Annual Financial
Report 2022
Contact us
Bendigo and Adelaide Bank Limited
ABN 11 068 049 178
Registered head office
The Bendigo Centre,
Bendigo VIC Australia 3550
Telephone: 1300 236 344
+61 3 5445 0666 (if calling from overseas)
Shareholder enquiries
Share Registry 1300 032 762 (within Australia)
Email: BEN@boardroomlimited.com.au
B A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
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Table of
contents
Section 1
2
3
4
6
Message from our Chair
Message from our Managing Director
Year in review highlights
Directors’ Report
16
Operating and Financial Review
28
Remuneration Report
Section 2
53
Financial Statements
135 Directors’ Declaration
136
Independent Auditor’s Report
Section 3
145 Shareholder Information
149 Glossary
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1
Message from
our Chair
Last financial year proved to be a challenging
one for many Australians. Once in a generation
floods, an uncertain economic outlook and the
persistent impact of COVID-19 have given the
community much to grapple with.
While our ability to influence events such as these is limited,
we are able to choose how we respond. It has once again
been reassuring to observe the resilience of those most
impacted and the willingness of the community to support
one another in difficult times.
Further challenges await us all and the Bank, as always,
is prepared for a range of outcomes. The economic
outlook in particular has changed significantly since I last
wrote to you with the return of inflation and the efforts of
central banks to contain it bringing with them a degree of
uncertainty.
Despite these uncertainties and challenges your Bank
has continued to adapt and find new ways to support
our customers in their daily lives. Pleasingly this has also
resulted in a solid performance through FY22 with the
bank delivering cash earnings after tax of more than
$500 million for the first time in its history.
Over the course of the year our capital levels continued to
rise reflecting the strength of our business. Our Common
Equity Tier 1 ratio - our financial buffers and a key measure
of financial strength - rose 11 basis points over the year to
9.68 percent. We are cautiously optimistic, but prudently
provisioned.
In addition to our Bank’s solid FY22 financial performance,
the value of considered and thoughtful stewardship was
further highlighted in the Bank’s approach to capital
management, which resulted in the Board’s declaration
of a final dividend of 26.5 cents per share, taking the fully
franked, full year dividend to 53 cents per share - a rise of
six percent on FY21. The Board trusts the shareholders
view these as positive returns that strike a balanced
approach to the needs of all stakeholders.
Through all of this we continued to put customers at
the centre of everything we do as we worked together
to achieve our vision to be Australia’s bank of choice.
Pleasingly this was validated with independent research
house Roy Morgan once again concluding we are
Australia’s most trusted bank.
Recognising that sustainability is crucial to our ongoing
success we also advanced several initiatives central to our
recently developed ESG Framework. Foundational steps
taken in FY22 include the establishment of a dedicated
ESG & Sustainability function that has progressed
important initiatives including improved ESG data integrity,
embedding ESG governance structures and the release of
our second Sustainability Report.
In this second year of our Climate Change Action Plan we
have made progress on a number of important initiatives
including reaching a total of 51 rooftop solar installations
on our branches and office locations, the commencement
of an electric vehicle pilot for our sealed road fleet and the
completion of our transition risk scenario analysis amongst
many others.
As we look to the future, we know we also need to
continue to invest into our next generation of leaders. Our
scholarship program, which entered its 16th year, provides
students with the opportunity to access a range of
scholarships to help ease the financial burden associated
with tertiary education.
Since its inception in 2007 the program has helped almost
1,400 students embark on tertiary education, as well as
address the disadvantages faced by some students in
regional areas. I congratulate all 292 first year students
who received support from the Bank as part of this year’s
2022 Scholarship Program and I wish them well in their
future educational endeavours.
Further to our important work on climate and nurturing the
leaders of tomorrow, the Board of Directors has undergone
its own period of renewal as we prepare the Bank for what
lies ahead with the appointments of Richard Deutsch in
September 2021 and Victoria Weekes in February 2022.
Richard brings with him extensive auditing and advisory
expertise, while Victoria has led several large organisations
through complex operating environments and periods of
significant change. Both have significant financial services
experience. We are fortunate to be able to attract such
high-quality candidates to our organisation.
As we continue our work in FY23 I want to assure you that
the Bank remains well positioned to support its customers
and adapt to the changing environment, as it has done
many times before in its 164-year history.
While FY22 has presented considerable, yet surmountable,
challenges to the Bank, I am confident we have the
right Board, Executive and Leadership team in place to
overcome the challenges of tomorrow and continue to
deliver on our purpose of feeding into the prosperity of the
community and not off it.
Jacqueline Hey
Chair, Bendigo and Adelaide Bank
2 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Message from our
Managing Director
As Bendigo and Adelaide Bank faces into the winds of
economic change, I remind myself and the team that it
has never been more important to focus on the things
we can control, such as our strategy, our vision and our
focus on customers and the community.
Our vision to be Australia’s bank of choice and our strategic imperatives
to reduce complexity, invest in capability and tell our story have not
changed, but in FY22’s results you will see our strengthened focus
on returns, execution and sustainable growth as we strive to drive
the business forward, better support our customers and staff, while
producing returns for our shareholders.
In line with this commitment, in February, we brought together our
business and agribusiness divisions and confirmed a refreshed and
accomplished Executive team.
This included the new appointments of Andrew Morgan as Chief
Financial Officer and Adam Rowse as Chief Customer Officer Business
and Agribusiness Banking. There were changes for existing members
of the executive team as well with Bruce Speirs appointed Chief
Operating Officer.
Our solid FY22 results further demonstrated our capability to deliver
on our promises, in the face of economic headwinds and global
uncertainty. We delivered continued growth in loans, deposits and
customer numbers and our cost-to-income ratio has declined for the
second consecutive year.
Attracted by our products, service levels and digital experience, our
customer numbers grew 7.3 percent to 2.2 million in FY22, while we
retained our position as Australia’s most trusted bank. You will find more
details about the results in the pages ahead.
Our transformation to becoming a bigger, better and stronger bank
continued as we reduced the number of core banking systems and
technology applications we operate. We now have more applications in
the cloud and more digital customers than 12 months ago.
In recognition of the progress we have made, in May, I was invited to
Sydney to address one of the largest cloud community gatherings
in the southern hemisphere about the Bank’s values, purpose, and
technology strategy.
It brought our story to a whole new audience and was a reminder of
how far the Bank has come in a short period of time.
In FY22, we also completed the acquisition of our technology partner,
Ferocia, which allowed the Bank to consolidate its ownership of Up -
Australia’s highest rating banking app - and further develop its digital
capability and customer offerings.
In just four years, Up has attracted more than 550,000 customers and
$1 billion in deposits. More recently, it launched its first digital home loan
product - Up Home - which will provide a pathway to home ownership
for a new generation of customers.
While COVID-19 restrictions were largely wound back in FY22, the
pandemic continued to challenge the operation of our business and the
communities in which we are based. Rising COVID-19 cases, combined
with a seasonal influenza outbreak, contributed to an increase in
temporary closures across our branch network - and businesses
everywhere - as we worked to manage and mitigate the risks posed to
our staff and customers.
Viewed through this lens, our Bank’s performance in FY22 - against
both financial and non-financial metrics - is a credit to the outstanding
work of every one of our employees across the country.
Our commitment to strengthening communities through our unique
Community Bank model remains unwavering. Since the model’s
inception in 1998, our Community Bank partners have returned over
$292 million to local communities and initiatives Australia-wide.
In FY22, our Community Bank model continued to thrive bringing strong
customer and deposit growth.
The communities themselves benefited from countless programs,
including several multiple million dollar projects.
I look forward to continuing to work closely with our Community
Bank partners in FY23, as we work together to evolve the successful
Community Bank model we have built together for the next 25 years
and beyond. While much has changed in the world of banking, I believe
there will always be appetite from consumers for a genuine and
competitive, community minded alternative.
In the years ahead, we may come to view the beginning of the interest
rate tightening cycle this year as a critical juncture for the national and
global economy. For some, it will be difficult to manage as the lingering
effects of the pandemic continue to be felt.
While the end of a long cycle of falling interest rates and low inflation will
bring with it significant challenges for the Bank and our customers, we
understand the challenges we face, the opportunities we can leverage
and the future we want to create for all our stakeholders.
At Bendigo and Adelaide Bank our focus on what matters has never
been clearer and our strategic imperatives never more important.
For our many stakeholders that focus means managing our costs
diligently, supporting our customers in good times and challenging times,
strengthening the returns we derive from our investments and improving
our returns and outcomes to you.
We remain as we have always been, an organisation with both heart
and heritage, united in our purpose of feeding into the prosperity of the
community and not off it.
Marnie Baker
Chief Executive Officer and Managing Director,
Bendigo and Adelaide Bank
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3
Year in review highlights
Bendigo and Adelaide Bank is committed to operating sustainably from an economic, social and
environmental standpoint, considering the needs and expectations of our stakeholders over the
long-term. While our expertise is in delivering best in class financial services, our purpose underpins
everything we do. The strength and success of Bendigo and Adelaide Bank has been consistently
built throughout 164 years in business, and the care and capability we offer in helping all stakeholders
to have the best opportunity to succeed. The following is a snapshot of our financial and non-financial
highlights, as well as milestones we have achieved in FY22.
2.2
million+
Customers
Most
trusted bank
(Top 20 most
trusted brand
Roy Morgan)
Customers
Customers are at the heart of what we do, our focus on customers and community is
central to who we are, and how we think and operate. We’re proud that more and more
Australians are choosing to bank with us. Our competitive range of banking products,
unique relationship model, digital capability and friendly customer service are just some
of the reasons why our Net Promoter Score continues to sit well above the industry
average. We are Australia’s most trusted bank and our leading customer advocacy and
satisfaction scores reflect the high esteem in which we are held by our customers.
+24.5
NPS
(Bendigo Bank)
+72
NPS
(UP)
People
46%
of leadership
roles held by
women
Employee
engagement score
increased to
77%
Refreshed our
diversity and
inclusion strategy,
Belonging
at BEN
Recognised as an
Inclusive Employer
2012-2022 by the
Diversity Council
of Australia
$292.2m
in Community
Contributions
since inception
307
Community Bank
branches across
Australia
70,000+
Community Bank
shareholders
1,600+
Community Bank
directors
We know when our people are supported and performing at their best, our customers and
community benefit. Investing in capability is critical to the success of our strategy and through
programs like myBENU and Lead BEN we’re delivering greater access to greater quality
learning to support performance uplift. This helps create the performance we’re seeking
and contributes to our strong group employee engagement, with 77 percent of our people
feeling as though they belong being the highest driver in our latest staff survey. Considerable
progress has been made on our Belonging at BEN strategy, focusing on foundational diversity
and inclusion programs, policies, and benchmark measures across priority dimensions
including gender, LGBTQI+, accessibility, cultural inclusion, and Aboriginal and Torres Strait
Islander inclusion. Our employer value proposition continues to be a major contributor to our
strong employment brand, allowing us to attract the talent we require to deliver our Group
strategy.
Community
As a regionally headquartered institution, we share a natural affinity with rural and regional
communities and see firsthand the role banking plays in supporting communities to be vibrant,
healthy, and dynamic places to live and work. To galvanise our efforts around our purpose in
2021-2022 the Bank adopted its first Social Impact Framework which focuses on achieving
shared value outcomes that address challenges in our community. Our award-winning
Community Bank model continues to be a fundamental part of this framework and in FY22,
more than $19 million was invested into communities through this model. Our Community
Enterprise Foundation is also pivotal in this framework. The Foundation’s expertise in
maximising community investment outcomes and experience in helping communities recover
from natural disasters supports the aims of the Community Bank model and enhances their
impact. We also continued our support of students awarding 292 scholarships, including
eight Indigenous scholarships in FY22. In total we have invested more than $11 million in
scholarships to support 1,398 students since the program began in 2007.
4 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Successfully
delivered the
second year of our
Climate Change
Action Plan
Over halfway to
meeting our 50%
absolute emissions
reduction by 2030
target
51
Branches and
office locations
are now fitted
with rooftop solar
systems
Commenced
electric vehicle
pilot for our
employee fleet
Released Supplier
Code of Conduct,
setting ESG
expectations with
suppliers
Developed
Social Impact
Procurement
Strategy
93.2%
of our small
business suppliers
paid within
30 days of
invoicing
Delivered our
Modern Slavery
Roadmap
$500.4m
Cash earnings
after tax
up 9.4%1
$1,709.9m
Total income
on a cash basis
up 0.4%1
$1,016.3m
Operating
expenses
down 1.1%1
1.74%
Net interest
margin down
21 basis points1
Reporting on our performance
Environment
We recognise climate change has far-reaching risks for the environment, the
economy, society, our customers and their communities. Bendigo and Adelaide
Bank achieved carbon neutral status in FY20 and FY21 and is maintaining this
in FY22. We support the required transition to net zero emissions by 2050 with
aligned interim targets. Since launching our Climate Change Action Plan, we have
reduced our absolute emissions by over 25 percent, our travel related greenhouse
emissions by 65.5 percent and 51 of our branches and office locations are now
fitted with rooftop solar systems.
Governance
Robust governance is essential to strong and sustainable growth and success.
We always strive to act ethically, capably and with great care and attention,
ensuring everyone is respectfully heard. However, like any organisation we
sometimes make mistakes and when we do, we take ownership and action
to make good and remediate any errors. Our highly skilled and trained people
engage with stakeholder groups in a disciplined manner, and this ensures
relationships are cultivated for the long term.
Financial performance
This year, the Bank announced cash earnings after tax increased by 9.4 percent,
to $500.4 million, the first time in our history that cash earnings have exceeded
$500 million. Statutory net profit after tax was $488.1 million, down 6.9 percent.
Cash earnings per share were 89.8 cents, up 4.9 percent. We delivered total
income on a cash basis of $1,709.9 million, up $7.4 million. Total lending increased
by 7.7 percent, largely driven by residential lending which continued to grow well
above system. Our cost to income ratio decreased by 90 basis points to 59.4
percent, reflecting an ongoing focus on sustainable cost reduction. Our capital
position further strengthened with Common Equity Tier 1 (CET1) ratio up 11 basis
points to 9.68 percent, reflecting a well-managed balance sheet and strong risk
management. We announced a fully franked final dividend of 26.5 cents per share,
taking the full year dividend to 53 cents per share and continuing our history of
rewarding shareholders with high yield and long-term returns.
