative Remuneration Disclosures (Directors and Senior Executives)
The comparative remuneration details for Mr K Abrahamson, Mr R Cook, Dr A Lloyd and Mr K Osborn disclosed at Table 15
represents the remuneration paid by the Company to these directors for the period 30 November 2007 (merger date) to 30
June 2008 or their date of retirement from the board (as applicable). The comparative short term employee benefit details for
former Adelaide Bank executives appointed to Senior Executive positions (identified at Table 1) also only relates to the period
30 November 2007 to 30 June 2008.
47
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMPONENTS OF REMUNERATION
The remuneration for Senior Executives has the following components:
a. Fixed Remuneration (including any salary sacrifice arrangements and company superannuation);
b. Performance Based “at-risk” Remuneration comprising:
Short-term Incentive Component – cash payment based on annual company performance and takes into
consideration performance at a business unit and individual level.
Long-Term Incentive Component – annual grants of Performance Rights and Options that are subject to achievement
of company and market relative performance hurdles over a 3 year performance period. As explained at Table 5, a
new arrangement will be introduced for the 2010 financial year involving grants of performance shares under the
Employee Salary Sacrifice, Deferred Share and Performance Share Plan.
It is the objective of the Board, and Managing Director, to achieve a balance between fixed remuneration and incentive
components that take into account market relativities and aligns Senior Executive remuneration with shareholder interests. The
incentive arrangements in place during the year were designed to reward the achievement of annual financial goals, individual
performance criteria and to grow shareholder value.
The relative proportions of Senior Executives’ 2009 remuneration that were ‘‘at-risk’’ (including the relative proportion that is
performance-based) are set out in Table 3 below:
Table 3 - Proportion of fixed and at-risk remuneration
% of Total Aggregate Remuneration (annualised) *
Fixed Remuneration
‘At risk’ – performance-based
FAR
34%
46%
STI**
54%
31%
LTI**
12%
23%
Between 49% and 57%
Between 23% and 29%
Between 17% and 20%
Managing
Director/CEO
Executive Director
Other Senior
Executives
* Aggregate Remuneration is comprised of fixed annual reward (including base salary, superannuation and allowances),
STI at-risk available for the F’09 year and the remuneration value of LTI grants for the F’09 year.
** These amounts are subject to ‘target’ performance levels being achieved. For the Managing Director, the LTI component
for the 2009 financial year was replaced with a cash incentive linked to merger integration goals set by the Board.
(a)
Fixed remuneration
The terms of employment for all Senior Executives contain a fixed remuneration component expressed as a dollar amount.
The fixed remuneration package is inclusive of a base salary and company superannuation.
The base salary includes any salary sacrifice or deductions from salary resulting from participation in benefit programs
available to Senior Executives. This amount of remuneration is not ‘at risk’ but is set by reference to appropriate benchmark
information for an individual’s role, responsibilities, experience and expertise.
It is intended that Senior Executive base salaries take into account market relativities having regard to the need for the
Company to attract, motivate and retain the appropriate executive management. The base salary is a specified amount and
Senior Executives are given the opportunity to receive their base salary in a variety of forms including cash and non-cash
(salary sacrifice) benefits such as motor vehicle, superannuation contributions and expense payment arrangements. Senior
Executives are able to structure their salary sacrifice arrangements so that the payments are optimal for the recipient, provided
they are made available at the same economic cost (including applicable fringe benefits tax) to the Company.
In setting the fixed remuneration arrangements for the Managing Director, the Board surveys the range of comparable
remuneration arrangements in the market, particularly in the banking and finance sector, to ensure that the remuneration
arrangements take into account market relativities and the particular experience, expertise and strategic direction that the
Managing Director brings to the role. The Board’s assessment has regard to changes in the size, nature and complexity of the
Group’s business activities and relevant industry developments which impact the Managing Director’s role and responsibilities.
The Board also considered independent advice from a remuneration consultant in setting the Managing Director’s 2009
remuneration arrangements.
In setting the fixed remuneration arrangements for other Senior Executives, the Managing Director takes into account general
market and peer information, relative to the particular role and responsibilities of the Senior Executive.
48
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
(b)
Performance-based ‘at risk’ remuneration
Short Term Incentive (STI)
Table 4 - Summary of STI
What is the STI?
The Senior Executive remuneration packages include an annual cash incentive component which
rewards both annual financial goals and Senior Executive contributions to longer term growth and
performance. Payment of any part of the incentive component is at the discretion of the Board in
respect of the Managing Director and at the discretion of the Managing Director for other Senior
Executives.
The maximum amount of the cash incentive is set by the Board for the Managing Director, taking
into account market data, and for the 2009 year, independent remuneration advice. The Managing
Director sets the maximum cash incentive for other Senior Executives, taking into account market
data and the Senior Executive’s particular role and responsibilities.
Who participates in
the STI?
All members of the Group’s leadership team, including Senior Executives, as decided by the Board
and Managing Director.
Why does the Board
consider the STI an
appropriate incentive?
The objective of the incentive component is to link the annual financial performance of the Group,
and the achievement of individual business priorities which enhance the future prospects of the
Company with the remuneration received by Senior Executives.
Are both target and
stretch performance
conditions imposed?
What are the
performance
conditions and why
were these conditions
chosen?
The total potential annual cash incentive is set for each Senior Executive with operational
responsibilities at a level which provides an appropriate incentive to achieve the business and
financial targets and at a cost that is reasonable to the Company in its circumstances.
The STI is based on target performance conditions. Payment of the STI for Senior Executives and
other participants (other than the Managing Director whose arrangements are described below) is at
the discretion of the Managing Director and is based, in the first instance, on the achievement of the
Company’s target financial performance for the year. If the targeted financial performance is not
achieved, the Managing Director will take into consideration the Senior Executive’s business unit
performance and individual performance in determining the amount of any STI payment.
In addition, Senior Executives may also participate in the bonus pool that is allocated amongst
Group employees. Senior Executives only participate in the bonus pool if Company performance
exceeds the Board approved targeted cash EPS performance. The amount of any payment from the
bonus pool to Senior Executives is also at the discretion of the Managing Director. There were no
payments to Senior Executives from the bonus pool for the 2009 financial year.
Managing Director
The Managing Director’s annual cash incentive component for the year ended 30 June 2009 was
based upon a mix of quantitative and qualitative performance measures and was set at a maximum
of $1,000,000.
The quantitative element focused on the Group achieving its targeted cash EPS performance and
the qualitative element focused on the continued progress of the Group strategic priorities including:
Brand positioning objectives;
Growth at profitable prices, revenue diversity and customer relationship objectives;
Customer, product, distribution, community engagement and IT capability objectives; and
Other internal and organisational priorities.
Other Senior Executives
The amount of the annual incentive component paid to Senior Executives and other participants is
primarily contingent upon the Group achieving its targeted cash EPS performance set by the Board.
The amounts are determined following the year-end profit announcement.
At the discretion of the Managing Director, payment of the annual incentive component may also
take into account the Senior Executive’s technical competence, leadership, operational
management performance and achievement of relevant business outcomes for the year.
The Board selected the cash EPS measure for the Managing Director as it represents a publicly
available performance measure that appropriately reflects the short-term interests of shareholders.
The Company’s cash EPS ratio ensures that an appropriate focus is placed upon both profit
performance and effective application of shareholder capital. The Managing Director selected the
same measure for the other Senior Executives for the same reasons.
The above qualitative and quantitative performance measures were selected by the Board and
Managing Director (respectively) to reflect a balance between measures which provide an annual
profit-based incentive and measures which provide incentive to generate sustainable shareholder
value during the short to medium term.
49
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
How are the
performance
conditions measured
and who assesses the
performance?
The achievement of the quantitative cash EPS performance condition for the Managing Director and
other Senior Executives is measured on the basis of the Company’s reported (audited) cash EPS
ratio.
The performance of the Managing Director is assessed by the non-executive directors on an annual
basis.
How well was the
performance
conditions met in the
2009 financial year?
The Chairman and Non-Executive Directors have historically conducted the assessment of the
Managing Director’s performance, taking into account the qualitative measures set by the Board,
after the Group’s year-end profit result announcement, at which time the Board determines the
amount of the incentive payment based upon the achievement of the agreed performance
measures. The Board also determines at the same time the following year’s fixed remuneration and
incentive arrangements including performance criteria. This year, due to Mr Hunt’s retirement on 3
July 2009 the Board conducted the 2009 assessment process in May 2009.
The Managing Director reviews and determines the annual STI payment for Senior Executives after
the Group’s year-end profit result announcement based on the reported cash EPS result and his
assessment of the achievement of Senior Executive qualitative performance measures.
The Company reported the following performance and other key developments for the 2009
financial year:
The Group recorded an after-tax profit (before significant items) of $173.2 million representing a
26% decrease on the previous year. The cash basis earnings per ordinary share decreased to 62.9
cents representing a decrease of 43.4% on the 2008 cash EPS ratio.
In accordance with the design of the STI there were no STI payments to Senior Executives (other
than Mr Hunt) for the year as the Company’s targeted financial performance was not achieved. The
Board determined that the Managing Director (Mr Hunt) would be awarded 50% of his STI. The
payment was determined after assessing the achievement of the qualitative performance measures
and taking into account the leadership and direction demonstrated by the Managing Director during
a year of unprecedented challenges for the sector.
Information on the percentage of the STI that was paid and the percentage that was forfeited for the
Senior Executives are presented in Table 8 on page 59.
50
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Long Term Incentive
Table 5 - Summary of LTI (includes LTI grants, employee share plans & policies affecting shareholdings)
The Company established an Executive Incentive Plan (the “Plan”) in 2006. Shareholder approval for grants under the Plan
was obtained at the 2006 Annual General Meeting. The Board considers it important that Senior Executives have ongoing
share ownership in the Company.
The Plan provides for grants of Options and Performance Rights (“Instruments”) to Senior Executives, including the Managing
Director and Executive Director. Under the Plan, Senior Executives are granted Options and Performance Rights subject to
performance conditions set by the Board. If the performance conditions are not satisfied during the relevant performance
period, the Options and Performance Rights will lapse and the Senior Executives will derive no value from the grants.
For the Managing Director, the LTI component for the 2009 financial year was replaced by a cash incentive linked to merger
integration goals set and assessed by the Board.
Due to proposed taxation reforms announced by the Federal Government the Board has decided to discontinue the annual
grant of performance rights and options under the Executive Incentive Plan. The Senior Executive LTI component will be
replaced by a new arrangement involving grants of performance shares under the Employee Salary Sacrifice, Deferred Share
and Performance Share Plan (“DSP”). Details of grants under the DSP for the 2010 financial year will be set out in the 2009
Notice of Annual General Meeting.
What is the purpose
of the LTI?
The plan is designed to link Senior Executive reward with key performance measures that underpin
sustainable growth in shareholder value including both share price and returns to shareholders.
Who participates in
the LTI?
What proportion of
total remuneration
does the LTI
represent?
How is reward
delivered under the
LTI?
Do participants pay
for the Performance
Rights & Options?
What rights are
attached to the
Performance Rights &
Options?
What are the
performance hurdles?
How is EPS
measured?
Why does the
Company think the
EPS hurdle is
appropriate?
All members of the Group’s leadership team as decided by the Board. Grants under the plan are
made on an annual basis having regard to the Managing Director’s and each Senior Executive’s
annual remuneration.
In the case of the Managing Director (Mr Hunt) and Executive Director (Mr McPhee), the fair value
of grants made under the plan target approximately 12% and 23% of their total annual
remuneration at the time the grant is made.
In the case of other Senior Executives, the grants under the LTI are structured to equate to
between 17% and 20% of their total annual remuneration.
Each Option and Performance Right represents an entitlement to one ordinary share in the
Company. Accordingly, the maximum number of shares that may be acquired by the Senior
Executives is equal to the number of Options and Performance Rights issued (subject to the
achievement of performance hurdles over a 3 year performance period).
Options and Performance Rights are granted at no cost to the Senior Executives. The plan rules
provide that the Board may determine that a price is payable upon exercise of an Option or
exercisable Performance Right. Generally the exercise price for Options will be the market price of
the shares at the grant date, and no exercise price will apply to exercisable Performance Rights.
Senior Executives are entitled to vote and to receive any dividend, bonus issue, return of capital or
other distribution made in respect of shares they are allocated on vesting and exercise of their
Performance Rights and Options, as applicable.
The grants are subject to a dealing restriction. Senior Executives are not entitled to sell, transfer or
otherwise deal with the shares allocated to them until 2 years after the end of the initial
performance period. The plan rules also contain a restriction on removing the “at-risk” element of
the instruments. Plan participants may not enter into any transaction designed to remove the “at-
risk” element of an instrument before it vests (Refer to section “Policies Affecting Shareholdings”
and subheading “Hedging restrictions”).
The performance condition for Options granted under the plan is based on the Company’s total
shareholder return (“TSR”). The performance condition for Performance Rights granted under the
plan is based on the Company’s compound growth in cash basis earnings per share (“EPS”). Both
are measured over a 3 year initial performance period.
Cash basis EPS will be calculated as the reportable earnings which reflect the underlying operating
performance of the business, as approved by the Board. For the purpose of the grants under the
Plan, the EPS performance condition involves a comparison between the cash basis EPS for the
last financial year of the performance period against the cash basis EPS for the first financial year
of the three year performance period.
The EPS based hurdle is a fundamental indicator of financial performance, both internally and
externally and links directly to the Company’s long-term objective of growing earnings. For
Performance Rights granted to date under the Plan, the Board has maintained a three year 10%
EPS performance hurdle for Performance Right grants. The Board has set a 5% EPS performance
hurdle for the 2009 Performance Right grant. The performance hurdle was consistent with the
Board’s view on the longer term sustainable EPS performance of the sector taking into account the
impacts of the global credit crisis, equity market volatility and economic outlooks.
Whilst the banking sector has enjoyed buoyant market conditions over a number of years, market
conditions have become much tougher and are expected to get even more competitive going
forward. The consistent achievement of the EPS hurdle will be extremely challenging taking into
account the current market environment, the stage of the credit cycle and intense level of
competition across the sector.
51
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
How is TSR
measured?
Why does the
Company think the
TSR hurdle is
appropriate?
TSR measures changes in the market value of the Company’s shares over the performance period
and the value of dividends on the shares during that period (dividends are treated as if they were
re-invested).
The use of a TSR based hurdle ensures an alignment between comparative shareholder return and
reward for the Senior Executives and provides a relative, external market performance measure,
having regard to the TSR performance of other companies in a comparator group. For the purpose
of the grants under the Plan, the comparator group consists of ASX 200 companies (excluding
property trusts and resources).
What are the Plan’s
vesting terms –
Performance Rights?
Performance Rights granted to date under the Plan will vest as set out below. At the end of the
relevant performance period, the growth in the Company’s cash basis EPS must equal or exceed
10% per annum, calculated on a compound basis.
Company’s compound growth in EPS
Percentage of Performance Rights that
vest
What are the Plan’s
vesting terms –
Options?
EPS growth less than 5% (10% for previous
grants)
Nil
EPS growth at or above 5% (10% for previous
grants)
100%
The Board has discretion to increase or decrease by 20% the number of Performance Rights
provided under the Plan based on an assessment of whether cash basis EPS growth was due to
factors controllable by the Company or external factors.
Options granted to date under the Plan will vest in accordance with the following table.
Company’s TSR ranking against TSR of Peer
Group
Percentage of Options that vest
TSR below 50th percentile
TSR at the 50th percentile
TSR between 51st and 74th percentile
Nil
50%
An additional 2% of Options will vest for
every percentage increase.
TSR at or above 75th percentile
100%
Does the Plan provide
for retesting?
To the extent that the performance conditions attaching to Options and Performance Rights granted
under the Plan are not satisfied at the end of the initial performance period, the Options and
Performance Rights that do not vest, will be carried forward and retested as described below.
Options will be retested after a further 6 months and, if still not satisfied, they may be retested one
final time after another 6 months. Performance Rights will be retested only once, after 12 months.
Any Options or Performance Rights that have not vested at the end of the additional 12 month
period will lapse.
The Board believes that retesting in these limited circumstances is appropriate because it ensures
that Senior Executives are not disadvantaged by one year of average performance over a longer-
term period of strong performance.
If a Senior Executive ends their employment with the Company before the performance conditions
for the Options or Performance Rights have been met, the Options and Performance Rights that
have not yet vested will lapse. However, if the Senior Executive’s employment ends because of
death, disability, redundancy, or any other reason approved by the Board for this purpose, the
Board may, in its discretion decide that a number of Options and Performance Rights vest.
If a Senior Executive were to act fraudulently, dishonestly or, in the Board’s opinion, in breach of his
or her legal duties, any unvested Options or Performance Rights will lapse.
What if a Senior
Executive ceases
employment?
What if a Senior
Executive breaches
their duties?
What happens in the
event of a change in
control?
If there is a takeover or change of control of the Company, the Board may, in its discretion decide
that unvested Options or Performance Rights vest, having regard to the Company’s pro rata
performance against the relevant performance conditions.
What about
Performance Rights &
Options that were
tested in FY2009?
The plan’s performance hurdles are tested over a three year period (except for the Tranche 1 grant
to the Managing Director which had a 2 year performance period). The first offer tested was the
Managing Director’s Tranche 1 grant made in November 2006, which was tested, and retested,
during 2008. Details of vested securities are presented at Tables 10 and 11.The first offer made to
other senior executives in 2006 and the replacement offer made to former executives of Adelaide
Bank in 2007 (Tranche 1 also having a 2 year performance period) are due to be tested in August
2009.
52
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Grants to Senior Executives
Shareholders at the 2006 annual general meeting approved the grant of instruments in three tranches to the Managing
Director. The first grant, Tranches 1 and 2, was made to the Managing Director shortly after the 2006 annual general meeting.
Tranche 3 was granted to the Managing Director in July 2007. There have been no further grants to the Managing Director.
The first offer to other Senior Executives to participate in the Plan was also made shortly after the 2006 Annual General
Meeting (“2007 grant”). The offer was made to all executive committee members of the Company at the time of the offer. A
second offer to the same Senior Executives was made in July 2007 (“2008 grant”).
A third grant to Senior Executives was made in November 2008 (“2009 grant”). The grant was made in accordance with the
terms as described in Table 5.
As disclosed in the 2008 remuneration report, the Company made a replacement grant of Performance Rights to the former
executives of Adelaide Bank (including Mr McPhee) on terms which, taken as a whole, were economically equivalent to the
terms of the Adelaide Bank offer. The replacement grant was made in December 2007. For the replacement grant to satisfy
the above mentioned “economically equivalent” requirement it was necessary to make a grant on different terms to some of
those described in Table 5 above. A summary of the differences was presented in the 2008 remuneration report.
Details of the instruments granted to all Senior Executives under the above grants are presented in the remuneration tables
that accompany this report.
53
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Company Performance
The following overview of the Company’s progress and performance is provided as background information to assist
shareholders in their consideration of the Remuneration Report and particularly to explain the link between the Company’s
performance and Senior Executive remuneration.
The Company announced on 10 August 2009 a statutory profit after-tax profit of $83.8 million. Cash earnings per share of 62.9
cents represents a 26% decrease on the previous financial year. Information on the Company’s share price performance is
presented below.
The reduced profit was attributable to a slowing economy and global recession, an unprecedented drop in official cash rates
and increased funding costs. The last financial year presented unprecedented challenges for all Australian banks which
included a deteriorating credit cycle, a rapid fall in official cash rates and reduced wholesale funding options that impacted
significantly on the Company’s financial results.
The Company recorded strong retail deposit growth with retail deposits increasing by 20 per cent to more than $28.5 billion.
This was a deliberate initiative to re-shape the business and place the Company in the best possible position to grow
shareholder value as market conditions improve.
The Company’s net interest income performance was largely affected by a reduced demand for credit and a decline in the
margin lending and third party mortgages portfolios. The company’s net interest margin was affected by a lag in term deposit
repricing in a rapidly easing cash rate environment
The Bendigo and Adelaide Bank Community Bank® network continues to drive superior franchise growth and above system
deposit generation, while the relative immaturity of this network means there is years of latent growth to be harnessed by the
Company. The Company has 1.4 million customers based across 191 company-owned and 237 Community Bank®
branches. The Company is being buoyed by approximately 11,000 new customers per month and is managing approximately
1.7 million accounts.
The accompanying graphs set out the Company’s key financial performance measures for the financial year ended 30 June
2009, and the four previous financial years, to illustrate the consequences of the Company’s performance on shareholder
value and returns and the link to Senior Executive remuneration.
As explained above, the Company’s earnings for the 2009 financial year have been significantly impacted by market and
economic conditions resulting in:
A decrease of $2.47 (26%) in the Company’s share price from $9.42 at 30 June 2004 to $6.95 at 30 June 2009. The
share price decreased by $3.98 in 2009 (36%). During the same period the All Ordinaries Index decreased by 26% and
the S&P/ASX 200 Financials Index decreased by 24%;
An increase in cash EPS of 4.4 cents (7.5%) from 58.5 cents for 2004 to 62.9 cents for 2009. The cash EPS decreased by
48.2 cents (43.4%) for 2009; and
An increase in dividend of 3 cents per share (7.5%) from 40 cents per share for 2004 to 43 cents per share for 2009. The
dividend decreased by 22 cents per share (34 %) for 2009.
Full details of the Company’s recent performance are set out in the Chairman’s and Managing Director’s Review on pages 5
and 6 of this Annual Report.
54
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Performance against key short-term metrics
The above graphs illustrate the progress in the key performance indicators used by the Board to measure and compare the
company’s year-on-year performance over the past 5 years. The performance indicators include the cash EPS ratio used as a
performance condition for Senior Executive STI payments and LTI grants. The second key performance indicator used for the
LTI is the Company’s TSR performance.
The Company did not achieve its targeted cash EPS performance for 2009 but did achieve the targeted cash EPS
performance for each of the 4 years prior to 2009. The Company’s market relative TSR performance is one of the key
performance conditions for the Company’s LTI component. The LTI has a 3 year performance period and was established in
2006.
55
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
REMUNERATION PAID (Details of the remuneration paid to the Senior Executives are set out in Table 7 below)
The comparative remuneration details for the former Adelaide Bank executives(1) for FY 2008 are for the period 30 November 2007 to 30 June 2008. All values are in A$ unless otherwise
stated.
Table 7 – Senior Executive remuneration paid for FY2009 and FY2008
Short-term Employee Benefits
Post-employment benefits
Cash
Salary 4
Bonuses
(STI) 5
Non-
Monetary
Benefits6
Other7
Super-
annuation
benefits 8
Other
Other Long-
term
employee
benefits9
Termination benefits
Share-based Payments 10 11
Total
Termination
Other
Performance
Rights
Options
Senior Executives of the Company and the Group
Current
R Hunt
2009
2008
J McPhee
2009
2008 1
M Hirst
2009
2008
M Baker
2009
2008
A Baum
2009
2008 1
R Fennell
2009
2008 1
G Gillett
2009
2008
1,066,688
1,500,000
54,300
223,296
271,800
964,402
726,000
49,943
269,416
248,828
765,819
-
66,338
412,647
350,000
396
727,533
-
2,992
538,117
320,000
27,761
331,855
-
36,463
322,091
140,000
35,517
346,724
-
18,950
172,438
100,625
8,450
339,312
-
18,059
175,870
94,792
7,032
11,913
13,350
16,579
20,178
14,247
17,775
-
-
-
-
326,009
-
102,440
27,217
352,729
170,000
103,850
34,830
83,840
49,846
92,822
73,384
45,473
43,770
48,305
21,859
45,606
20,592
54,612
54,263
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,732
164,312
31,622
11,450
36,844
10,285
12,099
9,103
-
-
-
-
7,534
10,036
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
214,599
216,054
3,565,469
342,092
330,386
3,095,379
375,782
86,667
1,421,981
196,452
-
1,034,141
140,210
140,612
1,157,592
65,373
65,775
1,120,873
68,242
44,945
68,519
576,898
45,223
658,424
106,123
23,000
543,102
56,482
-
359,854
99,973
53,209
83,032
53,910
21,667
524,617
-
351,495
83,369
684,213
54,249
833,867
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
D Hughes
2009
2008 1
R Jenkins
2009
2008
C Langford
2009
2008
T Piper
2009
2008 1
P Riquier
2009
2008 1
A Watts
2009
2008
Former
R Hasseldine 2
2008
V Kelly 3
2008
329,673
-
164,230
91,875
42,222
20,314
-
-
371,617
-
20,329
378,307
150,000
19,585
367,329
-
93,340
369,764
190,000
95,122
320,483
-
17,488
168,159
94,792
7,242
220,716
-
111,519
80,208
318,095
-
223,031
91,000
47,288
26,647
47,979
52,100
15,474
19,656
25,453
32,474
-
-
-
-
3,764
5,203
45,986
19,958
50,093
48,752
60,156
59,774
44,775
20,592
29,700
17,058
27,017
34,042
46,993
37,500
50,175
7,395
11,728
61,822
25,000
8,019
5,912
9,786
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,231
9,313
8,252
10,614
-
-
7,687
3,681
13,628
5,499
5,901
-
-
-
-
-
-
-
-
-
-
-
-
-
87,370
405,573
-
-
-
-
-
-
-
-
-
-
-
-
-
-
96,898
51,572
76,191
49,844
89,870
57,977
99,973
53,204
84,589
45,020
58,850
35,916
21,000
535,779
-
347,949
76,499
620,434
50,152
725,609
90,238
734,638
58,345
874,070
21,667
504,386
-
343,989
18,333
408,313
-
284,133
59,084
528,417
36,150
482,941
33,646
33,859
227,197
42,448
42,723
688,653
57
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
1 Commenced employment with the Company on 30 November 2007. The remuneration represents the amounts paid or payable by the Company for the period 30 November 2007 to 30 June 2008.
2 Ceased senior executive role on 30 November 2007. The amounts included under short term employee benefits and post-employment benefits are pro-rata for the period the executive was a KMP.
3 Ceased senior executive role on 27 August 2007 and ceased employment on 31 January 2008. The amounts included under short term employee benefits and post-employment benefits are pro-rata
for the period the executive was a KMP.
4 Cash salary amounts include the net movement in the KMP’s annual leave accrual for the year.
5 This amount represents STI payments to Senior Executives for 2009, which are expected to be paid in September 2009 (as applicable). For Mr Hunt, this also includes a payment of $1,000,000
relating to the merger integration incentive.
6 “Non-monetary” relates to sacrifice components of KMP salary.
7 “Other” relates to the notional value of the interest free loan benefit provided under the group’s employee share plans. A notional benefit is calculated using the average outstanding loan balance and
the bank’s average cost of funds. Details on loans provided to the Senior Executive under the employee share plans are disclosed in the full financial statements at Note 38.
8 Represents superannuation contributions made on behalf of key management personnel in accordance with the Superannuation Guarantee Charge legislation.
9 The amounts disclosed relate to movements in long service leave entitlement accruals.
10 In accordance with the requirements of the Accounting Standards, remuneration includes a proportion of the fair value of equity compensation granted or outstanding during the year. The fair value
of equity instruments which do not vest during the reporting period is determined as at the grant date and is progressively allocated over the vesting period. The amount included as remuneration is not
related to or indicative of the benefit (if any) that individual Senior Executives may ultimately realise should the equity instruments vest. The fair value of Performance Rights and Options as at the date
of their grant has been determined in accordance with AASB 124 applying a Black-Scholes-Merton valuation method incorporating a Monte Carlo simulation option pricing model to estimate the
probability of achieving the TSR hurdle and the number of options vesting. The assumptions underpinning these valuations are set out in Note 38 to the financial statements.
11 The amortisation value of Performance Rights and Options as a percentage of total remuneration was: R Hunt 12% (2008: 23%), J McPhee 23% (2008: 19%), M Baker 18% (2008: 14%), A Baum
17% (2008: 16%), R Fennell 18% (2008: 15%), G Gillett 20% (2008: 13%), M Hirst 17% (2008: 12%), D Hughes 17% (2008: 15%), R Jenkins 18% (2008: 13%), C Langford 20% (2008: 13%), T Piper
18% (2008: 15%), P Riquier 17% (2008: 17%), A Watts 17% (2008: 15%)
58
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
The percentages of maximum STI paid and not achieved for FY2009 are detailed in the table below.
Table 8 – Percentage of STI paid and forfeited for Senior Executives
Senior Executives
Current
Rob Hunt
Jamie McPhee
Mike Hirst
Marnie Baker
Anthony Baum
Richard Fennell
Greg Gillett
David Hughes
Russell Jenkins
Craig Langford
Tim Piper
Philip Riquier
Andrew Watts
Actual STI payment
($)(1)(2) (3)
Actual STI payment
as % of maximum
STI
% of maximum STI
payment forfeited
500,000
50%
-
-
-
-
-
-
-
-
-
-
-
-
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(1) STI constitutes a cash incentive earned during fiscal 2009.
(2) A minimum level of performance must be achieved before any STI is paid as outlined above. Therefore, the minimum
potential value of the STI which was granted in respect of the year was nil. The maximum value of grants under the STI is
the actual amount of STI paid.
(3) There is no grant date for the STI payments other than for the grant date applicable to the Managing Director, being 25 May
2009.
59
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
EQUITY INSTRUMENTS GRANTED AS REMUNERATION
As part of its remuneration strategy, the Company granted Performance Rights and Options to Senior Executives during the
year, as set out in Table 9 below.
Table 9 – Performance Rights and Options granted in FY2009
Senior Executive
Instrument
Number of
Performance Rights/
Options granted
(a)
Future years
payable
Fair value per
Performance Right/
Option
(b)
Maximum value of
grant
(c) (d)
Current
Rob Hunt(c)
Performance Rights
Options
-
-
Jamie McPhee(b)
Performance Rights
27,957
Options
189,781
Mike Hirst (c)
Performance Rights
24,141
Options
163,876
Marnie Baker (c)
Performance Rights
7,515
Options
51,013
Anthony Baum(b)
Performance Rights
7,419
Options
50,365
Richard Fennell(b)
Performance Rights
6,989
Options
47,445
Greg Gillett(c)
Performance Rights
9,394
Options
63,766
David Hughes(b)
Performance Rights
6,774
Options
45,985
Russell Jenkins(c)
Performance Rights
8,499
Options
57,693
Craig Langford(c)
Performance Rights
10,288
Options
69,839
Tim Piper(b)
Performance Rights
6,989
Options
47,445
Philip Riquier(b)
Performance Rights
5,914
Options
40,146
Andrew Watts(c)
Performance Rights
7,398
Options
50,219
-
-
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
-
-
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
$9.30
$1.37
-
-
$260,000
$260,000
$224,511
$224,510
$69,890
$69,888
$68,997
$69,000
$64,998
$65,000
$87,364
$87,359
$62,998
$62,999
$79,041
$79,039
$95,678
$95,679
$64,998
$65,000
$55,000
$55,000
$68,801
$68,800
(a) The grants made to Senior Executives constituted 100% of the grants available for the year and were made on the terms
summarised above. As the Performance Rights and Options only vest on satisfaction of performance conditions which
are to be tested in future financial periods. None of the Senior Executives forfeited Performance Rights or Options during
2009.
(b) The fair values were calculated as at the grant dates of 21 November 2008 for Performance Rights and Options. The
exercise price for the Options is $11.09 and expiry date is 31 July 2013. The exercise price for the Performance Rights is
nil and the expiry date is 30 June 2012. An explanation of the pricing model used to calculate these values is set out in
Note 38 to the financial statements.
(c) The maximum value of the grant has been estimated based on the fair value per instrument. The minimum total value of
the grant, if the applicable performance conditions are not met, is nil.
60
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Table 10 sets out details of the movement in the number of Performance Rights and Options held by Senior Executives during
the year.
Table 10 – Movement in Performance Rights and Options in FY2009 (number)
Senior Executive
Instrument
Balance at 1
July 2008
Granted
Vested
Exercised
Forfeited/La
psed
Balance at
30 June
2009
Movements in value
Current
Rob Hunt
Performance Rights
Options
66,957
402,352
-
-
Jamie McPhee
Performance Rights
41,533
27,957
Options
-
189,781
Mike Hirst
Performance Rights
14,542
24,141
Options
84,986
163,876
Marnie Baker
Performance Rights
9,996
7,515
Options
58,401
51,013
Anthony Baum
Performance Rights
11,941
7,419
Options
-
50,365
Richard Fennell
Performance Rights
11,249
6,989
Options
-
47,445
Greg Gillett
Performance Rights
Options
David Hughes
Performance Rights
12,002
70,251
10,903
9,394
63,766
6,774
Options
-
45,985
Russell Jenkins
Performance Rights
Options
Craig Langford
Performance Rights
Options
Tim Piper
Performance Rights
11,088
64,807
12,916
75,695
11,249
8,499
57,693
10,288
69,839
6,989
Options
-
47,445
Philip Riquier
Performance Rights
9,518
5,914
Options
-
40,146
Andrew Watts
Performance Rights
8,016
7,398
Options
46,976
50,219
19,043
19,043
120,349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,914
282,003
69,490
189,781
38,683
248,862
17,511
109,414
19,360
50,365
18,238
47,445
21,396
134,017
17,677
45,985
19,587
122,500
23,204
145,534
18.238
47,445
15,432
40,146
15,414
97,195
61
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Table 11 sets out details of changes in the value of Performance Rights and Options (a) held by Senior
Executives during the year.
Table 11 – Movement in Performance Rights and Options in FY2009 (value)
Senior Executive
Instrument
Granted(a)
Vested(b)
Exercised
Forfeited/Lapsed(c)
Current
Rob Hunt
Performance Rights
Options
-
-
$254,986
$228,663
Jamie McPhee
Performance Rights
Options
Mike Hirst
Performance Rights
Options
Marnie Baker
Performance Rights
Options
Anthony Baum
Performance Rights
Options
Richard Fennell
Performance Rights
Options
Greg Gillett
Performance Rights
Options
David Hughes
Performance Rights
Options
Russell Jenkins
Performance Rights
Options
Craig Langford
Performance Rights
Options
Tim Piper
Performance Rights
Options
Philip Riquier
Performance Rights
Options
Andrew Watts
Performance Rights
Options
$260,000
$260,000
$224,511
$224,510
$69,890
$69,888
$68,997
$69,000
$64,998
$65,000
$87,364
$87,359
$62,998
$62,999
$79,041
$79,039
$95,678
$95,679
$64,998
$65,000
$55,000
$55,000
$68,801
$68,800
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$254,986
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(a)
(b)
(c)
The value of the Performance Rights and Options granted to Senior Executives during the year is
set out in Table 11 above.
On the vesting of each Performance Right, the holder received one fully paid ordinary share in the
Company. The market value of each Performance Right on the date of vesting was $10.30, being
the closing price of the Company’s shares on the ASX on the preceding trading day.
No Performance Rights and Options were forfeited during the year having regard to the achievement of the
performance measures on a pro-rata basis. The value of each Performance Right and Option on the date it lapses or is
forfeited will be calculated using the fair value of the Performance Rights and Options. An explanation of the pricing
model used to calculate this value is set out in Note 38 to the financial statements.
62
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SERVICE AGREEMENTS
The remuneration and other terms of employment for Senior Executives are formalised in Service Agreements. Each
agreement provides for the payment of performance-related cash STI component and participation in the Company’s LTI
component. The material terms of the Service Agreements for the Senior Executives at the date of this report are set out
below.
Table 12 – Summary of Service Agreements
About the Contract
What is the duration of the
contracts?
Contractual Provision
Fixed term of 5 years, subject to the termination provisions
summarised below, and then continuing unless otherwise agreed by
the company or managing director.
On-going until notice is given by either party.
12 months’ notice or payment in lieu.
No notice period required if material change in duties or
responsibilities.
6 months’ notice or payment in lieu.
All Senior Executives
No notice period required if material change in duties or
responsibilities.
12 months’ notice or payment in lieu.
All Senior Executives
What notice must be
provided by a Senior
Executive to terminate a
Service Agreement
without cause?
What notice must be
provided by the Company
to terminate a Service
Agreement without cause?
(a)
What payments must be
made by the Company for
termination without
cause?
Payment of gross salary in lieu of period of notice (including payment
of accrued / unused leave entitlements calculated to end of relevant
notice period).
Up to 31 December 2009:
Payment of gross salary and superannuation (including payment of
accrued / unused leave entitlements and any entitlement under STI
and LTI plans) calculated to date of termination, an amount
equivalent to 12 months’ base salary and a pro-rata payment based
on years of service (including service with Adelaide Bank). The pro-
rata payment equates to seven weeks pay plus three weeks pay for
every year of service up to a maximum of ninety weeks.
From 1 January 2010 – as described for Senior Executives above
What are notice and
payment requirements for
termination for cause?
Termination for cause does not require notice. Payment of pro-rata
gross salary and benefits (including payment of accrued / unused
leave entitlements) is required to date of termination.
Up to 31 December 2009:
Termination for cause does not require notice. Payment of pro-rata
base salary and benefits (including payment of accrued / unused
leave entitlements and any entitlement under STI and LTI plans) is
required to date of termination.
From 1 January 2010 – as described for Senior Executives above
Are there any post-
employment restraints?
12 month non-competition and non-solicitation (employees,
customers and suppliers) restriction.
12 month non-solicitation restriction.
Up to 31 December 2009:
Must not engage in competitive business activity for 6 months in
Australia or New Zealand (applies only if employment ceases before
1 January 2010).
From 1 January 2010
12 month non-solicitation restriction.
Applies To
Managing Director
(Mr Hirst)
All Senior Executives
Managing Director
(Mr Hirst)
Senior Executives (b)
Executive Director
(J McPhee)
Senior Executives (b)
Executive Director
(J McPhee)
Managing Director
(Mr Hirst)
Senior Executives (c)
Executive Director
(J McPhee)
(a)
(b)
(c)
In certain circumstances, such as a substantial diminution of responsibility, the Company may be deemed to have
terminated the employment of a Senior Executive and will be liable to pay a termination benefit as outlined above at
“What payments must be made by the Company for termination without cause”.
Being the current Senior Executives listed at Table 1 excluding the Executive Director (Mr McPhee) and former
Managing Director (Mr Hunt).
Being the current Senior Executives listed at Table 1 excluding the Executive Director (Mr McPhee), the former
Managing Director (Mr Hunt) and new managing Director (Mr Hirst).
63
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
BOARD POLICY ON REMUNERATION
The table below sets out the key principles that underpin the Board’s policy on Non-Executive Director remuneration:
Table 13 – Principles underpinning remuneration policy for Non-Executive Directors
Principle
Comment
Aggregate Board fees are
approved by shareholders
The current aggregate fee pool for Non-Executive Directors of $1,700,000 was
approved by shareholders at the 2008 Extraordinary General Meeting.
Remuneration structured to
encourage longer term
perspective
Fees are set by reference to key
considerations
Fee changes recommended by
Board committee
(Note: Some benefits are payable outside of the shareholder-approved cap –
refer Table 14 for details)
As the focus of the Board is to build sustainable shareholder value by taking a
longer-term strategic perspective, there is no direct link between Non-Executive
Directors’ fees and the annual results of the Company. In accordance with the
Board policy, Non-Executive Director remuneration comprises the following
elements.
Base fee; and
Superannuation
Non-Executive Directors do not receive bonuses or incentive payments, nor
participate in the Company’s employee equity participation plans. Approval for
future issues of shares to non-executive directors under a fee-sacrifice share
plan was obtained at the 2008 Annual General Meeting.
Non-Executive Director fees are set by reference to considerations including:
The demands and the scope of responsibilities of Non-Executive Directors
Fees paid by peer companies and companies of similar market capitalisation
The Committee takes into account changes in director responsibilities and time
commitments during the year, at both the board and committee level, as well as
survey data and peer analysis to determine the level of director fees paid in the
market by companies of a relatively comparable size and complexity, including
the banking and finance sector, and to ensure that fees and payments reflect the
demands and the scope of responsibilities of directors.
The assessment takes into account the remuneration policies of the Company,
changes in the nature and operations of the Group including industry
developments which impact the responsibilities and risks associated with the
role of director.
The Board has decided that there will be no increase to the annual non-
executive director fees for the 2010 financial year. The directors have agreed to
donate 4% of their annual fee payment to a charitable cause such as the Board’s
scholarship program for underprivileged students.
Non-Executive Director fees are reviewed annually by the Board to ensure that
the structure and amounts are appropriate for the circumstances of the
Company. Fees for Non-Executive Directors are decided by the Board based on
the recommendation of the Governance Committee.
No retirement benefits
No additional benefits are paid to Non-Executive Directors upon their retirement
from office (i.e. in addition to their existing superannuation entitlements).1
Regular reviews of remuneration
The Board periodically reviews its approach to Non-Executive Director
remuneration to ensure it remains in line with general industry practice and best
practice principles of corporate governance.
1. The retirement benefit scheme which was in place for Non-Executive Directors since 1982 has been closed. No retirement
benefits (other than superannuation) have accrued to existing or new Non-Executive Directors after 31 August 2005.
64
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMPONENTS OF NON-EXECUTIVE DIRECTOR REMUNERATION
Table 14 – Components of remuneration for Non-Executive Directors
Element
Board fees
Other fees/benefits
Post-employment
benefits
Equity/NED Share
Plan
Details/
Explanation
Current fees per
annum are:
$125,000 for Board
members from 1
July 2008 (refer
also Table 13).
$250,000 for Chair
to recognise extra
time commitment.