In FY22, we have grown market share, customer numbers, total lending and deposits. Importantly, we have not achieved this at
the expense of our commitment to our customers, people, community, or the environment, also recording strong results against
our non-financial targets. More about our progress over the past year is contained within our reporting suite outlined below.
Annual Financial Report
Sustainability Report
Additional disclosures:
Our statutory
financial reporting
Corporate Governance
Statement
Our report on our material
ESG topics
Tax Report
Climate-related Financial
Disclosures (TCFD)
Modern Slavery Statement
Workplace Gender Equality
Agency reporting
All reports are available on our website via our Investor centre: www.bendigoadelaide.com.au/investor-centre
1 Movements are for the 12 months ended 30 June 2022
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5
Directors’
Report
The Directors of Bendigo and Adelaide Bank Limited present their report together with the financial report
of Bendigo and Adelaide Bank Limited (the “Bank”) and its controlled entities (the “Group”) for the year
ended 30 June 2022.
Directors’ information
The names and details of the Directors in office as at the date of this report are as follows:
Jacqueline Hey,
Chair, Independent
BCom, Graduate Certificate in Management,
GAICD, 56 years
Jacquie joined the Board in July 2011 and was appointed Chair in October 2019, becoming the Bank’s first female Chair.
She is currently one of only 19 ASX 200 female chairs. Jacquie offers a depth of international experience in business and
technology systems and enjoyed a highly successful executive career prior to becoming a full-time company director in 2011.
After majoring in economics at the University of Melbourne, Jacquie took up a graduate position with Ericsson - the Swedish
telecommunications company - where she held a variety of leadership roles across more than two decades, eventually rising
to become MD & CEO of Ericsson in the UK/Ireland and Australia/NZ.
Jacquie brings to the Board an extensive array of skills including executive leadership, corporate and business acumen,
technology and innovation, financial acumen and corporate governance.
Jacquie is a member of the People, Culture and Transformation Committee and the Audit Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Director: Qantas Airways Limited (ASX listed, period: August 2013 to present), Commonwealth Superannuation Corporation.
Member: Brighton Grammar School Council.
Former Director: AGL Energy Limited (ASX listed, period: March 2016 to May 2022)
6 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Marnie Baker,
Chief Executive Officer and Managing Director, Non-independent
BBus, ASA, MAICD and SFFin, 54 years
Marnie Baker was appointed Chief Executive Officer and Managing Director commencing July 2018. Marnie is the Bank's
first female CEO and one of only thirteen females currently serving as CEO of an ASX100 company.
Marnie has over 30 years’ experience in the financial services industry, across Banking and wealth. Marnie has been with
the Bendigo and Adelaide Bank Group since 1989, and an Executive of the Bank since 2000. Her most recent positions
include Chief Customer Officer which had responsibility for all the customer facing and direct customer support businesses
across the Group, and Executive Corporate Resources with responsibility for human resources, information technology,
legal, assurance, property & security, procurement and corporate services. Prior to this Marnie held the positions of Chief
Information Officer, Group Treasurer and Chief Executive Officer Sandhurst Trustees. Marnie holds a Bachelor of Business
(Accounting) from La Trobe University and is a member of the Australian Society of Certified Practicing Accountants,
member of the Australian Institute of Company Directors and a Senior Fellow of the Financial Services Institute of
Australasia. Marnie brings to the Board a strong understanding and connection to regional Australia as well as an extensive
array of skills, knowledge and experience from over three decades in financial services, two thirds of which has been in
Executive positions.
Marnie is not a member of any Board Committees.
Other director and memberships (including directorships of other listed companies for the previous three years):
Deputy Chair of the Australian Banking Association and member of Business Council of Australia, Mastercard (Asia Pacific)
Advisory Board, La Trobe University’s Bendigo Regional Advisory Board, Victorian Government – Economic Restart and
Recovery Steering Committee, Loddon Campaspe Regional Taskforce.
Vicki Carter,
Independent
BA (Social Sciences), Dip Mgt, Certificate in Executive Coaching,
GAICD, 58 years
Vicki joined the Board in September 2018.
Vicki has over 30 years’ experience in the financial services and telecommunications sectors with executive roles in
distribution, strategy and operations, human resources and transformation. Her extensive skills in large scale people
leadership, product and sales management, transformation delivery and risk management have been, and continue to be,
valuable and contemporary contributions to the Board and the Bank. Vicki recently concluded her role as Executive Director,
Transformation Delivery at Telstra, and prior to that held a number of executive roles at NAB including Executive General
Manager - Retail Bank, Executive General Manager - Business Operations and General Manager - People and Culture, as
well as senior leadership roles at MLC, ING and Prudential Assurance Co Ltd.
Vicki is Chair of the People, Culture and Transformation Committee and a member of the Risk Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Chair: Sandhurst Trustees Limited
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7
Directors’ information continued
Richard Deutsch,
Independent
BE, FCA, 55 years
Richard joined the Board in September 2021.
Richard brings extensive experience delivering complex audit and advisory services to Australia’s leading public, private,
government and not-for-profit organisations having most recently served as CEO of Deloitte Australia.
At Deloitte Australia, Richard was the Managing Partner of the Audit & Advisory Practice and a member of the Global Audit
& Advisory Leadership Team. Richard’s career also includes more than 25 years working with PwC, including nine years on
PwC’s Australian executive.
Richard is passionate about supporting organisations that have a positive impact in the community. He is a former Chairman
of OzHarvest and a former Director of Adara Group, a charitable organisation focusing on international development in
emerging economies.
His former directorships also include serving as President and Chairman of the Institute of Chartered Accountants Australia
(now Chartered Accountants Australia and New Zealand) and Director of SCEGGS Darlinghurst. Richard has also been a
member of the Male Champions of Change, Australian Climate Leaders Coalition and the Business Council of Australia.
Richard is Chair of the Audit Committee and a member of the Financial Risk Committee.
David Foster,
Independent
B.AppSci, MBA, SFFin, FAIM, GAICD, 53 years
David joined the Board in September 2019.
David is an experienced and highly skilled non-executive director, with a diverse portfolio of directorships and advisory
roles across a range of listed and government organisations. David’s executive career - primarily in financial services - has
spanned more than 25 years, most recently as CEO of Suncorp Bank from 2008 to 2013. He also held a number of senior
roles with Westpac Banking Corporation in Sydney and Queensland across a 14-year period. David brings to the Board an
extensive array of skills including strategy, M&A, operational leadership, finance and risk management, product management
and marketing, and change management.
David is Chair of the Financial Risk Committee and a member of the People, Culture and Transformation Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Chair: Motorcycle Holdings Limited (ASX listed, period: March 2016 to present), G8 Education Limited (ASX listed, period:
February 2016 to present)
Director: Youi Holdings Pty Ltd, Peak Services Pty Ltd, Queensland Titles Registry Pty Ltd, Australian Reinsurance Pool
Corporation
Member: Sunshine Coast University Council
Former Director: Thorn Group Limited (ASX listed, period: December 2014 to October 2019), Genworth Mortgage Insurance
Australia Limited (ASX listed, period: May 2016 to March 2022)
8 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Directors’ information continued
Jan Harris,
Independent
BEc (Hons), 63 years
Jan joined the Board in February 2016.
Jan’s exceptional experience and understanding of the regulatory and government landscape brings additional breadth and
balance to the Board. Jan has had a distinguished career in the Australian public service with broad experience in public and
regulatory policy development, economics and governance. Jan has held senior roles in the Department of the Treasury and
the Department of the Prime Minister and Cabinet, including as Deputy Secretary of the Treasury, as well as being a member
of the Australian Office of Financial Management Audit Committee. As well as her depth and understanding of public policy,
Jan brings an array of skills including finance, regulatory risk, compliance and risk management.
Jan is a member of the Audit Committee and the Risk Committee, having recently transitioned from Chair of that
committee.
Jim Hazel,
Independent
BEc, SFFin, FAICD, 71 years
Jim joined the Board in March 2010.
Jim is a professional public company director who has had an extensive career in banking, finance and risk management,
including in the regional banking industry. Jim brings to the Board more than 40 years of experience in the financial services
sector along with a deep understanding of regional and rural interests, valuable insights into the challenges faced by
Australia’s ageing population, and the retirement housing sector. Jim has led government initiatives to lower the occurrence
of motor vehicle accidents, reduce the impact of road trauma and oversee programs to change behaviours and encourage
safer driving.
Jim is a member of the Risk Committee and Financial Risk Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Chair: Ingenia Communities Group Limited (ASX listed, period: March 2012 to present), Precision Group, and Barossa Hills
Fleurieu Local Health network
Director: Coopers Brewery Limited, Inheritance Capital Management Pty Ltd, Omega Communities Pty Ltd, Chapman
Capital Partners
Memberships: Pro-Chancellor, University of South Australia
Former Director: Centrex Metals Limited (ASX listed, period: July 2010 to September 2019)
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9
Directors’ information continued
David Matthews,
Independent
Dip BIT, GAICD, 64 years
David joined the Board in March 2010.
David chaired the first Community Bank company in Australia, which began in Rupanyup and Minyip in Victoria. He retains a
keen interest in the sustainability of the Community Bank network, and its value and importance to hundreds of communities
across Australia. David also brings to the Board a sound understanding of the importance and resilience of the Australian
agricultural sector – both to the economy and to our future - and continues to operate a farm and an agricultural import/
export business based in the Wimmera region of Victoria. David continues to maintain a close involvement in several
agricultural industry bodies. David brings to the Board an extensive array of skills including broad experience in agribusiness
from production to international trade, deep community connections and an understanding of the critical role the ‘human’
piece plays in business success.
David is a member of the Audit Committee and People, Culture and Transformation Committee. David is also a member of
the Community Bank National Council and Rural Bank Advisory Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Director: Farm Trade Australia Pty Limited, Rupanyup/Minyip Finance Group Limited.
Victoria Weekes,
Independent
BCom (UNSW) LLB (UNSW), FAICD, 60 years
Victoria joined the Board in February 2022.
Victoria brings with her over 35 years of experience in financial services and has led several large organisations through
complex operating environments and periods of significant change. Victoria has held executive roles with major Australian
listed companies and multi-nationals including Westpac, Citi, ASIC and Jarden Morgan (now CS First Boston). Victoria is the
former chair of NSW Treasury Audit and Risk Committee and former Chair of OnePath Custodians.
An accomplished non-executive director and chair with experience across a range of business sectors in the public, private,
government and not-for-profit organisations, Victoria has deep expertise in risk management, regulation, and compliance at
both executive and board level.
Victoria is a Senior Fellow and past president of professional standards body FINSIA, a Fellow of the Australian Institute of
Company Directors, a Chartered Banker and was previously the chair of the Australian Gender Equality Council.
Victoria is Chair of the Risk Committee and member of the Financial Risk Committee.
Other director and memberships (including directorships of other listed companies for the previous three years):
Director: Alcidion Group Limited (ASX listed, period: September 2001 – present).
Member: State Library of NSW
Former Director: URB Investments Limited (ASX listed, period: April 2017 – December 2019), Deputy Chair St George
Community Housing Limited, OnePath Custodians, St George Community Housing Limited.
Robert Hubbard and Anthony Robinson retired as Directors at the end of the Annual General Meeting of shareholders on
9 November 2021.
10 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Company Secretary
Ms Carmen Lunderstedt (BCom, GradCertFinPlan, FGIA, FCIS)
was appointed as Company Secretary of the Bank on
14 October 2019. Ms Lunderstedt is a Chartered Secretary
with more than twenty years’ experience in governance, risk
and compliance, with more than half of these years in the
banking and financial services industry.
Principal Activities
The principal activities of the Group during the financial year
were the provision of a broad range of banking and other
financial services including consumer, residential, business, rural
and commercial lending, deposit-taking, payments services,
wealth management, margin lending, and superannuation,
treasury, and foreign exchange services.
On 1 December 2021, the Group completed the sale of its
insurance broking service, Community Insurance Solutions to
Community Broker Network.
In December 2021, the Group entered into an agreement
with Timelio Pty Ltd to sell its debtor finance asset book and
associated business.
Operating and Financial Review
Further information on the Group’s operating results (including
cash earnings results and commentary) for the financial year
are contained in the Operating and Financial Review section of
this report. The following commentary relates to the statutory
earnings results of the Group.
The Group’s statutory profit after tax for FY22 decreased
by 6.9% to $488.1 million (FY21: $524.0 million). This was
impacted by:
•
•
•
•
An increase in net interest income due to growth in the
lending portfolios, offset by a reduction in net interest
margin.
A decrease in other operating income primarily driven
by a reduction in Homesafe unrealised revaluation gains
resulting from changes to the valuation assumptions.
A slight increase in operating costs, which included
continued investment spend to simplify the business and
reduce complexity.
A decrease in credit expenses largely attributed to
improved economic conditions in the Australian economy
from FY21, partially offset by the impact of revised
scenarios more heavily weighted towards the downside
given economic uncertainty.
Dividends and Distributions
On 15 August 2022, the Directors announced a fully franked
dividend of 26.5 cents per fully paid ordinary share. The final
dividend is payable on 29 September 2022. The proposed
payment is expected to total $146.7 million.
The following fully franked dividends were paid by the Bank
during the year on fully paid ordinary shares:
•
A final dividend for the 2021 financial year of 26.5 cents
per share, paid on 30 September 2021 (amount paid:
$144.0 million); and
•
An interim dividend for the FY22 of
26.5 cents per share, paid on 31 March 2022 (amount
paid: $145.6 million).
Further details on dividends provided for or paid during FY22
on the Bank’s ordinary and preference shares are provided at
Note 7 Dividends of the Financial Report.
Review of Operations
An analysis of the Group’s operations for the financial year and
the results of those operations, including the financial position,
business priorities and prospects, is presented in the Operating
and Financial Review section of this report.
State of Affairs
Changes in the principal activities of the Group have been
outlined above.
There were changes made to the composition of the Board
and the Executive Team during the financial year, specifically:
•
•
•
•
•
Richard Deutsch was appointed as a non-executive
director effective 20 September 2021.
Robert Hubbard and Anthony Robinson retired from the
Board on 9 November 2021.
On 1 February 2022, the Executive Team was restructured.
Bruce Speirs was appointed to a new role of Chief
Operating Officer, Alexandra Gartmann resigned from the
role of Rural Bank CEO, and a new role of Chief Customer
Officer Business and Agribusiness was created. Adam
Rowse was subsequently appointed to this role effective
from 1 July 2022.
Victoria Weekes was appointed as a non-executive
director effective 15 February 2022.
Travis Crouch ceased as Chief Financial Officer, being
replaced by Andrew Morgan on 24 June 2022.
In the opinion of the Directors there have been no other
significant changes in the state of affairs of the Group during
the financial year. Further information on events and matters
that affected the Group’s state of affairs is presented in the
Chair’s and Managing Director’s Messages and the Operating
and Financial Review section of this report.
Events After Reporting Date
On 7 July 2022, Bendigo and Adelaide Bank Limited entered
into an agreement to acquire the ANZ Investment Lending
portfolio, with the transaction expected to be completed in
the first half of the 2023 calendar year. The acquisition will
allow the Group to further grow its margin lending business,
Leveraged Equities Limited. The value of the portfolio being
acquired is approximately $715 million and is subject to
movements in the underlying portfolio up until the completion
date. The Group will pay an immaterial premium over book
value.
The Directors are not aware of any other matter or
circumstance which arose since the end of the financial year
to the date of this report that has significantly affected or may
significantly affect the operations of the Group, the results
of those operations, or the state of affairs of the Group in
subsequent financial years.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1
Directors and Meetings of Directors
The Board met 21 times (scheduled and unscheduled meetings)
in the year ended 30 June 2022. The following table includes:
•
•
•
names of the Directors holding office at any time during, or
since the end of, the financial year;
the number of Board and Board Committee meetings for
which each Director was eligible to attend; and
the number of meetings attended by each Director.
Director
Board
Committees
Audit
Financial
Risk
Risk
People, Culture and
Transformation1
Technology2
A
21
21
21
15
21
21
21
9
21
9
7
B
21
21
21
15
21
21
21
9
21
9
7
A
4
5
7
3
7
3
B
4
5
7
3
7
3
A
B
A
B
3
7
10
3
7
10
10
10
3
4
3
4
6
3
9
9
3
4
6
3
9
8
3
4
A
8
8
5
8
3
B
8
8
5
8
3
A
2
2
2
2
B
2
2
1
2
Meetings during the year
Jacqueline Hey
Marnie Baker
Vicki Carter
Richard Deutsch3
David Foster
Jan Harris
Jim Hazel
Robert Hubbard4
David Matthews
Anthony Robinson5
Victoria Weekes6
A = Number eligible to attend
B = Number attended
1. Committee renamed to People, Culture and Transformation Committee effective 16 February 2022.
2. Remit of Technology Committee incorporated into other Committees effective 16 February 2022.
3. Richard Deutsch was appointed as a Non-executive Director commencing on 20 September 2021.
4. Robert Hubbard retired at the end of the Annual General Meeting of shareholders on 9 November 2021.
5. Anthony Robinson retired at the end of the Annual General Meeting of shareholders on 9 November 2021.
6. Victoria Weekes was appointed as a Non-executive Director commencing on 15 February 2022.
Directors’ interests in Equity
The relevant interest of each Director in shares in the Bank and in units of registered schemes made available by a related body corporate at
the date of this report are as follows:
Director
Ordinary Shares
Preference Shares Performance Rights Rights to Shares1
Jacqueline Hey
Marnie Baker
Vicki Carter
Richard Deutsch
David Foster
Jan Harris
Jim Hazel
David Matthews
Victoria Weekes
57,359
1,411,744
24,850
3,000
10,560
15,628
40,670
45,020
5,500
250
100
-
110,895
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,193
-
-
-
-
4,193
Sandhurst
Common Fund 2
-
$14,156.59
-
-
-
-
-
-
-
1. Rights to shares have been issued under the BEN Omnibus Plan Rules for the FY23 Non-Executive Directors Fee Share Plan. Each participant has
elected to sacrifice a portion of the base fee, to which a number of rights has been allocated by dividing the fee sacrifice amount by the five day
volume weighted average share price prior to the allocation date of 23 August 2022. The rights to shares vest in two equal tranches after 6 and 12
months, with the first tranche vesting in February 2023. Upon vesting, the converted shares must be retained for the duration of their service as a
Director or for up to 15 years, whichever occurs earlier, and will form part of the fulfilment of the Minimum Shareholding Policy introduced from FY21.
2. Being a relevant interest in a managed investment scheme made available by Sandhurst Trustees Limited, a subsidiary of the Bank.
12 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Share Options and Rights
There were no options over unissued ordinary shares at the
start of the financial year and no options to acquire ordinary
shares in the Bank were issued during or since the end of the
financial year.
Performance rights (“rights”) to ordinary shares in the Bank
are issued by the Bank under the Employee Salary Sacrifice,
Deferred Share, Deferred Share Rights and Performance Rights
Plan and the BEN Omnibus Equity Plan (“Plans”). Each right
represents an entitlement to one fully paid ordinary share in the
Bank, subject to certain conditions.
During or since the end of the financial year the Bank granted
1,429,004 rights (2021: 177,525). This included 83,722 rights
granted to key management personnel.
As at the date of this report there are 1,289,941 rights that are
exercisable or may become exercisable at a future date under
the Plans. The last date for the exercise of the rights ranges
between 30 June 2022 and 30 June 2026.
During or since the end of the financial year
•
493,220 rights vested (2021: 108,744) and no new fully
paid ordinary shares have been issued by the Bank during
or since the end of the financial year as a result of rights
being exercised.
111,510 rights have lapsed.
•
Further details of Key Management Personnel equity holdings
during the financial year are detailed in the 2022 Remuneration
Report.
Corporate Governance
An overview of the Bank’s corporate governance structures
and practices is presented in the 2022 Corporate Governance
Statement available from the Bank’s website at
www.bendigoadelaide.com.au/public/corporate_governance/
index.asp
The Bank confirms it has followed the ASX Corporate
Governance Principles and Recommendations (4th edition)
during FY22.
Environmental Regulation
The Bank endeavours to conduct its operations in a manner
that minimises its impact on the environment. Information on the
Bank’s environmental performance including its Climate Change
Policy Statement and focus areas to manage its environmental
impact are provided in the 2022 Climate Related Financial
Disclosures which are available from the Bank’s website
https://www.bendigoadelaide.com.au/esg/environment/
The Bank’s operations are not subject to any significant
environmental regulations under either Commonwealth or
State legislation. However, the Board believes that the Bank
has adequate systems in place for the management of its
environmental requirements and is not aware of any breach
of any environmental requirement. The Bank is not subject
to the Federal Government’s National Greenhouse and
Energy Reporting (NGER) Scheme which requires controlling
corporations to report annually on greenhouse gas emissions,
energy production and energy consumption, if they exceed
certain threshold levels. Whilst not required to report under the
Scheme, the Bank does measure and monitor its greenhouse
gas emissions and has voluntarily reported these emissions
since 2011 to the CDP.
Indemnification of Officers
The Bank’s Constitution provides that the Bank is to indemnify,
to the extent permitted by law, each officer of the Bank against
liabilities (including costs, charges, losses, damages, expenses,
penalties and liabilities of any kind including, in particular, legal
costs incurred in defending any proceedings or appearing before
any court, tribunal, government authority or other body) incurred
by an officer in or arising out of the conduct of the business of
the Bank or arising out of the discharge of the officer's duties.
As provided under the Bank’s Constitution, the Bank has entered
into deeds providing for indemnity, insurance and access to
documents for each of its Directors. The Bank may also enter
into deeds providing for indemnity and insurance for each
Executive Committee member and the Company Secretary as
well as deeds providing for indemnity, insurance and access to
documents for each Director of a subsidiary.
The deeds require the Bank to indemnify, to the extent permitted
by law, the officers for all liabilities (including costs, charges,
losses, damages, expenses, penalties and liabilities of any kind)
incurred in their capacity as an officer of the relevant company.
Indemnification of Auditor
To the extent permitted by law and professional regulations,
the Bank has agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement against all
claims by third parties and resulting liabilities, losses, damages,
costs and expenses (including reasonable external legal costs)
arising from the audit engagement including any negligent,
wrongful or wilful act or omission by the Bank.
The indemnity does not apply to any loss resulting from Ernst
& Young’s negligent, wrongful or wilful acts or omissions. No
payment has been made under this indemnity to Ernst & Young
during or since the financial year end.
Insurance of Directors and Officers
During or since the financial year end, the Bank has paid
premiums to insure certain officers of the Bank and its related
bodies corporate. The officers of the Bank covered by the
insurance policy include the Directors, the Company Secretary
and Directors and Company Secretaries of controlled entities
who are not Directors or Company Secretaries of the Bank. The
policy also covers officers who accept external directorships as
part of their responsibilities with the Bank. The insurance does
not provide cover for the external auditor of the Bank or related
bodies corporate of the Bank. Disclosure of the nature of the
liabilities covered and the amount of the premium is prohibited
by the confidentiality clause of the contract of insurance.
Rounding of Amounts
In accordance with ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191, amounts in the
Directors’ Report and Financial Report have been rounded to
the nearest million Australian dollars unless otherwise indicated.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3
Declaration by Chief Executive Officer and
Managing Director and Chief Financial Officer
The Chief Executive Officer and Managing Director and the
Chief Financial Officer have provided the required declarations
to the Board in accordance with section 295A of the
Corporations Act 2001 and recommendation 4.2 of the ASX
Corporate Governance Principles and Recommendations in
relation to the financial records and financial statements for the
year ended 30 June 2022.
The Chief Executive Officer and Managing Director and the
Chief Financial Officer also provided declarations to the Board,
consistent with the declarations under section 295A of the
Corporations Act 2001 and recommendation 4.2 of the ASX
Corporate Governance Principles and Recommendations, in
relation to the financial statements for the half year ended
31 December 2021.
To support the declaration, formal risk management and
financial statement due diligence and verification processes,
including attestations from senior management, were
undertaken. This assurance is provided every six months in
conjunction with the Bank’s 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.
Non-audit Services
The Board Audit Committee has assessed the independence of
the Group’s external auditor, Ernst & Young, for the year ended
30 June 2022. The assessment was conducted in accordance
with the Group’s External 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 2022.
Non-audit services are those services paid or payable to
Ernst & Young which do not relate to Group statutory audit
engagements. In its capacity as the Group’s external auditor,
Ernst & Young is 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.
The Board Audit Committee has reviewed the nature and scope
of the above non-audit services provided by Ernst & Young. 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. The Board Audit
Committee has confirmed that the provision of those services
is consistent with Group’s External Audit Independence Policy
and compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. This
confirmation was provided to, and accepted by, the full Board.
Details of the fees paid or payable to Ernst & Young for audit,
review, assurance and non-audit services provided during the
year are contained in Note 35 Remuneration of Auditor of the
Financial Report.
14 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 5
A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Auditor’s Independence Declaration to the Directors of Bendigo and Adelaide Bank Limited As lead auditor for the audit of the financial report of Bendigo and Adelaide Bank Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Bendigo and Adelaide Bank Limited and the entities it controlled during the financial year. Ernst & Young T M Dring Partner 5 September 2022 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Ernst & Young 8 Exhibition Street Melbourne VIC 3000 Australia GPO Box 67 Melbourne VIC 3001 Tel: +61 3 9288 8000 Fax: +61 3 8650 7777 ey.com/au Auditor’s Independence Declaration to the Directors of Bendigo and Adelaide Bank Limited As lead auditor for the audit of the financial report of Bendigo and Adelaide Bank Limited for the financial year ended 30 June 2022, I declare to the best of my knowledge and belief, there have been: a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; b. No contraventions of any applicable code of professional conduct in relation to the audit; and c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit. This declaration is in respect of Bendigo and Adelaide Bank Limited and the entities it controlled during the financial year. Ernst & Young T M Dring Partner 5 September 2022 Operating and
Financial Review
Our strategy
Our vision is to be Australia’s bank of choice – for those
who bank with us, work for us, partner with us and invest
in us. Our purpose of feeding into prosperity, not off it,
is our anchor; informing who we are today, and where
we see ourselves in the future. We believe our success is
driven by helping our customers, and the communities in
which they operate, to be successful.
Our overarching strategy has proven to be effective
and remains relatively unchanged. Our results for FY22
show that we have delivered what we promised in a
challenging and competitive environment.
As Australia’s better big bank and a top 100 ASX listed
company, we aim to set an example of how banking
should be; progressive, sustainable, shared and trusted.
We have delivered continued growth in loans, deposits
and customer numbers, we have reduced our costs and
improved our cost to income ratio while maintaining a
strong balance sheet and preserving credit quality.
Our transformation agenda continues to improve our
productivity, efficiency, speed to market and customer
experience. Our underlying business, balance sheet, brand
proposition, risk profile and transformation have made
our business stronger for the future.
While our strategy and vision remain the same, as we
enter a new financial year, we will continue to strengthen
our focus on returns, execution, sustainable growth and
capital generation as we drive the business forward
to better support and enhance the experience for our
stakeholders.
As we build on our purpose, we continue to reduce
complexity, invest in capability and tell our unique story,
with an eye to the future as we strive to be Australia’s
bank of choice.
Vision
Purpose
Australia’s bank of choice
To feed into prosperity, not off it
Imperatives
Reduce
complexity
Invest in
capability
Tell our
story
Customer Centric
Operating Model
Customer Value
Proposition
Digital by design, human
when it matters
Based on trust,
authenticity, knowledge,
expertise, connection and
personalised relationships
Growth and
Transformation
Strategy
Propelled by human,
digital and community
connections
ESG Framework
Strengthen our ESG
outcomes in line with our
purpose
For our customers, people, partners, communities and shareholders.
16 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Our Business
performance
We have delivered continued growth in loans, deposits and customer numbers, in
a challenging and competitive environment. We have reduced costs and improved
our cost-to-income ratio while maintaining a strong balance sheet and preserving
our credit quality.
In FY22 cash earnings after tax increased by
9.4 percent to $500.4 million, the first time in
our history that cash earnings has exceeded
$500 million. Statutory earnings of $488.1 million
decreased 6.9 percent, largely due to a decline
in Homesafe revaluation income. Cash earnings
per share of 89.8 cents were up 4.9 percent
from the prior year and the cost-to-income ratio
continued to improve, decreasing by 90 bps to
59.4 percent.