No increase to annual
fee amount for FY10.
No additional
committee fees.
Fee payments may be
increased annually by
the CPI index should
the Governance and
HR Committee not
recommend a general
fee increase
The Company
obtained shareholder
approval at the 2008
AGM for a Non-
Executive Director
Fee Sacrifice Plan
under which Non-
Executive Directors
may elect to sacrifice
part of their fees to
acquire shares in the
Company.
Superannuation
contributions are
made on behalf of the
Non-Executive
Directors at a rate of
9%, which satisfies
the Company’s
statutory
superannuation
obligations.
Non-Executive
Directors appointed
prior to 31 August
2005 were entitled to
a retirement benefit
under the Company’s
legacy retirement
benefit scheme. The
scheme is closed and
no retirement benefits
have accrued to
existing or new Non-
Executive Directors
after 31 August 2005.
All entitlements at that
date were crystallised
and have since been
paid to the Non-
Executive Directors.
1 The Board may
determine
additional fees for
appointments to
Subsidiary or Joint
Venture Boards.
2 Non-Executive
Directors are
permitted to be
paid additional
remuneration for
special services or
journey on the
business of the
Company. No
such fees were
paid during the
year.
3 Non-Executive
Directors are
entitled under the
Company’s
Constitution to be
reimbursed for all
reasonable travel,
accommodation
and other
expenses incurred
in attending
meetings or when
engaged on
company
business.
Included in
shareholder
approved cap?
Yes
Yes – 1 & 2
Yes (Superannuation) N/A
No – 3
65
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
REMUNERATION PAID
Details of Non-Executive Directors’ remuneration are set out in Table 15.
Table 15 – Non-Executive Director Remuneration for FY2009 and FY2010
Short-term benefits
Post-employment benefits
Fees
Non-monetary
benefits1
Superannuation
Contributions2
Retirement
Benefits
Share-based
payments
Non-Executive
Director Share
Plan
Current
R Johanson
(Chairman)
2009
2008
K Osborn 3
2009
2008
K Abrahamson 3, 6
2009
2008
J Dawson 6
2009
2008
T O’Dwyer 6
2009
2008
D Radford
2009
2008
K Roache
2009
2008
A Robinson
2009
2008
Former
N Axelby 4
2008
R Cook 3 5
2008
D Erskine 4
2008
A Lloyd 3 5
2008
250,000
197,538
125,000
57,692
73,577
6,634
210,000
98,769
160,000
98,769
125,000
98,769
125,000
98,769
68,093
53,769
41,078
4,658
41,078
-
-
-
-
86,423
51,058
-
-
-
-
-
-
-
-
56,907
45,000
-
-
-
22,500
17,778
11,250
5,192
14,400
5,192
18,900
8,889
14,400
8,889
11,250
8,889
11,250
8,889
11,250
8,889
3,697
419
3,697
9,297
48,395
5,192
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
272,500
215,316
136,250
62,884
174,400
62,884
228,900
107,658
174,400
107,658
136,250
107,658
136,250
107,658
136,250
107,658
44,775
5,077
44,775
62,884
1 Represents fee sacrifice component of base director fee amount.
2 Company superannuation contributions paid in accordance with the Superannuation Guarantee Legislation.
3 Appointed as a director on 30 November 2007. The comparative remuneration details represent the fees paid or payable
by the Company for the period 30 November 2007 to 30 June 2008.
4 Ceased as a director on 30 November 2007.
5 Ms Lloyd resigned on 30 June 2008 and Mr Cook resigned on 17 December 2007.
6 The fees paid to Mr Abrahamson and Mr O’Dwyer include an additional fee of $35,000 relating to their directorship on
Sunstate Lenders Mortgage Insurance Pty Limited and the fees paid to Ms Dawson include an additional fee of $85,000 as
chairman of subsidiary company, Adelaide Managed Funds Limited.
66
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Employee Share Plans: General Staff
a. Current Plans
Share Grant Plan
The Company has established a tax-exempt Employee Share Grant Plan (“ESGP”) as the main equity participation platform for
general employees. Shareholder approval for future grants under the ESGP was obtained at the 2008 Annual General
Meeting. The ESGP is open to all full-time and permanent part-time staff in the Group (excluding Directors and Senior
Executives) and it is was intended that grants under the ESGP would be made annually subject to Board discretion and having
regard to company performance. Employees will generally be entitled to participate in rights attached to the shares including to
receive dividends and to vote at general meetings. The shares are restricted for 3 years unless the employee leaves the
Company. A grant to general employees was made in January 2009 with a participation rate exceeding 87%.
Salary Sacrifice, Deferred Share and Performance Share Plan (previously named Salary Sacrifice & Deferred Share
Plan)
The Company has established an Employee Salary Sacrifice and Deferred Share Plan (“DSP”). Shareholder approval for
future issues under the DSP was obtained at the 2008 Annual General Meeting. The DSP provides a vehicle that will facilitate
the purchase of shares on a salary-sacrifice basis and the making of additional discretionary grants as may be required from
time to time in line with the Company’s employee attraction and retention objective. The DSP is open to permanent full-time
and part-time employees of the group and the number of shares to be granted to employees will be determined by the Board.
Employees will generally be entitled to participate in rights attached to the shares including to receive dividends and to vote at
general meetings. A minimum restriction period of 3 years will apply to each invitation under the DSP. There have been no
grants under the DSP to date.
The Board has recently approved changes to the rules of the Plan to enable the Plan to be used as the vehicle for the new
Managing Director’s long term incentive arrangement. The changes to the Plan rules include:
A definition of Performance Shares has been included;
Rules have been included to allow the Board to set performance conditions and to determine when those performance
conditions have been met and the Performance Shares vest.
A rule has been inserted clarifying that the Participant does not become beneficially entitled to the underlying shares until
the Performance Shares have vested.
Rules have been included to specify when a Performance Share may lapse and the Participant ceases to be entitled to
the underlying share.
Rules have also been included to clarify the Board’s discretions regarding how Performance Shares will be treated in
certain circumstances (for example, if the Participant’s employment ceases if the Participant is fraudulent, if the Company
is subject to a Takeover, or if the Company’s share capital is reorganised).
Details of the new Managing Director’s long term incentive arrangement will be set out in the 2009 Notice of Annual General
Meeting.
Employee Share Plan
The Company has established a loan-based limited recourse Employee Share Plan (“ESP”). The ESP is only available to
general staff. Senior Executives (including the Managing Director) may not participate in it.
Under the terms of the ESP, shares are issued at the prevailing market value and must be paid for by the staff member. The
Plan provides staff members with an interest-free loan for the sole purpose of acquiring Plan shares. Net cash dividends after
personal income tax obligations are applied to reduce the loan balance. Staff cannot deal in the shares until the loan has been
repaid. The primary benefit under the terms of the ESP is the financial benefit of the limited recourse interest-free loan.
The only issue to general staff under this ESP was completed in September 2006. An issue to employees of Community
Bank® companies was completed in the 2008 financial year. It is intended that the loan-based plan will be retained to provide
an opportunity for continued participation in share ownership of the Company by employees of joint venture and Community
Bank companies and for discretionary grants to employees as determined by the Board.
Shares issued under the above Plans are valued and expensed in accordance with applicable accounting requirements. The
Board will seek shareholder approval at the 2009 Annual General Meeting for future issues of shares under the ESP.
b. Discontinued Plans
The Company has the following legacy employee share plans which are now closed. The plans will continue until all shares
have been withdrawn and / or outstanding loans repaid as appropriate. Details of shares issued and loans outstanding to
Senior Executives under these plans are disclosed in Notes 38 and 40 of the 2009 Financial Statements.
1. Bendigo and Adelaide Bank Limited Employee Share Ownership Plan
2. Adelaide Bank Deferred Employee Share Plan
3. Adelaide Bank Allocation Scheme
4. Adelaide Bank Loan Scheme
67
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Meetings of directors
The number of meetings of the Bank’s directors (including meetings of committees of directors) held during the year ended 30
June 2009 and the number attended by each director were:
Board of
directors
Meetings
A
22
22
22
22
22
22
22
22
22
22
B
22
22
22
20
22
21
21
21
22
19
Attended by:
R Johanson
K Osborn
R Hunt AM 1
K Abrahamson
J Dawson
J McPhee
T O’Dwyer
D Radford
K Roache
A Robinson
Audit
Credit
Risk
Governance
IT Strategy
Meetings in Committees
A
B
A
B
A
B
7
7
7
7
7
6
7
7
5
7
13
12
13
13
13
13
13
13
12
11
7
7
7
7
7
7
6
7
7
6
7
5
A
4
4
B
4
4
4
4
4
3
A
6
6
6
6
6
6
B
6
6
5
6
6
4
A = Number eligible to attend
B = Number attended
1 During the year Mr Hunt was a standing attendee for audit committee meetings. In particular, Mr Hunt attended the meetings that
consider the group’s half-year and full-year result announcements and the statutory financial statements.
Insurance of Directors and Officers
During or since the financial year end, the Company has paid premiums to insure certain officers of the company and its
related bodies corporate. The officers of the Company covered by the insurance policy include the directors listed above, the
secretary and directors or secretaries of controlled entities who are not also directors and secretaries of Bendigo and Adelaide
Bank Limited, and general managers of each of the divisions of the economic entity.
Disclosure of the nature of the liability and the amount of the premium is prohibited by the confidentiality clause of the contract
of insurance. The Company has not provided any insurance for an independent auditor of the Company or a related body
corporate.
Indemnification of Officers
The constitution stipulates that the Company is to indemnify, to the extent permitted by law, each officer of the Company
against liabilities (including costs, damages and expenses incurred in defending any proceedings or appearing before any
court, tribunal, government authority or other body) incurred by an officer or employee in, or arising out of the conduct of the
business of the Company or arising out of the discharge of the officer's or employee's duties.
As provided under the Company's Constitution, the Company has entered into deeds providing for indemnity, insurance and
access to documents for each director who held office during the year. The deed requires the Company to indemnify, to the
extent permitted by law, the director against all liabilities (including costs, damages and expenses incurred in defending any
proceedings or appearing before any court, tribunal, government authority or other body) incurred by the director in, or arising
out of conduct of the business of the Company, an associated entity of the Company or in the discharge of their duties as a
director of the Company, a subsidiary or associated company.
68
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Directors' Interests in Equity
The relevant interest of each director (in accordance with section 205G of the Corporations Act 2001) in shares of the
company or a related body corporate at the date of this report is as follows:
Director
Ordinary shares
Preference
shares
Step-Up
Preference
Shares
Reset
Preference
Shares
R N Johanson
M J Hirst 1
K D Abrahamson
J L Dawson
J L McPhee 2
T J O’Dwyer
K G Osborn
D L Radford
K E Roache
A D Robinson
209,990
51,202
17,801
16,166
542,076
63,300
11,276
1,700
25,166
5,700
500
-
-
100
-
-
-
-
200
-
-
-
180
-
-
-
-
-
-
-
-
-
129
-
-
-
-
-
-
-
Performance
Rights &
Options
-
287,545
-
-
259,271
-
-
-
-
-
1 Includes 50,000 shares issued under the Bendigo Employee Share Ownership Plan.
2 Includes 204,250 shares issued under the Adelaide Bank Deferred Employee Share Plan. Mr McPhee also holds 90,723 units in the
Asset Backed Yield Trust. Adelaide Managed Funds Limited (a subsidiary of Adelaide Bank) is the responsible entity for the Trust.
Environmental Regulation
The consolidated entity's operations are not subject to any significant environmental regulations under either Commonwealth
or State legislation. However, the Board believes that the consolidated entity has adequate systems in place for the
management of its environmental requirements and is not aware of any breach of those environmental requirements as they
apply to the consolidated entity.
Company Secretary
David A Oataway B Bus, CA, ACIS
Mr Oataway has been the company secretary of Bendigo and Adelaide Bank Limited for eleven years. Prior to this position he
held roles within the Bank's internal audit and secretariat departments. Prior to joining the Bank he was employed by
Melbourne and Bendigo based chartered accounting firms.
Auditor Independence and Non-audit Services
The Company’s audit committee has conducted an assessment of the independence of the external auditor for the year ended
30 June 2009. The assessment was conducted on the basis of the Company’s audit independence policy and the
requirements of the Corporations Act 2001. The assessment included a review of non-audit services provided by the auditor
and an assessment of the independence declaration issued by the external auditor for the year ended 30 June 2009. The
audit committee's assessment confirmed that the independence requirements have been met. The audit committee’s
assessment was accepted by the full Board. A copy of the auditor’s independence declaration is provided at the end of this
Directors’ Report.
69
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Non-Audit Services
Non-audit services are those services paid or payable to the Group’s external auditor, Ernst & Young (Australia), which do not relate to
Group statutory audit engagements.
Details of all non-audit services for the year ended 30 June 2009:
(a)
Audit related fees:
In its capacity as the Group’s external auditor, Ernst & Young are periodically engaged to provide assurance services to the
Group in accordance with Australian Auditing Standards. All assignments are subject to engagement letters in accordance
with Australian Auditing Standards. They include audit services required for regulatory and prudential purposes and the
amounts shown are GST exclusive.
Service Category
APRA Prudential Standard APS310 report
Australian Financial Services Licence Audits
APRA Prudential Standard GPS220 report
Trust Deed Report – Euro Medium Term Note Program
Trust Deed Report- Victorian Securities Trust
Sub total – audit related fees
Fees
(excluding GST)
$
81,400
56,500
16,000
24,000
16,880
194,780
Entity
Bendigo and Adelaide Bank
Limited
(1) Refer below
Sunstate Lenders Mortgage
Insurance
Bendigo and Adelaide Bank
Limited
Bendigo and Adelaide Bank
Limited
(1) Amount attributed to Bendigo and Adelaide Bank and subsidiary companies: Sandhurst Trustees Limited, Victorian
Securities Corporation Limited, Adelaide Managed Funds Limited, Leveraged Equities Nominees Proprietary Limited, Bendigo
Financial Planning Limited and National Assets Securitisation Corporation
(b)
Non audit related fees:
Service
Tax advice
Professional Services
Sub total – non audit related fees
Total – non audit services
Fees
(excluding GST)
$
Entity
574,414
Bendigo and Adelaide Bank
Limited
Bendigo and Adelaide Bank
Limited
725,296
1,299,710
1,494,490
Non audit related fees are significantly higher due to acquisition accounting and tax advice as a result of the merger with
Adelaide Bank. This level of advice and fees is not expected to continue.
The Audit Committee has reviewed the nature and scope of the above non-audit services provided by the external auditor. In
doing so, the Audit Committee has assessed that the provision of those services is compatible with the general standard of
independence for auditors imposed by the Corporations Act.
This assessment was made on the basis that the non-audit services performed did not represent the performance of
management functions or the making of management decisions, nor were the dollar amounts of the non-audit fees considered
sufficient to impair the external auditor's independence. As noted previously, this Audit Committee's assessment has been
reviewed and accepted by the full Board.
70
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Auditor’s Independence Declaration to the Directors of Bendigo and Adelaide Bank Limited
In relation to our audit of the financial report of Bendigo and Adelaide Bank Limited for the financial year ended 30 June 2009,
to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the
Corporations Act 2001 or any applicable code of professional conduct.
Brett Kallio
Partner
Melbourne
8 September 2009
Ernst & Young
Liability limited by a scheme approved under
Professional Standards Legislation
71
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
This Directors Report is signed in accordance with a resolution of the Board of Directors
R N Johanson
Chairman
8 September 2009
M J Hirst
Managing Director
72
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INCOME STATEMENT
for the year ended 30 June 2009
Income
Net interest income
Interest income
Interest expense
Total Net interest income
Other revenue
Dividends
Fees
Commissions
Other revenue
Total other revenue
Other income
Ineffective cash flow hedges
Cash flow derivative - controlled entity
Realised accounting gain on sale of Visa Inc shares
Realised accounting gain on the sale of equity investments
Other
Share of joint ventures net profit/losses
Total income after interest expense
Expenses
Bad and doubtful debts on loans and receivables
Bad and doubtful debts
Bad and doubtful debts recovered
Total bad and doubtful debts on loans and receivables
Other expenses
Staff and related costs
Occupancy costs
Amortisation of intangibles
Property, plant & equipment costs
Fees and commissions
Impairment loss on equity investments
Integration costs
Employee shares shortfall
Other
Total other expenses
Profit before income tax expense
Income tax (expense)/benefit
Net profit for the period
Net (profit)/loss attributable to minority interest
Net profit attributable to members of the parent
Net profit / (loss) for the period attributable to:
Minority interest
Members of the Parent
Earnings per share for profit attributable to the ordinary equity holders of the Company:
Basic earnings per ordinary share (cents per share)
Diluted earnings per ordinary share (cents per share)
Franked dividends per ordinary share (cents per share)
9
9
10
73
Note
C o ns o lida t e d
P a re nt
2 0 0 9
2 0 0 8
2 0 0 9
2 0 0 8
4
4
4
4
4
4
4
4
4
4
22
4
4
4
4
4
4
4
4
4
4
6
36
36
$ m
$ m
$ m
$ m
3,154.7
2,519.7
635.0
2,695.6
2,098.1
597.5
1,842.4
1,435.0
407.4
1,227.6
863.0
364.6
2.2
203.0
47.7
22.7
275.6
(93.6)
-
-
26.0
(0.2)
(67.8)
30.9
873.7
86.2
(5.9)
80.3
296.8
54.8
32.7
13.9
22.2
10.0
41.4
5.3
197.0
674.1
119.3
(35.5)
83.8
-
83.8
-
83.8
25.6
25.6
43.0
3.9
172.4
54.4
16.2
246.9
(28.3)
-
25.2
-
2.2
(0.9)
26.4
869.9
25.7
(2.6)
23.1
256.3
43.0
26.2
13.4
20.4
30.3
9.4
-
161.5
560.5
286.3
(87.3)
199.0
(0.7)
198.3
147.4
166.2
13.8
31.6
359.0
(36.4)
-
-
25.9
(12.0)
(22.5)
197.0
121.0
11.4
21.1
350.5
-
(148.4)
18.6
-
2.2
(127.6)
-
-
743.9
587.5
63.7
(4.0)
59.7
7.7
(0.7)
7.0
241.1
68.8
20.8
12.0
18.3
9.2
37.0
5.3
166.3
578.8
105.4
8.2
113.6
-
113.6
188.4
52.4
5.2
9.7
16.6
30.2
4.8
-
128.7
436.0
144.5
18.5
163.0
-
163.0
0.7
198.3
-
113.6
-
163.0
87.7
87.6
65.0
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
BALANCE SHEET
as at 30 June 2009
Assets
Cash and cash equivalents
Due from other financial institutions
Assets held for sale
Financial assets held for trading
Financial assets available for sale - securities
Financial assets held to maturity
Current tax asset
Other assets
Financial assets available for sale - share investments
Derivatives
Loans and other receivables - investment
Net loans and other receivables
Amounts receivable from controlled entities
Investments in joint ventures accounted for
using the equity method
Shares in controlled entities
Property, plant & equipment
Deferred tax assets
Investment property
Intangible assets and goodwill
Total Assets
Liabilities
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Loans payable to securitisation trusts
Income tax payable
Provisions
Deferred tax liabilities
Reset preference shares
Subordinated debt - at amortised cost
Total Liabilities
Net Assets
Equity
Equity attributable to equity holders of the parent
Issued capital -ordinary
Perpetual non-cumulative redeemable convertible
preference shares
Step up preference shares
Employee Share Ownership Plan (ESOP) shares
Reserves
Retained earnings
Total Equity
Note
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
14
14
24
15
16
18
28
17
44
19
19
22
23
6
25
26
14
29
29
44
30
31
6
32
33
34
34
34
34
35
35
912.6
235.4
-
3,882.3
-
344.9
84.4
512.3
84.1
49.0
505.7
38,235.2
-
225.9
-
115.9
212.0
115.6
1,598.9
47,114.2
196.3
31,879.8
9,974.5
436.4
665.9
-
-
62.7
91.7
89.5
598.7
43,995.5
3,118.7
1,195.9
412.7
105.5
1,414.8
422.0
1,414.6
-
468.2
84.6
311.8
517.6
39,587.4
-
185.2
-
113.5
164.4
80.4
1,570.4
48,049.0
269.7
31,404.9
11,292.2
72.4
680.9
-
11.1
67.8
186.8
89.5
675.8
44,751.1
3,297.9
527.5
235.4
-
5,613.3
-
266.4
84.4
660.4
5.9
124.7
505.7
34,598.4
765.7
-
460.6
93.8
186.8
-
1,476.7
45,605.7
196.3
31,894.1
2,102.4
486.2
903.3
6,033.4
-
62.7
95.5
89.5
598.7
42,462.1
3,143.6
440.5
237.6
3.2
-
611.5
1,673.4
-
450.7
77.2
128.1
-
15,018.4
164.2
-
2,272.5
66.7
84.3
-
53.4
21,281.7
151.7
16,948.2
-
173.2
282.5
-
11.1
52.8
38.8
89.5
301.3
18,049.1
3,232.6
3,003.9
2,706.3
3,003.9
2,706.3
88.5
100.0
(32.7)
(185.3)
144.3
3,118.7
88.5
100.0
(37.4)
170.6
269.9
3,297.9
88.5
100.0
(32.7)
(159.5)
143.4
3,143.6
88.5
100.0
(37.4)
129.1
246.1
3,232.6
74
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
STATEMENT OF RECOGNISED INCOME AND EXPENSES
for the year ended 30 June 2009
Available for sale financial assets revaluation
Transfer available for sale assets impairment loss to income
Net gain/(loss) on cash flow hedges taken to equity
Net gain/(loss) on reclassification from CFHR to income
Net unrealised gain/(loss) on investments in AFS portfolio
Actuarial gain/(loss) on superannuation defined benefits plan
Tax effect on items taken directly to or transferred from equity
Net income/(loss) recognised directly in equity
Profit for the year
Total recognised income and expenses for the period
Total recognised income and expenses for the period attributable to:
Minority interest
Members of the Parent
Note
Consolidated
Parent
35
35
35
35
35
35
35
2009
$m
(34.3)
0.9
(538.4)
86.7
-
(6.9)
97.2
(394.8)
83.8
(311.0)
-
(311.0)
2008
$m
(56.0)
29.9
14.4
28.4
0.1
(1.4)
(13.9)
1.5
199.0
200.5
0.7
199.8
2009
$m
(36.8)
0.1
(436.3)
29.5
-
(2.7)
94.2
(352.0)
113.6
(238.4)
-
(238.4)
2008
$m
(56.7)
29.8
47.7
(0.3)
0.1
-
(16.1)
4.5
163.0
167.5
-
167.5
75
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
CASH FLOW STATEMENT
for the year ended 30 June 2009
Note
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
CASH FLOWS FROM OPERATING ACTIVITIES
Interest and other items of a similar nature received
Interest and other costs of finance paid
Receipts from customers (excluding effective interest)
Payments to suppliers and employees
Dividends received
Income taxes paid
Net cash flows from operating activities
13
CASH FLOWS FROM INVESTING ACTIVITIES
Cash flows for purchases of property, plant and equipment
Cash proceeds from sale of property, plant and equipment
Cash Proceed from sale of asset held for sale
Cash paid for purchases of intangible software
Cash paid for purchases of equity investments
Cash proceeds from sale of equity investments
Net (increase)/decrease in balance of loans and other receivables outstanding
Net (increase)/decrease in balance of investment securities
Net cash paid on acquisition of a portfolio
Net cash received/(paid) on acquisition of a subsidiary
Net cash received on derecognition of a subsidiary
Net cash flows from/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares
Proceeds from preference share instalment
Net increase/(decrease) in balance of retail deposits
Net increase/(decrease) in balance of wholesale deposits
Proceeds from issue of subordinated debt
Repayment of subordinated debt
Dividends paid
Net increase/(decrease) in balance of notes payable
Repayment of ESOP shares
Payment of share issue costs
Net cash flows from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents the at end of period
14
3,059.1
(2,481.6)
236.3
(646.7)
34.9
(74.7)
127.3
(47.2)
3.4
100.0
(9.7)
(80.2)
42.1
2,833.1
(987.9)
(1,482.0)
-
-
371.6
192.8
-
4,911.7
(4,429.0)
-
(80.0)
(142.2)
(1,341.9)
4.7
(2.2)
(886.1)
(387.2)
1,338.9
951.7
2,515.9
(1,993.4)
211.1
(510.3)
16.8
(81.9)
158.2
(85.9)
6.9
-
(0.2)
(34.4)
11.8
768.4
808.6
-
474.4
-
1,949.6
-
89.8
2,050.9
(955.6)
50.0
(56.0)
(94.9)
(2,000.8)
3.0
(0.4)
(914.0)
1,193.8
145.1
1,338.9
1,749.8
(1,415.1)
251.4
(700.0)
36.1
(59.4)
(137.2)
(8.4)
0.7
-
(9.5)
(101.8)
112.6
679.8
(4,134.4)
-
-
129.2
(3,331.8)
192.8
-
4,977.6
(2,483.5)
-
(80.0)
(142.2)
1,042.0
4.7
(2.2)
3,509.2
40.2
526.4
566.6
1,027.1
(828.4)
150.6
(193.6)
107.0
(46.0)
216.7
(29.2)
1.6
-
(0.2)
(91.2)
11.8
(1,662.2)
(213.0)
-
-
-
(1,982.4)
-
92.1
2,041.9
165.8
50.0
(56.0)
(94.9)
-
3.0
(0.4)
2,201.5
435.8
90.6
526.4
76
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
NOTES TO THE FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
The financial report of Bendigo and Adelaide Bank Limited (the Company) for the year ended 30 June 2009 was authorised for
issue in accordance with a resolution of the directors on 8 September 2009.
Bendigo and Adelaide Bank Limited is a company limited by shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange.
The domicile of Bendigo and Adelaide Bank Limited is Australia.
The registered office of the Company is:
The Bendigo Centre
PO Box 480
Bendigo, Victoria
Australia 3552
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
Bendigo and Adelaide Bank Limited is a “prescribed corporation” in terms of the Corporations Act 2001. Financial reports
prepared in compliance with the Banking Act are deemed to comply with the accounts provisions of the Corporations Act 2001.
The financial report is a general purpose financial report which has been prepared in accordance with the Banking Act,
Australian Accounting Standards, Corporations Act 2001 and the requirements of law so far as they are applicable to
Australian banking corporations.
The financial report has been prepared in accordance with the historical cost, amortised cost for loans and receivables and
financial liabilities, except for investment properties, land and buildings, derivative financial instruments and available-for-sale
financial assets which are measured at their fair value.
The amounts contained in the financial statements have been rounded off under the option available to the Company under
ASIC Class Order 98/0100. The Company is an entity to which the Class Order applies. The Class Order allows for rounding to
the nearest one hundred thousand dollars ($’00,000).
Due to the business combination on 30 November 2007 the prior year comparative figures represent 7 months contribution of
Adelaide Bank Limited.
77
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Compliance with IFRS
The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS).
Recently issued or amended standards not yet effective.
Australian Accounting Standards that have recently been issued or amended but are not yet effective have not been adopted
for the annual reporting period ending 30 June 2009:
Reference
Title
Summary
AASB Int. 18
Transfers of
Assets from
Customers
AASB 8 and
AASB 2007-3
Operating
Segments
and
consequential
amendments
to other
Australian
Accounting
Standards
AASB 1039
(revised)
Concise
Reporting
Application
date for
Group*
1 July 2009
1 July 2009
1 July 2009
Impact on
Group
financial
report
The
Interpretation
is unlikely to
have any
impact on the
Group since it
does not
currently
transfer
assets from
customers as
defined by the
interpretation.
AASB 8 is a
disclosure
standard
which may
impact the
goodwill
impairment,
as different
cash
generating
units may
apply.
AASB 1039 is
a disclosure
standard so
will have no
direct impact
on the
amounts
included in the
Group’s
financial
statements.
Application
date of
standard*
Applies
prospectively
to transfer of
assets from
customers
received on
or after 1 July
2009
1 January
2009
This Interpretation provides guidance on
the transfer of assets such as items of
property, plant and equipment or transfers
of cash received from customers. The
Interpretation provides guidance on when
and how an entity should recognise such
assets and discusses the timing of revenue
recognition for such arrangements and
requires that once the asset meets the
condition to be recognised at fair value, it is
accounted for as an ‘exchange transaction’.
Once an exchange transaction occurs the
entity is considered to have delivered a
service in exchange for receiving the asset.
Entities must identify each identifiable
service within the agreement and recognise
revenue as each service is delivered.
New Standard replacing AASB 114
Segment Reporting, which adopts a
management reporting approach to
segment reporting.
AASB 1039 was revised in August 2008 to
achieve consistency with AASB 8
Operating Segments. The revisions include
changes to terminology and descriptions to
ensure consistency with the revised AASB
101 Presentation of Financial Statements.
1 January
2009
78
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Reference
Title
Summary
Application
date of
standard*
The amendments to AASB 123 require that
all borrowing costs associated with a
qualifying asset be capitalised.
1 January
2009
AASB 123
(Revised) and
AASB 2007-6
Borrowing
Costs and
consequential
amendments
to other
Australian
Accounting
Standards
AASB 101
(Revised),
AASB 2007-8
and AASB
2007-10
Presentation
of Financial
Statements
and
consequential
amendments
to other
Australian
Accounting
Standards
Introduces a statement of comprehensive
income.
1 January
2009
Other revisions include impacts on the
presentation of items in the statement of
changes in equity, new presentation
requirements for restatements or
reclassifications of items in the financial
statements, changes in the presentation
requirements for dividends and changes to
the titles of the financial statements.
AASB 2008-1 Amendments
to Australian
Accounting
Standard –
Share-based
Payments:
Vesting
Conditions
and
Cancellations
1 January
2009
The amendments clarify the definition of
“vesting conditions”, introducing the term
“non-vesting conditions” for conditions
other than vesting conditions as specifically
defined and prescribe the accounting
treatment of an award that is effectively
cancelled because a non-vesting condition
is not satisfied.
79
Application
date for
Group*
1 July 2009
1 July 2009
1 July 2009
Impact on
Group
financial
report
The Group
has no
borrowing
costs
associated
with qualifying
assets and as
such the
amendments
are not
expected to
have any
impact on the
Group’s
financial
report.
These
amendments
are only
expected to
affect the
presentation
of the Group’s
financial
report and will
not have a
direct impact
on the
measurement
and
recognition of
amounts
disclosed in
the financial
report. The
Group has not
determined at
this stage
whether to
present a
single
statement of
comprehensiv
e income or
two separate
statements.
The Group
has share-
based
payment
arrangements
that may be
affected by
these
amendments.
However, the
Group has not
yet
determined
the extent of
the impact, if
any.
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Reference
Title
Summary
The amendments provide a limited
exception to the definition of a liability so as
to allow an entity that issues puttable
financial instruments with certain specified
features, to classify those instruments as
equity rather than financial liabilities.
AASB 2008-2 Amendments
to Australian
Accounting
Standards –
Puttable
Financial
Instruments
and
Obligations
arising on
Liquidation
Application
date of
standard*
1 January
2009
AASB 3
(Revised)
Business
Combinations
AASB 127
(Revised)
Consolidated
and Separate
Financial
Statements
1 July 2009
1 July 2009
The revised Standard introduces a number
of changes to the accounting for business
combinations, the most significant of which
includes the requirement to have to
expense transaction costs and a choice (for
each business combination entered into) to
measure a non-controlling interest
(formerly a minority interest) in the acquiree
either at its fair value or at its proportionate
interest in the acquiree’s net assets. This
choice will effectively result in recognising
goodwill relating to 100% of the business
(applying the fair value option) or
recognising goodwill relating to the
percentage interest acquired. The changes
apply prospectively.
There are a number of changes arising
from the revision to AASB 127 relating to
changes in ownership interest in a
subsidiary without loss of control, allocation
of losses of a subsidiary and accounting for
the loss of control of a subsidiary.
Specifically in relation to a change in the
ownership interest of a subsidiary (that
does not result in loss of control) – such a
transaction will be accounted for as an
equity transaction.
AASB 2008-3 Amendments
to Australian
Accounting
Standards
arising from
AASB 3 and
AASB 127
Amending Standard issued as a
consequence of revisions to AASB 3 and
AASB 127. Refer above.
1 July 2009
80
Application
date for
Group*
1 July 2009
1 July 2009
1 July 2009
1 July 2009
Impact on
Group
financial
report
These
amendments
are not
expected to
have any
impact on the
Group’s
financial
report as the
Group does
not have on
issue or
expect to
issue any
puttable
financial
instruments as
defined by the
amendments.
The Group
may enter into
some
business
combinations
during the
next financial
year. The
Group has not
yet assessed
which
accounting
policy to
adopt.
If the Group
changes its
ownership
interest in
existing
subsidiaries in
the future, the
change will be
accounted for
as an equity
transaction.
This will have
no impact on
goodwill, nor
will it give rise
to a gain or
loss in the
Group’s
income
statement.
Refer to AASB
3 (Revised)
and AASB
127 (Revised)
above.
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Reference
Title
Summary
AASB 2008-5 Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvement
s Project
AASB 2008-6 Further
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvement
s Project
The improvements project is an annual
project that provides a mechanism for
making non-urgent, but necessary,
amendments to IFRSs. The IASB has
separated the amendments into two parts:
Part 1 deals with changes the IASB
identified resulting in accounting changes;
Part II deals with either terminology or
editorial amendments that the IASB
believes will have minimal impact.
This was the first omnibus of amendments
issued by the IASB arising from the Annual
Improvements Project and it is expected
that going forward, such improvements will
be issued annually to remove
inconsistencies and clarify wording in the
standards.
The AASB issued these amendments in
two separate amending standards; one
dealing with the accounting changes
effective from 1 January 2009 and the
other dealing with amendments to AASB 5,
which will be applicable from 1 July 2009
[refer below AASB 2008-6].
This was the second omnibus of
amendments issued by the IASB arising
from the Annual Improvements Project.
Refer to AASB 2008-5 above for more
details.
Application
date for
Group*
1 July 2009
Application
date of
standard*
1 January
2009
Impact on
Group
financial
report
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
1 July 2009
1 July 2009
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
81
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Application
date for
Group*
1 July 2009
1 July 2009
Impact on
Group
financial
report
Recognising
all dividends
received from
subsidiaries,
jointly
controlled
entities as
income will
likely give rise
to greater
income being
recognised by
the parent
entity after
adoption of
these
amendments.
In addition, if
the Group
enters into
any group
reorganisation
establishing
new parent
entities, an
assessment
will need to be
made to
determine if
the
reorganisation
meets the
conditions
imposed to be
effectively
accounted for
on a ‘carry-
over basis’
rather than at
fair value.
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
Application
date of
standard*
1 January
2009
Reference
Title
Summary
AASB 2008-7 Amendments
to Australian
Accounting
Standards –
Cost of an
Investment in
a Subsidiary,
Jointly
Controlled
Entity or
Associate
The main amendments of relevance to
Australian entities are those made to AASB
127 deleting the “cost method” and
requiring all dividends from a subsidiary,
jointly controlled entity or associate to be
recognised in profit or loss in an entity's
separate financial statements (i.e., parent
company accounts). The distinction
between pre- and post-acquisition profits is
no longer required. However, the payment
of such dividends requires the entity to
consider whether there is an indicator of
impairment.
AASB 127 has also been amended to
effectively allow the cost of an investment
in a subsidiary, in limited reorganisations,
to be based on the previous carrying
amount of the subsidiary (that is, share of
equity) rather than its fair value.
AASB 2008-8 Amendments
to Australian
Accounting
Standards –
Eligible
Hedged Items
The amendment to AASB 139 clarifies how
the principles underlying hedge accounting
should be applied when (i) a one-sided risk
in a hedged item is being hedged and (ii)
inflation in a financial hedged item existed
or was likely to exist.
1 July 2009
82
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Application
date for
Group*
1 July 2009
Application
date of
standard*
Annual
reporting
periods
beginning on
or after 1
January 2009
that end on or
after 30 April
2009.
Impact on
Group
financial
report
AASB 7 is a
disclosure
standard so
will have no
direct impact
on the
amounts
included in the
Group’s
financial
results.
AASB 4,
AASB 1023
and AASB
1038 are not
relevant to the
Group.
1 July 2009
1 July 2009
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
Reference
Title
Summary
AASB 2009-2 Amendments
to Australian
Accounting
Standards –
Improving
Disclosures
about
Financial
Instruments
[AASB 4,
AASB 7,
AASB 1023 &
AASB 1038]
AASB 2009-4 Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvement
s Project
[AASB 2 and
AASB 138
and AASB
Interpretation
s 9 & 16]
The main amendment to AASB 7 requires
fair value measurements to be disclosed by
the source of inputs, using the following
three-level hierarchy:
► quoted prices (unadjusted) in active
markets for identical assets or
liabilities (Level 1);
►
inputs other than quoted prices
included in Level 1 that are observable
for the asset or liability, either directly
(as prices) or indirectly (derived from
prices) (Level 2); and
►
inputs for the asset or liability that are
not based on observable market data
(unobservable inputs) (Level 3).
These amendments arise from the
issuance of Improving Disclosures about
Financial Instruments (Amendments to
IFRS 7) by the IASB in March 2009.
The amendments to AASB 4, AASB 1023
and AASB 1038 comprise editorial changes
resulting from the amendments to AASB 7.
The amendments to some Standards result
in accounting changes for presentation,
recognition or measurement purposes,
while some amendments that relate to
terminology and editorial changes are
expected to have no or minimal effect on
accounting.
The main amendment of relevance to
Australian entities is that made to IFRIC 16
which allows qualifying hedge instruments
to be held by any entity or entities within
the group, including the foreign operation
itself, as long as the designation,
documentation and effectiveness
requirements in AASB 139 that relate to a
net investment hedge are satisfied. More
hedging relationships will be eligible for
hedge accounting as a result of the
amendment.
These amendments arise from the
issuance of the IASB’s Improvements to
IFRSs. The amendments pertaining to
IFRS 5, 8, IAS 1,7, 17, 36 and 39 have
been issued in Australia as AASB 2009-5
(refer below).
83
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Application
date for
Group*
1 July 2010
Application
date of
standard*
1 January
2010
Impact on
Group
financial
report
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
Reference
Title
Summary
AASB 2009-5 Further
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvement
s Project
[AASB 5, 8,
101, 107,
117, 118, 136
& 139]
The amendments to some Standards result
in accounting changes for presentation,
recognition or measurement purposes,
while some amendments that relate to
terminology and editorial changes are
expected to have no or minimal effect on
accounting.
The main amendment of relevance to
Australian entities is that made to AASB
117 by removing the specific guidance on
classifying land as a lease so that only the
general guidance remains. Assessing land
leases based on the general criteria may
result in more land leases being classified
as finance leases and if so, the type of
asset which is to be recorded (intangible v
property, plant and equipment) needs to be
determined.
These amendments arise from the
issuance of the IASB’s Improvements to
IFRSs. The AASB has issued the
amendments to IFRS 2, IAS 38, IFRIC 9 as
AASB 2009-4 (refer above).
1 July 2009
1 July 2010
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
The Group
has not yet
determined
the extent of
the impact of
the
amendments,
if any.
AASB 2009-Y Amendments
to Australian
Accounting
Standards
These comprise editorial amendments and
are expected to have no major impact on
the requirements of the amended
pronouncements.
1 July 2009
[AASB 5, 7,
107, 112, 136
& 139 and
Interpretation
17]
Amendments
to IFRS 2
Amendments
to
International
Financial
Reporting
Standards**
The amendments clarify the accounting for
group cash-settled share-based payment
transactions, in particular:
1 January
2010
►
►
the scope of AASB 2; and
the interaction between IFRS 2 and
other standards.
An entity that receives goods or services in
a share-based payment arrangement must
account for those goods or services no
matter which entity in the group settles the
transaction, and no matter whether the
transaction is settled in shares or cash.
A “group” has the same meaning as in IAS
27 Consolidated and Separate Financial
Statements, that is, it includes only a
parent and its subsidiaries.
The amendments also incorporate
guidance previously included in IFRIC 8
Scope of IFRS 2 and IFRIC 11 IFRS 2—
Group and Treasury Share Transactions.
As a result, IFRIC 8 and IFRIC 11 have
been withdrawn.
*
**
designates the beginning of the applicable annual reporting period unless otherwise stated
pronouncements that have been issued by the IASB and IFRIC but have not yet been issued by the AASB. Entities must
disclose the impact of these pronouncements in order to make the statement of compliance with IFRS under AASB
101.14. For-profit public sector entities may not be required to disclose the impact of IASB and IFRIC pronouncements if
they have applied an Australian Accounting Standard, which is inconsistent with IFRS requirements under AASB
101.Aus14.2. Not-for-profit entities need not comply with AASB 101.14 and are not required to disclose the impact of
IASB and IFRIC pronouncements under AASB 101.Aus14.3.
84
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3
Basis of consolidation
The consolidated financial statements comprise the financial statements of Bendigo and Adelaide Bank Limited and all of
its controlled entities (“the Group”). Interests in joint ventures are equity accounted and are not part of the consolidated
group.
A controlled entity is any entity (including special purpose entities) over which Bendigo and Adelaide Bank Limited has the
power to govern directly or indirectly decision-making in relation to financial and operating policies, so as to obtain benefits
from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether they group controls another entity.
Controlled entities prepare financial reports for consolidation in conformity with group accounting policies. Adjustments
are made to bring into line any dissimilar accounting policies that may exist. The financial statements of controlled entities
are prepared for the same reporting period as the parent company.
All inter-company balances and transactions between entities in the economic entity have been eliminated on
consolidation. Where a controlled entity has been sold or acquired during the year its operating results have been
included to the date control ceased or from the date control was obtained.
Investments in subsidiaries held by Bendigo and Adelaide Bank Limited are accounted for at cost in separate financial
statement of the parent entity.
The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of
accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the
liabilities and contingent liabilities assumed at the date of acquisition.
Minority interest not held by the group are allocated their share of net profit after tax in the income statement and are
presented within equity in the consolidated balance sheet, separately from parent shareholders’ equity.
2.4 Business combinations
The purchase method of accounting is used to account for all business combinations regardless of whether equity
instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares issued or
liabilities incurred or assumed at the date of exchange plus costs directly attributable to the combination. Where equity
instruments are issued in a business combination, the fair value of the instruments is their published price at the date of
exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an
unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair
value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Except for non-current assets or disposal groups classified as held for sale (which are measured at fair value less costs to
sell), all identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess
of the cost of the business combination over the net fair value of the Group’s share of the identifiable net assets acquired
is recognised as goodwill. If the cost of acquisition is less than the Group’s share of the net fair value of the identifiable
net assets of the subsidiary, the difference is recognised as a gain in the income statement, but only after a reassessment
of the identifiable and measurement of the net assets acquired.
Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their
present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate
at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Due to the business combination on 30 November 2007 the prior year comparative figures represent 7 months
contribution of Adelaide Bank.
Changes in accounting policies
2.5
The accounting policies are consistent with those applied in the previous financial year and corresponding interim period.
2.6
Significant accounting judgments, estimates and assumptions
(i) Significant accounting judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, apart
from those involving estimations, which have the most significant effect on the amounts recognised in the financial
statements:
85
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Operating Lease Commitments – Group as Lessor
The entity has entered into commercial property leases on its investment property portfolio. The entity has
determined that it retains all the significant risks and rewards of ownership of these properties and has thus
classified the leases as operating leases.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is
probable that future taxable profits will be available to utilise those temporary differences.
(ii) Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of
future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Impairment of goodwill and intangibles with indefinite useful lives.
The Group determines whether goodwill and intangibles with indefinite useful lives are impaired at least on an
annual basis. This requires an estimation of the recoverable amount of the cash-generating units to which the
goodwill and intangibles with indefinite useful lives are allocated. The assumptions used in this estimation of
recoverable amount and the carrying amount of goodwill and intangibles with indefinite useful lives are discussed
in note 27.
Impairment of financial assets and property, plant & equipment.
The group has to make a judgment as to whether an impairment trigger is evident at each balance date. If a trigger
is evident the asset must be tested for impairment, which requires the estimation of future cash flows and the use
of an appropriate discount rate.
Impairment of non-financial assets other than goodwill
The group assess impairment of all assets at each reporting date by evaluating conditions specific to the group
and to the particular asset that may lead to impairment. If an impairment trigger exists the recoverable amount of
the asset is determined. This involves value in use calculations, which incorporate a number of key estimates and
assumptions.
Employee benefits (leave provisions)
The carrying amount of leave liabilities is calculated based on assumptions and estimates of when employees will
take leave and the prevailing wage rates at the time the leave will be taken. Long service leave liability also
requires a prediction of the number of employees that will achieve entitlement to long service leave.
Superannuation defined benefit plan
Various actuarial assumptions are required when determining the group’s superannuation obligations. The bank’s
policy on superannuation defined benefit plan is disclosed in Note 2.24 and Note 44.
Loan provisioning
The group determines whether loans are impaired on an ongoing basis. This requires an estimation of the value of
future cash flows. The bank’s policy for calculation of loan loss allowance is disclosed in Note 2.13.
Assets held for sale – head office development asset
For 2008, the fair value carrying amount of the head office development was determined based on estimates of
cost to completion and other variables associated with a development of this nature.
Securitisations
2.7
Securitised positions are held through a number of Special Purpose Entities (“SPEs”). As the Bank is exposed to the
majority of the residual risk associated with these SPEs, their underlying assets, liabilities, revenues and expenses are
reported in the Bank’s consolidated balance sheet and income statement.
Trustee and funds management activities
2.8
Controlled entities of the Bank act as the Trustee and/or Manager for a number of funds. The assets and liabilities of
these funds are not included in the consolidated financial statements. The parent entity does not have direct or indirect
control of the funds as defined by Accounting Standard AASB 127 "Consolidated and Separate Financial Statements".
Commissions and fees generated by the funds management activities are brought to account when earned.
Foreign currency transactions and balances
2.9
Both the functional and presentation currency of Bendigo and Adelaide Bank Limited and each of its subsidiaries is
Australian dollars (AUD). Transactions in foreign currencies are initially recorded in the functional currency at the
exchange rates ruling on the date of the transaction.
All amounts are expressed in Australian currency and all references to "$" are to Australian dollars unless otherwise
stated. Amounts receivable and payable in foreign currencies at balance date are converted at the rates of exchange
ruling at that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to
account as exchange gains or losses in the income statement in the financial year in which the exchange rates change.
86
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.10 Cash and cash equivalents
Cash on hand and in banks and short-term deposits are stated at nominal value.
For the purposes of the cash flow statement, cash includes cash on hand and in banks, short-term money market
investments readily convertible into cash within 2 working days, net of outstanding overdrafts.
Bank overdrafts are carried at amortised cost. Interest is charged as an expense as it accrues.
2.11 Classification of financial instruments
Financial instruments in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified into
one of five categories, which determine the accounting treatment of the financial instrument.
The classification depends on the purpose for which the instruments were acquired. Designation is re-evaluated at each
financial year end, but there are restrictions on reclassifying to other categories.
The classifications are:
Loans & receivables -
Held to maturity -
Held for trading -
Available for sale -
Non-trading liabilities -
measured at amortised cost
measured at amortised cost
measured at fair value with changes in fair value charged to the income statement
measured at fair value with changes in fair value taken to equity
measured at amortised cost
All derivative contracts are recorded at fair value in the balance sheet.
2.12 Financial assets and financial liabilities
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition
charges associated with the investment. After initial recognition, investments, which are classified as held for trading and
available-for-sale, are measured at fair value. Gains or losses on investments held for trading are recognised in the
income statement.
All regular way purchases and sales of financial assets are recognised on the settlement date ie. the date the Group
settles the purchase of the asset. Regular way purchases or sales are purchases or sales of financial assets under
contracts that require delivery of the assets within the period established generally by regulation or convention in the
market place.
Gains or losses on available-for-sale investments are recognised as a separate component in equity until the investment is
sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative
gain or loss previously reported in equity is included in the income statement.
Treasury financial assets – held to maturity
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity
where the group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined
period are not included in this classification.
Investments that are intended to be held to maturity are subsequently measured at amortised cost using the effective
interest method.
Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity.
For investments carried at amortised cost, gains and losses are recognised in income when the investments are
derecognised or impaired, as well as through the amortisation process.
Treasury financial liabilities – deposits and subordinated debt
All treasury funding instruments are initially recognised at cost, being the fair value of the consideration given and
including charges associated with the issue of the instrument. They are subsequently measured at amortised cost using
the effective interest method.
Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity.
For liabilities carried at amortised cost, gains and losses are recognised in income when the instruments are
derecognised. Treasury funding instruments that are hedged are treated in accordance with the accounting policy for
hedges.
Funding instruments that are issued in currencies other than AUD are accounted for at amortised cost. These
transactions are restated to AUD equivalents each month with adjustments taken directly to income.
Financial assets – available for sale share investments
Investment securities available for sale consist of securities that are not actively traded by the economic entity.
Fair value of quoted investments in active markets are based on current bid prices. If the relevant market is not
considered active (or the securities are unlisted), the economic entity establishes fair value by using valuation techniques,
including recent arm's length transactions, discounted cash flow analysis, option pricing models and other valuation
techniques commonly used by market participants.
Purchases and sales of financial assets and liabilities that require delivery of assets/securities within the time frame, and
generally established by regulation or convention in the market place are recognised on the settlement date ie. the date
that the group receives or pays the principal sum.
87
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.13 Loans and receivables
Loans and receivables are carried at amortised cost, using the effective interest method. The effective interest rate
calculation includes the contractual terms of loans together with all fees, transaction costs and other premiums or
discounts.
Loans with renegotiated terms are accounted for in the same manner, taking account of any change to the terms of the
loan.
All loans are subject to continuous management review to assess whether there is any objective evidence that any loan or
group of loans is impaired.
Impairment loss is measured as the difference between the loan's carrying amount and the value of estimated future cash
flows (excluding future credit losses that have not been incurred) discounted at the loan's original effective interest rate.
Impairment losses are recognised in the income statement.
Specific provision
A specific provision is recognised for all impaired loans when there is reasonable doubt over the collectability of principal
and interest in accordance with the loan agreement. All bad debts are written off against the specific provision in the
period in which they are classified as not recoverable.
The provision is determined by specific identification, or by estimation of expected losses in relation to loan portfolios
where specific identification is impractical, based on historical impairment experience for these portfolios. These portfolios
include unsecured credit cards, overdrawn accounts and personal loans, unsecured mortgage loans (property realisation
shortfalls) where provisions are calculated based on historical loss experience.
Collective provision
Individual loans not subject to specific provisioning are grouped together according to their risk characteristics and are
then assessed for impairment. Based on historical loss data and current available information for assets with similar risk
characteristics, the appropriate collective provision is raised. Adjustments to the collective provision are recognised in the
income statement.
General reserve for credit losses
In addition a general reserve for credit losses is maintained to cover risks inherent in the loan portfolios. Movements in the
general reserve for credit losses are recognised as an appropriation of retained earnings.
Australian Prudential Regulation Authority (“APRA”) requires that banks maintain a general reserve for credit losses at a
minimum level of 0.50% of risk weighted assets (net of tax). In certain circumstances the collective provision can be
included in this assessment.
Investments in joint ventures accounted for using the equity method
2.14
The group's investment in joint ventures is accounted for under the equity method of accounting in the consolidated
financial statements. These are entities in which the group has significant influence and is not a subsidiary. The financial
statements of joint ventures are used by the group to apply the equity method. The reporting dates of the joint ventures
and the group. The accounting policies of the joint ventures and the group are consistent.
The investments in the joint ventures are carried in the consolidated balance sheet at cost plus post-acquisition changes in
the group's share of the results of operations of the joint ventures, less any impairment in value. The income statement
reflects the share of the results of operations of the joint ventures.
Where there have been changes recognised directly in the joint ventures’ equity, the group recognises its share of any
changes and discloses this, when applicable, in the consolidated statement of changes in equity. The cumulative post
acquisition changes in reserves are adjusted against the carrying amount of the investment.
Dividends receivable from joint ventures are recognised in the parent entity’s income statement, while in the consolidated
financial statements they reduce the carrying amount of the investment.
When the group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, including any
unsecured long-term receivables and loans, the group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the joint venture.
2.15
Property, plant & equipment
Cost and valuation
Plant and equipment is measured at cost less accumulated depreciation and any impairment in value. Land is measured
at fair value. Buildings are measured at fair value less accumulated depreciation.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
Asset category
Freehold buildings
Leasehold improvements
Plant & equipment
2009
Years
40
3 - 10
2 - 10
2008
Years
40
3 - 10
3 - 10
88
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment
Management has identified cash generating units and applicable impairment indicators in accordance with AASB 136
"Impairment of Assets".
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the
estimated recoverable amount, the assets are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-
generating unit to which the asset belongs.
Impairment losses are recognised in the income statement, unless they relate to revalued assets. Impairment losses of
revalued assets are recognised in the revaluation reserve.
Revaluations
Following initial recognition at cost, land and buildings are carried at a revalued amount which is the fair value at the date
of the revaluation less any subsequent accumulated depreciation on buildings and accumulated impairment losses.
Fair value is determined by reference to market-based evidence, which is the amount which the assets could be
exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction as at
the valuation date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the balance sheet
unless it reverses a revaluation decrease of the same asset previously recognised in the income statement.
Any revaluation deficit is recognised in the income statement unless it directly offsets a previous surplus of the same asset
recognised in the asset revaluation reserve.
An annual transfer from the asset revaluation reserve is made to retained earnings for the depreciation relating to the
revaluation surplus. In addition, any accumulated depreciation as at the revaluation date is eliminated against the gross
carrying amount of the asset and the net amount is restated to the revalued amount of the asset.
Upon disposal, any revaluation reserve relating to the particular asset being disposed is transferred to retained earnings.
The fair value of property, plant and equipment is assessed at each reporting date. Also, external valuations are
performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ
materially from the asset's fair value at the balance sheet date.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and
the carrying amount of the item) is included in the income statement in the year the item is derecognised.
Assets held for sale
2.16
An asset where the carrying amount will be recovered principally through a sale transaction is classified as held for sale.
The asset must be available for immediate sale in its present condition and the sale must be highly probable for an asset
to be classified as held for sale.
Held for sale assets are measured at the lower of carrying amount and fair value less costs to sell.
Adjustments in carrying value to write the asset down to fair value less costs to sell are recognised as an impairment loss.
Assets held for sale are not depreciated.
Investment properties
2.17
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of
replacing part of an investment property at the time the cost is incurred if the recognition criteria are met, and excludes the
costs of day-to-day servicing of an investment property.
Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the
balance sheet date. Gains or losses arising from changes in the fair values of investment properties are recognised in
profit or loss in the year in which they arise.
Investment properties are derecognised either when they have been disposed of or when the investment property is
permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the
retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.
Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of owner-
occupation, commencement of an operating lease to another party or ending of construction or development. Transfers
are made from investment property when, and only when, there is a change in use, evidenced by commencement of
owner-occupation or commencement of development with a view to sale.
89
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For a transfer from investment property to owner-occupied property or inventories, the deemed cost of property for
subsequent accounting is its fair value at the date of change in use. If the property occupied by the Group as an owner-
occupied property becomes an investment property, the Group accounts for such property in accordance with the policy
stated under ‘Property, plant and equipment’ up to the date of change in use. For a transfer from inventories to investment
property, any difference between the fair value of the property at that date and its previous carrying value is recognised in
profit or loss. When the Group completes the construction or development of a self-constructed investment property, any
difference between the fair value of the property at that date and its previous carrying amount is recognised in profit or
loss.
2.18
Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the
acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities at date of acquisition.
Following initial recognition, goodwill is measured at cost less any accumulated impairment loss. Goodwill is not
amortised. Goodwill is reviewed for impairment annually, or more frequently, if events or changes in circumstances
indicate that the carrying value may be impaired.
Management has identified cash generating units and applicable impairment indicators in accordance with AASB 136
"Impairment of Assets".
Goodwill with respect to business combinations is allocated to identify cash generating units expected to benefit from the
synergies of the combination.
Impairment is determined by assessing the recoverable amount of the cash generating unit to which the goodwill relates.
Where the recoverable amount of the cash generating unit is less than the carrying amount, which includes the allocated
goodwill, an impairment loss is recognised in the income statement, with the goodwill being impaired first. Impairment
losses of goodwill are not subsequently reversed.
Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or
loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and
the portion of the cash generating unit retained.
2.19
Intangibles assets
Acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value
as at the date of acquisition.
Following initial recognition, the cost model is applied to the class of intangible assets.
The useful lives of these intangible assets are assessed to be either finite or indefinite.
Where amortisation is charged on assets with finite lives, this expense is taken to the income statement. Intangible assets,
excluding development costs, created within the business are not capitalised and expenditure is charged against profits in
the year in which the expenditure is incurred.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite life
intangibles, annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual
basis and adjustments, where applicable, are made on a prospective basis.
The only intangible asset with an indefinite life currently carried by the group is the trustee licence relating to Sandhurst
Trustees Limited.
Computer software
Computer software, other than software that is an integral part of the computer hardware, is capitalised as intangible
software and amortised on a straight-line basis over the useful life of the asset.
Research and development costs
Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried forward when it is probable the future economic
benefits attributable to the asset will flow to the group.
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried
at cost less any accumulated amortisation and accumulated impairment losses.
Any expenditure carried forward is amortised over the period of expected future sales from the related project or expected
useful life.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more
frequently when an indicator of impairment arises during the reporting period indicating that the carrying value may not be
recoverable.
90
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
A summary of the policies applied to the group's intangible assets (excluding goodwill) is as follows:
Useful lives
Method used
Trustee Licence
Computer software/
Development costs
Intangible assets
acquired in business
combination
Indefinite
Finite
Finite
Not amortised or revalued
Usually not in excess of 5 years
– straight line (major software
systems – 7 years)
Amortised to reflect period
and pattern of economic
benefits
Internally generated/acquired
Acquired
Internally generated or acquired
Acquired
Impairment test/ recoverable
amount testing
Annually and where an
indicator of impairment
exists
Annually and where an indicator
of impairment
exists
Annually and where an
indicator of impairment
exists
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the income statement where the asset is
derecognised.
2.20
Trade and other payables
Liabilities for trade creditors and other amounts are carried at amortised cost, which is the fair value of the consideration to
be paid in the future for goods and services received, whether or not billed to the consolidated entity. Payables to related
parties are carried at the amortised cost.
Interest, when charged by the lender, is recognised on an effective interest rate basis.
Deferred cash settlements are recognised at the present value of the outstanding consideration payable on the acquisition
of an asset discounted at prevailing commercial borrowing rates.
Interest, when charged on payables to related parties, is recognised as an expense on an accrual basis using the effective
interest method.
2.21 Reserve fund
The Trustee Companies Act 1984 requires that a reserve fund be maintained to provide for the event of the appointment
of a liquidator, a receiver and manager or an administrator of a trustee company. In such an event, the monies in the
reserve fund are available to be utilised in accordance with Section 39 (3) of the Trustee Companies Act 1984.
Sandhurst Trustees Limited complies with the Act by setting aside the value of at call investments, freehold property and
other financial assets to the reserve fund.
Deposits
2.22
All deposits and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue
costs associated with the borrowing. After initial recognition, interest-bearing borrowings are subsequently measured at
amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs,
and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the
amortisation process.
2.23 Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a future
sacrifice of economic benefits to other entities as a result of past transactions or other past events, and it is probable that a
future sacrifice of economic benefits will be required and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific
to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A provision for dividend is not recognised as a liability unless the dividend is declared, determined or publicly
recommended on or before the reporting date.
2.24 Employee benefits
Wages and Salaries, Annual leave and Sick leave
Liabilities for wages and salaries have been recognised and measured as the amount which the economic entity has a
present obligation to pay, at balance date, in respect of employees' service up to that date. Liabilities have been calculated
at nominal amounts based on wage and salary rates current at balance date and include related on-costs. Wages and
salaries liabilities are recognised in payables.
91
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Annual leave liabilities are accrued on the basis of full pro rata entitlement at their nominal amounts, being the amounts
estimated to apply when the leave is paid. Sick leave bonus liability has been calculated at balance date in accordance
with the relevant group policy, which provides entitlement dependent on an individual employees’ years of service and
unused sick leave.
Long Service Leave
Long service leave has been assessed at full pro rata entitlement in respect of all employees with more than five year’s
service. The amount provided meets the requirement of Accounting Standard AASB 119 "Employee Benefits", which
requires the assessment of the likely number of employees that will ultimately be entitled to long service leave, the
estimated salary rates that will apply when the leave is paid, discounted to take account of the time value of money.
Annual leave, sick leave and long service leave liabilities are recognised in provisions.
Superannuation
Accumulation fund
Contributions are made to an employee accumulation superannuation fund and are charged to expenses when incurred.
Defined benefit plan
Contributions made to the defined benefit plan by entities within the consolidated entity are added to the superannuation
asset in the balance sheet. Any actuarial gains or losses are applied to the retained earnings with other fund movements
being recognised in the income statement.
2.25 Share based payments
The Group provides benefits to its employees (including key management personnel) in the form of share-based
payments, whereby employees render services in exchange for shares, rights or options over shares.
There are a number of plans in place to provide these benefits:
1.
the Employee Share Plan (“ESP”), which provides benefits only to the general staff. Executives (including the
Managing Director) may not participate in it.
Under the terms of the ESP, shares are issued at the prevailing market value at the time of the issues. The shares must
be paid for by the staff member. The ESP provides staff members with an interest-free loan for the sole purpose of
acquiring Bendigo and Adelaide Bank shares. Dividends paid on shares issued under the plan are applied primarily to
repay the loans. Staff cannot deal in the shares until the loan has been repaid.
The unpaid portion of the issued shares, reflected in the outstanding balance of interest-free loans advanced to
employees, is accounted for as ESP shares. The outstanding loan value of the ESP shares is deducted from equity in the
balance sheet.
The cost of issues under the plan is measured by reference to the fair value of the equity instruments at the date at which
they are granted. Shares granted under the ESP, vest immediately and are expensed to the Income Statement with the
employee benefits reserve increasing by a corresponding amount.
The last issue under this plan was made in January 2008.
2.
the Employee Share Grant Scheme
This Plan was introduced in September 2008. This Plan is open employees (excluding directors and senior executives) of
Bendigo and Adelaide Bank and its subsidiaries. Employees may be granted shares annually up to a maximum number
determined by the Directors having regard to the Bank’s performance. When an eligible employee accepts an invitation to
participate in the Scheme, the trustee of the Scheme will acquire shares on behalf of the employee and hold the shares on
trust for the employee. Three years after the trustee acquires the shares, they will be transferred to the employee.
The cost of issues under the Scheme is measured by reference to the fair value of the equity instruments at the date at
which they are granted. Shares granted under the Scheme vest immediately and are expensed to the Income Statement
with the employee benefits reserve increasing by a corresponding amount.
3. Employee Salary Sacrifice, Deferred Share and Performance Share Plan
This Plan was introduced in September 2008 as the Employee Salary Sacrifice and Deferred Share Plan, as a vehicle for
employees to purchase shares in the Bank via salary sacrifice. It was amended in August 2009 to allow for the grant of
performance shares. Performance shares may be granted to any person employed by or on behalf of a group company
who the Board decides are eligible to receive grants. The employee will not have beneficial title to the underlying shares
until the relevant performance conditions have been met. The shares will be held by a trustee until that time.
The cost of equity-settled transactions under this Plan is measured by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined with the assistance of an external valuer using a
binomial model.
The cost of equity-settled transactions is recognised, together with a corresponding increase to employee benefits
reserve, over the period in which the performance conditions are fulfilled (the vesting period), ending on the date on which
the relevant executive becomes fully entitled to the award.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
92
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
4.
the Executive Incentive Plan (“EIP”), which provides for grants of performance options and rights to key
executives, including the Managing Director.
Under the EIP, eligible executives are granted options and performance rights subject to performance conditions set by
the Board. If the performance conditions are satisfied during the relevant performance period, the options and
performance rights will vest.
The cost of these equity-settled transactions under the EIP is measured by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined with the assistance of an external valuer
using a binomial model.
The cost of equity-settled transactions is recognised, together with a corresponding increase to employee benefits
reserve, over the period in which the performance conditions are fulfilled (the vesting period), ending on the date on which
the relevant executive becomes fully entitled to the award.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
2.26 Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses over the period of the lease on a straight-line basis unless another systematic basis is more representative of
the time pattern of the benefit.
The economic entity has no leases deemed to be finance leases where substantially all the risks and benefits incidental to
the ownership of the asset, but not the legal ownership, are transferred to entities within the economic entity.
2.27 Financial guarantees
Bank guarantees have been issued by the bank on behalf of customers whereby the bank is required to make specified
payments to reimburse the holders for a loss they may incur because the customer fails to make a payment.
The fair value of financial guarantee contracts has been assessed using a probability weighted discounted cash flow
approach.
In order to estimate the fair value under this approach the following assumptions have been made:
Probability of default (PD): This represents the likelihood of the guaranteed party defaulting in a 1 year period
and is assessed on historical default rates.
Loss given default (LGD): This represents the proportion of the exposure that is not expected to be recovered in
the event of a default by the guaranteed party and is based on historical experience.
Exposure to default (EAD): This represents the maximum loss that Bendigo and Adelaide Bank is exposed to if
the guaranteed party were to default. The model assumes that the guaranteed loan/facility/contract is at
maximum possible exposure at the time of default.
The value of the financial guarantee over each future year of the guarantees’ life is then equal to PD x LGD x EAD, which
is discounted over the contractual term of the guarantee, to reporting date to determine the fair value. The discount rate
adopted is the five year Commonwealth government bond yield at 30 June. The contractual term of the guarantee
matches the underlying obligations to which it relates.
As guarantees issued by the bank are fully secured and the bank has therefore never incurred a loss in relation to financial
guarantees, the LGD (proportion of the exposure that is not expected to be recovered) is zero. This results in the fair
value of financial guarantees to be zero.
Therefore, the fair value of financial guarantees has not been included in the balance sheet. The nominal value of
financial guarantees is disclosed in the “Contingent liabilities” note of this financial report.
2.28 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue
can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
Interest, fees and commissions
Control of a right to receive consideration for the provision of, or investment in, assets has been attained.
Interest, fee and commission revenue is brought to account on an accruals basis. Interest is accrued using the effective
interest rate method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial instrument.
Loan origination and loan application fees
Loan origination and application fees are recognised as components of the calculation of the effective interest rate method
in relation to originated loans. They therefore affect the interest recognised in relation to this portfolio of loans.
The average life and interest recognition pattern of loans in the relevant loan portfolios is reviewed annually to ensure the
amortisation methodology for loan origination fees is appropriate.
93
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Unearned income
Unearned income on the economic entity's personal lending and leasing is brought to account over the life of the contracts
on an actuarial basis.
Loan portfolio premium
The loan portfolio premium is included as part of net loans and receivables in the balance sheet. The amortisation of the
loan portfolio premium is charged to the Income statement on an effective yield basis and is included in net interest
income.
Day 1 Profit
Where the transaction price in a non-active market is different to the fair value from other observable market transactions
in the same instrument or based on a valuation technique whose variables include only data from observable markets, the
Bank immediately recognises the difference between the transaction price and fair value (a 'Day 1' profit) in the income
statement in 'Other income'.
Dividends
Dividends are recognised when control of a right to receive consideration for the investment in assets is established.
2.29
Borrowing costs
Borrowing costs are recognised as an expense when incurred unless they are incurred in relation to qualifying assets.
Borrowing costs for qualifying assets are capitalised as part of the cost of that asset.
2.30 Income tax
The income tax for the period is the tax payable on the current period's taxable income based on the national income tax
rate, adjusted for changes in deferred tax assets and liabilities and unused tax losses.
The group has adopted the balance sheet liability method of tax effect accounting, which focuses on the tax effects of
transactions and other events that affect amounts recognised in either the balance sheet or a tax-based balance sheet.
Deferred tax assets and liabilities are recognised for temporary differences, except where the deferred tax asset/liability
arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to
be utilised. Unrecognised deferred tax balances are reviewed annually to determine whether they should be recognised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the balance sheet date.
2.31 Goods and services tax (“GST”)
Revenues, expenses and assets are recognised net of the amount of GST except:
where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item
as applicable; and
receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from or payable to the taxation authority is included as part of receivables or payables
in the balance sheet. Cash flows are included in the cash flow statement on a gross basis, the GST component of cash
flows arising from investing and financing activities, which are recoverable from or payable to the taxation authority are
classified as operating cash flows.
2.32 Derecognition of financial instruments
The derecognition of a financial instrument takes place when the group no longer controls the contractual rights that
comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable
to the instrument are passed through to an independent third party.
2.33 Derivative financial instruments
The group uses derivative financial instruments such as foreign currency contracts and interest rate swaps to hedge its
risks associated with interest rate and foreign currency fluctuations. Such derivative financial instruments are stated at fair
value.
94
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The fair value of forward exchange contracts is calculated by reference to current forward exchange rates with similar
maturity profiles. The fair value of interest rate swap contracts is determined by discounting the expected future cash
flows associated with the swaps. Discount rates are determined by reference to swap curves available through
independent market data providers.
For the purpose of hedge accounting, hedges are classified as either fair value hedges when they hedge the exposure to
changes in the fair value of a recognised asset or liability, or cash flow hedges where they hedge exposure to variability in
cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecasted
transaction.
In relation to fair value hedges which meet the conditions for hedge accounting, any gain or loss from remeasuring the
hedging instrument at fair value is recognised immediately in the income statement.
Any gain or loss attributable to the hedged risk on remeasurement of the hedged item is adjusted against the carrying
amount of the hedged item and recognised in the income statement. Where the adjustment is to the carrying amount of a
hedged interest-bearing financial instrument, the adjustment is amortised to the income statement such that it is fully
amortised by maturity.
In relation to cash flow hedges, to hedge firm commitments which meet the conditions for hedge accounting, the portion of
the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity and
the ineffective portion is recognised in the income statement.
The group tests each of the designated cash flow hedges for effectiveness on a monthly basis both retrospectively and
prospectively using regression analysis. A minimum of 30 data points is used for regression analysis and if the testing falls
within the 80:125 range the hedge is considered highly effective and continues to be designated as a cash flow hedge.
When the hedged firm commitment results in the recognition of an asset or liability, then, at the time the asset or liability is
recognised, the associated gains or losses that had previously been recognised in equity are included in the initial
measurement of the acquisition cost or other carrying amount of the asset or liability. For all other cash flow hedges, the
gains or losses that are recognised in equity are transferred to the income statement in the same year in which the hedged
firm commitment affects the net profit and loss, for example when the future sale actually occurs.
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken
directly to net profit or loss for the year.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer
qualifies for hedge accounting.
At that point in time, any cumulative gain or loss on the hedging instrument recognised in equity is kept in equity until the
forecasted transaction occurs.
If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred
to net profit or loss for the year.
Issued ordinary capital
2.34
Issued and paid up ordinary capital is recognised at the fair value of the consideration received by the company. Any
transaction costs (net of any tax benefit) arising on the issue of ordinary shares are recognised directly in equity as a
reduction of the share proceeds received.
2.35 Hybrid capital instruments
Perpetual non-cumulative redeemable convertible preference shares
Preference capital is recognised at the fair value of the consideration received by the company. Any transaction costs (net
of any tax benefit) arising on the issue of preference shares are recognised directly in equity as a reduction of the share
proceeds received. Dividends on the shares are recognised as a distribution of equity.
Reset preference shares
These instruments are classified as debt within the Balance sheet and distributions to the holders are treated as interest
expense in the Income statement.
Step up preference shares
These instruments are classified as equity and the dividends are recognised as a distribution of equity.
Earnings per ordinary share (EPS)
2.36
Basic EPS is calculated as net profit attributable to members, adjusted to exclude cost of servicing equity (other than
dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any
bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
costs of servicing equity (other than dividends), preference share dividends; the after tax effect of dividends and
interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
95
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash basis EPS is calculated as net profit attributable to members, adjusted for:
after tax intangibles amortisation (except intangible software amortisation); and
after tax significant income and expense items
costs of servicing equity (other than dividends) and preference share dividends
divided by the weighted average number of ordinary shares, adjusted for any bonus element.
96
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SEGMENT INFORMATION
3.
The Group’s primary reporting format is business segments and its secondary format is geographical segments.
Business segments
The Group's business segments are managed according to the nature of products and services provided and the key
delivery channels, with each segment representing a strategic business unit that offers a different delivery method and/or
different products and services.
Retail Banking
Net interest income predominantly derived from the provision of first mortgage finance less the interest paid to depositors;
and fee income from the provision of banking services delivered through the company-owned branch network and the
Group’s share of net interest and fee income from the Community Bank® branch network and other alliances and minor
subsidiaries.
Partner Advised Banking (previously named Wholesale Banking)
Net interest income and fees derived from the manufacture and processing of residential home loans, distributed through
mortgage brokers and mortgage managers and the Portfolio Funding and Specialised Lending businesses of the Group.
Wealth
Fees, commissions and interest from the provision of financial planning services, margin lending activities and wealth
deposits. Commission received as Responsible Entity for managed investment schemes and for corporate trusteeships
and other trustee and custodial services.
Joint Ventures
Profit share from equity accounted investments in joint ventures.
Corporate Support
Unallocated corporate support business units.
Geographic segments
Bendigo and Adelaide Bank Limited and its controlled entities operate predominately in the geographic areas of all
Australian states and territories, providing banking and other financial services.
Intersegment transactions
Applicable commercial rates are used as the basis for pricing intersegment transactions.
97
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SEGMENT INFORMATION (continued)
Business segments
The following tables present revenue and profit information and certain asset and liability information regarding business
segments for the years ended 30 June 2009 and 2008.
For the year ended 30 June 2009
Income
$ m
$ m
$ m
$ m
$ m
R e t a il
B a nk ing
P a rt ne r
A dv is e d
B a nk ing
We a lt h
S o lut io ns
J o int
T o t a l
V e nt ure s
S e gm e nt s
C o rpo ra t e
S uppo rt
Net interest income
352.4
204.4
78.2
T o t a l
$ m
635.0
301.4
(93.6)
207.8
$ m
-
31.9
(93.6)
(61.7)
-
-
-
-
635.0
269.5
-
269.5
190.1
-
190.1
42.7
-
42.7
36.7
-
36.7
Other income
Other external income
Ineffective cash flow hedges
Total other income
Share of net profit of equity
accounted investments
Total segment income after interest
expense
External income
Ineffective cash flow hedges
Total segment income
Results
Segment result from continuing
operations before income tax expense
Income tax expense
Consolidated entity profit from continuing
operations after income tax expense
Assets
Segment assets
Equity accounted assets
Total assets
Liabilities
Total liabilities
Impairment losses recognised in
profit and loss
Other segment information
Non-cash expenses
Depreciation
Amortisation of intangibles
Impairment losses recognised in
profit & loss
Non-cash expenses other than
depreciation and amortisation
Acquisition of property, plant &
equipment, intangible assets and
other non-current assets
-
-
-
30.9
30.9
-
30.9
542.5
-
542.5
247.1
-
247.1
114.9
-
114.9
30.9
-
30.9
935.4
-
935.4
31.9
(93.6)
(61.7)
967.3
(93.6)
873.7
76.7
112.3
55.6
30.9
275.5
(156.2)
119.3
(35.5)
83.8
16,825.2
-
16,825.2
16,579.0
-
16,579.0
3,370.6
-
3,370.6
520.6
225.9
746.5
37,295.4
225.9
37,521.3
9,592.9
-
9,592.9
46,888.3
225.9
47,114.2
20,008.8
6,153.0
5,708.3
857.1
32,727.1
11,268.4
43,995.5
-
-
-
16.0
5.7
-
0.7
0.5
-
0.8
0.5
-
40.8
29.7
(0.2)
25.1
35.7
0.5
-
-
-
-
-
-
-
10.0
10.0
17.5
6.7
-
70.3
0.9
26.0
-
18.3
18.4
32.7
-
88.6
61.3
75.8
137.1
98
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SEGMENT INFORMATION (continued)
For the year ended 30 June 2008
R e t a il
B a nk ing
P a rt ne r
A dv is e d
B a nk ing
We a lt h
S o lut io ns
J o int
T o t a l
V e nt ure s
S e gm e nt s
C o rpo ra t e
S uppo rt
Income
$ m
$ m
$ m
$ m
$ m
Net interest income
424.0
108.7
64.8
T o t a l
$ m
597.5
274.3
(28.3)
246.0
$ m
-
32.6
(28.3)
4.3
-
-
-
-
597.5
241.7
-
241.7
164.5
-
164.5
35.5
-
35.5
41.7
-
41.7
Other income
Other external income
Ineffective cash flow hedges
Total other income
Share of net profit of equity
accounted investments
Total segment income after interest
expense
External income
Ineffective cash flow hedges
Total segment income
Results
Segment result from continuing
operations before income tax expense
Income tax expense
Minority interests
Consolidated entity profit from continuing
operations after income tax expense
Assets
Segment assets
Equity accounted assets
Total assets
Liabilities
Total liabilities
Impairment losses recognised in
profit and loss
Other segment information
Non-cash expenses
Depreciation
Amortisation of intangibles
Impairment losses recognised in
profit & loss
Non-cash expenses other than
depreciation and amortisation
Acquisition of property, plant &
equipment, intangible assets and
other non-current assets
-
-
-
26.4
26.4
-
26.4
588.5
-
588.5
144.2
-
144.2
106.5
-
106.5
26.4
-
26.4
865.6
-
865.6
32.6
(28.3)
4.3
221.6
82.8
60.8
26.4
391.6
(105.3)
898.2
(28.3)
869.9
286.3
(87.3)
(0.7)
198.3
16,365.1
-
16,365.1
19,604.0
-
19,604.0
3,860.2
-
3,860.2
482.7
185.2
667.9
40,312.0
185.2
40,497.2
7,551.7
-
7,551.7
47,863.7
185.2
48,048.9
14,894.1
8,115.9
10,110.1
632.8
33,752.9
10,998.1
44,751.0
-
-
-
14.2
11.9
-
33.0
0.9
5.5
-
4.9
1.1
3.9
-
20.0
11.0
46.4
0.7
-
-
-
-
-
-
-
35.4
35.4
16.2
21.3
-
57.9
0.6
-
4.0
(7.8)
16.8
21.3
4.0
50.1
58.1
71.9
130.0
99
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
PROFIT
4.
Profit before income tax expense has been determined as follows:
(a) Income:
Interest income
Controlled entities
Cash and cash equivalents
Financial assets (treasury) held for trading, available for sale
and held to maturity
Loans and other receivables
Other persons/entities
Cash and cash equivalents
Financial assets (treasury) held for trading
Financial assets (treasury) available for sale
Financial assets (treasury) held to maturity
Loans and other receivables
Total interest income
Interest expense
Controlled entities
Wholesale - domestic
Other persons/entities
Deposits
Retail
Wholesale - domestic
Wholesale - offshore
Other borrowings
Notes payable
Reset preference shares
Subordinated debt
Total interest expense
Other revenue
Dividends
Controlled entities
Joint ventures
Other
Distribution from unit trusts
Fees
Assets
Liabilities & electronic delivery
Securitisation income
Trustee, management & other services
Trading profit/(loss) - held for trading securities
Other
Commissions
Wealth solutions
Insurance
Other
Other
Income from property
Foreign exchange income
Other
Other income
Ineffective cash flow hedges
Cash flow derivative - controlled entity
Profit/(loss) on disposal of property, plant & equipment
Profit on sale of other investments
Realised accounting gain on the sale of equity investments
Realised accounting gain on acquisition Visa Inc shares
Gain/(Loss) on transfer of Adelaide business
100
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
-
-
-
47.9
142.0
31.7
81.6
2,851.5
3,154.7
-
-
-
7.2
89.8
40.7
128.1
2,429.8
2,695.6
19.3
196.4
13.2
46.5
74.6
31.6
67.8
1,393.0
1,842.4
0.2
3.7
3.0
7.2
-
40.7
115.3
1,057.5
1,227.6
-
-
201.0
0.9
1,394.1
354.6
68.5
654.1
5.6
42.8
2,519.7
1,030.5
300.8
119.2
598.3
3.2
46.1
2,098.1
1,126.7
5.1
52.5
14.0
6.1
29.6
1,435.0
-
-
2.1
0.1
2.2
58.7
94.7
20.1
10.8
(0.4)
19.1
203.0
28.9
15.4
3.4
47.7
1.4
8.4
12.9
22.7
(93.6)
-
(0.2)
-
26.0
-
-
(67.8)
-
-
3.7
0.2
3.9
44.6
85.0
15.9
11.5
(0.6)
16.0
172.4
37.7
12.9
3.8
54.4
1.2
6.5
8.5
16.2
(28.3)
-
0.4
1.8
-
25.2
-
(0.9)
111.3
34.0
2.1
-
147.4
52.3
88.4
9.7
0.4
(1.4)
16.8
166.2
0.7
9.8
3.3
13.8
21.9
8.4
1.3
31.6
(36.4)
-
0.1
-
25.9
-
(12.1)
(22.5)
663.5
89.4
79.2
-
3.7
26.3
863.0
178.8
14.6
3.6
-
197.0
30.8
76.4
-
0.6
-
13.2
121.0
0.4
7.3
3.7
11.4
16.9
6.5
(2.3)
21.1
-
(148.4)
0.4
1.8
-
18.6
-
(127.6)
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
PROFIT (continued)
(b) Expenses
Bad and doubtful debts
Specific provision
Collective provision
Bad debts written off
Bad debts recovered
Staff and related costs
Salaries and wages
Superannuation contributions
Provision for annual leave
Provision for long service leave
Other provisions
Payroll tax
Fringe benefits tax
Executive equity transactions expense
Other
Occupancy costs
Operating lease rentals
Depreciation of buildings
Amortisation of leasehold improvements
Property rates and outgoings
Land tax
Repairs and maintenance
Utilities
Cleaning
Other
Amortisation of intangibles
Amortisation of intangible assets
Amortisation of intangible software
Impairment losses on goodwill
Property, plant & equipment costs
Depreciation of property, plant & equipment
Fees and commissions
Impairment loss on equity investments
Employee shares shortfall
Integration costs
Other
Administration expenses
Communications, postage and stationery
Computer systems and software costs
Advertising & promotion
Other product & services delivery costs
Impairment loss - shares in controlled entities
Impairment loss - assets held for sale
General administration expenses
Other
Listing and rating agency costs
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
57.5
7.5
21.2
(5.9)
80.3
236.2
21.5
0.5
3.7
2.0
11.2
3.1
3.3
15.3
296.8
32.7
0.8
3.7
3.0
0.1
4.7
3.5
3.4
2.9
54.8
26.2
6.5
-
32.7
13.9
22.2
10.0
5.3
41.4
33.2
53.4
13.2
32.7
-
-
59.4
3.7
195.6
1.4
13.7
2.9
9.1
(2.6)
23.1
182.1
18.9
5.2
10.6
0.6
12.4
3.4
3.3
19.8
256.3
22.2
-
3.3
2.1
0.1
5.3
2.9
3.5
3.6
43.0
15.9
6.3
4.0
26.2
13.4
20.4
30.3
-
9.4
28.9
44.2
16.9
26.8
-
1.1
34.8
7.6
160.3
42.0
7.6
14.1
(4.0)
59.7
189.3
17.7
0.4
4.1
1.8
8.6
2.2
3.3
13.7
241.1
50.0
0.2
3.7
2.5
0.1
3.8
3.1
3.1
2.3
68.8
14.9
5.9
-
20.8
12.0
18.3
9.2
5.3
37.0
29.4
45.7
11.8
31.2
4.9
-
50.4
(8.0)
165.4
8.3
(1.0)
0.4
(0.7)
7.0
140.2
14.0
0.8
1.6
0.6
8.9
2.4
5.0
14.9
188.4
35.1
0.2
3.3
1.4
-
4.1
2.4
3.1
2.8
52.4
-
5.2
-
5.2
9.7
16.6
30.2
-
4.8
24.5
36.8
14.5
24.9
-
1.1
20.9
5.4
128.1
1.2
0.9
0.6
Total other
197.0
161.5
166.3
128.7
101
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
UNDERLYING PROFIT
5.