For the third consecutive year we have delivered
above system growth in residential lending,
with total lending up $5.6 billion or 7.7 percent.
Customer deposits also grew by $6.4 billion
or 11.0 percent in FY22. Customer numbers
have grown 7.3 percent to 2.2 million and our
leading Net Promoter Score1 of 24.5 is 26.3
points higher than the industry average. We are
making progress on simplifying our business and
reducing complexity through our transformation
agenda. We have fewer brands, fewer core
banking systems and fewer IT systems. We also
have more apps in the cloud, more APIs being
re-used and more e-banking customers than ever
before. We have completed the acquisition of
Melbourne-based fintech, Ferocia Pty Ltd, which
has allowed us to consolidate ownership of Up -
Australia's highest rated banking app.
We announced a fully franked final dividend of
26.5 cents per sharetaking the fully franked full
year dividend to 53 cents per share, a rise of 6
percent on FY21.
These results demonstrate our strategy is
working. Our path to become a bigger, stronger
and simpler bank is on track.
CASH EARNINGS
AFTER TAX ($M)
STATUTORY NET PROFIT
AFTER TAX ($M)
COST TO
INCOME (%) 2
FY22
FY21
FY20
FY19
5 0 0 . 4
4 5 7. 2
3 0 1 . 7
4 1 5 . 7
FY22
FY21
FY20
FY19
4 8 8 .1
5 2 4 . 0
FY22
FY21
FY20
FY19
1 9 2 . 8
3 76 . 8
5 9. 4
6 0 . 3
6 2 . 7
5 9. 2
CASH EARNINGS
PER SHARE (C)
DIVIDEND
PER SHARE (C)
RETURN ON
EQUITY (%) 2
FY22
FY21
FY20
FY19
8 9. 8
8 5 . 6
8 5 . 0
FY22
FY21
FY20
FY19
5 9. 7
5 3 . 0
5 0 . 0
3 5 . 5
FY22
FY21
FY20
FY19
70 . 0
7. 7 2
7. 6 7
7. 5 5
5 . 3 6
1 Roy Morgan Net Promoter Score Roy Morgan Research, 6 month rolling averages, comparing BEN to the industry average. Industry includes:
ANZ, BOM, BOQ, Bank SA, Bankwest, CBA, ING, NAB, St. George, Suncorp & WBC. Net Promoter, Net Promoter System, Net Promoter Score,
NPS and the NPS related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
2 Calculated using cash earnings.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 7
CASH EARNINGS AFTER TAX
STATUTORY EARNINGS AFTER TAX
$500.4m
FY21 $457.2m
▲ 9.4%
$488.1m
FY21 $524.0m
▼ 6.9%
Income
INCOME (CASH BASIS)1
$1,709.9m
FY21 $1,702.5m
NET INTEREST MARGIN
1.74%
FY21 1.95%
Net interest income (cash basis) decreased 0.4 percent to
$1,417.4 million (FY21: $1,423.8 million). This was driven by an
increase in average interest earning assets, up $8.2 billion or
11.3 percent, offset by a decrease in net interest margin, down
21bps to 1.74 percent (FY21: 1.95 percent).
Net interest margin was impacted by continued pricing pressure
on mortgages, a change in customer preference to fixed rate
loans and a higher balance of lower yielding liquid assets. This
was partly offset by favourable term deposit pricing and lower
wholesale funding costs.
This was partly offset by reductions in fee income over the year,
mainly from reduced income in the Agribusiness' Government
services division. Card and merchant income also reduced, driven
by the sale of the Merchant Services business to Tyro Payments
Limited in the 2021 financial year. This revenue decline is partly
offset by cost savings realised from the transaction.
Net interest margin represents the return on average interest
earning assets less the costs of funding these assets. Net interest
margin is calculated including the impact of any revenue share
arrangements with partners.
Other income (cash basis) increased 5.0 percent to $292.5 million
(FY21: $278.7 million). This was driven by increased Homesafe
realised income, foreign exchange income and increased dividend
income from the Group’s strategic investments.
1
Includes Homesafe realised income.
Operating expenses
OPERATING EXPENSES (CASH BASIS)
COST TO INCOME RATIO
$1,016.3m
FY21 $1,027.4m
59.4%
FY21 60.3%
Operating expenses (cash basis) reduced 1.1 percent to $1,016.3
million (FY21: $1,027.4 million) mainly due to reduced investment
spend reflected in lower consultancy costs, with the completion
of a number of large foundational transformation projects in
the 2021 financial year. Lower staff costs reflected increased
headcount in Technology and Transformation teams (including
Ferocia staff), more than offset by efficiency gains from structural
and operational changes across the Group and lower redundancy
costs.
Software amortisation increased, with a number of significant
technology assets becoming operational during the year. Non-
credit losses and remediation costs increased $12.4 million from
the 2021 financial year.
The cost to income ratio decreased by 90 bps to 59.4 percent
(FY21: 60.3 percent), reflecting an ongoing focus on sustainable
cost reduction.
18 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Credit expenses and provisions
CREDIT EXPENSES
($27.2m)
FY21 $18.0m
TOTAL PROVISIONS
$371.6m
FY21 $445.7m
Total credit expenses reflected a net release of $27.2 million
(FY21: $18.0 million expense). This was largely attributed to a
release of $20.8 million in the collective provision mainly due to
improved economic conditions in the Australian economy from
the 2021 financial year, which was offset against the impact of
revised scenarios more heavily weighted towards the downside
given the continued economic uncertainty. In addition, there has
also been a sizable reduction in specific impairment charges
from the 2021 financial year, down $34.3 million to a
$2.3 million release (FY21: $32.0 million expense).
Credit performance remains strong, with low levels of arrears
leading to a reduction in impaired assets of 36.3 percent to
$133.1 million (FY21: $208.8 million). Provision levels remain
conservative given the continuing uncertainties resulting from
rising interest rates and property price projections. The total of
provisions and general reserve for credit losses decreased over
the year by 16.6 percent to $371.6 million (FY21: $445.7 million).
Dividends
DIVIDENDS
53.0c
FY21 50.0c
The Board declared a fully franked final dividend of 26.5 cents
per share (FY21 interim: 23.5 cents per share; FY21 final:
26.5 cents per share).
The Group has in place a Dividend Reinvestment Plan (DRP)
and a Bonus Share Scheme. The DRP provides shareholders
with the opportunity of converting their entitlement to a
dividend into new shares. The Bonus Share Scheme provides
shareholders with the opportunity to elect to receive a number
of bonus shares issued for no consideration instead of receiving
a dividend.
TOTAL PROVISIONS AND RESERVES
FOR DOUBTFUL DEBTS ($'M)
2H22
58.1
225.7
87.8
1H22
71.6
229.4
87.4
2H21
94.3
246.7
104.7
Specific
Collective
GRCL
DIVIDEND PER SHARE (CENTS)
35
35
76%
82.4%
35
35
4.5
59.5%
31
26.5
58.4%
23.5
26.5
59.0%
26.5
FY18
FY19
FY20 FY21
FY22
Interim
Final
Payout Ratio
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 9
Divisional performance
Consumer
CASH EARNINGS (AFTER TAX)
$492.2m
FY21 $455.1m
The Consumer division focuses on engaging with
and servicing our consumer customers and includes
the branch network (including Community Banks and
Alliance Banks), Up digital bank, mobile relationship
managers, third party banking channels, wealth
services, Homesafe, and customer support functions.
Business and Agribusiness
CASH EARNINGS (AFTER TAX)
$293.1m
FY21 $269.8m
The Business and Agribusiness division is focused on
servicing business customers, particularly small and
medium businesses who are seeking a relationship
banking experience and includes portfolio funding,
Delphi Bank and all banking services provided
to agribusiness, rural and regional Australian
communities through our Rural Bank brand.
Corporate
CASH EARNINGS (AFTER TAX)
($284.9m)
FY21 ($267.7m)
Corporate includes the results of the Group’s support
functions including treasury, technology, property
services, strategy, finance, risk, compliance, legal,
human resources, and investor relations.
Cash earnings increased to $492.2 million (FY21: $455.1 million), driven by:
•
•
•
•
Net interest income - Improvement in net interest income following
continued strong growth in the residential mortgage portfolio, partially
offset by NIM reductions mainly due to a higher proportion of lower
yielding fixed-rate lending compared to variable lending and competitive
pressure to support above system loan growth.
Other income - A decline in other income due to the sale of the
Merchant Services business in the 2021 financial year offset by
increases in interchange and scheme income, loan account fees and
fund management fees.
Operating expenses - The reduction in operating expenses is attributed
to savings realised from the sale of the Merchant Services business as
well as agency branch and rationalisation programmes, partially offset
by increases in costs due to the acquisition of Ferocia Pty Ltd and
increased non-credit losses and remediation costs.
Credit expenses - Lower credit expenses due to the releases of
collectively assessed provisions, in addition to lower specific provision
charges.
Cash earnings increased to $293.1 million (FY21: $269.8 million), with the key
drivers of this performance being:
•
•
•
•
Net interest income - Reduced net interest income following a decline in
average assets balances and an increase in liability balances over the
year, in addition to lower margins.
Other income - A reduction in other income due to reduced
management fees from Government Services in Rural Bank, partially
offset by increased foreign exchange income, in addition to new referral
arrangements entered into by the division in the first half of FY22.
Operating expenses - A reduction in operating expenses, reflecting the
savings in staff costs from efficiency programs that occurred in the
2021 financial year and FY22, partially offset by an increase driven by
impact of a one-off legal and insurance recovery in the 2021 financial
year.
Credit expenses - Lower credit expenses driven by specific and
collective impairment releases, in addition to increased recoveries.
Cash earnings for FY22 totalled ($284.9 million) (FY21: ($267.7 million)), with
the key drivers of this performance being:
•
•
•
Other income - Increased other income due to the Group's participation
in an equal access share buy-back by Cuscal Limited, in addition to the
receipt of a special dividend following Cuscal's sale of 86 400.
Operating expenses - Higher operating expenses, driven by increased
spend in the technology divisions, particularly on risk and compliance
projects, in addition to increased amortisation following a number of
significant technology assets becoming operational during the year.
Credit expenses - Smaller write-back with a net release of $8.2 million
in FY22, compared to a net release of $15.5 million in the 2021 financial
year.
20 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Capital
COMMON EQUITY TIER 1 RATIO
9.68%
FY21 9.57%
The Group maintained a strong capital position with a Common
Equity Tier 1 (CET1) ratio of 9.68 percent (FY21: 9.57 percent),
which is above APRA’s ‘unquestionably strong’ benchmark
target for standardised banks. Our continued strong capital
position reflects a well-managed balance sheet and strong risk
management.
The Group is regulated by APRA due to its status as an
Authorised Deposit-taking Institution (“ADI”). APRA is the
prudential regulator of the Australian financial services industry
which includes ADIs. APRA’s Prudential Standards aim to
ensure that ADIs remain adequately capitalised to support the
risks associated with their activities and to generally protect
Australian depositors. The Group is on the standardised
approach for calculating its regulatory capital requirements
under Basel II and targets a CET1 ratio in the range of 9.5
percent to 10.0 percent.
Liquidity
LIQUIDITY COVERAGE RATIO
142.2%
FY21 142.0%
NET STABLE FUNDING RATIO
134.1%
FY21 125.9%
The Liquidity Coverage Ratio (LCR) for the financial year was
142.2 percent (FY21: 142.0 percent), exceeding the regulatory
minimum of 100 percent.
The Net Stable Funding Ratio (NSFR) for the financial year was
134.1 percent (FY21: 125.9 percent), exceeding the regulatory
minimum of 100 percent.
The Liquidity Coverage Ratio represents the proportion of
high-quality liquid assets held by the Bank to meet short-term
obligations. The LCRs quoted above represent the average daily
LCRs over the respective 12-month periods.
The Net Stable Funding Ratio measures the extent to which
long-term assets are covered by stable sources of funding. The
NSFRs quoted above represent the average NSFRs over the
respective 12-month periods.
Funding (including deposits)
CUSTOMER
DEPOSITS
$64.3b
FY21: $57.9b
WHOLESALE
DEPOSITS
$10.3b
FY21: $8.3b
OTHER WHOLESALE
BORROWINGS1
$11.7b
FY21: $11.7b
LOAN
CAPITAL2
$1.4b
FY21: $1.4b
Total funding including deposits
increased by 10.5 percent to $87.7
billion over the year (FY21: $79.3 billion).
The Group’s principal source of funding
is customer deposits, which represent
73.3 percent (FY21: 73.0 percent) of
the Group’s total funding. Customer
deposits include deposits sourced from
retail, small business and corporate
customers, predominantly through the
retail network.
Wholesale funding activities support
the funding strategy providing
additional diversification benefits from
longer term borrowings. Wholesale
funding (including the TFF and
securitisation) reduced to 26.7 percent
of total funding (FY21: 27.0 percent)
during the year. Securitisation funding
represents 4.4 percent of total funding
(FY21: 4.5 percent).
1 Other wholesale borrowings include the RBA Term Funding Facility (TFF), securitisation and
medium-term notes.
2 Loan Capital includes subordinated debt, converting preference shares and capital notes.
References to 'wholesale funding' include deposits from wholesale customers, loan capital and
other wholesale borrowings.
FUNDING COMPOSITION
1.5%
8.0%
5.4%
11.8%
73.3%
Customer Deposits
Wholesale Deposits
Term Funding
Facility (TFF)
Wholesale Borrowings
Fixed (excl. TFF)
Loan Capital
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 2 1
Lending
GROSS LOAN BALANCES BY PURPOSE
RESIDENTIAL
$57.6b
FY21 $51.7b
▲ 11.0%
COMMERCIAL
$16.6b
FY21 $16.5b
▲ 1.1%
CONSUMER
$2.2b
FY21 $2.4b
▼ 9.8%
MARGIN LOANS
$1.4b
FY21 $1.5b
▼ 3.2%
Total gross loans increased 7.7 percent to $77.8 billion over the
financial year (FY21: $72.2 billion).