Underlying profit shows the growth in the core business of the economic entity
Profit after income tax expense
Add,
Bad and doubtful debts expense (net of bad debts recovered)
Amortisation of intangibles (excluding software amortisation)
Significant items before tax (Note 9)
Income tax expense - total (Note 6)
Underlying profit before income tax
INCOME TAX EXPENSE
6.
Major components of income tax expense are:
Income statement
Current income tax
Current income tax charge
Imputation credits
Adjustments in respect of current income tax of previous years
Deferred income tax
Relating to origination and reversal of temporary differences
Income tax expense/(benefit) reported in the income statement
Statement of changes in equity
Deferred income tax related to items charged or credited directly in equity
Net gain/(loss) on cash flow hedge
Net gain/(loss) on revaluation of investments
Net gain on revaluation of land and buildings
Net gain on acquisition revaluations
Other
Income tax benefit reported in equity
A reconciliation between tax expense and the product of accounting profit
before income tax multiplied by the group's applicable income tax rate is
as follows:
Income tax expense attributable to:
Accounting profit before income tax
Consolidated
2009
$m
2008
$m
83.8
198.3
80.3
26.2
127.7
35.5
353.5
23.1
19.9
49.9
87.3
378.5
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
(8.4)
(15.0)
0.7
58.2
35.5
33.6
(5.0)
(1.4)
-
0.3
27.5
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
141.6
(7.1)
0.6
(47.8)
87.3
33.1
(8.0)
-
3.2
0.6
28.9
(99.4)
(14.9)
1.4
104.7
(8.2)
(38.0)
(5.6)
(1.4)
-
0.3
(44.7)
41.2
(7.1)
(0.7)
(51.9)
(18.5)
24.2
(8.0)
-
-
-
16.2
119.3
286.3
105.4
144.5
102
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INCOME TAX EXPENSE (continued)
The income tax expense comprises amounts set aside as:
Provision attributable to current year at statutory rate, being
prima facie tax on accounting profit before tax
under (over) provision in prior years
tax credits and adjustments
Land, buildings and improvements
Accrued expenses
Borrowing costs
Deferred Expenses
Plant and equipment
Capital allowances
Expenditure not allowable for income tax purposes
Movement in cashflow hedges
Deferred tax movement
Other non assessable income
Tax effect attributable to joint ventures
Post-employment benefits
Prepayments
Movement in loan provisions
Movement in provisions
Intangible Liabilities on Acquisition
Intangible Assets on Acquisition
Tax loss on transfer of business
Tax effect of franking credits
Other
Income tax expense/(benefit) reported in the consolidated income statement
Effective income tax rate
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
35.8
0.7
(15.0)
(0.9)
(5.1)
(0.4)
7.7
0.1
-
1.4
(4.5)
58.2
(0.3)
0.4
1.1
2.1
12.7
0.6
14.8
(62.0)
-
4.5
(16.4)
35.5
29.8%
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
85.9
0.6
(7.1)
0.6
3.4
(7.1)
21.5
0.6
0.1
15.8
(0.8)
(47.8)
(7.5)
5.7
0.1
-
3.2
3.1
20.3
(8.4)
-
2.1
3.0
87.3
30.5%
31.6
1.4
(14.9)
0.8
(3.9)
-
5.5
0.4
-
4.9
(58.8)
104.7
(0.8)
-
1.2
1.0
12.9
(2.4)
14.8
(62.0)
3.6
4.5
(52.7)
(8.2)
(7.8%)
43.3
(0.7)
(7.1)
0.6
-
-
(6.6)
0.6
0.1
10.9
43.7
(51.9)
(6.7)
-
0.7
0.1
3.2
-
-
-
2.1
(50.8)
(18.5)
(12.8%)
Deferred income tax
Deferred income tax at 30 June relates to the following:
B a la nc e s he e t
Inc o m e s t a t e m e nt
-
-
-
-
Consolidated
Deferred tax liab ilities
Land, buildings and improvements
Revaluations of available-for-sale financial assets to fair value
Deferred gains and losses of interest rate swaps
Deferred gains and losses on foreign exchange contracts
Intangible assets on acquisition
Deferred expenses
Borrowing costs
Lease receivable
Prepayments
Other
Deferred tax liabilities
Deferred tax assets
Accrued expenses
Deferred expenses
Merger costs
Intangible liabilities on acquisition
Post-employment benefits
Deferred gains and losses of interest rate swaps
Expenses tax depreciable
Losses available for offset against future taxable income
Land, buildings and improvements
Plant and equipment
Movement in provisions
Prepaid income
Movement in loan provisions
Other
Deferred tax assets
Deferred tax income/(expense)
103
2 0 0 9
$ m
(0.4)
3.1
(11.9)
2.1
(62.0)
(13.0)
-
(0.5)
0.3
(9.4)
(91.7)
0.6
9.6
0.2
14.8
13.3
108.6
1.4
10.2
6.1
(4.4)
5.5
12.0
30.9
3.2
212.0
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
(4.3)
(3.6)
(68.3)
1.3
(88.3)
(5.5)
(3.6)
(12.7)
-
(1.8)
(186.8)
5.2
22.4
8.0
50.6
12.1
(0.1)
1.1
10.2
4.9
3.7
8.0
24.1
19.5
(5.3)
164.4
-
3.1
69.6
(3.0)
62.0
4.1
0.4
1.5
(2.1)
4.4
5.2
(11.8)
0.6
(14.8)
(1.2)
(65.2)
-
-
0.2
0.1
2.5
12.0
(12.8)
3.4
(0.1)
(5.1)
0.8
(0.6)
8.4
2.4
7.1
(0.1)
-
0.1
(3.4)
(23.6)
(1.9)
(20.3)
(0.1)
-
(0.1)
-
(1.2)
(0.6)
(3.1)
(3.1)
(3.2)
(0.1)
58.2
(47.8)
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INCOME TAX EXPENSE (continued)
Parent
Deferred tax liab ilities
Land, buildings and improvements
Revaluations of available-for-sale financial assets to fair value
Deferred gains and losses of interest rate swaps
Deferred expenses
Intangible assets on acquisition
Prepayments
Other
Deferred tax liabilities
Deferred tax assets
Post-employment benefits
Deferred expenses
Intangible liabilities on acquisition
Deferred gains and losses of interest rate swaps
Expenses tax depreciable
Land, buildings and improvements
Plant and equipment
Movement in provisions
Prepaid income
Movement in loan provisions
Other
Deferred tax assets
Deferred tax income/(expense)
B a la nc e s he e t
Inc o m e s t a t e m e nt
2 0 0 9
$ m
(0.2)
3.1
(14.6)
(13.0)
(62.0)
(0.7)
(8.1)
(95.5)
13.3
9.6
14.8
116.7
1.3
6.1
(4.5)
5.5
1.2
30.8
(8.0)
186.8
2 0 0 8
$ m
(0.1)
(1.8)
(27.7)
(9.6)
0.4
(38.8)
7.9
-
-
46.3
1.1
3.8
2.7
7.9
1.5
5.8
7.3
84.3
2 0 0 9
$ m
-
3.1
132.2
4.1
62.0
(1.0)
4.6
(1.3)
(9.6)
(14.8)
(73.4)
-
(0.8)
(0.5)
2.4
0.3
(12.9)
10.3
2 0 0 8
$ m
(0.1)
(6.7)
-
6.6
(0.4)
(0.7)
-
-
(43.7)
(0.1)
(0.7)
(0.5)
(3.2)
0.2
(0.1)
(2.5)
104.7
(51.9)
At 30 June 2009, there is no unrecognised deferred income tax liability (2008: Nil) for taxes that would be payable on the
unremitted earnings of certain of the group's subsidiaries or joint ventures, as the group has no liability for additional taxation
should such amounts be remitted.
Tax consolidation
Effective 1 July 2002, for the purposes of income taxation, Bendigo and Adelaide Bank Limited and its 100% owned subsidiaries
formed a tax consolidated group. Members of the group entered into a tax sharing agreement in order to allocate income tax
expense to the wholly-owned subsidiaries on a stand alone basis. In addition the agreement provides for the allocation of
income tax liabilities between the entities should the head entity default on its tax payment obligations. At the balance date, the
possibility of default is remote. The head entity of the tax consolidated group is Bendigo and Adelaide Bank Limited.
There has not been any material effect on tax assets or liabilities as a result of any revised tax legislation. Bendigo and
Adelaide Bank Limited formally notified the Australian Tax Office of its adoption of the tax consolidation regime upon the
lodgement of its 2003 income tax return.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement provides for the
allocation of current taxes to members of the tax consolidated group on a group allocation method based on a notional
standalone calculation, while deferred taxes are calculated by members of the tax consolidated group in accordance with the
principle of Accounting Standard AASB 112 “Income Taxes”. Allocations under the tax funding agreement are made at the end
of each month.
The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the subsidiaries inter-
company accounts with the tax consolidated group head company, Bendigo and Adelaide Bank Limited. The tax funding
agreement is in accordance with AASB Interpretation 1052 Tax Consolidation Accounting (UIG 1052). Where the tax funding
agreement is not in accordance with UIG 1052, the difference between the current tax amount that is allocated under the tax
funding agreement and the amount that is allocated under an acceptable method is recognised as a contribution/distribution of
the subsidiaries' equity accounts.
104
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INCOME TAX EXPENSE (continued)
Taxation of Financial Arrangements
The tax laws amendment (Taxation of Financial Arrangements) Act 2009 (TOFA legislation) was enacted during the year. The
TOFA legislation provides a framework for the taxation of financial arrangements, potentially providing a closer alignment
between tax and accounting requirements. The regime also includes comprehensive tax hedging rules that allow the tax
recognition of gains and losses on many hedged instruments to be matched to the recognition of gains and losses of the
underlying hedged items.
TOFA is mandatory for the Bendigo and Adelaide Bank Limited for tax years beginning on or after 1 July 2010. An early
adoption choice is available for tax years beginning on or after 1 July 2009. In addition, there are specific transitional provisions
in relation to the taxation of existing financial arrangements existing at the transition date (i.e. there is a choice to bring pre
commencement financial arrangements into the new regime subject to a balancing adjustment being calculated on transition be
returned over the next succeeding four tax years).
Bendigo and Adelaide Bank Limited may make the election to early adopt TOFA and the election to bring pre commencement
financial arrangements into the regime at any time on or before the first tax return lodgement date in the tax year beginning on
or after 1 July 2009.
Bendigo and Adelaide Bank Limited is currently assessing the potential effect of TOFA legislation, but has not yet determined
whether it will be early adopting TOFA nor whether it will bring pre commencement financial arrangements into the TOFA
regime.
105
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
7.
AVERAGE BALANCE SHEET AND RELATED INTEREST
For the twelve month period ended 30 June 2009
A v e ra ge
Int e re s t
A v e ra ge
B a la nc e
12 m t hs R a t e
Footnote
$ m
$ m
%
Average balances and rates
Interest earning assets
Cash and investments
Loans and other receivables - company
Loans and other receivables - alliances
Total interest earning assets
Non interest earning assets
Provisions for doubtful debts
Other assets
Total assets (average balance)
Interest bearing liabilities
Deposits
Retail - company
Retail - alliances
Wholesale - domestic
Wholesale - offshore
Notes payable
Reset preference shares
Subordinated debt
Total interest bearing liabilities
Non interest bearing liabilities and equity
Other liabilities
Equity
Total liabilities and equity
Interest margin and interest spread
Interest earning assets
Interest bearing liabilities
Net interest income and interest spread
Net free liabilities
Net interest margin
1
2
2
3
4
303.2
2,514.0
396.2
3,213.4
4.95
7.57
6.59
7.09
990.5
462.3
354.6
68.5
654.1
5.6
42.8
2,578.4
6,125.4
33,201.9
6,008.7
45,336.0
(76.2)
3,185.7
3,109.5
48,445.5
18,802.7
8,177.8
4,803.4
981.1
10,235.3
89.5
652.5
43,742.3
1,654.0
3,049.2
4,703.2
48,445.5
45,336.0
(43,742.3)
3,213.4
(2,578.4)
635.0
5.27
5.65
7.38
6.98
6.39
6.26
6.56
5.89
7.09
(5.89)
1.20
0.20
1.40
1.66
0.26
1.40
Impact of community bank/alliances profit share arrangements
Net interest margin before community bank/alliances share of net interest income
Less impact of community bank/alliances share of net interest income
Net interest margin
1 A verage balance is based o n mo nthly clo sing balances fro m 30 June 2008 thro ugh 30 June 2009 inclusive.
2 Interest payments to alliance partners are net values in the Inco me Statement. Interest inco me and expense values have been increased by $ 58.7m to
reflect the gro ss amo unts.
3 Interest spread is the difference between the average interest rate earned o n assets and the average interest rate paid o n funds.
4 Interest margin is the net interest inco me as a percentage o f average interest earning assets.
106
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
AVERAGE BALANCE SHEET AND RELATED INTEREST (continued)
For the twelve month period ended 30 June 2008
A v e ra ge
Int e re s t
A v e ra ge
B a la nc e
12 m t hs R a t e
Footnote
$ m
$ m
%
Average balances and rates
Interest earning assets
Cash and investments
Loans and other receivables - company
Loans and other receivables - alliances
Total interest earning assets
Non interest earning assets
Provisions for doubtful debts
Other assets
Total assets (average balance)
Interest bearing liabilities
Deposits
Retail - company
Retail - alliances
Wholesale - domestic
Wholesale - offshore
Notes payable
Reset preference shares
Subordinated debt
Total interest bearing liabilities
Non interest bearing liabilities and equity
Other liabilities
Equity
Total liabilities and equity
Interest margin and interest spread
Interest earning assets
Interest bearing liabilities
Net interest income and interest spread
Net free liabilities
Net interest margin
1
2
2
3
4
265.8
2,122.9
386.4
2,775.1
6.44
8.68
7.64
8.25
726.9
383.1
300.8
119.2
598.3
3.2
46.1
2,177.6
4,125.7
24,450.9
5,060.1
33,636.7
(41.0)
2,040.6
1,999.6
35,636.3
13,036.7
5,906.0
3,978.8
1,721.8
7,288.4
52.2
549.0
32,532.9
833.5
2,269.9
3,103.4
35,636.3
33,636.7
(32,532.9)
2,775.1
(2,177.6)
597.5
5.58
6.49
7.56
6.92
8.21
6.13
8.40
6.69
8.25
(6.69)
1.56
0.22
1.78
2.10
0.32
1.78
Impact of community bank/alliances profit share arrangements
Net interest margin before community bank/alliances share of net interest income
Less impact of community bank/alliances share of net interest income
Net interest margin
1 A verage balance is based o n mo nthly clo sing balances fro m 30 June 2007 thro ugh 30 June 2008 inclusive, with the exceptio n o f Who lesale do mestic,
which is based o n a daily clo sing balance.
2 Interest payments to alliance partners are net values in the Inco me Statement. Interest inco me and expense values have been increased by $ 79.5m to
reflect the gro ss amo unts.
3 Interest spread is the difference between the average interest rate earned o n assets and the average interest rate paid o n funds.
4 Interest margin is the net interest inco me as a percentage o f average interest earning assets.
107
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
8.
CAPITAL MANAGEMENT
a. Capital management
Bendigo and Adelaide Bank Limited key capital management objectives are to:
Optimise the level and use of capital resources to enhance shareholder value through maximising financial performance;
Maintain a sufficient level of capital above the regulatory minimum to provide a buffer against loss arising from
unanticipated events, and allow the Group to continue as a going concern;
Ensure that capital management is closely aligned with the Group’s business and strategic objectives; and
Achieve progressive improvement to short and long term credit ratings.
The Group manages capital adequacy according to the framework provided by the APRA Prudential Standards. Capital
adequacy is measured at two levels:
Level 1 includes Bendigo and Adelaide Bank Limited and certain controlled entities that meet the APRA definition of
extended licensed entities; and
Level 2 consists of the consolidated group, excluding non-controlled subsidiaries and subsidiaries involved in insurance,
funds management, non-financial operations and securitisation special purpose vehicles.
APRA determines minimum prudential capital ratios (eligible capital as a percentage of total risk-weighted assets) that must be
held by all authorised deposit-taking institutions. Accordingly, Bendigo and Adelaide Bank is required to maintain a minimum
prudential capital ratio (eligible capital as a percentage of total risk-weighted assets) at both Level 1 and Level 2 as determined
by APRA. As part of the Bank’s capital management process, the Board considers the Group’s strategy, financial performance
objectives, credit ratings and other factors relating to the efficient management of capital in setting target ratios of capital above
the regulatory required levels. These processes are formalised within the Bank’s internal capital adequacy assessment process
(or ICAAP).
The Bank has adopted the Prudential Capital Adequacy Standardised Approach to credit risk, operational risk and market risk,
which requires the Group to determine capital requirements based on standards set by APRA. The Bank has satisfied the
minimum capital requirements at Levels 1 and 2 throughout the 2008/9 financial year.
APRA has defined two broad categories of capital, and the form and substance of their components must meet APRA’s specific
requirements in order to be eligible for inclusion in the Group’s capital base. Tier 1 capital comprises the highest quality
components of capital, and Tier 2 includes other components of lesser quality, but which still contribute to the overall strength of
the group as a going concern. At least half of the Bank’s eligible capital must be held in the form of Tier 1 capital.
b. Rural Bank
Bendigo and Adelaide Bank increased its ownership in Rural Bank in May 2009.
The purchase took the Bank’s ownership in Rural Bank from 50% to 60%. The increase in ownership requires Bendigo and
Adelaide Bank to consolidate Rural Bank for capital adequacy purposes from May 2009.
The consolidation for capital adequacy purposes in May 2009 required Bendigo and Adelaide Bank to consolidate the risk
weighted assets of Rural Bank totalling approximately $4.0 billion while incorporating Elders Limited minority interest of
approximately $126 million as fundamental Tier 1 capital. Bendigo and Adelaide Bank’s investment in Rural Bank was
previously treated as a 100% deduction from Tier 2 capital on a consolidated (Level 2) basis under transitional relief from APRA
until March 31, 2010.
108
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
CAPITAL MANAGEMENT (continued)
c.
Capital adequacy
Risk weighted capital ratios
Tier 1
Tier 2
Total capital ratio
Qualifying capital
Tier 1
Contributed capital
Retained profits & reserves
Minority interests
Innovative tier 1 capital
Less,
Intangible assets, cash flow hedges and capitalised expenses
Net deferred tax assets
50/50 deductions
Other adjustments as per APRA advice
Total tier 1 capital
Tier 2
General reserve for credit losses/collective provision (net of tax effect)
Subordinated debt
Asset revaluation reserves
Less,
50/50 deductions
Other adjustments as per APRA advice
Subsidiary investment residual
Total tier 2 capital
Less,
Investments in non-consolidated subsidiaries or joint ventures and other
bank's capital instruments
Total qualifying capital
C o ns o lida t e d
A s a t
A s a t
J une 2 0 0 9
J une 2 0 0 8
$ m
$ m
7.43%
3.48%
10.91%
7.53%
2.91%
10.44%
3,003.9
(260.4)
126.6
277.9
1,321.4
11.5
19.6
1.8
1,793.7
129.5
722.1
8.7
860.3
19.6
-
-
840.7
2,706.3
207.5
-
277.9
1,592.5
66.9
40.6
-
1,491.7
103.6
681.8
11.4
796.8
40.6
179.5
-
576.7
-
2,634.4
-
2,068.4
Total risk weighted assets
24,155.0
19,820.8
109
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
CAPITAL MANAGEMENT (continued)
d.
Adjusted common equity (“ACE”) and Adjusted total equity (“ATE”)
Adjusted common equity and Adjusted total equity are measures considered by Standard & Poor’s in evaluating the Bank’s
credit rating. The ACE and ATE ratios have been calculated in accordance with the Standard & Poor’s methodology.
Shareholders' equity
Minority interest equity
Retained earnings
Expected dividends
Goodwill
Other deductions
Adjusted Common Equity ratio to risk weighted assets
Investments in joint ventures equity accounted for
Hybrid capital
Subsidiary investment residual
Adjusted total equity
Adjusted Total Equity ratio to risk weighted assets
9.
EARNINGS PER ORDINARY SHARE
Basic earnings per ordinary share
Diluted earnings per ordinary share
Cash basis earnings per ordinary share
C o ns o lida t e d
A s a t
A s a t
J une 2 0 0 9
J une 2 0 0 8
$ m
3,091.5
126.6
123.8
(45.1)
(1,598.9)
(1.8)
1,696.1
7.02%
$ m
2,766.9
-
242.0
(99.4)
(1,460.4)
(4.5)
1,444.6
7.29%
(3.2)
(185.2)
278.0
(9.0)
1,961.9
8.12%
278.0
(9.0)
1,528.4
7.71%
C o ns o lida t e d
2 0 0 9
2 0 0 8
C e nt s pe r s ha re C e nt s pe r s ha re
25.6
25.6
62.9
87.7
87.6
111.1
$ m
$ m
Reconciliation of earnings used in the calculation of basic earnings per ordinary share
Profit after tax
(Profit)/loss attributable to minority interests
Dividends paid on preference shares
Dividends paid/accrued on step up preference shares
Reconciliation of earnings used in the calculation of diluted earnings per ordinary share
Earnings used in calculating basic earnings per ordinary share
83.8
-
(4.5)
(5.0)
74.3
74.3
74.3
199.0
(0.7)
(5.5)
(3.7)
189.1
189.1
189.1
110
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
EARNINGS PER ORDINARY SHARE (continued)
Reconciliation of earnings used in the calculation of cash basis earnings per ordinary share
C o ns o lida t e d
2 0 0 9
2 0 0 8
Earnings used in calculating basic earnings per ordinary share
After tax intangibles amortisation (excluding softw are amortisation)
After tax significant income and expense items ( 1 )
Weighted average num ber of ordinary shares used in basic and cash
basis earnings per ordinary share
Effect of dilution - executive performance rights
Effect of dilution - preference shares
74.3
18.5
89.4
182.2
189.1
15.4
35.1
239.6
No. of shares No. of shares
289,778,761
215,528,083
430,151
294,427
-
-
Weighted average num ber of ordinary shares used in diluted earnings
per ordinary share
290,208,912
215,822,510
(1) Significant income and expense items after tax comprise:
$m
$m
Income
Ineffective cash flow hedges
Realised accounting gain on Visa Inc shares
Realised accounting gain on equity investments
Expense
Expense relating to an issue of shares to staff under the Employee Share Plan
Expenses relating to w ithdraw n capital raising
Shortfall relating to Employee Share Plan
Impairment loss - equity investments
Integration costs
Fair value adjustment - head office development
ATO audit costs
65.5
-
(18.2)
-
1.1
3.7
7.0
29.0
1.3
-
89.4
19.8
(17.6)
-
1.0
-
2.1
21.1
6.6
1.4
0.7
35.1
Significant items are items of income or expense that are, by management judgement, of significant value and/or
are unusual or non-recurring by nature. These items are excluded from cash basis earnings.
Conversions, calls, subscription or issues after 30 June 2009
On 10 August 2009 the Bank announced it intention to raise up to $300 million of capital (44,444,445 ordinary fully paid shares) pursuant to an
entitlement offer and placement offer as described in the prospectus lodged w ith the ASX on 10 August 2009. A maximum of 18,757,475 shares
w ill be issued under the placement offer and a maximum of 25,686,970 shares w ill be issued under the entitlement offer.
Inform ation on the classification of securities - Executive perform ance rights
Executive performance rights are treated as dilutive from the date of issue and remain dilutive so long as the
performance conditions are satisfied. In the event of a performance condition not being satisfied, the number of
dilutive rights w ould be reduced to the number that w ould have been issued if the end of the period w as the end
of the contingency period.
Potentially dilutive instrum ents
The follow ing instruments are potentially dilutive in the future, but are assessed as not being dilutive as at the
reporting date:
Preference shares
Step up preference shares
Reset preference shares
Executive share options
Executive performance rights
Dilutive
2009
No
No
No
No
Yes
2008
No
No
No
No
Yes
111
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
10.
DIVIDENDS
Dividends paid or proposed
Ordinary shares
Dividends paid during the year
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
current year
Interim dividend (28.0 cents per share) (2008 - 28.0 cents per share)
81.8
71.7
81.8
71.7
previous year
Final dividend (37.0 cents per share) (2008 - 34.0 cents per share)
98.8
46.8
98.8
46.8
180.6
118.5
180.6
118.5
Dividends proposed since the reporting date, b ut not recognised as a liab ility
Final dividend (15.0 cents per share) (2008: 37.0 cents per share)
45.1
99.4
45.1
99.4
All dividends paid were fully franked. Proposed dividends will be fully franked out of existing franking credits or out of franking credits arising
from payment of income tax provided for in the financial statements for the year ended 30 June 2009.
Preference shares
Dividends paid during the year
161.60 cents per share paid on 15 September 2008(2007: 142.66 cents)
152.98 cents per share paid on 15 December 2008 (2007: 147.76 cents)
104.89 cents per share paid on 17 March 2009 (2008: 154.28 cents)
79.12 cents per share paid on 15 June 2009 (2008: 162.85 cents)
Step up preference shares
Dividends paid during the year
168.00 cents per share paid on 10 July 2008 (2007: Nil)
167.00 cents per share paid on 10 October 2008 (2007: Nil)
138.00 cents per share paid on 12 January 2009 (2008: 152.00)
98.00 cents per share paid on 14 April 2009 (2008: 155.00)
Convertible preference shares
Dividends paid during the year
0.0448 cents per share paid on 6 Feb 2009 (2008: Nil)
0.0867 cents per share paid on 6 March 2009 (2008: Nil)
0.1345 cents per share paid on 7 April 2009 (2008: Nil)
Dividend franking account
Balance of franking account as at end of financial year
Franking credits that will arise from the payment of income tax provided for in the
financial report
Franking credits that will arise from the receipt of dividends recognised as
receivables as at end financial year
Impact of dividends proposed or declared before the financial report was authorised
for issue but not recognised as a distribution of equity holders during the period
The tax rate at which dividends have been franked is 30% (2008: 30%).
Dividends proposed will be franked at the rate of 30% (2008: 30%).
Dividend paid
Dividends paid by cash or satisfied by the issue of shares under the dividend
reinvestment plan during the year were as follows:
Paid in cash
Satisfied by issue of shares
Dividend Reinvestment Plan
1.5
1.4
0.9
0.7
4.5
1.7
1.6
1.4
1.0
5.7
0.1
0.2
0.1
0.4
1.3
1.3
1.4
1.5
5.5
-
-
1.5
1.6
3.1
-
-
-
-
1.5
1.4
0.9
0.7
4.5
1.7
1.6
1.4
1.0
5.7
0.1
0.2
0.1
0.4
1.3
1.3
1.4
1.5
5.5
-
-
1.5
1.6
3.1
-
-
-
-
249.4
230.4
(84.4)
11.1
(3.6)
(3.1)
(19.3)
(43.6)
142.1
194.8
142.3
48.9
191.2
95.0
32.1
127.1
142.3
48.9
191.2
95.0
32.1
127.1
The Dividend Reinvestment Plan provides shareholders with the opportunity of converting their entitlement to a dividend into
new shares. The issue price of the shares is equal to the volume weighted average share price of Bendigo and Adelaide Bank
shares traded on the Australian Securities Exchange over the ten trading days following the Record Date at a current discount
of 2.5% for 2009. Shares issued under this Plan rank equally with all other ordinary shares.
112
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIVIDENDS (continued)
Bonus Share Scheme
The Bonus Share Scheme provides shareholders with the opportunity to elect to receive a number of bonus shares issued for
no consideration instead of receiving a dividend. The issue price of the shares is equal to the volume weighted average price of
Bendigo and Adelaide Bank shares traded on the Australian Securities Exchange over the ten trading days following the Record
Date at a current discount of 2.5% for 2009. Shares issued under this scheme rank equally with all other ordinary shares.
The last date for the receipt of an election notice for participation in either the Dividend Reinvestment Plan or Bonus Share
Scheme for the 2009 final dividend was 2 September 2009.
11.
RETURN ON AVERAGE ORDINARY EQUITY
Return on average ordinary equity
Pre-significant items return on average ordinary equity
Cash basis return on average ordinary equity
Reconciliation of earnings used in the calculation of return on average ordinary equity
Net profit for the year
(Profit)/loss attributable to minority interests
Dividends paid on preference shares
Dividends paid/accrued on step up preference shares
Earnings used in calculation of return on average ordinary equity
After tax significant income and expense items
Earnings used in calculation of pre-significant items return on average
ordinary equity
After tax intangibles amortisation (excluding amortisation of intangible software)
Earnings used in calculation of cash basis return on average ordinary equity
C o ns o lida t e d
2 0 0 9
%
2.37
5.22
5.82
2 0 0 8
%
9.70
11.50
12.29
$ m
$ m
83.8
-
(4.5)
(5.0)
74.3
89.4
163.7
18.5
182.2
199.0
(0.7)
(5.5)
(3.7)
189.1
35.1
224.2
15.4
239.6
Reconciliation of ordinary equity used in the calculation of return on average ordinary equity
Total equity
Preference share net capital
Asset revaluation reserve - shares
Unrealised gains/losses on cash flow hedge reserve
Ordinary equity
Average ordinary equity
3,118.7
(188.5)
(5.5)
303.7
3,228.4
3,297.9
(188.5)
(14.8)
(55.8)
3,038.8
3,133.6
1,949.1
The above calculation uses a basic average balance calculation, consistent with previous years.
If a monthly average balance calculation was used for the 2008 year, the return on average ordinary
equity would be 8.55%. This is due to the significant increase in ordinary equity following the merger with
Adelaide Bank on 30 November 2007.
113
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
12.
NET TANGIBLE ASSETS PER ORDINARY SHARE
Net tangible assets per ordinary share
Reconciliation of net tangible assets used in calculation of net tangible assets
per ordinary share
Net assets
Intangibles
Preference shares - face value
Step up preference shares - face value
Net tangible assets
C o ns o lida t e d
$
2 0 0 9
4.31
$
2 0 0 8
5.60
$ m
3,118.7
(1,598.9)
(90.0)
(100.0)
1,329.8
$ m
3,297.9
(1,570.4)
(90.0)
(100.0)
1,537.5
Number of ordinary shares on issue at reporting date
308,243,636
274,678,383
13.
CASH FLOW STATEMENT RECONCILIATION
Profit after tax
Non-cash items
Doubtful debts expense
Amortisation
Depreciation
Revaluation (increments)/decrements
Equity settled transactions
Share of joint ventures' net profits
Dividends received/(accrued) from joint ventures
Profits on sale of investment securities
Impairment loss on investments
(Profits)/losses on sale of property, plant & equipment
Acquisition accounting for intangibles and fair value adjustments
Changes in assets and liabilities
Increase/(decrease) in tax provision
Increase/(decrease) in deferred tax assets & liabilities
(Increase)/decrease in accrued interest
Increase in accrued employees entitlements
Increase/(decrease) in other accruals, receivables and provisions
Net cash flows from/(used in) operating activities
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
83.8
199.0
113.6
163.0
86.2
32.7
18.4
(9.5)
11.9
(30.9)
32.8
(22.1)
-
0.5
-
84.7
(123.6)
5.6
(3.2)
(40.0)
127.3
25.7
11.1
16.7
16.0
4.4
(26.4)
13.0
(0.5)
4.0
(0.4)
(27.8)
34.1
(4.4)
(21.5)
63.7
5.8
15.7
(0.7)
11.9
-
-
(17.1)
-
-
-
18.9
(82.4)
32.1
21.6
(106.4)
158.2
(2.8)
(295.9)
(137.2)
7.7
5.2
13.2
19.5
6.1
-
-
(0.5)
-
(0.4)
-
(29.7)
(34.8)
(15.9)
11.1
72.2
216.7
Cash flows presented on a net basis
Cash flows arising from the following activities are presented on a net basis in the cash flow statement:
Loans and receivables, Investment securities, Retail deposits, Wholesale deposits and Subordinated debt.
114
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
14.
CASH AND CASH EQUIVALENTS
Notes, coin and cash at bank
Investments at call
Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes:
Cash and cash equivalents
Due from other financial institutions
Due to other financial institutions
15.
FINANCIAL ASSETS HELD FOR TRADING
Bank discount securities
Other discount securities
Floating rate notes
Government securities
Maturity analysis
Not longer than 3 months
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Over 5 years
16.
FINANCIAL ASSETS AVAILABLE FOR SALE - SECURITIES
Negotiable securities
Bank accepted bills of exchange
Negotiable certificates of deposit
Government securities
Bank accepted bills of exchange
Reset preference Shares
Maturity analysis
Not longer than 3 months
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Over 5 years
Recognised gains / (losses) before tax:
Gain/(loss) recognised directly in equity
Amount removed from equity and recognised in profit/(loss)
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
351.0
561.6
912.6
912.6
235.4
(196.3)
951.7
2 0 0 8
$ m
809.1
386.8
1,195.9
1,195.9
412.7
(269.7)
1,338.9
2 0 0 9
$ m
150.2
377.3
527.5
527.5
235.4
(196.3)
566.6
2 0 0 8
$ m
198.6
241.9
440.5
440.5
237.6
(151.7)
526.4
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
26.0
3,020.1
599.5
236.7
3,882.3
2,796.4
798.1
287.8
3,882.3
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
29.9
1,026.9
259.7
98.3
1,414.8
745.7
481.7
187.4
-
1,414.8
26.0
4,751.1
599.5
236.7
5,613.3
4,153.3
798.1
340.4
321.5
5,613.3
-
-
-
-
-
-
-
-
-
-
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
-
-
-
-
-
-
-
-
-
-
-
-
307.2
15.0
99.8
-
422.0
422.0
-
-
-
422.0
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
407.2
15.0
99.8
89.5
611.5
522.0
-
-
89.5
611.5
-
-
115
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
17.
FINANCIAL ASSETS AVAILABLE FOR SALE – SHARE INVESTMENTS
Share investments at fair value
Listed share investments
Unlisted share investments
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
81.2
2.9
84.1
2 0 0 8
$ m
79.7
4.9
84.6
2 0 0 9
$ m
3.0
2.9
5.9
2 0 0 8
$ m
74.5
2.7
77.2
Share investments at cost
Other share investments
-
Unlisted shares - estimated using valuation techniques based on assumptions that are not supported by observable market prices or rates.
Management believes the estimated fair values resulting from the valuation techniques and recorded in the balance sheet and the related
changes in fair values recorded in equity are reasonable and the most appropriate at the balance sheet date.
-
-
-
Recognised gains / (losses) before tax:
Gain/(loss) recognised directly in equity
Amount removed from equity and recognised in (profit)/loss
(15.2)
0.9
(56.0)
29.9
(17.0)
0.1
(56.7)
29.8
18.
FINANCIAL ASSETS HELD TO MATURITY
Negotiable securities
Bank accepted bills of exchange
Negotiable certificates of deposit
Government securities
Other
Non negotiable securities
Deposits - banks
Deposits - other
Other
Maturity analysis
Not longer than 3 months
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Over 5 years
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
1.8
28.4
-
301.7
331.9
-
13.0
-
13.0
344.9
135.6
100.9
108.4
-
344.9
2 0 0 8
$ m
5.3
798.9
204.3
394.1
1,402.6
-
12.0
-
12.0
1,414.6
813.8
333.9
266.9
-
2 0 0 9
$ m
-
-
-
266.4
266.4
-
-
-
-
266.4
85.5
85.5
95.4
-
1,414.6
266.4
2 0 0 8
$ m
-
1,131.4
204.3
337.7
1,673.4
-
-
-
-
1,673.4
1,077.9
328.6
266.9
-
1,673.4
116
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
19.
LOANS AND OTHER RECEIVABLES
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
2 0 0 9
2 0 0 8
$ m
$ m
$ m
Loans and other receivables - investments
505.7
517.6
505.7
-
Overdrafts
Credit cards
Term loans
Margin lending
Lease receivables
Factoring receivables
Other
Gross loans and other receivables
Specific provision for impairment (Note 20)
Collective provision for impairment (Note 20)
Unearned income
Deferred Costs
3,283.7
184.1
30,655.3
3,329.9
582.3
38.5
343.4
38,417.2
(67.7)
(44.3)
(89.6)
(201.6)
19.6
3,184.3
289.9
32,018.9
3,767.1
434.3
46.2
-
39,740.7
(22.1)
(36.8)
(106.7)
(165.6)
12.3
3,282.8
184.1
3,136.2
169.9
30,383.4
11,313.4
-
578.5
38.5
334.1
34,801.4
63.4
405.9
9.4
-
15,098.2
(58.6)
(44.0)
(87.2)
(189.8)
(13.2)
(9.5)
(10.0)
(60.3)
(79.8)
-
Net loans and other receivables
38,235.2
39,587.4
34,598.4
15,018.4
Impaired loans
Loans
- without provisions
- with provisions
Restructured Loans
less specific impairment provisions
Net impaired loans
79.4
144.2
7.4
(66.9)
164.1
16.2
43.2
-
(21.6)
37.8
79.3
128.3
7.4
(57.8)
157.2
-
12.9
(9.0)
3.9
Net impaired loans % of loans and other receivables
0.42%
0.09%
0.45%
0.03%
Portfolios facilities - past due 90 days, not well secured
less impairment provisions
Net portfolio facilities
Loans past due 90 days
Accruing loans past due 90 days, with adequate security balance
Amount in arrears
Accruing loans past due 90 days balance includes $18.2 million (2008: $6.5 million)
of loans due to their review date expiring more than 90 days ago, but
which are not in payment default.
4.1
(0.8)
3.3
2.4
(0.5)
1.9
4.1
(0.8)
3.3
340.7
61.0
281.4
38.1
339.3
61.0
2.4
(0.5)
1.9
54.1
6.2
Net fair value of properties acquired through the enforcement of security
Interest income recognised
52.8
88.3
52.8
15.3
Interest income recognised in respect of impaired loans
Interest income forgone in respect of impaired loans
Interest income recognised is the interest income actually received subsequent to these balances becoming impaired or restructured.
Interest income forgone is the gross interest income that would have been recorded during the financial year had the interest on such loans been
included in income.
0.3
0.8
0.2
5.4
0.2
1.3
0.3
0.8
Maturity analysis ( 1)
At call / overdrafts
Not longer than 3 months
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Longer than 5 years
1
Balances exclude specific and general provisions for doubtful debts and unearned revenue.
2,645.3
4,799.5
2,032.8
6,737.3
22,708.0
38,922.9
2,235.2
4,684.3
2,613.2
8,683.5
22,042.2
40,258.3
2,403.5
3,452.7
1,861.0
6,263.4
21,326.5
35,307.1
2,111.2
1,036.7
2,072.7
6,534.0
3,343.6
15,098.2
117
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
LOANS AND OTHER RECEIVABLES (continued)
Derecognition of securitised loan portfolios
The parent entity (“the Bank”) through its loan securitisation program, securitises mortgage loans to the Torrens Trust and
Lighthouse Trusts (“the Trusts”) which in turn issue rated securities to investors.
The Bank holds income and capital units in the Trusts at nominal values, which entitles the Bank to receive excess income, if
any, generated by the securitised assets, while the capital units receive upon termination of the Trust any residual capital
value.
Fees are received for various services provided to the Trusts on an arms length basis, including the servicing fee and
management fees and are reported in the Income Statement. As the value of fees and excess income is influenced by the
financial performance of the Trust, the Bank has determined that substantially all of the risks and rewards of these securitised
loan portfolios have been retained and consequently, the loans have not been derecognised. Securitised mortgage loans
totalling $10,956.8 million are reported in loans and receivables of the parent entity.
Investors in the Trust have no recourse against the Bank if cash flows from the securitised loans are inadequate to service the
obligations of the Trusts.
20.
IMPAIRMENT OF LOANS AND ADVANCES
Specific provision for impairment
Opening balance
Provision acquired in business combination
Charged to income statement
Transfer of Adelaide business
Impaired debts written-off applied to specific impairment provision
Closing balance
Collective provision for impairment
Opening balance
Provision acquired in business combination
Charged to income statement
Transfer of Adelaide business
Closing balance
General reserve for credit losses
Opening balance
Provision acquired in business combination
Transfer of Adelaide business
Charged to equity
Closing balance
Bad and doubtful debts expense
Specific provisions for impairment
Collective provision
Bad debts written off
Bad debts recovered
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
22.1
-
57.5
-
(11.9)
67.7
36.8
-
7.5
-
44.3
76.2
-
-
9.9
86.1
57.5
7.5
21.2
(5.9)
80.3
2 0 0 8
$ m
8.4
6.9
13.7
-
(6.9)
22.1
11.4
22.5
2.9
-
36.8
45.3
36.6
-
(5.7)
76.2
13.7
-
9.1
(2.6)
23.1
2 0 0 9
$ m
9.5
-
42.0
15.5
(8.4)
58.6
10.0
-
7.6
26.4
44.0
46.2
-
30.0
9.9
86.1
42.0
26.4
14.1
(4.0)
59.7
2 0 0 8
$ m
8.1
-
8.3
-
(6.9)
9.5
11.0
-
(1.0)
-
10.0
45.3
-
0.9
46.2
8.3
(1.0)
0.4
(0.7)
7.0
Ratios
Specific provision as % of gross loans less unearned income
0.18%
0.06%
Collective provision (net of tax) & General reserve for credit losses
as a % of risk-weighted assets
0.54%
0.51%
118
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
21.
PARTICULARS IN RELATION TO CONTROLLED ENTITIES
P rinc ipa l
A c t iv it ie s
Banking
(1)
(2)
Securitisation Manager
Security Trustee
Trust Manager
Trustee company
Investment company
Margin Lending
Responsible Entity for listed trust
Trustee for executive & staff equity plans
Property Owner
Investment company
Margin Lending
Margin Lending
Provider of share nominee services for
margin lending
Acquires and sells financial products
held as security for LE margin loans
Administration company
Leasing finance
Financial advisory services
Community initiatives
Community initiatives
Community initiatives
Community initiatives
Property owner
Financial services
Mortgage origination & m'ment
Securitisation manager
Invoice discounting
Trustee company
Nominee company
Custodian company
Nominee company
Investment manager
Mortgage insurance
Financial services
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Chief entity
Bendigo and Adelaide Bank Limited
Directly Controlled Operating Entities
AB Management Pty Ltd
ABL Custodian Services Pty Ltd
ABL NIM Pty Ltd
ABL Nominees Pty Ltd
ABL Securities Pty Ltd
Adelaide Equity Finance Pty Ltd
Adelaide Managed Funds Ltd
Co-operative Member Services Pty Ltd
Hindmarsh Adelaide Property Trust
Hindmarsh Financial Services Ltd
Leveraged Equities Ltd
Leveraged Equities 2009 Trust
Pirie Street Custodian Ltd
Pirie Street Nominees Pty Ltd
BBS Nominees Pty Ltd
Bendigo Finance Pty Ltd
Bendigo Financial Planning Ltd
Community Developments Australia Pty Ltd
Community Energy Australia Pty Ltd
Community Solutions Australia Pty Ltd
Community Exchanges Australia Pty Ltd
Fountain Plaza Pty Ltd
Homesafe Trust
National Mortgage Market Corporation Pty Ltd
National Assets Securitisation Corporation Pty Ltd
Oxford Funding Pty Ltd
Sandhurst Trustees Ltd
Sandhurst Nominees (Victoria) Ltd
Sandhurst Custodians Ltd
Sandhurst Nominees (Canberra) Ltd
Bendigo Asset Management Limited
Sunstate Lenders Mortgage Insurance Pty Ltd
Victorian Securities Corporation Ltd
Securitisation
AIL Trust No 1
Series 2007-1 Torrens Trust
Portfolio Funding Trust 2007-1
Series 2006-1(E) Torrens Trust
Series 2005-1 Torrens Trust
Series 2008-1 Torrens Trust
Lighthouse Warehouse Trust No 4
Series 2004-1 Torrens Trust
Series 2005-3 (E) Torrens Trust
NIM Trust
119
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
PARTICULARS IN RELATION TO CONTROLLED ENTITIES (continued)
Securitisation (cont)
Series 2003-1 Torrens Trust
Series 2002-1 Torrens Trust
Series 2005-1AAA Torrens Trust
Lighthouse Warehouse Trust No 12
Lighthouse Warehouse Trust No 2
Lighthouse Warehouse Trust No 1
Lighthouse Warehouse Trust No 11
Series 2004-2 (W) Torrens Trust
Series 2005-2(S) Torrens Trust
Q9 Trust
Lighthouse Warehouse Trust No. 5
Q10 Trust
Torrens Series 2008-2(W) Trust
Torrens Series 2008-3 Trust
Torrens Series 2008-4 Trust
Torrens Series 2009-1 Trust
1 No n-Operating co ntro lled entities are excluded fro m the abo ve list.
2 A ll entities are 100% o wned and inco rpo rated in A ustralia.
P rinc ipa l
A c t iv it ie s
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
120
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
22.
INVESTMENTS IN JOINT VENTURES USING THE EQUITY METHOD
N a m e
O wne rs hip
B a la nc e da t e
Rural Bank Ltd (1)
Tasmanian Banking Services Ltd
Community Sector Enterprises Pty Ltd
Homesafe Solutions Pty Ltd
Silver Body Corp Fin Serv Pty Ltd
Community Telco Australia Pty Ltd
Strategic Payments Services Pty Ltd
int e re s t he ld by
c o ns o lida t e d e nt it y
2 0 0 9
%
60.0
50.0
50.0
50.0
50.0
50.0
33.3
2 0 0 8
%
50.0
50.0
50.0
50.0
50.0
50.0
33.3
30 June
30 June
30 June
30 June
30 June
30 June
30 June
(i) Principal activities of joint venture companies
Rural Bank Ltd - financial services
Tasmanian Banking Services Ltd - financial services
Community Sector Enterprises Pty Ltd - financial services
Homesafe Solutions Pty Ltd - financial services
Silver Body Corporate Financial Services Pty Ltd - financial services
Community Telco Australia Pty Ltd - telecommunication services
Strategic Payments Services Pty Ltd - payment processing services
(1) The Rural Bank joint venture is subject to a shareholders agreement. This agreement has not changed despite the change of ownership such
that it continues to be a substantive jointly controlled entity. Therefore the AASB 127 control test has not been met as at 30 June 2009 and as a
result we have equity accounted for this entity.
All joint venture companies are incorporated in Australia, and have a balance date of 30 June 2009.
(ii) Share of joint ventures' revenue and profits
Share of joint ventures':
- revenue
- expense
- profit before income tax
- income tax expense
- profit after income tax
Share of joint ventures' operating profits after income tax:
- Rural Bank Ltd
- Tasmanian Banking Services Ltd
- Community Sector Enterprises Pty Ltd
- Homesafe Solutions Pty Ltd
- Silver Body Corporate Financial Services Pty Ltd
- Community Telco Australia Pty Ltd
- Strategic Payments Services Pty Ltd
The consolidated entity's share in the retained profits and reserves of joint venture
companies is not available for payment of dividends to shareholders of
Bendigo and Adelaide Bank Limited until such time as those profits and reserves are
distributed by the joint venture companies.
2 0 0 9
$ m
99.6
68.7
30.9
10.3
20.6
2 0 0 9
$ m
22.8
0.9
(0.3)
(0.5)
0.2
(1.2)
(1.3)
20.6
2 0 0 8
$ m
67.3
40.9
26.4
9.2
17.2
2 0 0 8
$ m
20.8
1.0
0.5
(0.7)
0.2
(1.9)
(2.7)
17.2
121
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INVESTMENTS IN JOINT VENTURES USING THE EQUITY METHOD (continued)
(iii) Carrying amount of investments in joint ventures
Balance at the beginning of financial year
- carrying amount of investment in joint ventures acquired during the year
- dividends received from joint ventures
- share of joint ventures' net profits (losses) for the financial year
- share of joint ventures' movements in retained earnings for the financial year
- share of joint ventures' movements in reserves for the financial year
Carrying amount of investments in joint ventures at the end of the financial year
Represented by:
Investments at equity accounted amount:
- Rural Bank Ltd
- Tasmanian Banking Services Ltd
- Community Sector Enterprises Pty Ltd
- Homesafe Solutions Pty Ltd
- Silver Body Corporate Financial Services Pty Ltd
- Community Telco Australia Pty Ltd
- Strategic Payment Services Pty Ltd
185.2
66.5
(34.3)
20.6
0.1
(12.2)
225.9
222.7
2.2
0.2
-
0.5
-
0.3
225.9
156.3
24.3
(14.6)
17.2
0.1
1.9
185.2
179.4
2.3
0.5
0.1
0.5
1.3
1.1
185.2
There are no impairment losses relating to investments in joint ventures.
Unrecognised losses relating to joint ventures
0.2
-
(iv) The consolidated entity's share of the assets and liabilities of joint venture
in aggregate
Assets
Liabilities
Net Assets
T o t a l
R ura l B a nk Lim it e d
2 0 0 9
2 0 0 8
2 0 0 9
2 0 0 8
2,147.0
1,977.0
170.0
2,122.4
1,959.8
162.6
2,137.8
1,970.3
167.5
2,111.5
1,954.5
157.0
(v) Amount of retained profits of the consolidated entity attributable to
joint ventures
59.1
72.8
Subsequent events affecting a joint ventures' profits/losses for the ensuing year (if any) are disclosed in the Events after Balance Sheet
Date note.
The consolidated entity's share of joint ventures' commitments and contingent liabilities (if any) are disclosed in the Commitments and
Contingencies note.
122
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
23.
PROPERTY, PLANT AND EQUIPMENT
C o ns o lida t e d
P a re nt
(a) Carrying Value
Property
Freehold land - at fair value
(1 )
Freehold buildings - at fair value
Accumulated depreciation
(1 )
Leasehold improvements - at cost
Accumulated depreciation
2 0 0 9
$ m
9.3
9.3
29.7
(1.0)
28.7
60.7
(20.9)
39.8
77.8
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
9.3
9.3
22.5
(0.5)
22.0
47.4
(17.3)
30.1
61.4
6.5
6.5
4.8
5.8
10.6
60.7
(20.9)
39.8
56.9
0.3
0.3
0.2
-
0.2
44.1
(15.8)
28.3
28.8
101.8
(63.9)
37.9
Other
Plant, furniture, fittings, office equipment & vehicles - at cost
Accumulated depreciation
170.2
(132.1)
38.1
180.2
(128.1)
52.1
167.4
(130.5)
36.9
115.9
113.5
93.8
66.7
(1 )
(b) Reconciliations
Freehold land
Carrying amount at beginning of financial year
Additions
Additions through acquisition of entities
Revaluations
Disposals
Transfer to assets
(1 )
Freehold buildings
Carrying amount at beginning of financial year
Additions
Additions through acquisition of entities
Revaluations
Disposals
Depreciation expense
Transfer to assets
Leasehold improvements - at cost
Carrying amount at beginning of financial year
Acquisitions
Additions
Additions through acquisition of entities
Disposals
Depreciation expense
Transfer to assets
Plant, furniture, fittings, office equipment & vehicles
Carrying amount at beginning of financial year
Acquisitions
Additions
Additions through acquisition of entities
Re-classification to assets held for sale
Disposals
Depreciation expense
Transfer to assets
9.3
-
-
-
-
-
9.3
22.0
7.5
-
-
-
(0.8)
-
28.7
30.1
-
14.3
-
(0.3)
(4.3)
-
39.8
52.1
-
3.4
-
-
(4.1)
(13.3)
-
38.1
If land and buildings were measured using the cost model the carrying amounts would be as follows:
Land
Buildings
Accumulated depreciation and impairment
Net carrying amount
8.6
29.3
(1.1)
36.8
5.8
-
8.2
-
(4.7)
-
9.3
1.2
-
21.4
-
(0.1)
(0.5)
-
22.0
24.6
-
7.3
1.6
-
(3.4)
-
30.1
29.9
-
21.8
14.5
-
(1.2)
(12.9)
-
52.1
8.6
38.3
(6.6)
40.3
0.3
-
-
-
-
6.2
6.5
0.2
-
-
-
-
(0.2)
10.6
10.6
28.3
-
14.2
-
(0.3)
(4.1)
1.7
39.8
37.9
-
2.7
-
-
(0.7)
(11.6)
8.6
36.9
0.1
0.1
-
0.2
0.4
-
-
-
(0.1)
-
0.3
0.3
-
-
(0.1)
-
-
0.2
24.6
-
6.9
-
-
(3.2)
-
28.3
28.3
-
20.6
-
-
(1.1)
(9.9)
-
37.9
0.1
0.1
-
0.2
1 Properties obtained as part of the acquisition of Adelaide Bank Limited were independently valued in November 2007, using a capitialisation rate of 6.875%.
The value of these properties totals $29.0 million. The remaining properties of the group have been determined by reference to director valuations, based upon
independent valuations previously obtained. The independent valuations are performed on an open market basis, being the amounts for which the assets could be
exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction at the valuation date.
The effective date of the revaluation was 30 June 2007.
123
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
24. ASSETS HELD FOR SALE
Carrying amount at beginning of financial year
Additions
Fair value adjustment
Disposals
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
105.5
6.9
(5.3)
(107.1)
-
2 0 0 8
$ m
93.4
15.2
(3.1)
105.5
2 0 0 9
2 0 0 8
$ m
3.2
-
(3.2)
-
$ m
-
4.3
(1.1)
3.2
In accordance with Accounting Standard AASB 5: “Non-current Assets Held for Sale and Discontinued Operations”, the
carrying value of the new Head Office development in Bendigo, Victoria has been disclosed as Assets held for sale.
The development is the subject of a Sale and Leaseback contract which took effect 29 August 2008.
25. INVESTMENT PROPERTY
Carrying amount at beginning of financial year
Additions
Net gain from fair value adjustments
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
80.4
26.3
8.9
115.6
2 0 0 8
$ m
34.2
41.0
5.2
80.4
2 0 0 9
2 0 0 8
$ m
-
-
-
-
$ m
-
-
-
-
Investment properties are carried at fair value, which has been determined in accordance with directors’ valuations and have
not been independently valued.
The fair value represents the amounts at which the assets could be sold in an arm’s length transaction at the date of valuation.
As the asset represents residential properties, the realisability of the properties and the remittance of income and proceeds of
disposal can be impacted by the real estate market conditions in relation to residential properties, particularly Melbourne and
Sydney.
124
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
26.
INTANGIBLE ASSETS AND GOODWILL
C o ns o lida t e d
P a re nt
(a) Carrying value
Intangible assets
Customer list - at cost
Accumulated amortisation
Computer software - at cost
Accumulated amortisation
Trustee licence - at cost
Accumulated impairment
Computer Software (Adelaide) - at fair value
Accumulated amortisation
Trade Name - at fair value
Accumulated amortisation
Customer Relationship - at fair value
Accumulated amortisation
Management rights - at fair value
Accumulated amortisation
Core Deposits - at fair value
Accumulated amortisation
Goodwill
Purchased goodwill
Accumulated impairment
Goodwill on consolidation - at fair value
Accumulated impairment
2 0 0 9
$ m
4.7
(4.5)
0.2
69.3
(40.6)
28.7
8.4
-
8.4
1.3
(0.8)
0.5
24.7
(6.7)
18.0
29.3
(5.7)
23.6
15.3
(1.6)
13.7
98.7
(25.9)
72.8
1,407.7
-
1,407.7
29.3
(4.0)
25.3
1,598.9
2 0 0 8
$ m
4.7
(4.0)
0.7
37.1
(15.3)
21.8
8.4
-
8.4
1.3
(0.4)
0.9
24.7
(2.5)
22.2
29.3
(2.1)
27.2
15.3
(0.6)
14.7
98.7
(9.5)
89.2
34.6
-
34.6
1,354.7
(4.0)
1,350.7
1,570.4
2 0 0 9
$ m
2 0 0 8
$ m
0.1
-
0.1
68.8
(40.1)
28.7
-
-
-
0.7
(0.2)
0.5
20.5
(2.5)
18.0
25.7
(2.1)
23.6
14.3
(0.6)
13.7
82.3
(9.5)
72.8
-
-
-
33.4
(14.6)
18.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,319.3
-
1,319.3
-
-
-
1,476.7
34.6
-
34.6
-
-
-
53.4
125
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INTANGIBLE ASSETS AND GOODWILL (continued)
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
0.7
-
(0.5)
0.2
21.8
1.6
10.7
-
(5.4)
28.7
8.4
8.4
0.9
-
(0.4)
0.5
22.2
-
(4.2)
18.0
27.2
-
(3.6)
23.6
14.7
(1.0)
13.7
89.2
-
(16.4)
72.8
34.6
1,373.1
1,407.7
1,350.7
1.4
(1,326.8)
-
25.3
1,598.9
2 0 0 8
$ m
1.4
0.1
(0.8)
0.7
19.7
3.2
4.3
-
(5.4)
21.8
8.4
8.4
-
1.3
(0.4)
0.9
-
24.7
(2.5)
22.2
-
29.3
(2.1)
27.2
-
15.3
(0.6)
14.7
-
98.7
(9.5)
89.2
34.6
-
34.6
29.6
1,325.1
-
(4.0)
1,350.7
1,570.4
2 0 0 9
$ m
-
0.1
-
0.1
18.8
1.6
13.9
-
(5.6)
28.7
-
-
-
0.7
(0.2)
0.5
-
20.5
(2.5)
18.0
-
25.7
(2.1)
23.6
-
14.3
(0.6)
13.7
-
82.3
(9.5)
72.8
2 0 0 8
$ m
-
-
-
-
19.6
-
4.6
-
(5.4)
18.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34.6
1,284.7
1,319.3
-
-
-
-
-
1,476.7
34.6
-
34.6
-
-
-
-
-
53.4
(b) Reconciliations
Intangible assets
Customer list
Carrying amount at beginning of financial year
Additions/fair value adjustment
Amortisation charge
Computer software
Carrying amount at beginning of financial year
Addition acquired through business combination
Additions
Disposals
Amortisation charge
Trustee licence
Carrying amount at beginning of financial year
Computer software (Adelaide)
Carrying amount at beginning of financial year
Addition acquired through business combination
Amortisation Charge
Trade Name
Carrying amount at beginning of financial year
Addition acquired through business combination
Amortisation Charge
Customer Relationship
Carrying amount at beginning of financial year
Addition acquired through business combination
Amortisation Charge
Management Rights
Carrying amount at beginning of financial year
Addition acquired through business combination
Amortisation Charge
Core Deposits
Carrying amount at beginning of financial year
Addition acquired through business combination
Amortisation Charge
Goodwill
Purchased goodwill
Carrying amount at beginning of financial year
Additions/transfer from goodwill on consolidation
Goodwill on consolidation
Carrying amount at beginning of financial year
Addition acquired through business combination/(purchase price adjustment)
Transfer to purchased goodwill
Impairment
126
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
INTANGIBLE ASSETS AND GOODWILL (continued)
Intangible assets
Finite useful life
The customer list was acquired through a business combination (Oxford Funding Pty Ltd) and has been capitalised at fair
value. The customer list has been assessed as having a finite life and is amortised using a method that reflects the pattern of
the economic benefits of the asset over a period of 5 years.
Computer software includes internally developed software and software that is not an integral part of the related hardware.
Intangible software is capitalised at cost and is amortised over the assessed useful life of the asset on a straight line basis.
This is generally a period of between 2.5 years and 7 years (major software items).
Other intangible assets acquired through the business combination with Adelaide Bank Limited, include trade name, customer
relationship, management rights and core deposits. These assets have been capitalised at fair value and are amortised to
reflect the period and pattern of economic benefit. Impairment testing is completed annually on these assets, and if impairment
indicators are met, the assets are written down to recoverable amounts.
Indefinite useful life
The trustee licence represents an intangible asset purchased through the effect of a business combination (Sandhurst
Trustees Limited). The useful life of this asset has been estimated as indefinite and the cost method utilised for measurement.
The asset is assessed as having an indefinite life as the authorisation for Sandhurst Trustees Limited to trade as a trustee
company has no end period. Revocation of the authority is unlikely and would occur only in the event of non-compliance with
conditions under which authorisation is granted. Sandhurst Trustees Limited has specific compliance procedures in place to
ensure these conditions are met.
Goodwill
The goodwill items represent intangible assets purchased through the effect of business combinations.
27.
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES
Goodwill acquired through business combinations is initially measured at its cost, being the excess of the cost of the business
combination over Bendigo and Adelaide Bank Limited interest in the net fair value of all subsidiaries’ identifiable assets,
liabilities and contingent liabilities. Goodwill is not amortised, but is tested for impairment annually or more frequently if
impairment indicators exist.
For intangible assets that have definite life, impairment testing is only required at each reporting date where there is an
indication of an impairment. For intangible assets that have indefinite life, impairment testing is required at least annually.
Allocation of Goodwill and Intangible Assets
Goodwill and intangible assets do not generate cash flows independently of other assets or groups of assets, and often
contributes to the cash flows of multiple cash-generating units. Therefore the accounting standard allows companies to
aggregate cash-generating units (“CGU”) and test goodwill for impairment at relatively higher levels than is the case of other
assets.
Amortisation and Impairment Charge – Intangible Assets with Finite Lives
All the intangible assets other than goodwill, trustee licence and customer list have been assessed as having finite lives in the
ranges as follows:
Category
Core deposit
Tradename
Customer Relationship
Management Rights
Software
Useful Life
2 – 10 years
5 – 15 years
7 – 12 years
15 years
1-4 years
Impairment Review Methodologies – Goodwill and Intangible Assets with Indefinite Lives
Impairment testing for goodwill and intangible assets is performed by comparing the carrying amount of the CGU grouping to
which the goodwill and intangible assets have been allocated with its recoverable amount. The recoverable amount is
measured as the higher of value in use and fair value less costs to sell.
127
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLES WITH INDEFINITE LIVES (continued)
(i) Fair Value Method
In the goodwill impairment review model, fair value less costs to sell is calculated by multiplying the CGU’s projected after tax
cash flows for 2009/2010 (adjusted for non-recurring items) by 12. The multiple of 12 is considered appropriate for each of the
groups identified CGU’s.
(ii) Value in Use Method
Value in use recoverable amount calculation is based on 5 years’ forecasted after tax cash flows for the CGU, discounted back
to the present value using an appropriate discount rate, plus a terminal value.
The discount rate applied to the cash flows projection is 11.58%. Management believe this discount rate is appropriate based
on current market risk free rate, company specific beta and market risk premium.
Terminal value for value in use method is calculated by discounting the fifth year’s earning by the discount factor (i.e. 11.58%
minus long term growth rate i.e. 2%). Long term growth rates of 2-3% have been used.
The 5 years’ forecasted after tax cash flows of each CGU is based on management’s expectation of group strategy and future
trends in the industry.
The below table represents the growth assumptions adopted for CGU's using the value in use methodology:
CGU
Retail Banking
Wealth Management
2010/11
12.5%
12.5%
2011/12
12.5%
12.5%
2012/13
10.0%
10.0%
2013/14
10.0%
10.0%
For the 2009/10 year is based on the budget approved by the Board.
Long term
growth
rate
3.0%
3.0%
For impairment review purposes, no impairment loss is required to be made if the CGU’s recoverable amount is above the
CGU’s net asset carrying amount under either of the fair value and value in use tests. Based on the fair value and value in use
tests results, no impairment loss is required to be made for all the CGU as at 30 June 2009.
For the purpose of impairment testing, goodwill and intangible assets acquired in a business combination shall, from the
acquisition date, be allocated to each of the acquirer’s cash-generating units, or groups of cash-generating units, that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are
assigned to those units or groups of units.
For goodwill allocation, the cash generating units identified represent the core business operations of the group as follows
Retail Banking
The provision of retail banking products and services delivered through the company-owned branch network and the Group’s
share of net interest and fee income from the Community Bank® branch network.
Third Party Mortgages
The provision of residential home loans, distributed through third party mortgage brokers and mortgage managers.
Wealth Management
The provision of financial planning services, margin lending activities and wealth deposit services. Fees and commissions are
received as the responsible entity for managed investment schemes and for corporate trusteeships and other trustee and
custodial services.
Business Partners
The provision of portfolio funding and specialised lending products and services and the share of joint venture profit and
losses.
The carrying amount of goodwill and intangibles allocated to each cash generating unit is as follows:
CGU
Retail Banking
Third Party Mortgages
Business Partners
Wealth Management
Goodwill test
applied
Value in use
Fair value
Fair value
Value in use
Total
Carrying
amount of
goodwill
$m
Carrying
amount of
intangibles
$m
Sensitivity before impairment
becomes evident for the test
applied
656.9
198.8
265.1
312.2
1,433.0
23.8 Year on year growth rates 1% lower
76.8 Multiple 1.2 times lower
17.5 Multiple 1.3 times lower
47.8 Year on year growth rates 2% lower
165.9
128
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
28.
OTHER ASSETS
Shares in joint ventures (1)
Accrued income
Prepayments
Sundry debtors
Accrued interest
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
-
22.6
38.8
334.2
116.7
512.3
2 0 0 8
$ m
-
24.1
24.4
245.6
174.1
468.2
2 0 0 9
$ m
229.2
28.6
15.8
273.6
113.2
660.4
2 0 0 8
$ m
162.8
108.6
9.3
88.9
81.1
450.7
Other assets are generally non-interest bearing and are short-term by nature.
Sundry debtors are normally settled within 30 days.
Accrued interest is interest accrued on loans and receivables and is generally charged to the loan or receivable on the first day of the next month.
(1) Shares in joint ventures are carried at cost. Refer to note 22 for more informatrion regarding joint ventures.
29.
DEPOSITS
DEPOSITS
Retail
Branch network
Treasury sourced
Wholesale
Domestic
Offshore
Deposits by geographic location
Victoria
New South Wales
Australian Capital Territory
Queensland
South Australia/Northern Territory
Western Australia
Tasmania
Overseas
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
26,505.0
2,031.4
28,536.4
2,652.6
690.8
3,343.4
31,879.8
13,298.6
4,422.8
229.1
3,738.5
7,172.9
1,552.8
565.9
899.1
31,879.8
20,537.9
3,103.0
23,640.9
6,306.2
1,457.8
7,764.0
31,404.9
9,862.3
3,384.8
111.6
2,657.1
12,835.3
1,221.8
366.0
966.0
31,404.9
26,447.4
2,103.3
28,550.7
2,652.6
690.8
3,343.4
31,894.1
13,289.8
4,422.5
229.5
3,733.6
7,196.0
1,555.6
566.9
900.1
31,894.1
13,247.2
751.6
13,998.8
1,708.6
1,240.8
2,949.4
16,948.2
9,179.4
2,842.6
110.4
2,316.8
309.6
1,086.0
354.9
748.5
16,948.2
NOTES PAYABLE
9,974.5
11,292.2
2,102.4
-
30.
OTHER PAYABLES
Sundry creditors
Accrued expenses and outstanding claims
Accrued interest
Prepaid interest
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
12.9
299.0
290.4
63.6
665.9
2 0 0 8
$ m
35.7
211.7
358.2
75.3
680.9
2 0 0 9
$ m
78.8
549.6
274.9
-
903.3
2 0 0 8
$ m
16.1
132.5
133.9
-
282.5
Payables are non-interest bearing and are generally settled within 30 days. Accrued interest is credited to customer accounts in accordance with the
terms of the investment products held by the customer, but generally within a twelve month period.
129
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
31.
PROVISIONS
(a) Balances
Employee benefits (Note 37)
Employee shares shortfall
Rewards program
Property Rent
Dividends
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
48.3
8.1
3.3
2.1
0.9
62.7
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
56.6
3.0
3.5
2.1
2.6
67.8
48.3
8.1
3.3
2.1
0.9
62.7
42.6
3.0
3.5
2.1
1.6
52.8
Provision employee shares shortfall is in relation to possible losses associated with employee loans relating to the Employee share plan. This
provision will only be utilised if:
(a) employees instruct the administrator of the plan to sell their shares in settlement of the employee loan relating to those shares: and,
(b) at the time of the sale the market price of Bendigo and Adelaide Bank Limited shares is below the outstanding value of those shares in
the loan account.
Provision for rewards program is to recognise the liability to customers in relation to points earned by them under the Bendigo and Adelaide Bank
Rewards Program and is measured on the basis of full value of points outstanding at balance date. As reward points "expire" after three years, the
balance will be utilised, or forfeited within a three year period.
Provision for property rent is to recognise the difference between actual property rent paid and the property rent expense recognised in the income
statement. The value recognised in the income statement is in accordance with Accounting Standard AASB 117 "Leases" whereby the lease
expense is to be recognised on a straight-line basis over the period of the lease. The provision is expected to be utilised over the period of the
respective leases, typically a period between three and ten years. However, it is expected that a balance will continue as old leases expire and are
replaced by new leases.
Provision for dividends represents the residual carried forward balance in relation to ordinary shareholders that participate in the dividend
reinvestment plan. It is expected that the current balance will be utilised within a 12 month period. However, an ongoing balance will continue
unless all outstanding balances are paid to shareholders upon ceasing participation in the dividend reinvestment plan. The provision also includes
accrued dividends relating to preference shares.
C o ns o lida t e d
P a re nt
(b) Movements
Employee benefits
Opening balance
Provision acquired in business combination
Additional provisions recognised
Decrease due to change in discount rate
Amounts utilised during the year
Closing balance
Employee shares shortfall
Opening balance
Additional provisions recognised
Amounts utilised during the year
Closing balance
Rewards program
Opening balance
Additional provisions recognised
Amounts utilised during the year
Closing balance
Property Rent
Opening balance
Additional provisions recognised
Amounts utilised during the year
Closing balance
Dividends
Opening balance
Provision acquired in business combination
Additional dividends provided
Dividends paid during the year
Closing balance
2 0 0 9
$ m
56.6
-
21.1
(0.8)
(28.6)
48.3
3.0
5.1
-
8.1
3.5
1.4
(1.6)
3.3
2.1
-
-
2.1
2.5
-
190.4
(192.0)
0.9
2 0 0 8
$ m
35.0
15.7
30.1
-
(24.2)
56.6
-
3.0
-
3.0
3.2
1.9
(1.6)
3.5
2.1
-
2.1
2 0 0 9
$ m
42.6
-
(4.9)
(0.8)
11.4
48.3
3.0
5.1
-
8.1
3.5
1.4
(1.6)
3.3
2.1
-
-
2.1
2 0 0 8
$ m
34.5
-
24.5
(0.1)
(16.3)
42.6
-
3.0
-
3.0
3.2
1.9
(1.6)
3.5
2.1
-
2.1
0.1
1.3
128.2
(127.1)
2.5
1.5
-
190.5
(191.1)
0.9
0.1
-
128.5
(127.1)
1.5
130
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
32.
RESET PREFERENCE SHARES
Reset preference shares - 894,574 fully paid $100 preference shares
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
89.5
89.5
2 0 0 8
$ m
89.5
89.5
2 0 0 9
$ m
89.5
89.5
2 0 0 8
$ m
89.5
89.5
Reset preference shares are perpetual, but can be exchanged at the request of the holder or Bendigo and Adelaide Bank. Dividends are
non-cumulative and are payable six-monthly in arrears at the discretion of the directors, based on a dividend rate of the five year mid swap
reference rate plus the initial margin multiplied by one less the corporate tax rate.
33.
SUBORDINATED DEBT
Subordinated capital notes
598.7
675.8
598.7
301.3
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
Maturity analysis
Not longer than 3 months
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Over 5 years
94.7
141.0
288.0
75.0
598.7
-
79.6
522.1
74.1
675.8
94.7
141.0
288.0
75.0
598.7
-
30.3
271.0
-
301.3
131
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
34.
ISSUED CAPITAL
Issued and paid up capital
Ordinary shares fully paid - 308,243,636 (2008: 274,678,383)
Preference shares of $100 face value fully paid - 900,000 (2008: 900,000 fully paid)
Step-up preference shares of $100 face value fully paid - 1,000,000 (2008: 1,000,000
Employee share ownership plan shares
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
3,003.9
88.5
100.0
(32.7)
3,159.7
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
2,706.3
88.5
100.0
(37.4)
2,857.4
3,003.9
88.5
100.0
(32.7)
3,159.7
2,706.3
88.5
100.0
(37.4)
2,857.4
Effective 1 July 1998, the corporations legislation in place abolished the concepts of authorised capital and par value shares. Accordingly,
the parent does not have authorised capital nor par value in respect of its issued shares.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Preference share (BPS) dividends are non-cumulative and are payable quarterly in arrears, at the discretion of the directors, based on a
dividend rate equal to the sum of the 90 day bank bill rate plus the initial margin multiplied by one minus the company tax rate. It is expected
that dividends paid will be fully franked. The BPS are perpetual, but may be redeemed by Bendigo and Adelaide Bank subject to prior
approval of APRA.
Step up Preference share (SPS) dividends are non-cumulative and are payable quarterly in arrears, at the discretion of the directors, based
on a dividend rate equal to the sum of the 90 day bank bill rate plus the initial margin multiplied by one minus the company tax rate. It is
expected that dividends paid will be fully franked. The SPS are perpetual, but may be redeemed by Bendigo and Adelaide Bank subject to
prior approval of APRA.
Employee share ownership plan shares is the value of loans outstanding in relation to shares issued to employees under this plan and
effectively represents the unpaid portion of the issued shares.
Movement in ordinary shares on issue
Opening balance - 1 July
Shares issued under:
Bonus share scheme - 262,362 @ $11.01; 329,948 @ $6.13;
(2008: 149,813 @ $14.87; 212,687 @ $9.60)
Dividend reinvestment plan - 2,472,153 @ $11.01; 3,538,902 @ $6.13;
(2008: 854,591 @ $14.87; 2,024,856 @ $9.60)
Share Grant Scheme - 764,504 @ $10.78 (2008: 226,790 @ $13.40)
Issue to Adelaide Bank shareholders - Nil; (2008: 117,687,891 @ $16.80)
Preference share conversions - 2,130,339 @ 9.39; 3,343,355 @ $5.98;
1,656,461 @ $7.24 (2008: Nil) (1)
Share placement and share purchase plan - 19,067,229 @ $10.00
(2008: 9,333,865 @ $9.60)
Share issue costs
Closing balance - 30 June
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
2,706.3
605.2
2,706.3
605.2
-
48.9
8.2
-
52.0
-
-
-
32.1
48.9
32.1
3.0
1,977.2
8.2
-
3.0
1,977.2
-
52.0
-
190.7
(2.2)
89.6
(0.8)
190.7
(2.2)
89.6
(0.8)
3,003.9
2,706.3
3,003.9
2,706.3
(1) As part of the acquisition of the Macquarie Group Margin Lending portfolio the bank issued 4,766,270 Tranched Convertible Preference Shares (TCS)
during the financial yearat an issue price of $10.91. The TCS were mandatorily converted to 7,130,155 ordinary shares within the financial year.
Movements in preference shares on issue
Opening balance 1 July - 900,000 fully paid (2008: 900,000 partly paid to $50)
Payment of unpaid portion of existing shares
Closing balance 30 June - 900,000 fully paid to $100.00 (2008: 900,000 fully paid)
Movements in step up preference shares on issue
Opening balance 1 July - 1,000,000 (2008: 1,000,000)
Issue of fully paid step up preference shares (2008: 1,000,000 @ $100.00)
Closing balance 30 June - 1,000,000 fully paid to $100 (2008: 1,000,000)
Movements in convertible preference shares
Opening balance 1 July
Issue of convertible preference shares (2008: Nil)
Conversion of convertible preference shares to ordinary shares
Closing balance 30 June
Movements in Employee share ownership plan shares
Opening balance 1 July
Issue of share capital
Reduction in Employee share ownership plan shares
88.5
-
88.5
100.0
-
100.0
-
52.0
(52.0)
-
(37.4)
-
4.7
(32.7)
88.5
88.5
-
100.0
100.0
-
-
-
-
(40.4)
(3.0)
6.0
(37.4)
88.5
-
88.5
100.0
-
100.0
-
52.0
(52.0)
-
(37.4)
-
4.7
(32.7)
88.5
-
88.5
-
100.0
100.0
-
-
-
-
(40.4)
(3.0)
6.0
(37.4)
Total issued and paid up capital
3,159.7
2,857.4
3,159.7
2,857.4
132
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
35.
RETAINED EARNINGS AND RESERVES
C o ns o lida t e d
P a re nt
RETAINED EARNINGS
Movements
Opening balance 1 July
Profit for the year
Movements in general reserve for credit losses
Dividends
Establishment of Adelaide Bank GRCL on acquisition
Defined benefits actuarial adjustment
Transfer of business - Adelaide Bank
Balance 30 June
OTHER RESERVES
(a) Balances
Employee benefits reserve
Asset revaluation reserve - property
Asset revaluation reserve - available for sale share investments
Cash flow hedge reserve
Cash flow hedge reserve - joint ventures
General reserve for credit losses
General reserve for credit losses - joint ventures
(b) Nature, purpose and movements
Employee benefits reserve
(a) Nature and purpose
The employee benefits reserve is used to record the assessed cost of shares issue to
non-executive employees under the Employee Share Plan and the assessed cost of
options granted to executive employees under the Executive Incentive Plan.
(b) Movements
Opening balance
Net increase in reserve
Asset revaluation reserve - property
(a) Nature and purpose
The asset revaluation reserve is used to record increments and decrements in
the value of non-current assets.
(b) Movements
Opening balance
Transfer asset revaluation reserve to retained earnings (revalued buildings
depreciation)
Net revaluation increments/(decrements)
Tax effect of net revaluation increments
Asset revaluation reserve - available for sale share investments
(a) Nature and purpose
The asset revaluation reserve is used to record increments and decrements in
the value of non-current assets. The reserve can only be used to pay dividends
in limited circumstances.
(b) Movements
Opening balance
Transfer asset revaluation reserve to retained earnings (sold assets)
Transfer impairment loss to income
Net revaluation increments/(decrements)
Tax effect of net revaluation increments
Net unrealised gains reserve
(a) Nature and purpose
The net unrealised gains reserve is used to record unrealised gains and losses on
investments in the available for sale portfolio.
(b) Movements
Opening balance
Net unrealised gains/(losses)
133
2 0 0 9
$ m
269.9
83.8
(11.7)
(190.4)
-
(6.9)
(0.3)
144.4
13.6
2.1
5.5
(295.4)
(8.3)
86.1
11.1
(185.3)
2 0 0 8
$ m
232.5
198.3
4.7
(127.6)
(36.6)
(1.4)
-
269.9
12.4
2.1
14.8
51.9
3.9
76.2
9.3
170.6
2 0 0 9
$ m
246.1
113.6
(39.9)
(190.9)
-
(2.7)
17.2
143.4
13.6
0.3
2.3
(261.8)
-
86.1
-
(159.5)
2 0 0 8
$ m
212.6
163.0
(1.0)
(128.5)
-
-
-
246.1
12.6
0.3
13.6
56.4
-
46.2
-
129.1
12.4
1.2
13.6
6.5
5.9
12.4
12.6
1.0
13.6
6.5
6.1
12.6
2.1
-
-
-
2.1
14.8
19.1
0.9
(34.3)
5.0
5.5
2.2
(0.1)
-
-
2.1
32.6
-
29.9
(56.0)
8.3
14.8
0.3
-
-
-
0.3
0.3
-
-
-
0.3
13.6
19.8
0.1
(36.8)
5.6
2.3
32.4
-
29.8
(56.7)
8.1
13.6
-
-
-
(0.1)
0.1
-
-
-
-
(0.1)
0.1
-
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RETAINED EARNINGS AND RESERVES (continued)
OTHER RESERVES (continued)
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
Cash flow hedge reserve
(a) Nature and purpose
The cash flow hedge reserve records the portion of the gain or loss on a hedging
instrument in a cash flow hedge that is determined to be an effective hedge.
(b) Movements
Opening balance
Changes due to mark to market
Tax effect of changes due to mark to market
Changes due to transfer to the income statement
Tax effect of changes due to transfer to the income statement
Cash flow hedge reserve - joint ventures
(a) Nature and purpose
Joint ventures record the group's share of the portion of the gain or loss on a hedging
instrument in a cash flow hedge that is determined to be an effective hedge.
(b) Movements
Opening balance
Net gains on cash flow hedges
General reserve for credit losses
(a) Nature and purpose
The general reserve for credit losses records the value of a reserve maintained to
recognised credit losses inherent in the group's lending portfolio, but not yet
identified. The bank is required to maintain general provisions (includes general reserve
for credit losses and collective provision) by APRA at a minimum level of 0.50% (net of tax)
of risk-weighted assets.
(b) Movements
Opening balance
Establishment of Adelaide Bank GRCL on acquisition
Increase/(decrease) in general reserve for credit losses
General reserve for credit losses - joint ventures
(a) Nature and purpose
The general reserve for credit losses - joint ventures records the group's share of
a joint venture company's GRCL in accordance with equity accounting.