Residential lending grew 11.0 percent or $5.7 billion during
FY22, which was above system lending growth, reflecting
the continued strength in customer demand and the ongoing
investment made in our retail and third-party businesses. This
lending growth was delivered in our core segments of owner
occupied and principal and interest lending. In FY22 there was
continued customer preference towards fixed rate lending in
anticipation of interest rate increases. As interest rates started to
increase in the first half of FY22, customer preferences changed
from fixed rate lending to variable lending.
During FY22, commercial lending across the Group increased by
1.1 percent. Agribusiness lending saw a marginal increase on June
2021. A record harvest, in tandem with record commodity pricing,
has led to large paydowns of the Agribusiness facilities, noting
that these paydowns do not impact the customers' credit limits.
Business lending reduced marginally, driven by continued market
competition and a deleveraging of risk within the portfolio. In early
February 2022 it was announced that the Business Banking and
Agribusiness divisions would be combined into a single division, with
a clear focus on growth.
Reconciliation of cash earnings to statutory earnings
Cash earnings after tax
Homesafe unrealised adjustments
Revaluation losses on economic hedges
Sale of Merchant Services business
Sale of Insurance Broker business
Sale of Debtor Financing business
Ferocia acquisition costs
Restructure costs
Amortisation of acquired intangibles
Homesafe realised income
Statutory Profit after tax
FY22
($m)
500.4
19.3
-
-
3.3
1.7
(2.9)
(6.8)
(4.2)
(22.7)
488.1
FY21
($m)
457.2
90.4
(5.7)
(3.1)
-
-
-
-
(2.1)
(12.7)
524.0
Homesafe unrealised adjustments represent unrealised funding
costs (calculated as the interest expense incurred to fund existing
contracts for the current year) and valuation movements of the
investment properties held.
Revaluation losses on economic hedges represents unrealised
losses from changes in the fair value of economic hedges. These
movements represent timing differences that will reverse through
earnings in the future.
Sale of Insurance Broker business represents proceeds less costs
of disposal relating to the sale of Community Insurance Solutions
to Community Broker Network.
Sale of Debtor Financing business represents proceeds less costs
of disposal relating to the sale of the Debtor Financing business to
Timelio Pty Ltd.
Ferocia acquisition costs represents legal, consultancy and
integration costs incurred in relation to the acquisition of Ferocia
Pty Ltd.
Restructure costs represents business restructuring costs incurred
following the changes made to the Group's Executive structure
as announced in February 2022, as well as costs associated with
the conversion of the Alliance Partner model to the Community
Bank model and operating structure, and costs associated with
the creation of a separate Responsible Entity for the Bendigo
Superannuation Fund.
Amortisation of acquired intangibles
This amount represents the amortisation of intangible assets
acquired by the Group including brand names, customer lists,
management rights, and acquired software.
Homesafe realised income represents funds received on
completion, being the difference between the cash received
on completion less the initial funds advanced, and realised
funding costs representing accumulated interest expense on the
completed contracts since initiation.
22 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Risk Management Framework, Material Risks and Business Uncertainties
The Board is responsible for the risk management strategy
which includes establishing and overseeing the risk management
framework and risk appetite within which the business is
expected to operate.
The Group has in place a Group Risk Management Framework,
approved by the Board, which forms part of the detailed
description of the Risk Management Strategy for the Group.
The Group Risk Management Framework (Summary) in
combination with the following individual Risk Management
Frameworks, details the Group’s management approach for
each of its material risks:
•
•
•
Group Credit Risk Management Framework
Group Operational Risk Management Framework –
encompassing Operational Risk, Data Risk, Technology Risk
(including Information Security), Regulatory Compliance
Risk, Financial Crime Risk, Third-party Supplier Risk and
Conduct Risk; Group Interest Rate Risk Management
Framework.
Group Traded Market Risk Management Framework;
Group Liquidity Risk Management Framework; and
Strategic Including Environmental, Social and Governance
Risk (ESG) and Other Risks - incorporated in the Group Risk
Management Framework (Summary).
All material risks are managed within a defined risk appetite
which is aligned with the Group strategy and business
objectives. The Board’s risk appetite for its material risks are
documented in the Group’s Risk Appetite Statement (RAS). The
Group’s RAS is reviewed, updated and approved annually by the
Board. The Group’s adherence to the risk appetite is reported
regularly to the Board.
Risk Culture
The Group’s risk culture (being a subset of broader enterprise
culture) plays a key role in managing risk. An effective risk culture
is critical for the Group to deliver its strategic objectives and
operate within its risk appetite. The Board, Executive and Senior
Management play a pivotal role in establishing the target risk
culture state which guides and prioritises risk culture specific
initiatives and assists the Board and Executive to form an
aligned view of risk culture and its drivers.
Lines of Defence
The Group adopts a Three Lines of Defence model which
includes ownership (First Line), challenge and oversight (Second
Line) and independent assurance (Third Line). The First Line
is the business itself. The day-to-day responsibility for risk
management rests with the Executive management team and
business divisions. The Second Line is Group Risk. Group Risk
provides oversight and challenge to the First Line. The Third Line
is the Group Internal Audit function which conducts independent
testing and verification of the effectiveness of internal controls
and provides assurance that the risk management process is
functioning as designed.
Further information on our risk management framework,
governance and appetite is presented in the 2022 Corporate
Governance Statement.
Emerging Risks
The Group conducts a formal process for the identification,
consideration and assessment of emerging risks and their
integration into the Group Risk Management Frameworks. In
addition, new and emerging risks are also considered in risk
assessments and risk profiling activities.
Material Risks
Our business is exposed to a broad range of financial and non-
financial risks arising from our operations.
The most material risks that the Group faces have been
assessed as ‘material risks’ which are considered to be those
risks that may affect the Group’s ability to meet its obligations to
shareholders and depositors. The Group’s risk categorises have
been split between financial and non-financial and are detailed in
the diagram below.
Overarching
Frameworks:
Group Risk Management
Framework (Summary)
Risk Appetite
Statement (RAS)
Financial Risks
Material Risks Categories
Non-Financial Risks
Credit Risk
Strategic Risk
Environmental, Social
& Governance Risk
Traded Market Risk
Operational Risk
Data Risk
Interest Rate Risk
Liquidity Risk
Technology Risk
Regulatory
Compliance Risk
Financial Crime Risk
Third-party
Supplier Risk
Conduct Risk
Financial Risks
The Group has identified the following material financial risks:
Material Risks Categories
Financial Risks
Credit Risk
Traded Market Risk
Interest Rate Risk
Liquidity Risk
These material financial risks each have an individual risk
management framework, and are supported by an established
network of systems, policies, standards and procedures which
are overseen by the Board and Board Committees, with
support from Management Committees and our independent
risk management functions. These material financial risks are
considered within the Group’s RAS, with both Primary and
Secondary Appetite Settings.
The definition and management of these financial risks are
outlined in further detail in Note 20 Risk Management of the
Financial Report.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 2 3
Non-Financial Risks
The material non-financial risks each have or are incorporated
within a risk management framework, and are supported by
an established network of systems, policies, standards and
procedures which are overseen by the Board and Board
Committees, with support from Management Committees and
our independent risk management functions. The material non-
financial risks are considered within the Group’s RAS, with both
Primary and Secondary Appetite Settings.
The Group has identified the following material non-financial
risks.
Material Risks Categories
Non-Financial Risks
Strategic Risk
Environmental, Social
and Governance Risk
Strategic Risk is defined as the risk that adverse business
decisions, ineffective or inappropriate business plans or failure
to respond to changes in the environment will impact our ability
to meet our objectives.
The Group has an integrated strategic planning process
to ensure alignment between the Group’s strategy and risk
management process. The Group sets strategic imperatives
and outcomes which are documented in a three-year rolling
strategic plan, that is approved by the Board. Performance
against the strategy is reviewed on an ongoing basis.
The Group also regularly examines new initiatives and market
opportunities, including acquisitions and disposals, with a
view to growing shareholder value. The Group actively scans
the environment to identify emerging risks and assesses
the adequacy of the Group’s risk framework to monitor and
manage.
The Group seeks to maintain an engaged workforce with
appropriate culture, conduct and capability to execute the
strategy. Failure to recruit and retain key executives, employees
and Directors may have an adverse effect on our business.
Environmental, Society and Governance (ESG) Risk
ESG Risk is the risk of failure to appropriately identify and
manage material environmental, social and governance risks
and opportunities.
ESG Risk is a subset of Strategic Risk and managed via the
Group ESG Framework that creates a structure for how the
Group manages ESG Risks and opportunities, and supports
meeting emerging ESG compliance requirements, as well
as developing greater rigour in the Group’s ESG reporting
to market. It also serves to build the capability of Group
employees to understand ESG in connection with their roles.
Material Risks Categories
Non-Financial Risks
Operational Risk
Operational Risk is defined as the risk of impact on objectives
or the risk of loss resulting from inadequate or failed
internal processes, people and systems or from external
events. Operational Risk may lead to a range of potential
consequences including financial, business disruption, customer/
partner, regulatory/legal, people and reputation.
Operational Risk is managed via a comprehensive risk
management framework, and is supported by an established
network of systems, policies, standards and procedures. The
Operational Risk Management Framework assist the Group
in integrating risk management into significant activities and
functions.
An operational risk event may also result in an adverse
outcome for customers that the Group would need to
remediate. Where this occurs, activities are instigated to ensure
affected parties are remediated in a timely and fair manner.
These events could require the Group to incur significant
remediation costs (which may include compensation payments
to customers, legal fees and costs associated with correcting
the underlying issue). The Group has established remediation
governance, frameworks and compensation methods which
are managed within the specific business divisions.
Reputational damage is considered as a consequence of an
operational risk event. Reputational damage may arise as a
result of an external event, our own actions or the actions of
a partner, and adversely affect perceptions about us held by
the public. Reputational damage may occur through traditional
media or via social media platforms where the velocity of this
impact elevated through the rising use of social media.
Operational Risk is wide in scope. The Group has identified
sub-risks within Operational Risk, and considers six to be
material. These are outlined in the diagram below. In addition,
to these material sub-risks, other Operational Risks include
People Risk, Physical Security and Safety, Business Continuity,
Transaction Processing and Execution, Statutory Reporting and
Tax, and Model Risk. These are managed in accordance with
the Operational Risk Management Framework.
Material Risks Categories
Non-Financial Risks
Operational Risk
Data Risk
Technology Risk
Regulatory
Compliance Risk
Financial Crime Risk
Third-party
Supplier Risk
Conduct Risk
Data Risk
Data Risk is defined as the risk of failing to appropriately
manage and maintain data, including all types of data, for
example, client data, employee data, and the organisation’s
proprietary data. Data Risk encompass the risk of data loss,
poor quality of data, inaccurate data that serves as model
inputs, incomplete collection of data that serves as reporting
inputs, poor management of data and data corruption or
unavailability resulting in business disruption.
Data Risk could adversely affect the Group and result in
failure to meet these objectives, including regulatory and legal
requirements. The range of data assets the Group administers
24 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
is extensive and includes commercially sensitive information
which is collected and maintained on behalf of its customers
and partners. Data Risk is a subset of Operational Risk with
policies, processes and practices for Data Risk fully aligned
to Operational Risk. The Group seeks to minimise Data Risk
through maintaining a dedicated Data Risk Management
Framework to ensure Data Risk is identified, managed and
measured for the Group. The Group actively scans the internal
and external environment to identify and monitor for current,
evolving and emerging data related threats and vulnerabilities.
Technology Risk (including Information Security)
Technology Risk is defined by the Group as the governance,
people, process or technology risks which result in loss or
negative impact to the confidentiality, availability and/or
integrity of the Group’s information technology environment
or parts of the information technology environment, including
infrastructure, systems, applications and data. Most of the
Group’s daily operations are highly dependent on information
technology and there is a risk that these systems or
technologies might fail or not be available. The exposure to
systems risks includes information security threats and risks,
the complete or partial failure of information technology or
data centre infrastructure and using internal or third-party
information technology systems that do not adequately
support the requirements of the business.
Technology Risk is a subset of Operational Risk with policies,
processes and practices for Technology Risk fully aligned to
Operational Risk. The Group Technology Risk Management
Framework has been developed to specifically recognise the
significance of Technology Risk as a sub-risk of Operational
Risk and highlight specific measurements, monitoring and
reporting to be developed as part of the Group’s Strategy and
Risk Appetite for Technology Risk. The Group seeks to minimise
Technology Risk through maintaining a dedicated Technology
Risk Management Framework to ensure Technology Risks are
identified, managed and measured for the Group. The Group
actively scans the internal and external environment to identify
and monitor for current, evolving and emerging technology and
information security related threats and vulnerabilities, as well
as other digital devices used to transmit and communicate
data and conduct financial transactions.
Regulatory Compliance Risk
Regulatory Compliance Risk is defined as the risk associated
with failure to comply with any legal or regulatory obligations.
The Group’s operations are highly regulated and subject to
various laws, regulations, policies, standards and industry
codes. In addition, at times there are regulatory changes which
can affect the Group in substantial and unpredictable ways
which includes the need to significantly increase investment in
staff, systems and procedures to comply with the regulatory
requirements. A failure to comply could result in financial losses
and/or a range of actions against the Group including fines,
penalties, sanctions being imposed by regulatory authorities,
the exercise of discretionary powers by regulatory authorities
or other compensatory action by affected persons.
Regulatory Compliance Risk is a subset of Operational Risk
and managed with policies, processes and practices aligned to
the Operational Risk Management Framework. The Regulatory
Compliance function provides independent advice, oversight
and challenge on regulatory compliance as well as providing
advice to individual business divisions to assist with the
implementation of regulatory change.
Financial Crime Risk
The Group is exposed to the risk of financial crime and internal
and external fraud. Financial Crime Risk is defined as the risk of
money laundering, sanctions violations, bribery and corruption,
and Know Your Customer (KYC) failure.
Financial crime is an inherent risk within financial services,
given the ability for employees and external parties to obtain
advantage for themselves or others. An inherent risk also exists
due to systems and internal controls failing to prevent or detect
all instances of financial crime.
Financial Crime related risks are a subset of Operational Risk
and managed with policies, processes and practices aligned
to the Operational Risk Management Framework. A dedicated
Financial Crime Risk function is responsible for establishing
programs, policies, procedures and tools as independent
challenge, oversight, monitoring and reporting of financial
crime risks and internal and external Fraud. The Group has
established robust techniques and capabilities to detect and
prevent financial crime and comply with legislation.