(b) Movements
Opening balance
Increase in general reserve for credit losses
51.9
(526.2)
118.2
86.7
(26.0)
(295.4)
33.2
12.5
(13.7)
28.4
(8.5)
51.9
56.4
(436.3)
97.4
29.5
(8.8)
(261.8)
33.2
47.7
(24.3)
(0.3)
0.1
56.4
3.9
(12.2)
(8.3)
2.0
1.9
3.9
-
-
-
-
-
.
76.2
-
9.9
86.1
9.3
1.8
11.1
45.3
36.6
(5.7)
76.2
46.2
-
39.9
86.1
45.3
-
0.9
46.2
8.3
1.0
9.3
-
-
-
-
-
-
Total reserves
(185.3)
170.6
(159.5)
129.1
134
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
36.
MINORITY INTEREST
Interest in:
Ordinary shares
Retained earnings
Reconciliation of minority equity interest in controlled entities:
Opening balance
Derecognition of minority interest
Closing balance
37.
EMPLOYEE BENEFITS
Employee benefits liability
Provision for annual leave
Provision for other employee payments
Provision for long service leave
Provision for sick leave bonus
Provision for employee on costs
Aggregate employee benefits liability
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
-
-
-
-
-
-
-
-
-
(0.7)
0.7
-
-
-
-
-
-
-
-
-
-
-
-
-
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
17.5
0.1
26.8
3.9
-
48.3
2 0 0 8
$ m
17.0
9.8
23.1
2.5
4.2
56.6
2 0 0 9
$ m
17.5
0.1
26.8
3.9
-
48.3
2 0 0 8
$ m
12.4
9.8
14.0
2.4
4.0
42.6
It is anticipated that annual leave provided at balance date will be paid in the ensuing 12 month period.
Other employee payments are expected to be paid in September 2009.
Long service leave is taken with agreement between employee and employer, or on termination of employment.
Sick leave bonus is paid to entitled employees on termination of employment.
135
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
38.
SHARE BASED PAYMENT PLANS
Executive Incentive Plan (discontinued)
The Executive Incentive Plan (“Plan”) was established in 2006. The Plan provides for grants of options and performance rights
(“Instruments”) to the group’s senior leadership team including the Managing Director and Executive Director (“Senior
Executives”). Under the Plan, Senior Executives are granted options and performance rights subject to performance
conditions set by the Board. If the performance conditions are satisfied during the relevant performance period, the options and
performance rights will vest. The Plan has been discontinued and will be replaced by a new arrangement involving grants of
performance shares under the Employee Salary Sacrifice, Deferred Share and Performance Share Plan for the 2010 financial
year.
The performance conditions and performance periods for grants under the Plan are set out in the 2009 Remuneration Report.
Each option and performance right represents an entitlement to one ordinary share in the company. Accordingly, the maximum
number of shares that may be acquired by key executives is equal to the number of options and performance rights issued.
Options and performance rights are granted at no cost to the Senior Executives. The Plan rules provide that the Board may
determine that a price is payable upon exercise of an option or exercisable performance right. The exercise price for options
will generally be the market price of the shares at the grant date, and no exercise price will apply to exercisable performance
rights.
The number of options and performance rights granted to the Senior Executives is based on the value of each option and
performance right. The assessed fair value of each option and each performance right granted under the Plan are set out in
the tables presented at note 40.
Senior Executives are entitled to vote and to receive any dividend, bonus issue, return of capital or other distribution made in
respect of shares they are allocated on vesting and exercise of their performance rights and options, as applicable. The grants
are subject to a dealing restriction. Senior Executives are not entitled to sell, transfer or otherwise deal with the shares
allocated to them until 2 years after the end of the initial performance period.
The scheduled annual grant was made under the Plan during the year to Senior Executives of the group as at July 2008. The
grant was in accordance with the terms disclosed in the 2009 Remuneration Report.
The grant made in 2009 was valued and expensed in accordance with applicable accounting requirements. The expense
recognised in the income statement in relation to share-based payments is disclosed in note 40.
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in
performance options issued during the year.
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
2009
No.
1,034,849
1,050,601
(33,251)
-
-
2,052,199
2009
WAEP
$14.98
$11.09
$14.96
-
-
$12.99
2008
No.
632,693
424,421
(22,265)
-
-
1,034,849
2008
WAEP
$14.66
$15.47
$15.11
-
-
$14.98
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in
performance rights issued during the year.
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
2009
No.
294,427
154,767
-
(19,043)
-
430,151
2009
WAEP
$0.00
$0.00
-
$0.00
-
$0.00
2008
No.
100,117
203,772
-
(9,462)
-
294,427
2008
WAEP
$0.00
$0.00
-
$0.00
-
$0.00
The outstanding balance as at 30 June 2009 is represented by:
602,177 performance options over ordinary shares with an exercise price of $14.66 each, 399,421 performance options
over ordinary shares with an exercise price of $15.47 each and 1,050,601 performance options over ordinary shares with
an exercise price of $11.09 each, exercisable upon meeting the above conditions, and until 31 July 2013.
430,151 performance rights over ordinary shares with an exercise price of $0.00 each, exercisable upon meeting the
above conditions, and until 30 June 2012.
The weighted average fair value of rights granted during the year was $9.30 (2008: $15.17). The weighted average fair value
of options and granted during the year was $1.37 (2008: $2.60).
136
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SHARE BASED PAYMENT PLANS (continued)
The fair value of the performance options and performance rights granted under the Plan takes into account the terms and
conditions upon which the options were granted. The fair value is estimated as at the date of grant using the Black-Scholes –
Merton Option Pricing Model incorporating a Monte Carlo simulation option pricing model to estimate the probability of
achieving the TSR hurdle and the number of options vesting.
The following table lists the inputs to the model used for the year ended 30 June 2009.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of option (years)
Expected life of rights (years)
Option exercise price ($) (1)
Closing share price at grant date ($)
(1) For performance rights the exercise price is nil.
2009 Grant
(Rights & Options)
4.0
25 and 30
3.51
4.1
3.5
11.09
10.51
The expected life of the rights and options is based on historical data and is not necessarily indicative of exercise patterns that
may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may
also not necessarily be the actual outcome.
Employee Share Plans
Current Plans
The Bank established a new loan-based limited recourse Employee Share Plan (“Plan”) in 2006. The Plan is substantially the
same as the Legacy plan that was in place from 1995 to 2006. However, the new Plan is only available to general staff.
Executives (including the Managing Director) may not participate in it.
Under the terms of the new Plan, shares are issued at the prevailing market value. The shares must be paid for by the staff
member. The Plan provides staff members with an interest-free loan for the sole purpose of acquiring Plan shares. Net cash
dividends after personal income tax obligations are applied to reduce the loan balance. Staff cannot deal in the shares until
the loan has been repaid. The primary benefit under the terms of the Plan is the financial benefit of the limited recourse
interest-free loan.
The first issue to general staff under this plan was completed in September 2006. A grant to Community Bank® employees
was made in December 2007. There have been no further issues under this Plan.
The share issue in December 2007 was valued and expensed in accordance with applicable accounting requirements. The
expense recognised in the income statement in relation to share-based payments is disclosed on the following page.
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of and movements in Plan
shares issued during the year.
Outstanding at the beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
2009
No.
5,553,369
-
-
(673,592)
-
4,879,777
2009
WAEP
37,400,000
-
(4,709,216)
32,690,784
2008
No.
5,710,615
226,790
-
(384,036)
-
5,553,369
2008
WAEP
40,400,000
3,038,986
-
(6,038,986)
-
37,400,000
Exercisable at the end of the year
4,879,777
32,690,784
5,553,369
37,400,000
The outstanding balance as at 30 June 2009 is represented by 4,879,777 ordinary shares with a market value at 30 June 2009
of $6.95 each (value: $33,914,450), exercisable upon repayment of the employee loans.
The acquisition price of shares granted during the year was nil as no new shares were issued (2008: $13.40), being the
volume weighted average share price of the company’s shares traded on the ASX in the 7 days trading ending one calendar
week before the invitation date.
The fair value of the shares granted under the Plan is estimated as at the date of grant using the Black-Scholes-Merton Option
Pricing Model taking into account the terms and conditions upon which the shares were granted. The fair value determined by
independent valuation for the 2008 grant was $4.56.
137
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SHARE BASED PAYMENT PLANS (continued)
The following table lists the inputs to the model used for the year ended 30 June 2009.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of shares (years)
Share exercise price ($)
Share price at grant date ($)
2009
-
-
-
-
-
-
2008
-
22 and 25
6.66
5
13.40
14.16
The expected life of the share options is based on historical data and is not necessarily indicative of exercise patterns that may
occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also
not necessarily be the actual outcome. No other features of shares granted were incorporated into the measurement of fair
value. The exercise price of the shares issued will reduce over time as dividends are applied to repay the staff loans.
C o ns o lida t e d
Recognised share-based payment expenses
Expense arising from equity settled share-based payment transactions
Total expense arising from share-based payment transactions
Employee share and loan values and EPS impact (1)
Employee Share and Loan Values
Value of unlisted employee shares on issue at 30 June 2009 -
4,879,777 shares @ $6.93 (2008 - 5,553,369 shares @ $10.93)
Value of outstanding employee loans at beginning of year relating to employee shares
Value of new loans relating to employee shares issued during year
Value of repayments of loans during year
Value of outstanding employee loans at end of year relating to employee shares
2 0 0 9
$ m
11.9
11.9
33.8
37.4
-
(4.7)
32.7
2 0 0 8
$ m
4.4
4.4
60.7
40.4
3.0
(6.0)
37.4
Number of employees with outstanding loan balances
2,894
3,075
Indicative cost of funding employee loans
Average balance of loans outstanding
Average cost of funds
After tax indicative cost of funding employee loans
Earnings per ordinary share - actual
Earnings per ordinary share - adjusted for interest foregone
- cents
- cents
34.4
39.0
5.89%
6.69%
1.4
25.6
26.1
1.8
87.7
88.6
The cost of employee interest-free loans is calculated by applying the bank's average cost of funds for the financial year to the
average outstanding balance of employee loans for the financial year. This cost is then tax-effected at the company tax rate of
30% (2008: 30%).
Earnings per ordinary share - adjusted is calculated by adding the after tax indicative cost of funding employee loans to profit
available for distribution to ordinary shareholders. This adjusted earnings figure is divided by the weighted average number of
ordinary shares.
(1) The EPS analysis relates to shares issued under the Company’s current and legacy employee share plans. The analysis
does not take into account the plans operated by Adelaide Bank as summarised on the next page.
Share Grant Plan
The Company has established a tax-exempt Employee Share Grant Plan (“ESGP”) as the main equity participation platform for
general employees. Shareholder approval for future grants under the ESGP was obtained at the 2008 Annual General
Meeting. The ESGP is open to all full-time and permanent part-time staff in the Group (excluding Directors and Senior
Executives) who can elect to acquire fully paid ordinary shares. It is was intended that grants under the ESGP would be made
annually subject to Board discretion and having regard to company performance.
138
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
SHARE BASED PAYMENT PLANS (continued)
Current Plans cont’d…
Employees will generally be entitled to participate in rights attached to the shares including to receive dividends and to vote at
general meetings. The shares are restricted for 3 years unless the employee leaves the Company. A grant to general
employees was made in January 2009 with 764,504 fully paid ordinary shares being issued at $10.78, being the volume
weighted average price of the Company’s shares traded over the 5 days prior to the issue. The share issue was valued and
expensed in accordance with applicable accounting requirements. The expense recognised in the income statement in relation
to share-based payments is disclosed on the previous page. As at 30 June 2009 there were 744,544 fully paid ordinary shares
held by the Plan Trustee.
Salary Sacrifice, Deferred Share and Performance Share Plan
The Company has established an Employee Salary Sacrifice, Deferred Share and Performance Share Plan (“DSP”). The DSP
provides a vehicle that will facilitate the purchase of shares on a salary-sacrifice basis and the making of additional
discretionary grants as may be required from time to time in line with the Company’s employee attraction and retention
objective.
The DSP is open to permanent full-time and part-time employees of the group and the number of shares to be granted to
employees will be determined by the Board. Employees will generally be entitled to participate in rights attached to the shares
including to receive dividends and to vote at general meetings. The Board has recently approved changes to the rules of the
Plan to enable the Plan to be used as the vehicle for the Group’s long term incentive arrangement. Details of the changes are
set out in the 2009 Remuneration Report. No shares have been issued under the DSP to date.
Further details of these plans are disclosed in the 2009 Remuneration Report.
Discontinued Plans
The Group has the following legacy employee share plans which are now closed.
Bendigo and Adelaide Bank Employee Share Ownership Plan
The Company discontinued in 2006 the existing loan-based Employee Share Ownership Plan (“Plan”) that was open to all
employees in the Group, including the Managing Director and senior executives. The Plan will continue as a legacy plan until
such time as the loans provided to fund share purchases under the Plan have been repaid. There have been no issues of
shares under this Plan since November 2004. Shares were issued under the Plan at market value.
The notional value of the limited recourse interest-free loan provided to the managing director and relevant senior executives
under this legacy Plan is disclosed in the remuneration tables that accompany this report.
Adelaide Bank Deferred Employee Share Plan
Adelaide Bank operated a deferred employee share plan (“Plan”) for senior and executive staff whereby that part of total
remuneration allocated to short-term incentive and long-term incentive were received by way of shares held in the Plan.
Participation in the Plan was at the Board’s discretion and the shares were purchased on-market.
The shares are held by the Plan Trustee for the benefit of plan participants. A participant’s right to receive shares allocated
under the Plan may be subject to performance and/or vesting criteria (“requirements”). When the requirements have been met
the participant may request the Trustee to transfer the vested shares from the Plan or direct the Trustee to sell the shares on
market.
As at 30 June 2009 there were 35,135 shares held by the Plan Trustee with 35,135 shares having vested.
Adelaide Bank Share Allocation Scheme
The Adelaide Bank Share Allocation Scheme (“Scheme”) allowed the Board to allocate a percentage of Adelaide Bank’s pre-
tax operating profit each year towards the acquisition of fully paid shares for eligible non-executive employees (free of charge).
The Scheme was open to all part time, full time and casual employees who had completed at least one year of continuous
service with Adelaide Bank.
The percentage of profit at the discretion of the Board that could be allocated under the scheme ranged between 2% and 5%.
Invitations were issued to eligible employees and, in relation to accepted invitations, the Scheme Trustee would acquire and
hold the shares on trust for the participants. Three years after the shares had been acquired, the Trustee must transfer the
shares to the participant provided the participant had not previously ceased their employment.
As at 30 June 2009, 41,756 shares were held by the Scheme Trustee with 11,350 shares having vested and 30,406 shares
having not yet vested.
Adelaide Bank Loan Plan
Adelaide Bank operated an employee share plan (“Plan”) whereby shares were allotted from time to time to eligible staff that
elected to take up their entitlement. The Plan was open to all part time, full time and casual employees who had completed at
least one year of continuous service and participation in the Plan was at the Board’s discretion.
The price was generally set at market price and funded by an interest free loan from a subsidiary of Adelaide Bank. The Plan
provided participants with a right to take up a limited recourse loan from an Adelaide Bank subsidiary to fund the purchase of
the shares. Until the loan is repaid the shares are held in trust by the Trustee of the Plan. Dividends paid on the shares were
applied to repay the outstanding loan balance. The last allocation of shares made under the Plan was in 2001.
As at 30 June 2009, the Plan Trustee held 268,750 shares under the plan with a market value of $1,867,813. The aggregate
amount of loans outstanding at year end was $171,313.
The above discontinued plans will continue until all shares have been withdrawn and / or outstanding loans repaid as
appropriate.
139
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
39.
AUDITOR’S REMUNERATION
Chief entity auditors
The auditor of Bendigo and Adelaide Bank Limited is Ernst & Young (Australia)
Amounts received, or due and receivable by the auditors for:
-auditing the financial statements of the chief entity and
any other entity in the economic entity
-taxation services in relation to the chief entity and
any other entity in the economic entity
-other services in relation to the chief entity and
any other entity in the economic entity
Amounts received, or due and receivable by non Ernst & Young audit firms for:
-review of the financial report
-other services in relation to the chief entity and
any other entity in the economic entity
C o ns o lida t e d
P a re nt
2 0 0 9
$
2 0 0 8
$
2 0 0 9
$
2 0 0 8
$
2,021,222
1,358,071
1,727,477
784,875
574,414
579,751
538,685
154,378
725,296
3,320,932
555,965
2,493,787
725,296
2,991,458
228,247
1,167,500
-
-
-
15,000
10,420
25,420
-
-
-
-
-
-
140
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
40.
DIRECTOR AND EXECUTIVE DISCLOSURES
Details of the remuneration of directors and executives of the group for the 2009 financial year
(a) Details of key management personnel
The key management personnel (being the directors of the Bank and the executives who have the authority and
responsibility for planning, directing and controlling the activities of the Group), and the five most highly remunerated
executives of the Group and the Company for the 2009 financial year are set out in the 2009 Remuneration Report at
pages 42 and 66.
(b) Compensation of key management personnel
The Corporations Legislation Amendment Act made a number of changes to section 300A of the Corporations Act and
Regulations relating to the disclosure of executive and director remuneration by disclosing entities. These changes were
made in order to remove the duplication of disclosures which existed in the Corporations Act and Accounting Standard
AASB124 Related Party Disclosures. The remuneration disclosures (including comparative information) in relation to key
management personnel are provided in the “Remuneration Report” section of the Directors’ Report.
(c) Compensation by category: for key management personnel (being the directors of the Bank and the executives who
have the authority and responsibility for planning, directing and controlling the activities of the Group), and the five most
highly remunerated executives of the Group for the 2009 financial year.
CONSOLIDATED
2009
$
2008
$
Short-term employee benefits
8,238,004
8,050,194
Post employment benefits
Other long-term benefits
Termination benefits
900,185
146,629
-
743,232
327,564
405,573
Share-based payment
2,521,041
1,898,952
Total Compensation
11,805,859
11,425,515
(d) Performance rights and options: Granted and vested during the year (Consolidated)
During the financial year performance rights and performance options were granted as equity compensation under the
Executive Incentive Plan (“Plan”) to certain key management personnel. No share rights or options have been granted
to non-executive Directors under this Plan.
The Plan provides for grants of options and performance rights (“Instruments”) to key executives, including the
Managing Director. Under the Plan, eligible executives are granted options and performance rights subject to
performance conditions set by the Board. If the performance conditions are satisfied during the relevant performance
period, the options and performance rights will vest.
Each option and performance right represents an entitlement to one ordinary share in the company. Accordingly, the
maximum number of shares that may be acquired by the key executives is equal to the number of options and
performance rights issued.
Options and performance rights are granted at no cost to the key executives. The exercise price for options will
generally be the market price of the shares at the grant date, and no exercise price will apply to exercisable
performance rights.
The number of options and performance rights granted to the Managing Director and key executives have been based
on the value of each option and performance right, calculated using the recognised Black – Scholes-Merton valuation
methodology. The assessed fair value of each option and each performance right granted under the Plan are set out in
the tables below.
The grants are subject to a dealing restriction. Executives are not entitled to sell, transfer or otherwise deal with the
shares allocated to them until 2 years after the end of the initial performance period. Further details of the Plan are set
out in the 2009 Remuneration Report.
A Plan participant may not enter into a transaction designed to remove the “at-risk” element of an entitlement under the
Plan before it vests. Plan participants may only enter into a transaction designed to remove the “at risk” element of an
entitlement under the Plan after it vests and if the Board has not decided to restrict or prohibit the participant from doing
this. If a Plan participant enters into such a transaction, they must tell the Company Secretary and provide any details
requested.
141
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Performance Options
Vested Granted
Terms & Conditions for each Grant
30 June 2009
No.
No.
Grant
Date
Fair Value
per option
at grant
date
Exercise
price per
option
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
Directors
R Hunt
J McPhee
Executives
M Baker
A Baum
R Fennell
G Gillett
M Hirst
D Hughes
R Jenkins
C Langford
T Piper
P Riquier
A Watts
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189,781
21.11.08
$1.37
$11.09
31.7.13
30.6.11
31.7.13
51,013
21.11.08
50,365
21.11.08
47,445
21.11.08
63,766
21.11.08
163,876
21.11.08
45,985
21.11.08
57,693
21.11.08
69,839
21.11.08
47,445
21.11.08
40,146
21.11.08
50,219
21.11.08
877,573
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$1.37
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
$11.09
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
30.6.11
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
31.7.13
Performance Rights
Vested Granted
Terms & Conditions for each Grant
30 June 2009
No.
No.
Grant
Date
Fair Value per
right at grant
date
Exercise
price per
right
Expiry
Date
First
Exercise
Date
Last
Exercise
Date
Directors
R Hunt
J McPhee
Executives
M Baker
A Baum
R Fennell
G Gillett
M Hirst
D Hughes
R Jenkins
C Langford
T Piper
P Riquier
A Watts
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,957
21.11.08
$9.30
$0.00
30.6.12
30.6.11
30.6.12
7,515
7,419
6,989
9,394
21.11.08
21.11.08
21.11.08
21.11.08
24,141
21.11.08
6,774
8,499
21.11.08
21.11.08
10,288
21.11.08
6,989
5,914
7,398
129,277
21.11.08
21.11.08
21.11.08
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$9.30
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.11
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
30.6.12
During the year 19,043 shares (2008: 9,462 shares) were issued on the exercise of performance rights. No shares were
issued on the exercise of vested options.
142
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Performance Options
30 June 2009
Balance at
beginning of
period
01-Jul-08
Granted as
Remun-
eration
Options
Exercised
Net Change
Other
Balance at
end of
period
30-Jun-09
Total
Exercisable Not
Exercisable
Directors
R Hunt
J McPhee
Executives
M Baker
A Baum
R Fennell
G Gillett
M Hirst
D Hughes
R Jenkins
C Langford
T Piper
P Riquier
A Watts
Total
402,352
-
-
189,781
58,401
-
-
70,251
84,986
-
64,807
75,695
-
-
46,976
51,013
50,365
47,445
63,766
163,876
45,985
57,693
69,839
47,445
40,146
50,219
803,468
877,573
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
402,352
402,352
120,349
189,781
189,781
109,414
109,414
50,365
47,445
50,365
47,445
134,017
134,017
248,862
248,862
45,985
45,985
122,500
122,500
145,534
145,534
47,445
40,146
97,195
47,445
40,146
97,195
-
-
-
-
-
-
-
-
-
-
-
-
1,681,041
1,681,041
120,349
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance Rights
30 June 2009
Balance at
beginning of
period
01-Jul-08
Granted as
Remun-
eration
Rights
Vested
Net Change
Other
Balance at
end of
period
30-Jun-09
Total
Exercisable Not
Exercisable
Directors
R Hunt
J McPhee
Executives
M Baker
A Baum
R Fennell
G Gillett
M Hirst
D Hughes
R Jenkins
C Langford
T Piper
P Riquier
A Watts
Total
66,957
41,533
9,996
11,941
11,249
12,002
14,542
10,903
11,088
12,916
11,249
9,518
8,006
-
(19,043)
27,957
7,515
7,419
6,989
9,394
24,141
6,774
8,499
10,288
6,989
5,914
7,398
-
-
-
-
-
-
-
-
-
-
-
-
231,900
129,277
(19,043)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,914
69,490
17,511
19,360
18,238
21,396
38,683
17,677
19,587
23,204
18,238
15,432
15,404
47,914
69,490
17,511
19,360
18,238
21,396
38,683
17,677
19,587
23,204
18,238
15,432
15,404
342,134
342,134
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
143
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
(e) Shareholdings of directors and named executives (including their related parties)
Balance 1 July 2008
Net Change
Balance 30 June 2009
Ordinary
shares
Employee
shares
Preference
Shares
Ordinary
shares
Employee
shares
Preference
Shares
Ordinary
shares
Employee
shares
Preference
Shares
284,228
-
1,000
R Hunt AM
348,734
600,000
16,801
19,114
-
-
371,576
236,500
61,900
9,078
1,000
22,607
2,500
7,609
538
8,856
450
208
-
-
-
-
-
55,720
30,746
132,590
50,000
-
23,707
69,880
750
123,367
16,878
-
1,630
-
2,467
19,470
21,885
39,459
1,000
2,591
-
-
-
-
(33,750)
(32,250)
1,400
2,198
700
2,559
700
-
309
150
-
-
-
-
200
-
500
1,348
-
-
-
-
-
-
-
-
-
-
1,761
752
500
3,380
700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
306,113
-
1,000
388,193
600,000
17,801
21,705
-
-
337,826
204,250
63,300
11,276
1,700
25,166
3,200
-
-
-
-
-
8,957
538
55,720
30,746
10,617
132,590
1,202
50,000
708
-
27,087
69,880
1,450
123,367
16,878
-
-
2,467
1,630
19,470
-
309
150
-
-
-
-
200
-
500
-
-
-
-
-
-
-
-
-
1,245,347
1,288,490
2,159
Shares held in
Bendigo and
Adelaide Bank
Directors
R Johanson
K Abrahamson
J Dawson
J McPhee
T O’Dwyer
K Osborn
D Radford
K Roache
A Robinson
Senior
Executives
M Baker
A Baum
G Gillett
M Hirst
D Hughes
R Jenkins
C Langford
T Piper
P Riquier
A Watts
Total
1,198,164
1,320,740
2,159
47,183
(32,250)
1 Converted to ordinary shares.
All equity transactions with key management personnel have been entered into under terms and conditions no more favourable than
those the entity would have adopted if dealing at arm’s length other than shares issued under the Employee Share Ownership Plan
and the Adelaide Bank Loan Plan. Issue of shares under the Employee Share Plans are made under conditions disclosed in Note
38.
144
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
(f)
Loans to directors and named executives (including their related parties)
(i) Details of aggregates of loans to directors and named executives (including their related parties) are as follows:
Balance
at beginning of
period
Interest
charged
Interest not
charged
Write-off
Balance at
end of
period
Number at
30 June
2009
$’000
$’000
$’000
$’000
$’000
Directors1
Executives1
2009 2
2008
2009 2
2008
Total directors and executives
2009 2
2008
14,146
8,294
8,562
7,046
22,708
15,340
645
550
355
465
1,000
1,015
235
117
102
85
337
202
-
-
-
-
-
-
11,824
14,146
6,555
8,562
18,379
22,708
7
7
10
10
17
17
(ii) Details of individuals (including their related parties) with loans above $100,000 in the reporting period are as
follows:
Balance
at beginning of
period
$’000
Interest
charged
Interest not
charged
Write-off
$’000
$’000
$’000
Balance at
end of
period
$’000
Directors
R Johanson
R Hunt AM
Staff share loan
J Dawson
J McPhee
Staff share loan
D Radford
K Roache
T Robinson
Senior Executives
M A Baker
Staff share loan
Loans
A Baum
Loans
R Fennell
Loans
G Gillett
Staff share loan
Loans
M Hirst
Staff share loan
Loans
R Jenkins
Staff share loan
Loans
C Langford
Staff share loan
Loans
627
2,235
3,934
473
1,906
275
992
2,204
1,500
255
114
554
400
494
786
293
-
280
1,125
462
1,757
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
527
2,101
3,636
449
1.006
129
995
2,181
800
228
97
451
407
428
701
269
3
245
1,035
401
1,593
-
-
223
-
-
12
-
-
-
14
-
-
-
27
-
17
-
15
-
25
-
32
120
-
36
82
-
72
176
127
-
6
43
24
-
52
-
-
-
75
-
112
145
Highest owing
in period
$’000
627
2,358
3,934
474
1,906
275
1,086
2,476
1,510
255
114
741
407
494
801
293
5
280
1,142
462
1,767
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTOR AND EXECUTIVE DISCLOSURES (continued)
Balance
at beginning of
period
$’000
Interest
charged
Interest not
charged
Write-off
$’000
$’000
$’000
Balance at
end of
period
$’000
Senior Executives
cont’d..
T Piper
Loans
P Riquier
Loans
A Watts
Staff share loan
Loans
1,299
236
69
438
4
13
-
26
-
-
4
-
-
-
-
-
-
218
59
423
Highest owing
in period
$’000
1,303
238
69
467
1 Balances include interest-free loans provided to the Managing Director and Senior Executives in connection with share
issues under employee share plans as described at Note 38.
2 Opening balances have been adjusted to include loans to directors and senior executives appointed during the year and to
exclude directors and senior executives who ceased during the year.
Terms and conditions of director and senior executive loans
The loans to directors and senior executives are made in the ordinary course of the company’s business and on an arms
length basis. The loans are processed and approved in accordance with the Bank’s standing lending processes and
prevailing terms and conditions.
Terms and conditions of the loans under Staff Share Plan
Loans have been provided to Mr R G Hunt, Mr M Hirst, Mr J McPhee and Senior Executives under the terms of Bank’s
legacy Employee Share Ownership Plan and Adelaide Bank Loan Plan. Details of the Plan’s terms and conditions are
provided at Note 38 to the financial statements.
(g)
Other transactions of directors and director related entities
Mr K Roache as partner of the legal firm Coulter Roache has provided legal services to Bendigo and Adelaide Bank Ltd by
way of mortgage document preparation based on normal commercial terms and conditions. The amount paid or payable
during the year totalled $80,913 (2008: $93,774).
Mr R Johanson is a director of the Grant Samuel Group, which provided professional advisory services to Bendigo and
Adelaide Bank Ltd based on normal commercial terms and conditions. A protocol, approved by the Board, has been
established for the engagement of Grant Samuel by the Bank which includes arrangements for dealing with conflicts of
interest. The services are provided in accordance with scheduled fee rates which were discussed and approved by the Board
in the absence of Mr Johanson.
The services provided during the 2009 financial year included services in relation to corporate matters including alliance and
joint venture activities, strategic developments and the Adelaide Accommodation project. The amount paid or payable for the
year was $1,216,187 (2008: $5,444,190).
Mr Robinson is a director of IOOF Holdings Limited. Mr Robinson is also a director of IOOF Investment Management Limited
(“IOOF”) and Perennial Investment Partners Limited (“Perennial”), which are subsidiaries of IOOF Holdings Ltd. These
companies provide investment management services to managed investment schemes for which Sandhurst Trustees Ltd is
the responsible entity. The fees paid by Sandhurst Trustees for these services are on normal commercial terms and
conditions. The fees paid for the year totalled $188,000 (2008 $304,000).
Bendigo Financial Planning Ltd (“BFP”), a subsidiary of Bendigo and Adelaide Bank, is the sponsor and markets and
promotes Bendigo Financial Solutions Personal Superannuation (“BFSPS”). BFSPS is a superannuation product offered by
IOOF Investment Management Services Ltd. The fees paid by IOOF to BFP are based on normal commercial terms and
conditions. The Board has approved a protocol that sets out arrangements for dealing with potential conflicts of interest
connected with the financial services activities of IOOF Holdings Limited and its subsidiaries. The fees paid to BFP for the
year were $2,714,239 (2008 $3,236,000).
Mr Hunt is a Director of Bendigo Community Telco (“BCT”). BCT supplies telecommunications and business continuity
services to the group. The services are provided on commercial terms and conditions. Bendigo and Adelaide Bank also
provides banking overdraft and lending facilities to BCT. The banking services are provided in accordance with Bendigo and
Adelaide Bank’s prevailing product terms and conditions. The amount paid or payable for the year was $15,752,831 (2008:
$14,773,407).
Joint venture company directorships:
Mr R Johanson is a non-executive director of Rural Bank Limited, a joint venture entity of Bendigo and Adelaide Bank. Mr
Johanson was entitled to receive a director fee of $58,000 plus Superannuation Guarantee Charge by Rural Bank Limited in
connection with the directorship.
146
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
41.
RELATED PARTY DISCLOSURES
Ultimate Parent Entity
Bendigo and Adelaide Bank Limited is the ultimate parent entity.
Wholly owned group transactions
Bendigo and Adelaide Bank Limited is the parent entity of all entities listed in Note 21 - Particulars in relation to
controlled entities. Transactions undertaken during the financial year with those entities are eliminated in the
consolidated financial report. The transactions principally arise from the provision of administrative, distribution,
corporate and the general banking services.
Additionally, Bendigo and Adelaide Bank pays operating costs and banks receipts on behalf of certain controlled
entities which are financed via unsecured interest free intercompany loans. The loans have no fixed repayment date.
Amounts due from and due to controlled entities at balance date are shown in the balance sheet. The balance of
these inter-company loans is included in the net amount owing to/(from) subsidiaries column of the table below.
Interest received or receivable from and paid or payable to controlled entities and dividends received and receivable
from controlled entities is disclosed in Note 4 - Profit and is included in the table below.
147
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RELATED PARTY DISCLOSURES (continued)
Material transactions between Bendigo and Adelaide Bank and its subsidiaries during the period were as follows:
Bendigo Finance Pty Ltd
National Mortgage Market Corporation Limited
National Assets Securitisation Corporation Pty Ltd
Fountain Plaza Pty Ltd
Victorian Securities Corporation Limited
Bendigo Financial Planning Limited
Benhold Pty Ltd
IOOF Building Society Pty Ltd
Community Developments Australia Pty Ltd
Community Exchanges Australia Pty Ltd
Sandhurst Trustees Limited
Oxford Funding Pty Ltd
Sunstate Lenders Mortgage Insurance Limited
Pirie Street Holdings Limited
(previously Adelaide Bank Limited)
Adelaide Equity Finance Pty Ltd
Leveraged Equities
Co-op Member Services Pty Ltd
Hindmarsh Financial Service Pty Ltd
AB Management Pty Ltd
Adelaide Managed Funds Limited
Hindmarsh Adelaide Property Trust
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
Net receipts
Supplies, Net am ount
and fees
fixed assets
ow ing
paid to and services
to/(from )
subsidiaries
charged to subsidiaries
subsidiaries
at 30 June
$m
0.4
(0.6)
(1.0)
2.3
-
0.2
91.2
(2.9)
15.1
10.6
9.8
10.5
5.1
-
(20.4)
-
0.9
(1.3)
1.2
0.2
(60.4)
28.1
45.2
3.5
-
-
32.1
(2.6)
(388.1)
-
(191.6)
-
22.2
-
(1.8)
-
6.9
-
2.6
-
(4.4)
-
$m
-
-
0.5
0.6
-
0.1
1.8
2.2
2.7
2.7
11.9
10.6
-
-
-
-
1.8
1.3
-
0.2
10.0
30.3
6.9
8.1
1.4
1.1
52.7
54.7
8.6
-
18.6
-
-
-
(0.7)
-
-
-
8.6
-
(0.5)
-
$m
(1.6)
(2.0)
7.5
9.0
0.9
0.9
1.6
(87.8)
8.5
(3.9)
(4.2)
(2.1)
-
(5.1)
-
20.4
(9.1)
(8.2)
(0.2)
(1.4)
(70.7)
(0.3)
1.4
(36.9)
(10.0)
-
(77.9)
(57.3)
(396.7)
-
(210.2)
-
22.2
-
(1.1)
-
6.9
-
(6.0)
-
(3.9)
-
On 1 December 2008, all of the assets and liabilities of Adelaide Bank Limited were transferred to the parent entity, at
fair value. This transaction resulted in a loss of $12.1 million to the parent entity.
In June 2009 Sunstate Lenders Mortgage Insurance Pty Ltd transferred unearned premium income of $18.1 million to
Bendigo and Adelaide Bank Limited on cessation of its mortgage insurance operations.
In June 2009 Bendigo and Adelaide bank Limited sold share investments to Sandhurst Trustees Limited at market
price. These sales are reflected in the above table of transactions relating to Sandhurst Trustees Limited. These sales
resulted in a $1.9 million profit being realised in Bendigo and Adelaide Bank Limited.
- Tasmanian Permanent Trustees Limited
- IOOF Holdings Limited
$ 2.3m
$ 72.8m
Bendigo and Adelaide Bank provides funding and guarantee facilities to several subsidiary companies as detailed in
the following table. The balance outstanding on these facilities is included in the net amount owing to/(from)
subsidiaries in the above table.
Guarantees disclosed in the above table with a zero limit are less than $0.1 million.
All funding and guarantee facilities are provided to subsidiary companies on normal commercial terms and conditions.
148
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RELATED PARTY DISCLOSURES (continued)
Several subsidiary companies have bank accounts and investment funds held with Bendigo and Adelaide Bank
Limited under normal terms and conditions. These balances are included in the amount owing to/(from) subsidiaries
in the above table.
Subsidiary
Sandhurst Trustees Limited
Bendigo Financial Planning Limited
Victorian Securities Corporation Limited
Community Energy Australia Pty Ltd
Community Solutions Australia Pty Ltd
Facility
Standby
Guarantee
Standby
Guarantee
Overdraft
Overdraft
Guarantee
Limit
20.0
-
10.0
-
0.4
0.8
-
Drawn/issued at
30 June 2009
-
-
-
-
-
0.7
-
Guarantees disclosed in the above table with a zero limit are less than $0.1 million.
All funding and guarantee facilities are provided to subsidiary companies on normal commercial terms and conditions.
Several subsidiary companies have bank accounts and investment funds held with Bendigo and Adelaide Bank Limited under normal terms
and conditions. These balances are included in the amount owing to/(from) subsidiaries in the above table.
The following dividends received by Bendigo and Adelaide Bank Limited from subsidiary companies are included in the supplies/services
column of the above table:
Adelaide Bank Limited
(now Pirie Street Holdings Limited)
Sandhurst Trustees Limited
Sunstate Lenders Mortgage Insurance Pty Ltd
2009
2008
2009
2008
2009
2008
There were no material transactions between subsidiary companies.
Other related party transactions
Securitised and sold loans
$m
86.8
54.7
14.4
20.6
10.0
-
The bank securitised or sold loans totalling $5,857.6 million (2008: $3,308.0 million) during the financial year. Of this
total, $248.9 million (2008: $359.1 million) were sold to the Common Funds managed by Sandhurst Trustees Limited.
The consolidated Group does invest in some of its own securitisation programs where the Bank holds A & B notes
equivalent to $4,565.9 million as at 30 June 2008. The Bank does invest in other securitisation programs unrelated to
the Bank as part of normal investment activities.
Joint venture entities
Bendigo and Adelaide Bank Limited has investments in joint venture entities as disclosed in Note 22 - Investments in
joint ventures. The group has transactions with the joint venture entities, principally relating to commissions received
and paid, services and supplies procured from joint ventures and fees charged in relation to the provision of banking,
administrative and corporate services. These revenue and expense items are included in the relevant values
disclosed in Note 4 - Profit. The transactions are conducted on terms and conditions no more favourable than those
which it is reasonable to expect would have been adopted if dealing with the joint venture entities at arm's length in
the same circumstances.
149
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RELATED PARTY DISCLOSURES (continued)
During the financial year, transactions took place between the Bendigo and Adelaide Bank group and joint venture
entities as follows:
Rural Bank Ltd
Tasmanian Banking Services Ltd
Community Sector Enterprises Pty Ltd
Caroline Springs Financial Services Pty Ltd
Silver Body Corporate Financial Services Pty Ltd
Strategic Payments Services Pty Ltd
Homesafe Trust
Community Telco Australia Pty Ltd
Com m issions Supplies and Am ount ow ing
and fees paid
services
to/(from ) joint
to joint ventures
provided to
ventures at
joint ventures
30 June
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
2009
2008
$m
1.4
1.5
10.5
9.6
3.8
4.6
-
0.5
1.1
1.2
6.6
2.2
-
-
-
-
$m
8.2
3.5
3.3
4.8
2.9
2.3
-
0.6
0.4
0.6
-
-
-
-
-
-
$m
(0.3)
(0.3)
0.5
0.6
0.1
0.2
-
-
0.1
-
-
-
(98.5)
-
(0.7)
0.4
Dividends received and receivable from joint venture entities are disclosed in Note 4 – Profit.
Bendigo and Adelaide Bank Limited provides loans, guarantees and/or overdraft facilities to joint venture companies
in connection with cash flow management, and the payment of administration costs on behalf of the joint venture
companies. The loans have agreed repayment terms which vary according to the nature of the facility. The
outstanding balances of these loans are disclosed in the above table.
150
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
42.
RISK MANAGEMENT
RISK OVERSIGHT
The management of risk is an essential element of the Group’s strategy and profitability and the way the Group
operates.
The Board, being ultimately responsible for risk management associated with the Group’s activities, has established
an integrated governance and accountability framework, policies and controls to identify, assess, monitor and
manage risk.
In addition to strategic and reputation risk the material business risks relating to the Group can be categorised as:
credit, market (including interest rate and currency), liquidity, and operational risk (includes compliance, contagion,
environment/sustainability risks). In addition to these material risks, the Group acknowledges the risk arising from
integrating the operations of Bendigo and Adelaide Banks.
The risk management strategy is based upon risk principles approved by the Board and is underpinned by a system
of delegations, passing from the Board through Board committees, the Managing Director (“MD”), management
committees to the various risk, support and business units of the Group.
An essential element of the risk framework is the risk culture of the Group. Management of risk is the responsibility of
the business units of the Group. Embedded in our culture is the value in all staff to doing the right thing, taking
responsibility for managing risks inherent in their role and engaging with our stakeholders including the broader
community to deliver a sustainable business proposition for all. The Group’s risk management culture is also
demonstrated by many aspects of management of the Group, including:
Risk is managed both top down and bottom up.
Risk management is embedded in strategy, planning, policy and procedures.
An ability to identify opportunities, strive for quality and efficiency and minimise losses.
Maintaining risk competencies especially for key roles.
Regular discussion on risk at the business unit level.
Acting promptly to manage risks and events whether internal or external.
The existence of a close working relationship/partnership between the business and risk functions and
acceptance of a “healthy tension” between the functions.
Board Responsibilities
In accordance with the Board Charter, the Board principally through the Audit, Credit, Risk and Governance & HR
Committees oversees the establishment, implementation, review and monitoring of risk management systems and
policies, taking into account the risk appetite of the Group, the overall business strategy, management expertise and
the external environment. This includes approving risk limits and risk policies.
Board Committee Responsibilities
The Board has approved policies that support the implementation of a risk oversight and management framework for
the Group. These policies are overseen by the Board Committees with each Committee operating under a Board
approved charter that is reviewed annually.
Each Committee has established Terms of Reference that describes the relevant responsibilities in respect to
oversight and monitoring of Board-approved risk management policies.
The Committees evaluate developments in respect to the Group’s structure and operations, as well as economic,
industry and market developments that may impact the Group’s management of risk.
Executive Responsibilities
On a day to day basis each Executive, management and staff are responsible for carrying out their roles in a way that
manages risk in line with policies and procedures.
Whilst the Board has responsibility for setting the Group’s appetite for risk, the MD and other Executive Committee
members are responsible for developing strategies and business plans commensurate with that risk appetite.
The Executive Committee has responsibility for ensuring that the Board approved strategies and decisions are
appropriately implemented as well as managing and monitoring the day to day activities of the Group including the
management of risk and consideration of emerging risks and opportunities.
The Executive has a number of committees that assists the Executive consider risk management matters including
the Asset Liability Management Committee, Credit Committee and the OH&S and Security Committee.
151
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Independent Review
Group Assurance (Internal Audit)
The Bank Assurance function operates under a charter and annual audit plan approved by the Board Audit
Committee. The Board, on recommendation of the Board Audit Committee, approves the appointment of the Head of
Bank Assurance. The Committee receives reports at each meeting in respect to the outcomes and status of the
internal bank assurance plan. The independent Bank Assurance function audits all functions across the Group
including the effectiveness of the Group’s risk management and internal compliance and control systems, in line with
the bank assurance plan and has direct access to the Board through the Board Audit Committee.
Group Risk
Group Risk is an independent function of the Group, providing the frameworks, policies and procedures to assist the
Group in managing credit and operational risk in line with the strategy and risk appetite set by the Board.
The Group Credit Risk function is responsible for reviewing portfolio credit quality, policy development and
promulgation, credit policy compliance, the assessment of large/maximum credit and manages the performance of
the credit management system at the Group level.
The Group Operational Risk function is responsible for providing the frameworks, tools and support to assist the
business in the management of its operational risk (including regulatory compliance, business continuity, financial
crimes and dealings through Partners).
The Group Insurance function develops an insurance strategy and program for “insurable risk” which is approved by
the Board Risk Committee
The Group Risk function has direct access to the Board through the Board Credit and Risk Committees.
Group Treasury
A function has been established within Group Treasury that is responsible for monitoring Treasury Policy compliance
(including adherence to tolerance limits). Group Treasury has direct access to the Asset Liability Management
Committee and in turn the Board Risk Committee.
MD/CEO and CFO Assurance
As part of the statutory reporting arrangements for the Group, the Managing Director (MD/CEO) and Chief Financial
Officer (CFO), provide a written declaration to the Board that:
The Group’s financial statements present a true and fair view, in all material respects, of the Group’s financial
position and performance, are in accordance with the Corporations Act and comply with the Corporations
Regulations 2001 and comply with accounting standards.
The financial records of the Group for the financial year have been properly maintained in accordance with
Section 286 of the Corporations Act 2001.
The above statements regarding the integrity of the financial reports are founded on a sound system of risk
management and internal control and that the systems, including those relating to business continuity, are
operating effectively in all material respects in relation to financial reporting risks.
Any other matters that are prescribed by the Corporations Act regulations as they relate to the financial
statements and notes to the financial statements are met.
To provide this assurance a formal due diligence and verification process, including attestations from management, is
conducted. This assurance is provided each six months in conjunction with the half year and full year financial
reporting obligations. The statements are made on the basis that they provide a reasonable but not absolute level of
assurance and do not imply a guarantee against adverse circumstances that may arise in future periods.
Further a description of the systems and policies employed to manage the key risks to which the Bank and Group is
exposed is provided to APRA. The MD confirms annually the integrity of these descriptions to APRA with the
endorsement of the Board.
RISK PRINCIPLES
Overview
The Group’s Risk Management Principles and Systems Description document summarises the risk management
control framework of the Group. These principles are approved by the Board and may be amended with
endorsement of the Board. Specific details and responsibilities for managing each category of risk are contained in
the relevant policy statements, frameworks and procedural manuals.
The risk principles are summarised below.
Risk Management Strategy
A structured framework has been established to ensure that the risk management objectives are linked to the Group’s
business strategy and operations. The risk management strategy is underpinned by an integrated framework of
responsibilities and functions driven from Board level down to operational levels, covering all aspects of risk, most
notably market, credit, liquidity, operational (includes compliance, contagion and environmental), strategic and
reputation risks.
The framework recognises the governance structure and risk management framework referred to above.
152
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Risk Limits
Risk limits for market risk, credit risk and capital at risk are set and monitored by the appropriate management
committees within the parameters approved by the Board.
The management of operational risk is performed using qualitative self assessment and the Group has defined
general parameters to manage the Group-wide operational risk profile to comply with the approved risk appetite and
tolerances.
Limits (which may be in the form of net interest income, net profit before or after tax, retained earnings, market value
of equity or other key performance indicators) are based upon the level of capital the Board is willing to place at risk.
Limits are calculated by aggregating quantifiable measures of market, credit and operational risk.
Prior to approval by the Board, limits are formally reviewed on a regular basis by the appropriate management and
Board committees, and consider changes in market conditions, strategy or risk appetite with limits:
Set and reviewed regularly by the Asset Liability Management Committee (“ALMAC”), Executive Credit
Committee and Executive Committee.
Aligned with the budgeting and planning cycle.
Taking into account historic and projected risk-adjusted performance.
Independently monitored.
Risk Management Measurement Reporting and Control
Effective measurement, reporting and control of risk is vital to manage the Group’s business activities in accordance
with overall strategic and risk management objectives. The risk management, reporting and control framework
requires the quantification of market, credit and liquidity risk, the capability to aggregate and monitor exposures, a
comprehensive set of limits to ensure that exposures remain within agreed boundaries, and a mechanism for
evaluating performance on a risk-adjusted basis. The management of operational risk is based on a documented
policy and framework. The Board has defined general parameters to manage the Group-wide operational risk profile
to comply with the approved risk appetite and tolerances which considers both downside risk and opportunities.
Internal controls
The risk management framework requires robust internal controls across all aspects of the business as well as strong
support functions covering legal, regulatory, governance, reputation, finance, information technology, human
resources and strategy. Consequently the effectiveness and efficiency of controls is evaluated in all new and
amended products, processes and systems or where external and internal factors impact the operating environment
(e.g. changes in organisation structure, growth, new regulation).
Risk Management Systems
Accurate, reliable and timely information is vital to support decisions regarding risk management at all levels. The
requirements span a diverse range of risk functionality including market and credit risk analysis systems, budgeting,
strategic planning, asset and liability management, performance measurement, operational risk and regulatory
reporting, as well as trading and trade processing systems and those systems supporting our staff.
Data reconciliation is established to provide for the integrity of the information used and appropriate security controls
around all systems. Back-up and recovery procedures are defined and business continuity plans approved and
communicated to promote resilience and minimise the impact of an incident.
The Group maintains and implements specific policies and procedures to measure, monitor, manage and report on
the material risks to which the Group is exposed. Each policy contains requirements to be met for review and
approval.
MATERIAL RISKS
Overview
The risk management framework of the Group is structured upon:
Core Risk Principles – overriding principles governing all activities and risk monitoring procedures; and
Specific Risk Policies – appropriate policies, framework documents, procedures and processes implemented to
manage specific risks to which the Group is exposed.
The Board, and industry regulators, have identified the material risks to which the Group is exposed as being credit,
market (including interest rate and currency), liquidity and operational risk. The Group has identified a further short
term risk, termed ongoing integration risk, relating to the merger of Bendigo and Adelaide Bank Group and Adelaide
Bank Group on 30 November 2007. Specific risk management structures have been established by the Group to
manage these and other risks (e.g. reputation, strategic, contagion and sustainability).
The material risks are described below.
153
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Credit Risk
Credit risk is the potential that the Group will suffer a financial loss due to the unwillingness or inability of a
counterparty to fully meet their contractual debts and obligations.
The Board Credit Committee is responsible for monitoring adherence to credit policies, practices and procedures
within the Group. The Board has established levels of delegated lending authority under which various levels of
management (including the Credit Committee), partners and the Board Credit Committee can approve transactions.
Group Credit Risk has responsibility for:
Managing, maintaining and enhancing the currency and relevance of the Group’s Credit Policies;
Providing support and analysis of credit portfolio information for credit management purposes; and
Reporting to the Executive Credit Committee and the Board Credit Committee.
The table below shows the maximum exposure to credit risk for the components of the balance sheet, including
derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of master netting
and collateral agreements.
Gross maximum exposure
Consolidated
Parent
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale - securities
Financial assets held to maturity
Other assets
Financial assets available for sale - share investments
Derivatives
Shares in controlled entities
Amounts receivable from controlled entities
Loans and other receivables - investment
Gross loans and other receivables
Contingent liabilities
Commitments
Total credit risk exposure
2009
$ m
912.6
235.4
3,882.3
-
344.9
512.3
84.1
49.0
-
-
505.7
38,417.2
44,943.5
171.6
4,632.4
4,804.0
49,747.5
2008
$ m
1,195.9
412.7
1,414.8
422.0
1,414.6
468.2
84.6
311.8
-
-
517.6
39,740.7
45,982.9
179.4
3,954.2
4,133.6
50,116.5
2009
$ m
527.5
235.4
5,613.3
-
266.4
660.4
5.9
124.7
460.6
765.7
505.7
34,801.4
43,967.0
171.6
4,616.2
4,787.8
48,754.8
2008
$ m
440.5
237.6
-
611.5
1,673.4
450.7
77.2
128.1
2,272.5
164.2
-
15,098.2
21,153.9
137.5
2,671.7
2,809.2
23,963.1
Where financial instruments are recorded at fair value the amounts shown above represent the current credit risk
exposure but not the maximum risk exposure that could arise in the future as a result of changes in values.
The effect of collateral and other risk mitigation techniques is shown in the Ageing table, page 157 below.
Concentrations of the maximum exposure to credit risk
Concentration of risk is managed by client/counterparty, by geographical region and by industry sector. The
maximum credit exposure to any client or counterparty as at 30 June 2009 was $519.8 million (2007: $232.5 million)
before taking account of collateral or other credit enhancements and $519.8 million (2007: $232.5 million) net of such
protection.
Geographic
The group’s financial assets, before taking into account any collateral held or other credit enhancements can be
analysed by the following geographic regions:
Gross maximum exposure
Consolidated
Parent
Victoria
New South Wales
Australian Capital Territory
Queensland
South Australia/Northern Territory
Western Australia
Tasmania
Overseas/other
Total credit risk exposure
2009
$ m
15,573.9
12,984.5
468.3
8,757.8
6,936.6
3,590.5
816.2
619.6
49,747.4
2008
$ m
14,807.3
11,339.1
468.9
8,545.6
9,553.7
3,653.4
1,090.7
657.9
50,116.5
2009
$ m
16,170.7
12,701.2
422.1
8,059.6
7,680.3
2,387.8
722.1
611.0
48,754.8
2008
$ m
11,446.1
2,969.1
314.1
3,292.8
3,319.7
1,478.1
742.4
400.7
23,963.1
154
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Industry sector
An industry sector analysis of the group’s financial assets, before taking into account collateral held or other credit
enhancements, is as follows:
Consolidated
Accom, cafes & restaurants
Agriculture & associated industries
Communication services
Construction
Cultural & recreational services
Education
Electricity, Gas and Water Supply
Finance & insurance
Financial services
Government Administration and Defence
Health & community services
Manufacturing
Margin Lending
Mining
Other
Personal & other services
Property & business services
Residential/consumer
Retail trade
Retirement
Transport & storage
Wholesale trade
Gross
maximum
exposure
2009
$ m
482.6
1,592.9
199.2
1,913.8
216.7
422.1
172.0
829.8
5,911.9
461.2
933.6
905.8
3,315.8
256.5
278.7
507.3
4,015.4
24,144.7
1,613.4
294.1
793.7
486.3
49,747.5
Parent
Gross
Gross
Gross
maximum maximum maximum
exposure
exposure
2008
2009
$ m
$ m
439.4
441.1
797.0
1,505.4
192.8
164.5
1,560.4
1,659.1
195.5
189.8
386.9
312.1
152.5
140.5
2,833.9
784.4
3,567.7
8,696.4
409.4
361.1
696.5
792.6
818.6
736.8
63.4
-
226.4
216.8
156.9
263.2
299.8
445.9
3,318.8
3,823.9
5,250.3
25,396.0
1,512.0
1,426.7
-
294.1
653.3
666.9
431.6
437.5
23,963.1
48,754.8
exposure
2008
$ m
457.4
1,553.4
195.3
1,666.4
205.9
395.6
153.3
548.5
5,432.4
417.3
964.2
855.5
3,706.3
228.9
606.2
524.2
3,274.6
25,862.6
1,525.8
247.9
823.2
471.5
50,116.5
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are
implemented regarding the acceptability of types of collateral and valuation parameters.
The main types of collateral obtained are as follows:
For commercial lending, charges over real estate properties (including residential properties), inventory and trade
receivables
For retail lending, mortgages over residential properties
Management monitors the market value of collateral, requests additional collateral in accordance with the underlying
agreement, and monitors the market value of collateral obtained during the review of the adequacy of the allowance for
impairment losses.
It is the group’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce or repay
the outstanding claim.
155
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Credit quality
The credit quality of financial assets is managed by the group using internal credit ratings. The table below shows the
credit quality by class of asset for loan-related balance sheet lines, based on the group’s credit rating system.
Consolidated
2009
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale - securities
Financial assets held to maturity
Other assets
Financial assets available for sale - share investments
Derivatives
Loans and other receivables - investment
Loans and other receivables
2008
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale - securities
Financial assets held to maturity
Other assets
Financial assets available for sale - share investments
Derivatives
Loans and other receivables - investment
Loans and other receivables
Neither past due or impaired
High
Grade
Standard
Grade
Sub-standard
Grade
$ m
-
235.4
3,882.3
-
344.9
-
-
-
-
2,560.6
7,023.2
-
412.7
1,414.8
422.0
1,414.6
-
-
-
-
2,636.9
6,301.0
$ m
-
-
-
-
-
-
-
-
-
6,742.3
6,742.3
-
-
-
-
-
-
-
-
-
6,824.3
6,824.3
$ m
-
-
-
-
-
-
-
-
-
621.7
621.7
-
-
-
-
-
-
-
-
-
428.4
428.4
Unrated
$ m
912.6
-
-
-
-
512.3
84.1
49.0
505.7
1,167.0
3,230.7
1,195.9
-
-
-
-
468.2
84.6
311.8
517.6
1,290.5
3,868.6
Consumer
Loans *
$ m
-
-
-
-
-
-
-
-
-
26,565.5
26,565.5
Past Due or
Impaired
$ m
-
-
-
-
-
-
-
-
-
760.1
760.1
Total
$ m
912.6
235.4
3,882.3
-
344.9
512.3
84.1
49.0
505.7
38,417.2
44,943.5
-
-
-
-
-
-
-
-
-
27,856.6
27,856.6
-
-
-
-
-
-
-
-
-
704.0
704.0
1,195.9
412.7
1,414.8
422.0
1,414.6
468.2
84.6
311.8
517.6
39,740.7
45,982.9
* Consumer loans are predominantly mortgage secured residential loans not rated on an individual basis.
Parent
2009
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale - securities
Financial assets held to maturity
Other assets
Financial assets available for sale - share investments
Derivatives
Loans and other receivables - investment
Loans and other receivables
Amounts receivable from controlled entities
Shares in controlled entities
2008
Cash and cash equivalents
Due from other financial institutions
Financial assets available for sale - securities
Financial assets held to maturity
Other assets
Financial assets available for sale - share investments
Derivatives
Loans and other receivables
Amounts received from controlled entities
Shares in controlled entities
Neither past due or impaired
High
Grade
Standard
Grade
Sub-standard
Grade
$ m
-
235.4
5,613.3
-
266.4
-
-
-
-
383.4
-
-
6,498.5
-
237.6
611.5
1,673.4
-
-
128.1
105.0
-
-
2,755.6
$ m
-
-
-
-
-
-
-
-
-
5,552.4
-
-
5,552.4
-
-
-
-
-
-
-
4,616.0
-
-
4,616.0
$ m
-
-
-
-
-
-
-
-
-
592.3
-
-
592.3
-
-
-
-
-
-
-
369.0
-
-
369.0
Unrated
$ m
527.5
-
-
-
-
660.4
5.9
124.7
505.7
1,292.7
765.7
460.6
4,343.2
440.5
-
-
-
450.7
77.2
-
435.0
164.2
2,272.5
3,840.1
Consumer
Loans *
$ m
-
-
-
-
-
-
-
-
-
26,291.4
-
-
26,291.4
Past Due or
Impaired
$ m
-
-
-
-
-
-
-
-
-
689.2
-
-
689.2
-
-
-
-
-
-
-
8,994.2
-
-
8,994.2
-
-
-
-
-
-
-
579.0
-
-
579.0
Total
$ m
527.5
235.4
5,613.3
-
266.4
660.4
5.9
124.7
505.7
34,801.4
765.7
460.6
43,967.0
440.5
237.6
611.5
1,673.4
450.7
77.2
128.1
15,098.2
164.2
2,272.5
21,153.9
* Consumer loans are predominantly mortgage secured residential loans not rated on an individual basis.
156
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Ageing
Ageing analysis of past due but not impaired loans and other receivables
Consolidated
2009
2008
Parent
2009
2008
Renegotiated terms
Less than
30 days
$ m
31 to
60 days
$ m
614.6
584.6
568.5
407.5
229.9
262.6
224.4
64.6
61 to
90 days
$ m
104.4
137.7
102.3
32.9
More than
91 days
$ m
Fair value of
collateral
$m
Total
$ m
228.2
231.3
1,177.1
3,205.8
1,216.2
2,536.5
226.1
1,121.3
3,195.0
61.0
566.0
1,861.9
Generally, the terms of loans are only renegotiated on a temporary basis in the event of customer hardship. In these
cases the term of the loan is extended, but no longer than the maximum term entitlement for the product. Original
terms are typically re-instated within a 3 to 6 month period. The majority of retail customers proactively contact the
bank prior to the loan becoming past due or impaired. Therefore, the carrying value of financial assets that would
otherwise be past due or impaired whose terms have been renegotiated is considered immaterial.
Impairment assessment
The main considerations for the loan impairment assessment include whether any payments of principal or interest
are overdue by more than 90 days or there are any known difficulties in the cash flows of counterparties, credit rating
downgrades, or infringement of the original terms of the contract. The group addresses impairment assessment in
three areas: individually assessed allowances (specific provisions), collectively assessed allowances (collective
provisions) and a prudential reserve (general reserve for credit losses).
Individually assessed provisions (specific provisions)
The group determines the impairment provision appropriate for each individually significant loan or advance on an
individual basis. Items considered when determining provision amounts include the sustainability of the counterparty’s
business plan, its ability to improve performance once a financial difficulty has arisen, projected receipts and the
expected dividend payout should bankruptcy ensue, the availability of other financial support and the realisable value
of collateral, and the timing of expected cash flows. The impairment losses are evaluated on a continuous basis.
Allowances are assessed on a portfolio basis for losses on loans and receivables that are not individually significant
(including unsecured credit cards, personal loans, overdrafts, unsecured mortgage loans) and where specific
identification is impractical. Provisions are calculated for these portfolios based on historical loss experience.
Collectively assessed provisions (collective provisions)
Where individual loans are found not to be specifically impaired they are grouped together according to their risk
characteristics and are then assessed for impairment. Based on historical loss data and current available information
for assets with similar risk characteristics, the appropriate collective provision is raised. The collective provisions are
re-assessed at each balance date.
Prudential reserve (general reserve for credit losses)
A general reserve for credit losses is maintained to cover risks inherent in the loan portfolios.
Australian Prudential Regulation Authority (“APRA”) requires that banks maintain a general reserve for credit losses
at a minimum level of 0.50% of risk weighted assets (net of tax). In certain circumstances the collective provision can
be included in this assessment. The bank maintained a GRCL at 0.54% as at 30 June 2009 (2008:0.51%).
Liquidity Risk
Liquidity risk is the risk that the group will be unable to meet its payment obligations when they fall due under normal
and stress circumstances.
Group Treasury is responsible for implementing liquidity risk management strategies in accordance with approved
policies and adherence is monitored by the Asset Liability Management Committee and Board Risk Committee. This
includes maintaining prudent levels of liquid reserves and a diverse range of funding options to meet daily, short-term
and long-term liquidity requirements.
Liquidity scenarios are calculated under stressed and normal operating conditions to assist in anticipating cash flow
needs and providing adequate reserves.
The group maintains a portfolio of highly marketable and diverse assets that can be easily liquidated in the event of
an unforeseen interruption of cash flow. The group also has committed lines of credit that it can access to meet
liquidity needs. The liquidity position is assessed and managed under a variety of scenarios, giving due consideration
to stress factors relating to both the market in general and specifically to the group. The most important of these is to
maintain limits on the ratio of net liquid assets to customer liabilities, set to reflect market conditions. Net liquid assets
consist of cash, short term bank deposits and liquid debt securities available for immediate sale, less deposits for
banks and other issued securities and borrowings due to mature within the next month.
157
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
The liquidity ratio during the financial year was as follows:
30 June
Average during the financial year
Highest
Lowest
2009
%
11.95
14.45
16.97
11.19
2008
%
13.53
14.59
17.02
12.67
Analysis of financial liabilities by remaining contractual maturities
The table below summarises the maturity profile of the group’s financial liabilities at 30 June 2009 based on contractual
undiscounted cash flows. Cash flows which are subject to notice are treated as if notice were to be given immediately.
However, the group expects that many customers will not request repayment on the earliest date the group could be
required to pay and the table does not reflect the expected cash flows indicated by the group’s deposit retention history.
Consolidated
2009
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Income tax payable
Reset preference shares
Subordinated debt - at amortised cost
2008
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Income tax payable
Reset preference shares
Subordinated debt - at amortised cost
Parent
2009
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Loans payable to securitisation trusts
Income tax payable
Reset preference shares
Subordinated debt - at amortised cost
2008
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Income tax payable
Reset preference shares
Subordinated debt - at amortised cost
At call Not longer
than 3 mths
$ m
$ m
196.3
10,879.5
-
-
625.7
-
-
-
11,701.5
269.7
5,825.0
-
-
768.9
11.1
-
-
6,874.7
196.3
10,974.6
-
-
882.5
30.8
-
-
-
12,084.2
151.7
5,338.8
-
-
282.5
11.1
-
-
5,784.1
-
15,185.9
2,806.5
275.2
-
-
-
100.9
18,368.5
-
17,939.5
321.5
575.7
-
-
-
11.6
18,848.3
-
15,164.3
414.6
260.2
-
895.7
-
-
100.9
16,835.7
-
7,976.9
-
93.7
-
-
-
5.1
8,075.7
3 to 12
months
$ m
-
4,299.9
2,439.6
656.0
-
-
5.4
155.6
7,556.5
-
5,638.5
121.7
691.8
-
-
5.4
100.1
6,557.5
-
4,243.7
1,727.5
583.9
-
142.5
-
5.4
155.6
6,858.6
-
2,990.0
-
238.1
-
-
5.4
49.0
3,282.5
1 to 5
years
$ m
-
1,915.4
3,476.5
1,116.2
-
-
103.0
311.2
6,922.3
-
2,296.3
10,977.0
1,313.2
-
-
18.9
568.5
15,173.9
-
1,909.4
-
930.2
-
473.8
-
103.0
311.2
3,727.5
-
775.7
-
554.6
-
-
18.9
311.6
1,660.8
Longer
than
5 years
$ m
-
1.0
1,305.6
88.6
-
-
-
95.2
1,490.4
-
17.4
-
74.2
-
-
89.5
75.0
256.1
-
1.0
-
88.6
-
4,490.6
-
-
95.2
4,675.4
-
0.1
-
197.3
-
-
89.5
-
286.9
Total
$ m
196.3
32,281.7
10,028.2
2,136.0
625.7
-
108.4
662.9
46,039.2
269.7
31,716.7
11,420.2
2,654.9
768.9
11.1
113.8
755.2
47,710.5
196.3
32,293.0
2,142.1
1,862.9
882.5
6,033.4
-
108.4
662.9
44,181.5
151.7
17,081.5
-
1,083.7
282.5
11.1
113.8
365.7
19,090.0
Excluded from the table above the undiscounted contractual maturities arising from $75m of floating rate capital notes.
These are perpetual notes with no fixed maturity.
158
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
The table below shows the contractual expiry by maturity of the group’s contingent liabilities and commitments.
Consolidated
2009
Contingent liabilities
Commitments
Total
2008
Contingent liabilities
Commitments
Total
Parent
2009
Contingent liabilities
Commitments
Total
2008
Contingent liabilities
Commitments
Total
At call
$ m
171.6
4,295.6
4,467.2
179.4
3,627.1
3,806.5
171.6
4,279.4
4,451.0
137.5
2,355.5
2,493.0
Not longer
than 3 mths
$ m
3 to 12
months
$ m
-
-
-
-
-
-
-
-
-
-
-
-
-
64.2
64.2
-
56.9
56.9
-
64.2
64.2
-
51.2
51.2
1 to 5
years
$ m
-
137.4
137.4
-
132.4
132.4
-
137.4
137.4
-
127.1
127.1
Longer
than
5 years
$ m
-
135.2
135.2
Total
$ m
171.6
4,632.4
4,804.0
-
137.8
137.8
179.4
3,954.2
4,133.6
-
135.2
135.2
-
137.9
137.9
171.6
4,616.2
4,787.8
137.5
2,671.7
2,809.2
Market Risk (including interest rate and currency risk)
Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in
market variables such as interest rates, foreign exchange rates, and equity prices.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values
of financial instruments. The Board has established limits on the interest rate gaps for stipulated periods. Positions
are monitored on a daily basis and hedging strategies are used to ensure positions are maintained within the
established limits.
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other
variables held constant, on the group’s income statement and equity.
The sensitivity of the income statement is the effect of assumed changes in interest rates on the net interest for one
year, based on the floating rate financial assets and financial liabilities held at 30 June 2009, including the effect of
hedging instruments. The sensitivity of equity is calculated by revaluing fixed rate available for sale financial assets
(including the effect of any associated hedges), and swaps designated as cash flow hedges, at 30 June 2009 for the
effects of the assumed changes in interest rates. The sensitivity of equity is analysed by maturity of the asset or
swap. With sensitivity based on the assumption that there are parallel shifts in the yield curve.
Monitoring of adherence to policies, limits and procedures is controlled through the Asset Liability Management
Committee and the Board Risk Committee.
159
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Reasonably possible movements in interest rates
Consolidated
Net interest income
Cash flow hedge ineffectiveness
Income tax effect at 30%
Effect on profit
Effect on profit (per above)
Available for sale reserve
Cash flow hedge reserve
Income tax effect on reserves at 30%
Effect on equity
Parent
Net interest income
Cash flow hedge - controlled entity
Income tax effect at 30%
Effect on profit
Effect on profit (per above)
Available for sale reserve
Cash flow hedge reserve
Income tax effect on reserves at 30%
Effect on equity
+100 basis
points
2009
$ m
-100 basis
points
2009
$ m
+100 basis
points
2008
$ m
-100 basis
points
2008
$ m
46.0
0.2
(13.9)
32.3
32.3
-
95.4
(28.6)
99.1
45.5
-
(13.7)
31.8
31.8
-
95.4
(28.6)
98.6
(46.0)
(0.2)
13.9
(32.3)
(32.3)
-
(95.4)
28.6
(99.1)
(45.5)
-
13.7
(31.8)
(31.8)
-
(95.4)
28.6
(98.6)
(29.8)
0.3
8.9
(20.6)
(20.6)
(0.8)
176.8
(52.9)
102.5
16.1
(57.7)
12.5
(29.1)
(29.1)
(0.8)
91.6
(27.2)
34.5
29.8
(43.3)
4.1
(9.4)
(9.4)
0.8
(133.8)
39.9
(102.5)
(16.1)
57.7
(12.5)
29.1
29.1
0.8
(91.6)
27.2
(34.5)
The movements in profit are due to higher/lower interest costs from variable rate debt and cash balances. The majority of
ineffective cash flow hedges acquired on the merger with Adelaide Bank on the 30 November 2007 have either matured, been
sold, terminated, or exercised as at 30 June 2009. Ongoing ineffective hedge impacts to profit and loss due to interest rate
movements are expected to be small. The movement in equity is also affected by the increase/decrease in the fair value of
derivative instruments designated as cash flow hedges, where these derivatives are deemed effective. Controlled entity
hedges are no longer held following the transfer of all of the assets and liabilities of Adelaide Bank Limited to the parent entity.
This analysis reflects a scenario where no management actions are taken to counter movements in rates.
Foreign currency risk
The Group does not have any significant exposure to foreign currency risk, as all borrowings through the Bank’s Euro medium
term note program (EMTN) and Euro commercial paper program (ECP) are fully hedged. At balance date the principal of
foreign currency denominated borrowings under these programs was AUD $707.4 million (2008: AUD 1,460.2 million) with all
borrowings fully hedged by cross currency swaps, and foreign exchange swaps. Retail and business banking FX transactions
are managed by the Bank’s Financial Markets unit, with resulting risk constrained by Board approved spot and forward limits.
Adherence to limits is independently monitored by the Treasury Operations unit.
It is the current policy of the Group that it does not trade in derivatives or foreign currencies (i.e. the risk is managed rather
than actively sought).
Equity price risk
The Group’s exposure to equity securities at 30 June 2009 is $ 84.1m (2008:$ 84.6m) with $81.2m (2008:$ 79.7m) of these
listed on a recognised stock exchange. The fair value of listed investments is affected by movements in market prices, whilst
unlisted investment fair values are determined using other valuation methods.
Equity securities price risk arises from investments in equity securities and is the risk that the fair values of equities decrease
as the result of changes in the levels of equity indices and the value of individual stocks. The majority of the value of equity
investments held are of a high quality and are publicly traded on either the ASX or NSX.
The Groups’ equity investments represent less than 0.2% of total Group assets and are predominately long term strategic
holdings, therefore short term volatility in fair values is not considered significant and a sensitivity analysis has not been
completed.
160
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
RISK MANAGEMENT (continued)
Operational Risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and
systems or from external events that are not already covered by other regulatory capital charges (i.e. credit and
market risks).
The Board Risk Committee is responsible for the oversight of the operational risk management policies and
effectiveness of implementation across the Group.
The Executive Committee and each individual Executive member has day to day responsibility and accountability for
the management of operational risk in their business/support line including, but not limited to ensuring operational risk
management strategies are in place and operating effectively.
Management and staff in each business are responsible for identifying operational risks and determining,
implementing, monitoring and reporting on policies and practices to manage operational risks to which their business
is exposed.
In managing operational risks, the Group is cognisant of its correlation with strategic, reputation and contagion risk.
The Group considers both the internal and external environment as well emerging risks when monitoring and
assessing operational risk.
Inherent in our industry the following factors can also impact the Group’s operations and outcomes:
Globalisation & global impacts e.g. market liquidity, investor sentiment
Economy e.g. changes in economic growth, interest rates
Changes in Government policy and regulation
Demographic trends
Technological dependency, advancements and speed to market
Financial convergence and competitive landscape
Group Operational Risk, has a role to assist and support the Executive Committee and Business Units to develop,
implement, monitor and report on the effectiveness of implementation of the Group’s Operational Risk Management
framework. It reports to the Board Risk Committee on the status of the implementation of the framework and
implications of significant risks and risk events at the Group level.
Sustainability and climate change
Sustainability and climate change risk is defined as the risk to the business and our stakeholders of meeting
objectives due to changes in climate and environment.
In recognition of the importance of managing this risk (both downside and opportunity) the Group’s risk and business
functions consider the broader environment, social responsibility and resilience in its decision making.
161
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
43.
FINANCIAL INSTRUMENTS
Fair value
Disclosed below is the estimated fair value of the economic entity's financial instruments presented in accordance
with the requirements of Accounting Standard AASB 132 "Financial Instruments: Disclosure and Presentation”.
A financial instrument is defined by AASB 132 as any contract that gives rise to both a financial asset of one entity
and a financial liability or equity instrument of another entity. A financial liability is a contractual obligation either to
deliver cash or another financial asset to another entity, or, to exchange financial instruments with another entity
under conditions that are potentially unfavourable.
Methodologies
The methodologies and assumptions used depend on the terms and risk characteristics of the various instruments
and include the following:
Cash and cash equivalents, due to and from other financial institutions
The carrying values of certain on-balance sheet financial instruments approximate fair values. These include
cash and short-term cash equivalents, due to and from other financial institutions and accrued interest receivable
or payable. These instruments are short-term in nature and the related amounts approximate fair value and are
receivable or payable on demand.
Derivatives (assets and liabilities)
The fair value of exchange-rate and interest-rate contracts, used for hedging purposes, is the estimated amount
the Group would receive or pay to terminate the contracts at reporting date. The fair value of these instruments is
disclosed under “Derivative financial instruments”.
Financial assets – held for trading (Securities)
These financial assets include floating rate notes and discounted short term securities. The carrying value of
these assets is based on a mark to market value. Therefore the carrying value represents fair value.
Financial assets - available for sale
Available for sale financial assets (securities) are predominantly short-term bank accepted bills of exchange and
negotiable certificates of deposit and are carried at fair value.
Financial assets - held to maturity (Securities)
The fair value of financial assets held to maturity, including bills of exchange, negotiable certificates of deposit,
government securities and bank and other deposits, which are predominantly short-term, is measured at
amortised book value. Carrying value of these assets approximates fair value.
Financial assets - available for sale (share investments and shares in controlled entities)
The fair value of share investments is based on market value for listed share investments and carrying values for
unlisted share investments. As the listed share investments are carried at market value, carrying value
represents fair value.
Loans and other receivables
The carrying value of loans and other receivables is net of specific and collective provisions for doubtful debts.
For variable rate loans, excluding impaired loans, the carrying amount is a reasonable estimate of fair value. The
net fair value for fixed loans is calculated by utilising discounted cash flow models (ie the net present value of the
portfolio future principal and interest cash flows), based on the maturity of the loans. The discount rates applied
represent the rate the market is willing to offer these loans at arms-length.
The net fair value of impaired loans is calculated by discounting expected cash flows using these rates.
Investments in joint ventures
These investments are carried at the proportional share of equity invested in the joint venture, including
accumulated profit or losses of the joint venture. The fair value has been determined using a multiple of the latest
annual profit after tax. Where the joint venture is not yet profitable the fair value has been assumed to be nil.
Other assets
This category includes items such as sundry debtors, which are short-term by nature and the carrying amount is
therefore a reasonable estimate of fair value.
Deposits and notes payable
The carrying value of call, variable rate and fixed rate deposits repricing within six months approximates the fair
value at balance date. The fair value of other term deposits is calculated using discounted cash flow models,
based on the deposit type and its related maturity. The discount rates applied represent the rate the market is
willing to offer these loans at arms-length.
Other financial liabilities
This category includes items such as sundry creditors which are short-term by nature and the carrying amount is
therefore a reasonable estimate of fair value.
Reset preference shares
The closing share price of the reset preference shares on 30 June is used to calculate the fair value of these
financial liabilities.
162
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
FINANCIAL INSTRUMENTS (continued)
Subordinated debt and other debt
The fair value of subordinated debt is calculated based on quoted market prices, where applicable. For those
debt issues where quoted market prices were not available, a discounted cash flow model using a yield curve
appropriate to the remaining maturity of the instrument is used.
Summary
The following table provides comparison of carrying and net fair values for each item discussed above, where
applicable:
CONSOLIDATED
Financial Assets
Cash and cash equivalents
Due from other financial institutions
Derivatives
Financial assets held for trading
Financial assets available for sale - securities
Financial assets available for sale - share investments
Financial assets held to maturity
Loans and other receivables - investment
Net loans and other receivables
Investments in joint ventures accounted for using the equity method
Other assets
Financial Liabilities
Due to other financial institutions
Deposits
Notes Payable
Derivatives
Other payables
Reset preference shares
Subordinated debt
PARENT
Financial Assets
Cash and cash equivalents
Due from other financial institutions
Derivatives
Financial assets available for sale - securities
Financial assets available for sale - share investments
Shares in controlled entities
Financial assets held to maturity
Loans and other receivables - investment
Net loans and other receivables
Amounts receivable from controlled entities
Other assets
Financial Liabilities
Due to other financial institutions
Deposits
Derivatives
Other payables
Loans payable to securitisation trusts
Reset preference shares
Subordinated debt
C a rrying v a lue
N e t f a ir v a lue
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
912.6
235.4
49.0
3,882.3
-
84.1
344.9
505.7
38,235.2
225.9
512.3
196.3
31,879.8
9,974.5
436.4
665.9
89.5
598.7
527.5
235.4
124.7
-
5.9
460.6
266.4
505.7
34,598.4
765.7
660.4
196.3
31,894.1
486.2
903.3
6,033.4
89.5
598.7
1,195.9
412.7
311.8
1,414.8
422.0
84.6
1,414.6
517.6
39,587.4
185.2
468.2
269.7
31,404.9
11,292.2
72.4
680.9
89.5
675.8
440.5
237.6
128.1
611.5
77.2
2,272.5
1,673.4
-
15,018.4
164.2
450.7
151.7
16,948.2
173.2
282.5
-
89.5
301.3
912.6
235.4
49.0
3,882.3
-
84.1
344.9
507.6
41,053.9
281.6
512.3
196.3
31,555.7
9,807.5
436.4
665.9
78.7
527.1
527.5
235.4
124.7
-
5.9
460.6
266.4
507.6
38,988.5
765.7
657.1
196.3
31,560.2
486.2
903.3
6,033.4
78.7
527.1
1,195.9
412.7
311.8
1,414.8
422.0
84.6
1,414.6
519.7
40,007.9
220.0
468.2
269.7
31,423.8
11,354.9
72.4
680.9
78.7
659.9
440.5
237.6
128.1
611.5
77.2
2,272.5
1,673.4
-
15,535.6
164.2
450.7
151.7
16,546.9
173.2
282.5
-
78.7
301.3
163
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
FINANCIAL INSTRUMENTS (continued)
Interest rate risk
The economic entity's exposure to interest rate risks of financial assets and liabilities at the balance date are disclosed in the
following table.
Sensitivity to interest rates arises from mismatches in the period to repricing of assets and liabilities. These mismatches are
managed as part of the overall asset and liability management process.