Third-party Supplier Risk
Third-party Supplier Risk is defined as the risk of failing to
manage third party relationships and risks appropriately, for
example: not taking reasonable steps to identify and mitigate
additional Operational Risks resulting from the outsourcing of
services or functions.
The Group sources a number of key services from external
suppliers and service providers. The failure of a key service
provider, or the inability of a key service provider to meet their
contractual obligations, including key service standards, could
disrupt our operations and ability to comply with regulatory
requirements.
Third-party Supplier Risk is a subset of Operational Risk and
managed with policies, processes and practices aligned to
Operational Risk. The Group has a Procurement Policy which
provides the required steps to undertake sourcing activities
and the assessment and treatment of supplier risk. In addition,
the Group has an Outsourcing Policy which outlines the
principles and practices to effectively manage risks arising
from the outsourcing of its business activities and functions.
The Enterprise Procurement function provides advice, support
and oversight throughout the procurement process as well as
manage policies, procedures and tools.
Conduct Risk
Conduct Risk is the risk of delivering unfair outcomes for our
customers, investors, staff, communities, the Group and/or markets
in which we operate from inappropriate, unethical, or unlawful
behaviour, action or omission by management or employees
which may be deliberate or inadvertent. Poor conduct is a cause
of Operational Risk. The Group is exposed to both intentional and
unintentional misconduct risks.
Conduct risk is managed with policies, processes and practices
aligned to the Operational Risk Management Framework. The
Group seeks to minimise conduct risk through maintaining a
dedicated Conduct Risk Management Framework incorporating
a set of Good Conduct Principles and by promoting an
appropriate organisational culture.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 2 5
Other Non-Financial Risks
The Group is exposed to other non-financial risks, which are
detailed in the diagram below:
Other Risks Categories
Non-Financial Risks
Contagion Risk
Business Strategy Risk
Transformation /
Change Risk
Contagion Risk
Contagion Risk is the possibility that problems arising in
other Group members may compromise the financial and
operational position of the ADI. This may include related
entities, incorporating subsidiaries, partnerships, Community
Bank and our Alliance Bank network.
The Board oversees the business activities conducted by
subsidiary entities and is cognisant of specific legal and
regulatory requirements applicable to subsidiary business
activities. The Board approved Related Entity Policy sets out
the key risks that may arise from dealings between Bendigo
and Adelaide Bank and its related entities and the associated
policies and limits designed to manage those risks.
Business Strategy Risk
Business Strategy Risk is the risk of a material shareholder
value destruction or less than planned value creation, due
to adverse business decisions, ineffective or inappropriate
business plans or failure to respond to changes in the
environment.
The Group has an integrated strategic planning process
to ensure alignment between the Group’s strategy and risk
management process. The Group sets strategic imperatives
and outcomes which are documented in a three-year rolling
strategic plan, that is approved by the Board. Performance
against the strategy is reviewed on an ongoing basis.
Transformation/Change Risk
Transformation/Change Risk are those risks that may impact
on the successful delivery of an initiative or are introduced to
the Group upon implementation of an initiative. Transformation/
Change Risk is a subset of both Strategic and Operational Risk
and managed with policies, processes and practices aligned
to the Operational Risk Management Framework. The Group
continues to execute its transformation and growth strategy
and an Enterprise Delivery Framework has been developed
which outlines the process of how the Group delivers
transformation and programs of work including consideration
of resourcing, risk, issues and interdependencies.
Business uncertainties
The financial prospects of any company are sensitive to
the underlying characteristics of its business. The external
operating environment can at times be dynamic, volatile and
unpredictable. The external environment and emerging trends
are considered as part of the strategic planning process.
Uncertainties remain and risks arising from the external
environment need to be managed and remain a focal point.
A summary of the significant uncertainties are presented
below:
Dependence on prevailing macroeconomic and
financial market conditions
The business is highly dependent on the general state of
the domestic economy and global financial markets. Our
performance can be significantly impacted by economic and
political events, both domestic and international, as well as
by natural disasters and pandemics. This includes the level of
economic activity and demand for financial services by our
customers. In particular, lending is dependent on customer
and investor confidence, the overall state of the economy
including employment levels, the residential lending market and
the prevailing interest rate environment. The Group’s Economic
Oversight Committee is responsible for the approval of
forecast macroeconomic scenarios.
Geopolitical tensions/events
Geopolitical tensions/events arise due to differing global
political agendas which may result in international trade wars
and a general loss of business confidence. The global economy
may then experience a slowdown which reduces global
appetite for Australian exports. The Group may be significantly
affected by geopolitical tensions/events which may impact our
ability to deliver our strategy and business objectives.
Climate change and other environmental factors
The Group and its customers and external suppliers are
based in, and operate across, a diverse range of geographical
locations. Physical drivers such as climate change including
increases in temperatures and sea levels and the frequency
and severity of adverse climate events has the potential to
disrupt business activities, impact on our operations, damage
property, impact on our customers and affect the value of
assets held in affected locations and our ability to recover
amounts owing to us.
Market Competition
The markets in which we operate are highly competitive
and may become even more so. Factors that contribute
to competition include mergers and acquisitions, changes
in customer behaviour, entry of new participants, the
development of new sales methods and regulatory change.
Increasing competition could potentially lead to reduced
business volumes and revenue, a compression in our net interest
margins as well as additional costs to retain market share. The
Group is also dependent on its ability to offer products and
services that meet changing customer preferences.
A weakening in the Australian real estate market
Residential, commercial and rural lending, together with
property finance, constitute important businesses to us. A
significant slowdown in Australian property markets, including
a decrease in Australian property valuations, could decrease
the amount of new lending the Group is able to write and/or
increase the amount of credit losses from existing loans, as well
as impact the valuation of the Homesafe portfolio.
Changes in monetary policy
The Reserve Bank of Australia (RBA) sets official interest rates
so as to affect the demand for money and credit in Australia.
The cash rate influences other interest rates in the economy
which then affects the level of economic activity.
26 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Movements in the cash rate impact our cost of funds for
lending and investing and the return earned on these loans and
investments which can impact our net interest margin.
Changes in monetary policy can also affect the behaviour of
borrowers and depositors, such as potentially increasing the
risk that borrowers may fail to repay their loans, or repay their
loans in advance, and in the case of depositors, potentially
increasing the risk that they may seek returns in other asset
classes.
Credit Ratings
External credit ratings have a significant impact on both
our access to, and the cost of, capital and wholesale
funding. Credit ratings may be withdrawn, made subject
to qualifications, revised, or suspended by a credit rating
agency at any time. Also, the methodologies by which they
are determined may be revised. A downgrade or potential
downgrade to our rating may reduce access to capital and
wholesale debt markets, potentially leading to an increase
in funding costs, as well as affecting the willingness of
counterparties to transact with the Group.
Capital Base
The capital base is critical to the management of our
businesses and our ability to access funding. We are required to
maintain a level of capital by APRA and other key stakeholders
to support our business operations and risk appetite. There can
be no certainty that additional capital required in the future will
be available or able to be raised on acceptable terms.
Extreme cyber or critical infrastructure events
Cyber-attacks are becoming more frequent and severe
globally, with increasing online adoption, reliance on digital
services and supply chain risks also leading to greater
sophistication and complexity. The Group monitors internal and
external cyber-security threats and risks that could impact the
organisation and its customers, people, partners, stakeholders
and the broader industry. The Group operates a range of
controls and protection methods to manage and mitigate
cyber risk. Monitoring, contingency planning and control testing
is also regularly performed to minimise the potential of a
disruption to critical systems or infrastructure and to maintain a
resilient technology environment.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 2 7
Remuneration Report
To our shareholders:
On behalf of your Board, I am pleased to present the
Bendigo and Adelaide Bank Remuneration Report for
FY22. During the previous 12 months there have been
changes in the Bank’s executive team and we have
developed a new executive reward framework for FY23.
These changes are designed to support the Bank’s
strategic objectives; ensuring we attract, retain and
motivate the executive talent required to deliver on our
strategy, and that we align remuneration outcomes with
the interests of our shareholders, customers, community,
people, planet and regulators. We hope the following
report provides you with an understanding of our
approach in pursuing these goals.
Executive changes
During the year there were
changes to the executive team to
support the Bank’s strategic and
growth objectives.
In February 2022 we announced
structural changes to the
executive team, with Richard
Fennell transitioning to the role of
Chief Customer Officer, Consumer
Banking and Bruce Speirs
transitioning to the role of Chief
Operating Officer. These changes
in organisational structure
support our objective of reducing
complexity by centralising like
functions and maintaining our
focus on customers.
In March 2022 we appointed a
new Chief Financial Officer (CFO),
Andrew Morgan, who commenced
on 24 June 2022. Mr Morgan’s
experience and understanding of
the banking landscape will help
us to execute our strategy and
become a bigger, better, and
stronger bank. In addition, we
have recently appointed Adam
Rowse as Chief Customer Officer
Business and Agribusiness. Mr
Rowse joined the executive team
on 1 July 2022. His appointment
is an important step in bringing the
business and agribusiness banking
divisions together to better
support the Bank’s customers and
grow their businesses.
As part of the changes the former
CFO, Travis Crouch, moved into
the Deputy CFO role. Alexandra
Gartmann, former Executive Rural
Bank, Partnerships, Marketing and
Corporate Affairs, stepped down
from her role effective February
2022.
Remuneration
Report contents
Section 1:
Remuneration overview
Section 2:
Performance and
reward outcomes
Section 3:
Executive remuneration
framework in detail
Section 4:
Remuneration governance
Section 5:
Executive shareholdings
and contracts
Section 6:
Executive statutory
remuneration
Section 7:
Non-executive Director
arrangements
31
34
37
41
42
43
49
28 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Remuneration outcomes
for FY22
The overall structure and approach
to executive remuneration at
Bendigo and Adelaide Bank
remained unchanged during the
year, and there were no fixed
remuneration increases for the
executive team.
The executive team, including
the Managing Director, do not
participate in a short-term
incentive plan, and no cash bonus
payments were made during FY22.
Following the end of the financial
year, historical long-term incentive
grants and the FY21 Loan Funded
Share Plan grant were tested.
Our continued focus on our
customers resulted in achievement
of performance metrics based on
relative Net Promoter Score (NPS).
Our market growth aspirations
over the FY21 and FY22 periods
were achieved, and our focus on
disciplined cost management has
resulted in a material decrease
in our cost to income ratio since
FY2020. Based on these results
the performance targets for the
FY21 Loan Funded Share Plan
were met.
However, our total returns to
shareholders have been below our
selected peer group, and this has
meant that long-term incentive
grants linked to relative total
shareholder return have not vested.
A summary of performance
outcomes for FY22 can be found
below.
During the year the Bank
undertook a review of the Non-
executive Director fee structure.
Historically, the Bank has paid
an all-inclusive Non-executive
Director’s fee, which compensated
Non-executive Directors for their
time on the main board and
committees. Following the review,
and in line with market practice,
it was determined appropriate to
move to a base fee and committee
fee structure. The introduction of
committee fees was largely offset
by a reduction in the Base Board
fee. These changes were effective
from 1 January 2022. There was
no change to the Board Chair’s fee
in FY22.
Refer to Section 7 for further
information on the new fee
structure and for remuneration paid
to Non-executive Directors in the
year.
Changes for FY23
During the year, we conducted
a comprehensive review of the
Bank’s approach to executive
remuneration to ensure that our
reward frameworks support our
strategic objectives and meet the
requirements of APRA’s Prudential
Standard CPS511 Remuneration,
which is effective from 1 January
2023.
For the FY23 year the executive
remuneration framework will consist
of fixed remuneration, a short-term
incentive, and a long-term incentive
plan. These plans will be aligned to a
range of balanced outcomes across
shareholders, customers, community,
people, planet and our regulators.
These changes have been made
within the context of our long-held
philosophy that our remuneration
structures, when compared to the
market, are weighted towards fixed
remuneration and equity incentives.
Looking ahead
The remuneration and executive
changes made during the year
support us in the delivery of our
strategy to become a better big
bank.
The FY23 remuneration
framework will reinforce our
approach to disciplined execution
so that we continue making a
positive contribution to all our
stakeholders.
As always, we look forward to
shareholder feedback.
Vicki Carter
Chair - People, Culture and
Transformation Committee
This Remuneration Report is for the financial year ended 30 June 2022. The Report has been prepared in accordance
with section 300A of the Corporations Act 2001 and the Corporations Regulations 2001 and has been audited. The
Remuneration Report sets out our remuneration framework, the remuneration arrangements applicable to the Key
Management Personnel (KMP), and the link between performance and remuneration outcomes for the year.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 2 9
Executive remuneration outcomes for FY22
Remuneration
component
Remuneration outcomes
There were no increases in fixed remuneration for executive KMP in FY22.
Fixed Base
Executive KMP fixed remuneration is inclusive of superannuation. The increase in the superannuation guarantee rate of
0.5 percent to 10 percent from 1 July 2021 resulted in a small reduction in cash salary.
Executive
Appoint-
ments
The Board approved competitive remuneration packages for two executive appointments in FY22.
•
Andrew Morgan commenced as Chief Financial Officer on 24 June 2022 with a fixed remuneration of $865,000. Mr
Morgan received a sign-on equity grant of deferred rights to the value of $600,000 to compensate for remuneration forgone
upon resignation from his previous employer. 40% of the deferred rights will vest in September 2023 and 60% will vest in
September 2026, subject to continued service.
•
Adam Rowse commenced as Chief Customer Officer Business and Agribusiness on 1 July 2022, with a fixed
remuneration of $750,000. Mr Rowse will be included as executive KMP in the FY23 Remuneration Report.
Neither executive was eligible for a variable reward under the FY22 executive remuneration framework. Their FY23 variable
reward will be made under the new FY23 framework, summarised in Section 3.
Deferred
Base Shares
(Managing
Director
Only)
As approved by shareholders at the 2018 AGM, a grant of 200,000 deferred shares was granted in 2018 to the
Managing Director. Vesting of the third tranche of the deferred shares was approved by the Board, with the service
condition having been met on 30 June 2022. For FY22, 50,000 of the deferred shares are considered part of the
Managing Director’s remuneration.
The remaining fourth and final tranche of the award is scheduled to vest subject to the Managing Director being
employed on 30 June 2023.