AS AT 30 JUNE 2009
Floating
interest Less than
rate 3 months
Between
3 months
Fixed interest rate repricing :
Between Between
After
1 year 5 years
6 months
Consolidated
$m
$m
& 6 months & 12 months & 5 years
$m
$m
$m
$m
$m
Non-interest
bearing carrying value
per
Total Weighted
average
effective
Balance sheet interest rate
%
$m
544.4
-
-
-
2.3
21,644.8
-
22,191.5
-
-
3,374.7
-
333.0
5,435.6
-
9,143.3
-
8,578.5
-
-
-
-
8,578.5
-
16,214.4
8,250.3
-
-
598.7
25,063.4
-
-
438.9
-
9.6
1,424.3
-
1,872.8
-
2,441.3
615.5
-
-
-
3,056.8
-
-
68.7
-
-
3,076.8
-
3,145.5
-
3,428.6
1,108.7
-
-
-
4,537.3
-
-
-
-
-
7,234.8
-
7,234.8
-
1,217.0
-
-
89.5
-
1,306.5
-
-
-
-
-
50.7
-
50.7
-
-
-
-
-
-
-
368.2
235.4
-
-
-
(126.1)
49.0
526.5
196.3
-
-
436.4
-
-
632.7
912.6
235.4
3,882.3
-
344.9
38,740.9
49.0
44,165.1
196.3
31,879.8
9,974.5
436.4
89.5
598.7
43,175.2
1.94
-
3.53
-
3.45
6.72
-
-
-
3.58
4.11
-
6.16
3.96
-
Assets
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale
Financial assets held to maturity
Loans and other receivables
Derivatives
Total financial assets
Liabilities
Due to other financial instituions
Deposits
Notes payable
Derivatives
Reset preference shares
Subordinated debt
Total financial liabilities
AS AT 30 JUNE 2008
Consolidated
$m
$m
$m
$m
$m
$m
$m
Floating
interest Less than Between
3 months
3 months
rate
Fixed interest rate repricing :
Between
6 months
& 6 months & 12 months & 5 years
Between
1 year
Non-interest
bearing
After
5 years
Total
carrying value
per
Balance sheet
$m
Weighted
average
effective
interest rate
%
-
-
-
-
9.9
-
-
-
(0.0)
-
3,347.0 11,320.7
-
3,356.9 11,320.7
-
-
4,741.1
-
-
-
-
4,741.1
-
23.1
-
-
89.5
-
112.6
-
-
-
-
-
46.2
-
46.2
-
-
-
-
-
-
-
136.0
251.7
-
-
-
(133.3)
311.8
566.1
269.7
-
-
72.4
-
-
342.1
1,195.9
412.7
1,414.8
422.0
1,414.6
40,105.0
311.8
45,276.8
269.7
31,404.9
11,292.2
72.4
89.5
675.8
43,804.5
6.73
3.17
7.08
7.78
7.77
8.71
-
-
-
6.85
7.73
-
6.16
8.18
-
Assets
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale
Financial assets held to maturity
Loans and other receivables
Derivatives
Total financial assets
Liabilities
Due to other financial institutions
Deposits
Notes payable
Derivatives
Reset preference shares
Subordinated debt
Total financial liabilities
901.6
161.0
1,414.8
-
56.8
21,320.9
-
23,855.1
158.3
-
-
353.0
614.8
2,776.3
-
3,902.5
-
8,447.0
11,118.1
-
-
377.2
19,942.3
-
13,069.6
174.1
-
-
154.2
13,397.9
-
-
-
69.1
733.0
1,427.2
-
2,229.3
-
5,124.1
-
-
-
144.4
5,268.5
164
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
FINANCIAL INSTRUMENTS (continued)
Interest rate risk (continued)
AS AT 30 JUNE 2009
Floating
interest Less than
rate 3 months
Between
3 months
Fixed interest rate repricing :
Between Between
After
1 year 5 years
6 months
& 6 months & 12 months & 5 years
$m
$m
$m
Non-interest
Total Weighted
average
bearing carrying value
per
effective
Balance sheet interest rate
$m
$m
$m
%
Parent
$m
$m
Assets
Cash and cash equivalents
Due from other financial institutions
Financial assets held for trading
Financial assets available for sale
Financial assets held to maturity
Loans and other receivables
Derivatives
Total financial assets
370.9
-
-
-
2.0
13,200.8
-
13,573.7
-
-
5,105.3
-
264.4
6,079.6
-
11,449.3
Liabilities
Due to other financial institutions
Deposits
Notes payable
Loans payable to securitisation trusts
Derivatives
Reset preference shares
Subordinated debt
Total financial liabilities
-
8,672.1
-
30.8
-
-
-
8,702.9
-
16,247.9
406.9
895.7
-
-
598.7
18,149.2
-
-
439.3
-
-
880.1
-
1,319.4
-
2,359.2
605.3
71.0
-
-
-
3,035.5
-
-
68.7
-
-
1,556.3
-
1,625.0
-
3,403.9
1,090.2
71.5
-
-
-
4,565.6
-
-
-
-
-
-
-
-
-
-
5,304.4 8,198.8
-
5,304.4 8,198.8
-
-
1,210.0
-
-
1.0
-
473.8 4,490.6
-
-
-
1,773.3 4,491.6
-
89.5
-
156.6
235.4
-
-
-
(115.9)
124.7
400.8
196.3
-
-
-
486.2
-
-
682.5
527.5
235.4
5,613.3
-
266.4
35,104.1
124.7
41,871.4
196.3
31,894.1
2,102.4
6,033.4
486.2
89.5
598.7
41,400.6
2.26
-
4.09
-
3.40
6.59
-
-
-
3.57
4.10
-
-
6.16
3.96
-
Non-interest
bearing
Total
carrying value
per
Weighted
average
effective
Balance sheet interest rate
AS AT 30 JUNE 2008
Fixed interest rate repricing :
Floating
interest Less than Between
3 months
3 months
rate
Between
6 months
Between
1 year
After
5 years
& 6 months & 12 months & 5 years
Parent
$m
$m
$m
$m
$m
$m
$m
$m
%
Assets
Cash and cash equivalents
Due from other financial institutions
Financial assets available for sale
Shares in controlled entities
Financial assets held to maturity
Loans and other receivables
Derivatives
Total financial assets
Liabilities
Due to other financial institutions
Deposits
Notes payable
Derivatives
Reset preference shares
Subordinated debt
Total financial liabilities
73.2
-
-
-
0.5
6,323.3
-
6,397.0
-
4,903.7
-
-
-
-
4,903.7
263.3
-
453.0
-
590.5
1,475.3
-
2,782.1
-
4,800.4
-
-
-
155.7
4,956.1
-
-
69.1
-
1,072.6
788.6
-
1,930.3
-
3,853.0
-
-
-
145.6
3,998.6
-
-
-
-
9.8
1,225.6
-
1,235.4
-
3,370.2
-
-
-
-
3,370.2
-
-
89.5
-
-
5,191.7
-
5,281.2
-
21.0
-
-
89.5
-
110.5
-
-
-
-
-
29.9
-
29.9
-
-
-
-
-
-
-
104.0
237.6
77.2
2,272.5
-
(16.0)
128.1
2,803.4
151.7
-
-
173.2
-
-
324.9
440.5
237.6
688.7
2,272.5
1,673.4
15,018.4
128.1
20,459.3
151.7
16,948.2
-
173.2
89.5
301.3
17,663.9
6.34
-
7.58
-
7.84
8.70
-
-
-
6.04
-
-
6.16
8.59
-
165
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
44. DERIVATIVE FINANCIAL INSTRUMENTS
The economic entity uses derivatives primarily to hedge banking operations and for asset and liability management. Some
derivatives transactions may qualify as either cash flow or fair value hedges. The accounting treatment of these hedges is
outlined in Note 2.33 Derivative Financial Instruments.
The economic entity is exposed to volatility in interest cash flows inherent in its loan portfolio and that of the securitisation vehicles.
Interest rate swaps are used to hedge the risk that this volatility creates.
During the 2009 financial year the consolidated entity recognised a loss of $93.6 million (2008: loss $28.3) due to hedge
ineffectiveness.
Value of derivatives as at 30 June
Notional
Amount
$ m
Consolidated 2009
Asset
Revaluation
Liability
Revaluation
Net Fair Value
Notional Amount
Asset
Revaluation
Liability
Revaluation
Net Fair Value
Consolidated 2008
$ m
$ m
$ m
$ m
$ m
$ m
$ m
Included in derivatives category
Derivatives held for trading
Cross Currency Sw ap
Interest Rate Sw aps
Foreign Exchange
Contracts
Derivatives
505.1
163.8
52.9
721.8
Derivatives held as fair value hedges
150.8
Interest Rate Sw aps
Embedded Derivatives
Derivatives
1.4
152.2
Derivatives held as cash flow hedges
689.1
Cross Currency
Sw aps
Interest Rate Sw aps
Foreign Exchange
Contracts
Derivatives
Derivatives
14,025.1
-
14,714.2
15,588.2
Included in deposits category
Cross Currency
Sw aps
-
Total derivatives
15,588.2
Derivative values as at 30 June
-
3.4
1.4
4.8
0.4
-
0.4
(1.3)
(2.9)
(1.1)
(5.3)
(4.3)
-
(4.3)
(1.3)
0.5
0.3
(0.5)
(3.9)
-
(3.9)
-
17,455.0
-
17,455.0
355.8
1.5
357.3
-
0.9
-
0.9
6.1
-
6.1
-
(0.6)
-
(0.6)
(2.4)
(0.1)
(2.5)
-
0.3
-
0.3
3.7
(0.1)
3.6
43.8
-
43.8
1,525.1
12.8
(11.6)
1.2
-
(426.8)
(426.8)
15,848.4
-
(426.8)
-
(383.0)
496.9
17,870.4
(436.4)
(387.4)
35,682.7
284.0
8.0
304.8
311.8
(33.1)
250.9
(24.6)
(69.3)
(16.6)
235.5
(72.4)
239.4
-
16.3
-
-
(12.9)
(12.9)
(436.4)
(371.1)
35,682.7
311.8
(85.3)
226.5
-
43.8
49.0
16.3
65.3
Parent 2009
Parent 2008
Notional
Amount
$m
Asset
Revaluation
$m
Liability
Revaluation Net Fair Value
$m
$m
Notional Amount
$m
Asset
Revaluation
$m
Liability
Revaluation Net Fair Value
$m
$m
Included in derivatives category
Derivatives held for trading
Cross Currency Sw ap
Interest Rate Sw aps
Foreign Exchange
Contracts
Derivatives
505.1
11,209.6
52.9
11,767.6
Derivatives held as fair value hedges
159.3
Interest Rate Sw aps
159.3
Derivatives
Derivatives held as cash flow hedges
13,475.1
Interest Rate Sw aps
13,475.1
Derivatives
-
122.6
1.4
124.0
0.7
0.7
-
-
(1.3)
(57.9)
(1.0)
(60.3)
(0.0)
(0.0)
(1.3)
64.7
0.4
63.7
0.7
0.7
505.1
2,044.5
66.2
2,615.8
-
-
(425.8)
(425.8)
(425.8)
(425.8)
5,336.3
5,336.3
Derivatives
25,402.0
124.7
(486.2)
(361.5)
7,952.1
0.1
-
0.2
0.3
-
-
127.8
127.8
128.1
(0.2)
(138.6)
(1.5)
(140.3)
-
-
(32.9)
(32.9)
(0.1)
(138.6)
(1.3)
(140.0)
-
-
94.9
94.9
(173.2)
(45.1)
Included in deposits category
Cross Currency
Sw aps
-
16.3
-
16.3
-
-
(12.9)
(12.9)
Total derivatives
25,402.0
141.0
(486.2)
(345.2)
7,952.1
128.1
(186.1)
(58.0)
166
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DERIVATIVE FINANCIAL INSTRUMENTS (continued)
As at 30 June 2008, hedged cash flows are expected to occur and they are expected to affect the income statement as follows:
Consolidated
2009
Cash inflow s (Assets)
Cash outflow s (Liabilities)
Net cash inflow
Income statement
2008
Cash inflow s (Assets)
Cash outflow s (Liabilities)
Net cash inflow
Income statement
Parent
2009
Cash inflow s (Assets)
Cash outflow s (Liabilities)
Net cash inflow
Income statement
2008
Cash inflow s (Assets)
Cash outflow s (Liabilities)
Net cash inflow
Income statement
Net gain on cash flow hedges reclassified to the income statement:
Interest income
Interest expense
Other operating expenses
Taxation
Net gain on cash flow hedges reclassified to the income statement
Within 1 year
$ m
1 to 3 years
$ m
3 to 8 years Over 8 years
$ m
$ m
636.1
(931.2)
(295.1)
653.2
(933.8)
(280.6)
147.8
(215.6)
(67.8)
54.1
(55.5)
(1.4)
(282.9)
(272.4)
(65.8)
(1.0)
1,333.2
(1,230.8)
102.4
96.9
1,161.1
(1,079.1)
82.0
79.8
247.6
(234.9)
12.7
11.3
37.8
(37.6)
0.2
0.2
Within 1 year
$ m
1 to 3 years
$ m
3 to 8 years Over 8 years
$ m
$ m
849.5
(1,258.7)
713.5
(1,132.4)
(409.1)
(418.9)
(392.2)
(406.7)
364.4
(320.4)
44.0
428.2
(393.3)
34.9
197.6
(296.3)
(98.7)
(95.7)
169.0
(159.3)
9.7
44.0
34.9
9.7
55.3
(56.7)
(1.4)
(1.0)
37.8
(37.6)
0.2
0.2
Consolidated
Parent
2009
$ m
5.3
(92.0)
(6.9)
(93.6)
28.1
(65.5)
2008
$ m
14.3
(42.7)
0.1
(28.3)
8.5
(19.8)
2009
$ m
4.3
(33.7)
(7.0)
(36.4)
10.9
(25.5)
2008
$ m
-
-
0.3
0.3
(0.1)
0.2
During 2009 the consolidated entity recognised a loss on fair value hedges of $0.4m, due to hedge ineffectiveness. Hedges that
are mark to market, not in a hedge relationship, a loss $0.7m has been recognised.
167
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
45. COMMITMENTS AND CONTINGENCIES
(a) Commitments
The following are outstanding expenditure and credit related commitments as at 30 June 2009. Except where specified, all commitments are
payable within one year.
Operating lease commitments - group as lessee
The group has entered into commercial property leases and commercial leases on certain motor vehicles and items of office equipment.
These leases have an average life of between 3 and 7 years. Some property leases include optional renewal periods included in the
contracts. There are no restrictions placed upon the lessee by entering into these leases. The head office development has a lease term
of 18 years remaining.
Future minimum rentals payable under non-cancellable
operating leases as at 30 June:
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
Consolidated
Parent
2009
$m
2008
$m
2009
$m
2008
$m
62.1
137.4
135.2
334.7
54.6
127.2
137.9
319.7
62.1
137.4
135.2
334.7
43.9
127.2
137.7
308.8
Operating lease commitments - group as lessor
The group has entered into commercial property leases on the group's surplus office space. These non-cancellable leases have
remaining terms of between 2 and 5 years. All leases have a clause to enable upward revision of the rental charge on a regular basis
according to prevailing market conditions.
Future minimum rentals receivable under non-cancellable
operating leases as at 30 June
Not later than 1 year
Later than 1 year but not later than 5 years
Capital expenditure commitments
Capital expenditure commitments not provided for in the financial statements,
payable not later than one year
Other expenditure commitments
Sponsorship commitments not paid as at balance date, payable not later than
one year
Credit related commitments
Gross loans approved, but not advanced to borrowers
Credit limits granted to clients for overdrafts and credit cards
Total amount of facilities provided
Amount undrawn at balance date
Normal commercial restrictions apply as to use and withdrawal of the facilities
1.1
2.2
3.3
0.9
1.2
2.1
1.1
2.2
3.3
0.9
1.2
2.1
-
6.0
-
6.0
2.1
1.4
2.1
1.4
606.2
623.5
589.7
348.0
9,351.7
3,689.4
7,828.2
3,003.6
9,351.1
3,689.7
5,286.8
2,007.5
168
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMMITMENTS AND CONTINGENCIES (continued)
(b) Superannuation Commitments
The Bendigo and Adelaide Bank Group has a legally enforceable obligation to contribute to a superannuation plan for employees
either on an accumulation basis (including the Superannuation Guarantee Charge) or on a defined benefits basis (Adelaide Bank
staff superannuation plan) which provides benefits on retirement, disability or death based on years of service and final average
salary. Employees contribute to the plan at a fixed percentage of remuneration.
The Group’s contribution to the defined benefit plan is determined by the Trustee after consideration of actuarial advice and an
actuarial review is carried out every three years. The last actuarial review was carried out as at 1 July 2006 by Kathryn Daniels
B.Sc, FIAA of Mercer Human Resource Consulting Pty Ltd. The value of accrued benefits from this Actuarial review was $62.5
million. At balance date, the Directors believe that funds available were adequate to satisfy all vested benefits under the plan. The
next actuarial review will be completed during the 2009/2010 financial year.
Accounting Policy
Actuarial gains and losses are recognised in retained earnings.
Plan Information
Defined benefit members receive lump sum benefits on retirement, death, disablement and withdrawal. The defined benefit
section of the Plan is closed to new members. All new members are entitled to become members of the accumulation categories
of the fund.
Fair Value of Plan Assets
The fair value of Plan assets includes Bendigo and Adelaide Bank shares to the value of $1.2 million as at 30 June 2009.
Actual Return
Actual return on Plan assets
Principal Actuarial Assumptions
Discount rate
Expected rate of return on Plan assets
Expected salary increase rate
Reconciliation of the Present Value of the Defined Benefit Obligation
Present value of defined benefit obligations at beginning of period (1)
Add Current service cost
Add Interest cost
Add contributions by plan participants
Add Actuarial gains/(losses)
Less Benefits paid
Less Taxes, premiums and expenses paid
Add Transfers in
Less Contributions to accumulation section
Present value of defined benefit obligations at end of the year
Reconciliation of the Fair Value of Plan Assets
Fair value of Plan assets at beginning of period (1)
Add Expected return on plan assets
Add Actuarial gains/(losses)
Add Employer contributions
Add Contributions by plan participants
Less Benefits paid
Less Taxes, premiums and expenses paid
Add Transfers in
Less Contributions to accumulation section
Fair value of Plan assets at end of the year
169
Consolidated
2009
$ m
(4.0)
Consolidated
2008
$ m
(0.4)
5.2% pa
7.5% pa
0.0% pa first year
4.0% pa thereafter
6.1% pa
7.2% pa
4.5% pa
$ m
12.2
0.7
0.8
0.3
(0.9)
1.9
0.1
0.1
0.2
11.0
18.7
1.4
(5.3)
0.3
0.3
1.9
0.1
0.1
0.2
13.3
$ m
13.0
0.5
0.4
0.3
-
1.9
0.1
0.2
0.2
12.2
21.4
0.8
(1.8)
-
0.3
1.9
0.1
0.2
0.2
18.7
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMMITMENTS AND CONTINGENCIES (continued)
Reconciliation of the Assets and Liabilities Recognised in the Balance
Sheet
Defined Benefit Obligation ^
Less Fair value of Plan assets
(Surplus)
Net superannuation (asset) / liability
^ includes contributions tax provision
Movements in Liability / (Asset) Recognised in the Balance Sheet
Net superannuation (asset) at beginning period (1)
Add Expense recognised in income statement
Less Employer contributions
Net superannuation (asset) at 30 June
Expense Recognised in Income Statement
Service cost
Interest cost
Expected return on assets
Superannuation expense
Amount recognised directly in Equity
Actuarial (gain) / loss
Cumulative amount recognised directly in Equity
Actuarial (gain) / loss
Plan Assets
The percentage invested in each asset class at the balance sheet date:
Australian Equity
International Equity
Fixed Income
Property
Alternatives
Cash
Consolidated
2009
$ m
11.0
13.3
(2.3)
(2.3)
(6.5)
4.5
0.3
(2.3)
0.7
0.8
(1.3)
0.2
4.3
3.9
Consolidated
2008
$ m
12.2
18.7
(6.5)
(6.5)
(8.5)
2.0
-
(6.5)
0.5
0.4
(0.8)
0.1
1.8
(0.3)
Consolidated
2009
$ m
39%
25%
9%
10%
7%
10%
Consolidated
2008
$ m
40%
23%
9%
10%
8%
10%
Funding Arrangements for Employer Contributions
Surplus / (Deficit)
The following is a summary of the financial position of the Adelaide Bank Staff Superannuation Plan as at the date of the last
actuarial review conducted on 1 July 2006. Note that the figures below relate to the Plan as a whole, including the accumulation
section.
Accrued benefits
Net market value of Plan assets
Net surplus
170
1 July 2006
$ m
62.5
67.5
5.0
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMMITMENTS AND CONTINGENCIES (continued)
Contribution Recommendations
The Bank has recently recommenced employer funding of the defined benefit section of the Plan after an extended period of
contribution holiday. This decision was made in accordance with recommendations from the Actuary. The next actuarial valuation
will be during the 2009/2010 financial year. The financial position of the defined benefits is reviewed regularly by the Bank, at least
annually, to ensure that the contribution amount remains appropriate.
Funding Method
The method used to determine the employer contribution recommendations at the last actuarial review was the Attained Age
Normal method. The method adopted affects the timing of the cost to the Bank.
Under the Attained Age Normal method, a “normal cost” is calculated which is the estimated employer contribution rate required to
provide benefits in respect of future service after the review date. The “normal” cost is then adjusted to take into account any
surplus (or deficiency) of assets over the value of liabilities in respect of service prior to the review date. Any surplus or deficiency
can be used to reduce or increase the “normal” employer contribution rate over a suitable period of time.
Economic Assumptions
The long-term economic assumptions adopted for the last actuarial review of the Plan as at 1 July 2006 were:
Expected rate of return on assets (discount rate)
Expected salary increase rate
Nature of Asset
7.50% pa
Nil - first year
4.00% pa - thereafter
Bendigo and Adelaide Bank has recognised an asset in the Balance Sheet (under Other assets) in respect of its defined benefit
superannuation arrangements. If a surplus exists in the Plan, Bendigo and Adelaide Bank may be able to take advantage of it in
the form of a reduction in the required contribution rate, depending on the advice of the Plan’s actuary.
The Adelaide Bank Staff Superannuation Plan, a sub-plan of the Mercer Super Trust, does not impose a legal liability on Bendigo
and Adelaide Bank to cover any deficit that exists in the Plan. If the Plan were wound up, there would be no legal obligation on the
Bank to make good any shortfall. The rules of the Plan state that if the Plan winds up, the remaining assets are to be distributed
amongst the Members as determined by the Trustee of the Plan.
The Bank may at any time terminate its contributions by giving one month’s notice in writing to the Trustee.
Historical Information
Present value of defined benefit obligation
Fair value of Plan assets
(Surplus) / deficit in Plan
Experience adjustments (gain)/loss - Plan assets
Experience adjustments (gain)/loss - Plan liabilities
Expected Contributions
Financial year ending
Expected employer contributions
2009
$ m
11.0
13.3
(2.3)
5.3
0.1
2008
$ m
12.2
18.7
(6.5)
1.8
0.3
2010
$m
0.9
(1) Opening balances for prior year comparatives are from 30 November 2007 upon merger with Adelaide Bank Limited.
(c) Legal claim
In the course of its operations Bendigo and Adelaide Bank may be subject to material litigation, which, if it should crystallise, may
adversely affect the financial position or financial performance of the Bank.
Bendigo and Adelaide Bank has extended loans to a large number of investors to facilitate their investments in the schemes of
which Great Southern Managers Australia Limited is the responsible entity. Administrators and Receivers and Managers have
been appointed to Great Southern. The bank has been notified that a number of investors in the Great Southern schemes may
involve the Bank in legal proceedings in relation to the schemes. However no legal action has commenced. The risk of litigation
will continue to be assessed on an ongoing basis.
171
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
COMMITMENTS AND CONTINGENCIES (continued)
(d) Contingent liabilities and contingent assets
Contingent liabilities
Guarantees
The economic entity has issued guarantees on behalf of clients
Other
Documentary letters of credit & performance related obligations
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
144.4
161.7
144.4
119.8
27.2
17.7
27.2
17.7
As the probability and value of guarantees, letters of credit and performance related obligations that may be called on is unpredictable,
it is not practical to state the timing of any potential payment.
Contingent assets
As at 30 June 2009, the economic entity does not have any contingent assets.
46.
STANDBY ARRANGEMENTS AND UNCOMMITTED CREDIT FACILITIES
Amount available:
Offshore borrowing facility
Domestic note program
Amount utilised:
Offshore borrowing facility
Domestic note program
Amount not utilised:
Offshore borrowing facility
Domestic note program
C o ns o lida t e d
P a re nt
2 0 0 9
$ m
2 0 0 8
$ m
2 0 0 9
$ m
2 0 0 8
$ m
9,855.3
5,000.0
6,255.4
7,000.0
9,855.3
5,000.0
2,077.9
2,000.0
707.4
724.0
1,460.2
1,730.2
707.4
724.0
1,234.1
200.0
9,147.8
4,276.0
4,795.3
5,269.8
9,147.8
4,276.0
843.9
1,800.0
The Bank has a $US 5,000 million Euro Commercial Paper program of which $US 150 million was drawn down as at 30 June 2009, and a
$US 3,000 million Euro Medium Term Note program of which $EURO 300 million was drawn down. The Bank also has a $5,000 million
Domestic Note Program of which $ 724 million was issued as at 30 June 2009.
47.
FIDUCIARY ACTIVITIES
The economic entity conducts investment management and other fiduciary activities as trustee, custodian or manager for a
number of funds and trusts, including superannuation, unit trusts and mortgage pools. The amounts of the funds concerned,
which are not included in the economic entity's statement of financial position are as follows:
Funds under trusteeship
Assets under management
Funds under management
C o ns o lida t e d
2 0 0 9
$ m
2,649.7
2,408.8
2,082.5
2 0 0 8
$ m
3,820.2
4,828.0
1,822.6
As an obligation arises under each type of duty the amount of funds has been included where that duty arises. This may lead to
the same funds being shown more than once where the economic entity acts in more than one capacity in relation to those funds
eg manager and trustee. Where controlled entities, as trustees, custodian or manager incur liabilities in the normal course of their
duties, a right of indemnity exists against the assets of the applicable trusts. As these assets are sufficient to cover liabilities, and
it is therefore not probable that the Group companies will be required to settle them, the liabilities are not included in the financial
statements. Bendigo and Adelaide Bank does not guarantee the performance or obligations of its subsidiaries.
172
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
48.
EVENTS AFTER BALANCE SHEET DATE
On 3 July 2009 Mr Hunt retired from the role of Managing Director and Mr Hirst was appointed to the role of Managing Director.
On 10 August 2009 the Bank declared a final dividend, details of which are disclosed in the directors' report and in Note 10. On 10
August 2009 the Bank announced it intention to raise up to $300 million of capital (44,444,445 ordinary fully paid shares) pursuant
to an entitlement offer and placement offer as described in the prospectus lodged with the ASX on 10 August 2009. A maximum of
18,757,475 shares will be issued under the placement offer and a maximum of 25,686,970 shares will be issued under the
entitlement offer. The shares will be issued $6.75 per share. On 21 August 2009 the Bank announced that it had completed the
issue of 18,757,475 shares under the placement offer.
On 10 August 2009 the Bank also announced that it had completed the purchase of Tasmanian Perpetual Trustees Limited’s 50
per cent share of the joint venture company, Tasmanian Banking Services Limited.
On the 24 August 2009, Slater and Gordon lodged a statement of claim in the Federal Court of Australia against Sandhurst
Trustees Limited. The legal claim is concerning Sandhurst’s role, as debenture trustee, for failed property developer Fincorp Pty
Ltd. The position of Sandhurst has been reviewed by the Bendigo and Adelaide Bank, and the Bank does not believe that
Sandhurst has been negligent, fraudulent or in breach of its duty. Sandhurst will strongly defend itself against these claims. The
bank does not consider the legal claim to be materially adverse and will continue to monitor its proceedings.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in
subsequent financial years.
49.
BUSINESS COMBINATIONS
On 30 November 2007 Bendigo and Adelaide Bank Limited acquired all the ordinary shares in Adelaide Bank Limited (“Adelaide”)
for $1,994,311,136, satisfied by the issue of 117,687,891 ordinary shares in Bendigo and Adelaide Bank Limited at a fair value of
$16.80 per share, based on the volume weighted average price on the day of acquisition plus $17,154,567 in cash (transaction
costs). The cost of the acquisition includes directly attributable costs including consultancy, legal, accounting and other
professional fees.
On 8 December 2008, all of the assets and liabilities of Adelaide Bank Limited were transferred to the parent entity, at fair value.
The principal activities of Adelaide Bank Limited were the provision of wholesale mortgages, business lending, wealth
management and retail banking services.
173
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
BUSINESS COMBINATIONS (continued)
The acquisition had the following effect on the Group’s assets and liabilities:
Assets
Cash and cash equivalents
Due from other financial institutions
Derivatives
Financial assets held for trading
Financial assets held to maturity - securities
Financial assets available for sale - share investments
Loans and other receivables
Property, plant & equipment
Intangible assets
Intangible software
Goodwill
Brands, Trade names
Deferred tax assets
Other assets
Total Assets
Liabilities
Due to other financial institutions
Deposits
Notes payable
Derivatives
Other payables
Income tax payable
Provisions
Deferred tax liabilities
Reset preference shares
Subordinated debt - at amortised cost
Total Liabilities
Net identifiable assets and liabilities attributable to Bendigo and Adelaide Bank Limited
Consideration paid in cash (transaction costs)
Cash acquired
Net cash inflow
Goodwill on acquisition
Goodwill
P re - a c quis it io n
R e c o gnis e d
c a rrying a m o unt
v a lue s o n
$ m
483.8
120.3
210.7
1,934.5
64.8
3.0
27,414.8
28.7
3.9
33.9
-
42.0
34.1
30,374.5
112.5
15,674.4
13,105.2
30.9
22.9
(13.2)
16.6
68.4
89.9
384.8
29,492.4
882.1
a c quis it io n
$ m
483.8
120.3
210.7
1,934.5
64.8
0.3
27,070.2
45.7
5.2
-
168.0
142.1
34.1
30,279.7
112.5
15,663.5
13,026.8
30.9
29.8
0.9
16.6
163.5
89.9
377.3
29,511.7
768.0
(17.5)
491.6
474.1
1,326.8
Goodwill arose in the business combination as the consideration paid for the combination effectively included amounts in relation
to the skills and talent of the acquired business workforce, the benefit of expected head office and operational synergies, revenue
growth and future market development.
These benefits are not recognised separately from goodwill as the future economic benefits arising from them cannot be
measured reliably or they are not capable of being separated from the Group and sold, transferred, licensed, rented or exchanged
either individually or together with any related contracts.
174
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
BUSINESS COMBINATIONS (continued)
Macquarie margin lending portfolio
On 8 January 2009, Bendigo and Adelaide Bank Limited purchased a $1.5 billion margin lending portfolio from Macquarie Group
Limited. The total consideration paid for the portfolio was $1,563,992,000 including the issue of $52 million of short dated
convertible preference shares to Macquarie. The convertible shares were converted to ordinary shares in Bendigo and Adelaide
Bank during 2009. The cost of the acquisition includes directly attributable costs including consultancy, legal, accounting and other
professional fees.
The fair values currently established are provisional and are subject to further review during the 12 month period following
acquisition. This will alter asset and liabilities as currently disclosed for 30 June 2009.
The acquisition had the following effect on the Group's assets and liabilities:
Assets
Cash and cash equivalents
Loans and other receivables
Deferred tax assets
Other assets
Total Assets
P re - a c quis it io n
R e c o gnis e d
c a rrying a m o unt
v a lue s o n
$ m
30.0
1,467.2
19.8
0.7
1,517.7
a c quis it io n
$ m
30.0
1,467.2
19.8
0.7
1,517.7
Net identifiable assets and liabilities attributable to Bendigo and Adelaide Bank Limited
1,517.7
1,517.7
Consideration paid in cash (transaction costs)
Cash acquired
Net cash outflow
Total consideration
Provisional fair value of identifiable assets and liabilities
Provisional goodwill on acquisition
(1,512.0)
30.0
(1,482.0)
1,564.0
(1,517.7)
46.3
175
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Bendigo and Adelaide Bank Limited, we state that:
In the opinion of the directors:
(a)
the financial statements, notes and the additional disclosures included in the directors’ report designated as
audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the Company's and consolidated entity's financial position as at 30 June
2009 and of their performance for the year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
This declaration has been made after receiving the declarations required to be made to the directors in accordance with
section 295A of the Corporations Act 2001 for the financial year ending 30 June 2009.
On behalf of the Board
R N Johanson
Chairman
8 September 2009
M J Hirst
Managing Director
176
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Independent auditor’s report to the members of Bendigo and Adelaide Bank Limited
Report on the Financial Report
We have audited the accompanying financial report of Bendigo and Adelaide Bank Limited, which comprises the balance sheet
as at 30 June 2009, and the income statement, statement of recognised income and expense and cash flow statement for the
year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of
the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the
financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with
the Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This
responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the
financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2.2, the directors also
state that the financial report, comprising the financial statements and notes, complies with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to the
entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit we have met the independence requirements of the Corporations Act 2001. We have given to the
directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report. In
addition to our audit of the financial report, we were engaged to undertake the services disclosed in the notes to the financial
statements. The provision of these services has not impaired our independence.
Auditor’s Opinion
In our opinion:
1.
i
the financial report of Bendigo and Adelaide Bank Limited is in accordance with the Corporations Act 2001, including:
giving a true and fair view of the financial position of Bendigo and Adelaide Bank Limited and the consolidated
entity at 30 June 2009 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
ii
2.
the financial report also complies with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 42 to 69 of the directors’ report for the year ended 30 June 2009.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based
on our audit conducted in accordance with Australian Auditing Standards.
177
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
Auditor’s Opinion
In our opinion the Remuneration Report of Bendigo and Adelaide Bank Limited for the year ended 30 June 2009, complies with
section 300A of the Corporations Act 2001.
Brett Kallio
Partner
Melbourne
8 September 2009
Ernst & Young
Liability limited by a scheme approved under
Professional Standards Legislation
178
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
ADDITIONAL INFORMATION
1. MATERIAL DIFFERENCES
There are no material differences between the information supplied in this report and the information in the preliminary
final report supplied by Bendigo and Adelaide Bank Limited to the Australian Securities Exchange on 10 August 2009.
2.
AUDIT COMMITTEE
As at the date of the Directors' Report the economic entity had an audit committee of the Board of Directors.
3.
CORPORATE GOVERNANCE PRACTICES
The corporate governance practices adopted by Bendigo and Adelaide Bank Limited as detailed in the Corporate
Governance section of this report.
4.
SUBSTANTIAL SHAREHOLDERS
As at 18 August 2009 there were no substantial shareholders in Bendigo and Adelaide Bank Limited are detailed in
substantial holdings notices given to the company.
5.
DISTRIBUTION OF SHAREHOLDERS
Range of Securities as at 18 August 2009 in the following categories:
Category
Fully Paid
Fully Paid
BPS
RPS
SPS
Ordinary Em ployee Preference Preference Preference
Shares
Shares
Shares
Shares
Shares
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
35,460
35,975
5,551
2,947
94
3,220
971
104
28
3
3,309
52
3,435
76
3,123
76
1
2
1
6
3
0
2
6
0
Num ber of Holders
80,027
4,326
3,365
3,520
Securities on Issue
303,559,617
5,465,929
900,000
894,574
3,207
1,000,000
6.
MARKETABLE PARCEL
Based on the closing price of $8.61 on 18 August 2009 the number of holders with less than a marketable parcel of the
Company’s main class of securities (Ordinary Shares), as at 18 August 2009 was 3,227.
7.
UNQUOTED SECURITIES
The number of unquoted equity securities that are on issue and the number of holders of those securities are shown in
the above table under the heading of Fully Paid Employee shares.
179
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
8. MAJOR SHAREHOLDERS
Names of the 20 largest holders of Fully Paid Ordinary Shares, including the number of shares each holds and the
percentage of issued ordinary share capital that number represents as at 18 August 2009 are:
FULLY PAID ORDINARY SHARES
Rank Name
1 HSBC Custody Nominees (Australia) Limited
2
J P Morgan Nominees Australia Limited
3 National Nominees Limited
4 Citicorp Nominees Pty Limited
5 AMP Life Limited
6 Milton Corporation Limited
7 Cogent Nominees Pty Limited
8 ANZ Nominees Limited
9 Cogent Nominees Pty Limited
10 Queensland Investment Corporation
11 Bainpro Nominees Pty Limited
12 HSBC Custody Nominees (Australia) Limited - A/C 3
13 HSBC Custody Nominees (Australia) Limited - A/C 2
14 Equitas Nominees Pty Limited <2870903 A/C>
15 Choiseul Investments Limited
16 Merrill Lynch (Australia) Nominees Pty Limited
17
18
19 Carlton Hotel Limited
20 Warbont Nominees Pty Ltd
Tasmanian Perpetual Trustees Limited
Leesville Equity Pty Ltd
Number of fully paid
Ordinary Shares
29,883,683
19,084,704
10,780,640
6,058,485
4,842,490
4,451,366
3,172,626
2,393,971
2,102,478
2,080,035
1,827,121
1,756,148
1,523,362
1,270,000
1,039,750
958,889
781,910
752,530
752,500
736,024
Percentage held of
Issued Ordinary Capital
9.67%
6.18%
3.49%
1.96%
1.57%
1.44%
1.03%
0.77%
0.68%
0.67%
0.59%
0.57%
0.49%
0.41%
0.34%
0.31%
0.25%
0.24%
0.24%
0.24%
BBS Nominees Pty Ltd, trustee for the Bendigo and Adelaide employee share ownership plan, held 5,465,929 unquoted
shares as at the date of this report. These shares have not been included in the above table, but are included in total
issued ordinary share capital.
Names of the 20 largest holders of Bendigo and Adelaide Preference Shares, including the number of shares each holds
and the percentage of preference share capital that number represents as at 18 August 2009 are:
96,248,712
31.14%
Number of fully paid Percentage held of issued
Preference Capital
21.03%
1.72%
1.22%
1.11%
0.51%
0.49%
0.44%
0.33%
0.31%
0.30%
0.28%
0.28%
0.28%
0.27%
0.27%
0.27%
0.24%
0.23%
0.23%
0.22%
Preference Shares
189,233
15,481
10,942
10,000
4,549
4,402
4,000
3,000
2,794
2,660
2,531
2,500
2,500
2,474
2,428
2,400
2,200
2,071
2,046
2,000
270,211
30.03%
FULLY PAID PREFERENCE SHARES
Rank Name
J P Morgan Nominees Australia Limited
1
2 Citicorp Nominees Pty Limited
3 ANZ Nominees Limited
4 Cogent Nominees Pty Limited
5 Cambooya Pty Ltd
6 RBC Dexia Investor Services Australia Nominees Pty Limited
7 Dylac Pty Ltd
8
9 Mr Jeffrey Frederick Edwards & Mrs June Rose Edwards
The Trustees Of The Diocese Of Tasmania
10 World Wide Fund For Nature Australia
11 Green Super Pty Ltd
12 Cambooya Pty Ltd
13 Uniting Church In Australia Property Trust (WA)
14 Bostock J & Taylor H & RSL Custodian Pty Ltd
15 Rome Pty Ltd
16 Dylac Pty Ltd
17
18 Carol Roberts Investments Pty Ltd
19 Buckingham GF & EM
20 Mrs Rita Marion Andre
Fedton Pty Ltd
180
BENDIGO AND ADELAIDE BANK LIMITED
ABN 11 068 049 178
Full Financial Report
Period ending 30 June 2009
MAJOR SHAREHOLDERS (continued)
Names of the 20 largest holders of Bendigo and Adelaide Reset Preference shares, including the number of shares each
holds and the percentage of reset preference share capital that number represents as at 18 August 2009 are:
FULLY PAID RESET PREFERENCE SHARES
Rank Name
1 Blann Investments Pty Limited
2 M F Custodians Ltd
3 RBC Dexia Investor Services Australia Nominees Pty Limited
4 Questor Financial Services Limited
5 Cogent Nominees Pty Limited
6
7 ANZ Nominees Limited
8 M F Custodians Ltd
9 Synod of the Diocese of Adelaide of the Anglican Church of Australia Inc
Taverner No 11 Pty Ltd
10 National Nominees Limited
11 Mr Ian William Bailey & Mrs Gloria Jean Bailey
12 Malvern Development Co Pty Ltd
13 Dr Spencer David
14 Baker Custodian Corporation
15
16 Austymca Nominees Pty Ltd
Invia Custodian Pty Limited
17
Fortis Clearing Nominees P/L
18
19
Liangrove Group Pty Ltd
20 Citicorp Nominees Pty Limited
The Invergowrie Foundation
Number of fully paid Percentage held of issued
Reset Preference Shares
2.19%
1.99%
1.18%
0.99%
0.91%
0.89%
0.79%
0.79%
0.67%
0.49%
0.45%
0.45%
0.43%
0.38%
0.37%
0.36%
0.34%
0.32%
0.31%
0.31%
Reset Preference Shares
19,585
17,834
10,593
8,849
8,131
8,000
7,072
7,055
6,000
4,400
4,000
4,000
3,860
3,390
3,350
3,200
3,015
2,862
2,800
2,750
130,746
14.61%
Names of the 20 largest holders of Bendigo and Adelaide Step Up Preference Shares, including the number of shares
each holds and the percentage of step up preference share capital that number represents as at 18 August 2009 are:
FULLY PAID STEP UP PREFERENCE SHARES
Rank Name
J P Morgan Nominees Australia Limited
1
2 National Nominees Limited
3 RBC Dexia Investor Services Australia Nominees Pty Limited
4 Argo Investments Limited
5 ANZ Nominees Limited
6
7 Returned Services League Of Australia (Queensland Branch)
8 Questor Financial Services Limited
9 Wal Investments Pty Ltd
Laidlaw Family Investment Pty Ltd
Fortis Clearing Nominees P/L
10
11 Rogand Pty Ltd
12 Peroda Nominees Pty Limited
13 Aileendonan Investments Pty Ltd
14
JGW Investments Pty Ltd
15 Baker Custodian Corporation
16 HSBC Custody Nominees (Australia) Limited
17
18 Moladi Pty Ltd
19 Richard Oppen Investments Pty Ltd
20 Acland Street Investments Pty Ltd
The Trustees Of The Diocese Of Tasmania
Number of fully paid
Step Up Preference Shares
51,020
40,000
28,196
17,000
14,600
10,293
10,000
7,475
4,605
4,309
4,220
4,004
4,000
3,948
3,893
3,838
3,670
3,526
3,031
3,000
Percentage held of issued
Step Up Preference Shares
5.10%
4.00%
2.82%
1.70%
1.46%
1.03%
1.00%
0.75%
0.46%
0.43%
0.42%
0.40%
0.40%
0.39%
0.39%
0.38%
0.37%
0.35%
0.30%
0.30%
224,628
22.45%
9.
VOTING RIGHTS
The holders of ordinary shares are entitled to vote at meetings of shareholders in the first instance by a show of hands of
the shareholders present and entitled to vote. If a poll is called, each shareholder has one vote for each fully paid share
held.
Holders of partly paid shares have a vote which carries the same proportionate value as the proportion that the amount
paid up on the total issue price bears to the total issue price of the share.
In the case of an equality of votes the Chairman has, on both a show of hands and at a poll, a casting vote in addition to
the vote to which the Chairman may be entitled as a shareholder, proxy, attorney or duly appointed representative of a
shareholder.
181