Long-term
Incentive -
Loan Funded
Share Plan
The Loan Funded Share Plan grant that was made in November 2020 was tested at the end of FY22. The grant has three
tranches and all three of the tranches met their performance condition:
•
The FY22 cost to income ratio, when adjusted for the impact of the acquisition of Ferocia, was 58.4 percent, meeting
the target set by the Board.
•
•
The Bank achieved a relative NPS score of 27.4 compared to a peer group of retail banks, demonstrating our continued
focus on customer experience, meeting the target set by the Board
The Bank achieved market share of 2.42 percent at the end of FY22, which represented a significant growth over the
period, and met our growth target set by the Board.
Full details of the performance outcomes are provided in Section 2.2.
The shares are subject to a further two-year service condition and may vest to executives at the end of FY2024 following
the risk assessment by the Board. As such, executives did not receive any remuneration relating to the Loan Funded Share
Plan in FY22.
During FY22 the Managing Director received a grant of loan funded shares in accordance with the terms approved by
shareholders at the 2021 AGM. A grant of loan funded shares was made to other executives in accordance with their
remuneration mix.
The FY2019 Managing Director performance rights grant and half of the FY2020 executive performance rights grant were
tested at the end of FY22.
Relative TSR performance fell below the median of the peer group. As a result, the sleeves of the grants that were linked to
relative TSR were forfeited.
Long-term
Incentive -
Performance
Rights Plan
The sleeves of grants that were linked to the Customer Hurdle vested in full. This was in recognition of the Bank’s relative
NPS being 27.2 points above the industry average for the three-year performance period and 27.7 points for the four-year
performance period finishing 30 June 2022.
The executive rights are subject to a further one-year deferral period before they vest and as such, executives did not
receive any remuneration relating to the Performance Rights Plan in FY22. The FY2019 Managing Director grant does not
have a further service condition (see Section 2.3 for further detail).
In FY22 the Managing Director received a grant of performance rights in accordance with the terms approved by
shareholders at the 2021 AGM. A grant of performance rights was made to other executives in accordance with their
remuneration mix. Both grants are subject to a four-year performance period.
Non-
executive
Director Fees
Following a review of Non-executive Director fees, a new fee structure was introduced effective 1 January 2022. The new
fee structure saw a change from the previous all-inclusive Board fee to a Base Board fee and separate committee fees.
The introduction of committee fees was largely offset by a reduction in the Base Board fee. There was no change to the
Board Chair fee.
Further details are outlined in Section 7 of the report.
The Non-executive Directors continue to contribute $5,000 each to the Bank’s scholarship program.
The aggregate Non-executive Director fees paid for the year was $1.920 million which represents 76.8 percent of the
$2.5 million fee cap approved by shareholders.
30 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Section 1: Remuneration overview
1.1 Key Management Personnel
KMP are the persons with authority and responsibility for planning, directing, and controlling the activities of the Group.
Name
Position
Term as KMP
Non-executive directors
Jacqueline Hey
Chair
Vicki Carter
Non-executive Director
Richard Deutsch
Non-executive Director
Full Year
Full Year
Appointed to the Board effective
20 September 2021
David Foster
Non-executive Director
Jan Harris
Jim Hazel
Non-executive Director
Non-executive Director
David Matthews
Non-executive Director
Full Year
Full Year
Full Year
Full Year
Victoria Weekes
Non-executive Director
Appointed to the Board effective
15 February 2022
Former Non-executive directors
Robert Hubbard
Non-executive Director
Anthony Robinson
Non-executive Director
Retired from the Board effective
9 November 2021
Retired from the Board effective
9 November 2021
Executive KMP
Marnie Baker
Managing Director &
Chief Executive Officer
Full Year
Ryan Brosnahan
Chief Transformation Officer
Full Year
Taso Corolis
Chief Risk Officer
Richard Fennell1
Chief Customer Officer,
Consumer Banking
Full Year
Full Year
Andrew Morgan
Chief Financial Officer
Commenced 24 June 2022
Bruce Speirs2
Chief Operating Officer
Full Year
Former Executive KMP
Travis Crouch3
Former Chief Financial Officer Ceased as KMP on 13 June 2022
Alexandra Gartmann4
Former Executive,
Rural Bank, Partnerships,
Public and Corporate Affairs
Ceased as KMP on
1 February 2022
Progress against
Minimum
Shareholding Policy 5
Meets
Meets
On track
On track
On track
Meets
Meets
On track
N/A
N/A
Meets
Meets
Meets
Meets
On track
Meets
N/A
N/A
1 Mr Fennell changed role from Executive, Consumer Banking to Chief Customer Officer, Consumer Banking on 1 February 2022 as part of changes to the
organisational structure.
2 Mr Speirs changed role from Executive, Business Banking to Chief Operating Officer on 1 February 2022 as part of changes to the organisational structure.
3 Mr Crouch stepped down as Chief Financial Officer on 13 June 2022.
4 Ms Gartmann stepped down as Executive, Rural Bank, Partnerships, Public and Corporate Affairs on 1 February 2022, and her employment will cease on
22 October 2022.
5 Details on the Minimum Shareholding Policy can be found in Section 5.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3 1
1.2 Executive remuneration framework FY22
The overall structure and approach to executive remuneration remained unchanged during FY22.
Teamwork
We are one team
with one vision
Integrity
We build a
culture of trust
Our values
Performance
We strive for
sustainable
success
Engagement
We listen,
understand –
then deliver
Remuneration Principles
Leadership
We all lead
by example
Passion
We believe in
what we do
Simplicity
The link between
performance, value
created, and reward
should be clear and
the framework easy
for all employees to
understand so that it
effectively attracts,
retains and motivates
the talent the
organisation needs
to deliver long term
sustainable success.
Transparency
The Bank commits to
providing employees
with visibility
wherever possible of
the considerations
made in making
reward decisions and
fairly undertaking all
performance and
reward processes to
support the objective
of fair remuneration.
This includes
addressing, when
necessary, gender
pay equity.
Alignment with
Values
Remuneration
should reinforce the
corporate values of
teamwork, integrity,
performance,
engagement,
leadership and
passion. Individual
reward outcomes are
first dependent on the
success of the Bank,
Division and team.
Appropriate Risk
Behaviour
Remuneration should
encourage innovation
and prudent risk
taking that supports
the achievement
of superior long-
term results for
shareholders and
customers and
supports the risk
management
framework of the
Bank.
Good customer
Outcomes
Reward structures
and practices will
be designed to
minimise the risk
of incentivising
behaviours that
may lead to poor
customer outcomes
whilst encouraging
the right behaviours,
at the right time
for great customer
experiences.
Remuneration Framework
Fixed Reward
Fixed Base - Cash
Long Term Incentive (LTI)
Loan Funded Share Plan
Performance Rights Plan
Comprises cash salary and
superannuation contributions.
Set by reference to the size, complexity
of role and individual responsibilities.
External market benchmarking includes
comparable roles in the banking
sector and companies of a similar size,
complexity and performance outlook.
Recognises an individual’s experience,
skills, competencies and value.
In addition to her cash salary the MD
receives a portion of their salary as
deferred shares, with the final tranche
from FY2019 vesting in FY23.
Shares granted with a non-recourse
interest free loan subject to performance
criteria. Dividends received pay off the loan
for the duration of the grant. Plan operates
over 6 years.
At 2 years, performance is measured
against Cost to Income ratio (50 percent),
relative Net Promoter Score (25 percent)
and Market Share (25 percent) to
determine vesting.1
Any vested shares are subject to a
further 2 year deferral period. Any
unvested shares are forfeited.
At year 4 participants have another 2
years to settle the loan.
Annual grant of performance rights. Each
right represents an entitlement to one
ordinary share in the Bank.
Rights are granted at no cost and have
no exercise price.
Vesting is subject to a relative Total
Shareholder Return (rTSR) performance
measure, risk and service condition
tested over 4 years.
All equity grants are subject to ongoing risk adjustment and the Clawback and Malus Policy
Minimum Shareholding Policy
Details of the Minimum Shareholding Policy (MSP) are provided in Section 5 of this report.
1
In FY22, Cash Earnings was included as an additional performance measure, with equal weighting applied across the four measures.
32 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Executive remuneration mix
The total target reward for executives is set by the Board at the
start of each year and represents the potential target maximum
reward. The arrangements are reviewed by the People, Culture
and Transformation Committee to ensure the mix and total
target reward continues to be fair and balances the interests of
stakeholders.
The below chart sets out the target remuneration mix for each
executive who was in their position as at 30 June 2022 (excluding
Mr Morgan as he was not eligible for variable reward for FY22).
The actual remuneration mix will vary depending on performance
outcomes. The percentages represent the maximum opportunity
for each component, e.g. the face value (loan value) of the Loan
Funded Shares and the face-value of the Performance Rights.
The face value of the Loan Funded Share Plan is the loan value at
time of grant and is depicted in the table below. The actual value to
participants if the shares vest is equal to any capital gain and the
dividends paid over the period, and is likely to be significantly less
than the face value. It should be noted that the face value of the
opportunity is significantly higher than the fair value of the shares
allocated. At the time of implementation, the Board determined
that a multiple of 3.9x was aligned with market practice and would
facilitate the appropriate levels of reward outcomes in line with
the intended reward package value. When adjusted to reflect the
option like nature of the Loan Funded Share plan, the opportunity is
25-40% of Fixed Base Reward.
Managing Director
27%
11%
Executive, Consumer Banking
38%
Other Executives
45%
56%
56%
48%
6%
6%
7%
Fixed Base
Deferred Base
Shares
LTI - Loan Funded
Share Plan
LTI - Performance
Rights
Remuneration time horizon
The following provides an illustration of how FY22 remuneration will be delivered to the Managing Director and other executive KMP.
Vesting date
Fixed
Base
FY2019 MD
Deferred Base
Shares
Tranche 4
2-year performance period
2-year vesting period
2-years
Loan Funded
Share Plan
Four separate tranches:
• Cost To Income
• Cash Earnings
• Market Growth
• Customer Advocacy
Vesting period with risk
assessment at end of 2-years
2 additional years
to pay off the loan
Performance
Rights
Relative Total Shareholder Return
4 year performance period
FY22
FY23
FY24
FY25
FY26
FY27
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3 3
Remuneration Framework
Fixed Reward
Fixed Base - Cash
Long Term Incentive (LTI)
Loan Funded Share Plan
Performance Rights Plan
Comprises cash salary and
superannuation contributions.
Shares granted with a non-recourse
Annual grant of performance rights. Each
interest free loan subject to performance
right represents an entitlement to one
criteria. Dividends received pay off the loan
ordinary share in the Bank.
Set by reference to the size, complexity
of role and individual responsibilities.
External market benchmarking includes
comparable roles in the banking
sector and companies of a similar size,
complexity and performance outlook.
Recognises an individual’s experience,
skills, competencies and value.
In addition to her cash salary the MD
receives a portion of their salary as
deferred shares, with the final tranche
from FY2019 vesting in FY23.
for the duration of the grant. Plan operates
over 6 years.
At 2 years, performance is measured
against Cost to Income ratio (50 percent),
relative Net Promoter Score (25 percent)
and Market Share (25 percent) to
determine vesting.1
Any vested shares are subject to a
further 2 year deferral period. Any
unvested shares are forfeited.
At year 4 participants have another 2
years to settle the loan.
Rights are granted at no cost and have
no exercise price.
Vesting is subject to a relative Total
Shareholder Return (rTSR) performance
measure, risk and service condition
tested over 4 years.
All equity grants are subject to ongoing risk adjustment and the Clawback and Malus Policy
Details of the Minimum Shareholding Policy (MSP) are provided in Section 5 of this report.
Minimum Shareholding Policy
Section 2: Performance and reward outcomes
2.1 Group financial performance
The level of variable remuneration outcomes reflects the Bank’s performance as presented in this five-year snapshot of key
measures and metrics.
Group Performance Measures
Cash Earnings1 ($m)
FY Closing Share Price ($)
Relative TSR Percentile2
500.4
457.2
11.58
10.84
445.1
415.7
10.49
9.07
60
301.7
7.01
41
47
35
23
Annual relative NPS
compared with industry
average
28.1
28.3
27.5
27.4
25.8
2018 2019 2020 2021 2022
2018 2019 2020 2021 2022
2018 2019 2020 2021 2022
2018 2019 2020 2021 2022
1 Cash earnings is an unaudited, non-IFRS financial measure.
2 Relative TSR percentile rank versus ASX comparator group over the performance period tested at the end of each corresponding financial year.
Variable Reward Outcomes for Executives
Average STI awarded as a % of maximum
opportunity
Financial year
2018
2019
2020
20211
20221
63%
0%
0%
n/a
n/a
Percentage of LTI which vested
0%
83%
30%
35%
35%
1 STI is not part of the Executive reward framework for FY21 and FY22.
Below is a summary of other key performance metrics for the previous five years, including FY22.
Company performance measure
Statutory net profit after tax ($m)
Statutory earnings per share (cents)
Cash earnings per share (cents)
Dividends paid and payable (cents per share)
2018
434.5
89.9
92.1
70.0
Financial year
2020
192.8
38.1
59.7
31.0
2019
376.8
77.1
85.0
70.0
2021
524
98.1
85.6
50.0
2022
488.1
87.5
89.8
53.0
Total shareholder return (annual)
4.20%
14.20%
-36.40%
55.45%
-6.80%
Annual relative NPS compared with
industry average 1
+28.1
+28.3
+27.5
+25.8
+27.42
1 Roy Morgan data provided for FY2020 has been adjusted due to reporting issue incurred during FY2020, however this did not result in any adjustments to
LTI outcomes relating to FY2020.
2 Over the period 1 July 2020 to 30 June 2022, per the terms of the FY21 Loan Funded Share Plan.
34 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
2.2 Variable reward outcomes for FY22
Equity grants that were tested for vesting
Deferred Base
Deferred base pay shares were granted to the Managing
Director on 19 December 2018. As at 30 June 2022 the
service condition for the third tranche of deferred base pay
shares was met. The Board considered their vesting with
regard to the financial soundness and risk profile of the
organisation, and it was determined by the Board to vest the
deferred shares in full (see Section 6.3 for further details).
Loan Funded Share Plan
The FY21 Loan Funded Share Plan grant was tested at the end
of FY22 at the completion of the two-year performance period.
All three tranches met their performance conditions. The award
is subject to a further two-year service condition and may vest to
executives at the end of FY2024 following the risk assessment by
the Board. As such, executives did not receive any remuneration
relating to the Loan Funded Share Plan in FY22.
Performance results for each tranche are summarised below.
Measure
Weighting
Performance
Outcome
Performance commentary
Cost to Income
(CTI) ratio
50%
58.4%
Met
Market Growth
25%
2.42%
Met
Customer
Advocacy
(relative NPS)
25%
+27.4
Exceed
Performance Rights Plan
The FY2019 Managing Director LTI grant and half of the FY2020
senior executive LTI grant were tested on 30 June 2022.
The FY2019 Managing Director LTI was granted on 19 December
2018 with a four-year performance period. The grant used a two
‘sleeve’ approach, with the first sleeve linked to a ‘Customer Hurdle’
(NPS) and the second sleeve linked to the relative TSR measure.
The FY2020 senior executive grant also used the two ‘sleeve’
approach outlined above and the grant was then split into two
sets, one set had a three-year performance period with a
The Bank has continued to focus on cost management and
achieved the CTI target.
The target, that was set at the end of FY2020 did not con-
sider the impact of the Ferocia transaction on operating ex-
penses. The cost of this transaction has been excluded from
the CTI ratio. The Board believes this is appropriate as the
transaction has long-term shareholder benefit and manage-
ment should be encouraged to pursue such transactions.
The Bank achieved market share growth over the period,
with a total footings (deposits and lending) of 2.42 percent
at the end of the performance period.
The Bank achieved a relative NPS score of 27.4, compared
to a peer group of retail banks, demonstrating our continued
focus on customer experience.
one-year further service condition and the other set had a four-
year performance period. The three-year performance period
was tested on 30 June 2022. The second set of the grant will be
tested on 30 June 2023 following the completion of the four-year
performance period.
The results for the FY2019 Managing Director grant and half of
the FY2020 LTI senior executive grant (three-year performance
period set) are detailed below.
Grant
Hurdle Weighting Grant Date
Test Date
Outcome
FY2019
Managing
Director
FY2020 LTI Senior
Executive (three-year
performance period) 1
TSR
NPS
TSR
NPS
65%
35%
65%
19.12.2018 30.06.2022
40th percentile
19.12.2018 30.06.2022
+27.7
17.12.2019 30.06.2022
35th percentile
35%
17.12.2019 30.06.2022
+27.2
100%
0%
Vested
20221
Lapsed
2022
0%
100%
0%
100%
0%
100%
1 Performance rights issued as part of the FY2020 LTI Senior Executive grant are subject to a further one-year service condition.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3 5
The table below sets out the value of Loan Funded Share
Plan and Performance Rights Plans that were subject to
performance tests as at 30 June 2022. In the case of the
Loan Funded Share Plan and FY2020 LTI Senior Executive
(three-year performance period) the equity has not vested
to participants, and is subject to service conditions and risk
adjustment.
The table includes the executive KMP who held that position
as at 30 June 2022. Values are based on the share price
at 30 June 2022. This table has been introduced for FY22
Remuneration Report to provide transparency on the potential
value of the Loan Funded Share Plan, noting that the final value
available to participants is subject to ongoing conditions and
changes in share price.
Executive
M Baker2
R Brosnahan
T Corolis
R Fennell
A Morgan3
B Speirs
Year
2022
2022
2022
2022
2022
2022
Net Loan Funded
Share Plan value1
Performance Rights Total tested outcomes
$1,108,110
$158,725
$1,266,835
$325,916
$315,482
$563,834
$0
$286,799
$21,913
$21,913
$38,348
$0
$20,544
$347,829
$337,395
$602,182
$0
$307,343
1 Represents the Net value of the Loan Value Funded Shares that achieved their performance condition as of 30 June 2022 but are subject to ongoing
service requirements and risk adjustments. This is calculated as the value of the Loan Funded Shares less the value of the loan that executives are required
to repay as at 30 June 2022.
2 M Baker participated in the FY2019 Managing Director Performance Rights plan, this grant has vested, and is not subject to any further restrictions.
3 A Morgan did not have any equity grants subject to testing.
2.3 Actual remuneration received in FY22
The table below sets out actual remuneration received by
the executive KMP for FY22 including the value of any equity
awarded in prior years which vested during this financial year.
Equity awards that vested during FY22 based on meeting
performance conditions, but which are still subject to a further
service condition have been excluded. The table below also
shows the maximum value of total remuneration forgone,
including previous years’ equity awards that were due to vest
but did not meet the relevant hurdles and were lapsed.
The executive team do not participate in a short-term incentive
plan, and no cash bonus payments were made to executive
KMP in the year.
The table includes the executive KMP who held that position
as at 30 June 2022.
The information presented differs from the statutory
remuneration table which presents remuneration in accordance
with Australian Accounting Standards. Statutory disclosures
are provided in Section 6.
Executive
M Baker
R Brosnahan
T Corolis
R Fennell
A Morgan7
B Speirs
Year
Fixed Base1
Prior years’
deferred base
vested 2
Prior years’
deferred LTI
vested3,4
Total
remuneration
received 5
Total
remuneration
forgone 6
$158,725
$1,829,059
$294,775
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$1,144,537
$1,188,826
$740,280
$761,753
$688,352
$672,131
$890,677
$888,010
$14,210
-
$610,216
$632,202
$525,797
$583,810
-
$90,508
-
-
-
-
-
$1,772,636
$740,280
$852,261
$688,352
$817,135
$890,677
$90,508
$54,496
-
-
$149,336
$95,365
$1,132,711
-
-
-
-
-
-
$90,508
$51,086
$14,210
-
$610,216
$773,796
-
$40,697
-
$40,697
$101,197
$71,218
$177,103
-
-
$38,157
$94,872
1 Fixed Base includes cash salary, non-monetary benefits, superannuation,
and movements in accrued annual and long service leave and reflects the
time in role during the year.
2 Ms Baker was granted 200,000 deferred base pay shares in FY2018/19,
in four tranches of 50,000, each with a varying deferral period, vesting
annually from the time of grant. Any dividends received on these grants
are reinvested into ordinary shares and allocated in tranches. The
dividend reinvested deferred base pay shares also vested and were
released in 2022.
3 Performance rights awarded to Ms Baker in 2018 were tested on 30
the period 1 July 2019-30 June 2022, were tested on 30 June 2022
resulting in 100% lapsing of the TSR hurdle and 100% vesting of the NPS
hurdle. Details of the award will be included in the FY23 remuneration
report following an additional one-year service condition. Further details on
testing outcomes, refer to Section 2.2.
5 The Loan Funded Share Plan grant awarded in FY2020/21 was tested
on 30 June 2022 and outcomes were achieved. Vesting outcomes will be
provided in the FY2024 remuneration report following an additional
two-year service condition and subject to a risk assessment by the
Board. Further details on testing outcomes, refer to Section 2.2.
June 2022, measured for the period 1 July 2018-30 June 2022, resulting
in 100% lapsing of the TSR hurdle and 100% vesting of the NPS hurdle.
The award has reached the four-year performance period and the NPS
vested component of the grant was released. For further details on
testing outcomes, refer to Section 2.2.
6 Total remuneration forgone values are inclusive of prior year LTI which
lapsed on 30 June 2022, performance hurdles not achieved. Forgone
amounts are calculated using the 30 June closing share price. For further
details on vesting outcomes refer to Section 2.2.
7 The fixed base for Mr Morgan reflects his pro-rated remuneration from his
4 Performance rights awarded to executives in FY2019/20, measured for
commencement on 24 June 2022.
36 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Section 3: Executive remuneration framework in detail
3.1 Executive reward framework for FY22
Fixed Base
Fixed Base comprises cash salary, non-monetary benefits and employer superannuation contributions.
Deferred Base Pay Shares
For Managing Director only.
Deferred base is a grant of deferred shares that are held in trust for a deferral period, and forms part of the Managing
Director’s total Fixed Base. Deferred shares are fully paid ordinary shares granted at no cost and are beneficially owned
by the recipient from grant date. The grants are subject to a service condition and risk adjustment at the discretion of
the Board. If the service condition is not met the deferred shares will not vest and are forfeited, unless the Board decides
otherwise.
The Managing Director received a grant of 200,000 deferred shares in FY2018/19 delivered in four equal tranches of
50,000 shares and each tranche had a deferral period of two-years, three-years, four-years, and five-years respectively.
Tranche 1 vested in FY2020, Tranche 2 in FY21 and Tranche 3 vested in FY22. Tranche 4 is to be tested for vesting in FY23.
The deferred base shares are no longer part of the executive remuneration framework.
The following tables describe the Long-term Incentive which is in two parts, the Loan Funded Share Plan and Performance Rights
Plan. The Board believes that equity based long-term incentives are important to ensure an appropriate part of the executive’s
reward is linked to generating long-term returns for shareholders.
Long Term Incentive – Loan Funded Share Plan
Features
Approach
Instrument
Loan Funded Shares
Loan Funded Shares are ordinary shares (Shares) provided via an interest free, non-recourse loan.
Participants
Executives
100% to 150% of Fixed Base.
Opportunity
The number of shares granted is determined using the face value method. This is determined by
dividing the loan value by the arithmetic average of the daily volume weighted average price of fully
paid ordinary BEN shares sold on the ASX in the ordinary course of trading for the five trading days
prior to allocation.
It should be noted that the face value of the opportunity is significantly higher than the fair value of
the shares allocated. At the time of implementation the Board determined that a multiple of 3.9X was
aligned with market practice and would facilitate the appropriate levels of reward outcomes in line
with the intended reward package value. When adjusted to reflect the option like nature of the Loan
Funded Share the opportunity is 25-40% of the Fixed Base Reward.
Performance
Hurdles
Measure
How
Weighting
Cost to Income
ratio
Significant improvements in the Bank’s CTI Ratio, consistent
with the Bank’s stated objective of CTI towards 50% over the
medium term.
Cash Earnings
Performance against the FY22 and FY23 targets which has
been set in line with our growth agenda.
Market Growth
Grow our deposits and loans faster than system and increase
our market share.
Customer
Advocacy
(relative NPS)
Bank’s Net Promoter Score over the performance period
(measured using a six-month rolling average) must be 20 points
greater than the average performance of a peer group of
Australian Banks.
25%
25%
25%
25%
Performance
Period
Measured over two years plus two further years of restriction period
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3 7
Duration to access
reward post grant
Four years with two years to settle any outstanding loan balance
Vesting
Cliff vesting
•
•
If the performance hurdle is met or exceeded, that proportion of the incentive will vest.
If the performance hurdle is not met, that proportion of the incentive will lapse. Shares and loan
balance will be forfeited.
How the Loan
works
Any dividends or other distributions paid on the Shares while the Shares are restricted, are applied (on
a notional after-tax basis) towards repaying the loan.
Any vested shares will be used to settle the loan balance owing.
Risk Assessment
& Risk Behaviour
Gateway
In accordance with the Bank's Clawback and Malus Policy, the Board has broad discretion to ensure
that, amongst other things, no unfair benefit is derived by any participant in the case of a material
misstatement of financial results or serious misconduct by a participant. Reputation and conduct
matters are also considered under the policy.
This includes discretion to reduce or forfeit unvested awards, reset or alter the performance conditions
applying to the applicable award or require the repayment of any vested awards.
Cessation of
Employment
Shares will be forfeited in the event of resignation, or the Bank terminates employment due to fraud,
dishonesty, breach of legal duties or serious misconduct.
Where a participant ceases employment due to death, disablement, bona fide redundancy or by
agreement with the Bank, shares will remain on-foot to be tested against the applicable performance
conditions at the same time as continuing participants and will have 1 year to settle the loan.
Long Term Incentive – Performance Rights
Features
Approach
Instrument
Performance rights
A performance right is a promise to an ordinary share subject to performance conditions.
Participants
Executives
Opportunity
15% of Fixed Base
Number of performance rights granted is determined using the face value method. This is determined
by dividing the loan value by the arithmetic average of the daily volume weighted average price of
fully paid ordinary BEN shares sold on the ASX in the ordinary course of trading for the five trading
days’ prior to 1 July of the financial year of issue.
Performance
Hurdles
Relative TSR
Total Shareholder Return is measured over the four-year performance period against a peer group
consisting of the ASX100 companies (excluding property trusts and resources companies).
Performance
Period
Four years
Duration to access
reward post grant
Four years
The vesting scale is as follows:
TSR performance against peer group
Percentage of performance rights that vest
At or below the 50th percentile
At 50.1th percentile
0%
60%
Vesting
Between the 50.1th and 75th percentiles
Straight-line vesting:
•
•
starting at 60%; and
reaching 100% at the 75th percentile.
At or above the 75th percentile
100%
38 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Risk Assessment
& Risk Behaviour
Gateway
In accordance with the Bank's Clawback and Malus Policy, the Board has broad discretion to ensure
that, amongst other things, no unfair benefit is derived by any participant in the case of a material
misstatement of financial results or serious misconduct by a participant. Reputation and conduct
matters are also considered under the policy.
This includes discretion to reduce or forfeit unvested awards, reset or alter the performance conditions
applying to the applicable award or require the repayment of any vested awards.
Cessation of
Employment
Performance rights will be forfeited in the event of resignation, or the Bank terminates employment
due to fraud, dishonesty, breach of legal duties or serious misconduct.
Where a participant ceases employment due to death, disablement, bona fide redundancy or by
agreement with the Bank, performance shares will remain on-foot to be tested against the applicable
performance conditions at the same time as continuing participants.
3.2 Executive reward framework for FY23
The Bank introduced the current executive reward
framework, including the Loan Funded Share Plan, in FY21.
The current framework creates a high degree of alignment
with shareholders, however changes in internal and external
factors meant that it was appropriate to review the Bank’s
executive incentive structure. These factors included APRA
setting clear expectations on remuneration design as part
of the implementation of CPS511 Remuneration, changes
in the labour market, and the evolution of our strategy with
an increased focus on sustainable growth, while remaining
true to our purpose and protecting our trusted position in the
Australian community.
The Board was supported by KPMG as part of the design
process, and the review included consultation across a wide
number of stakeholders. The new framework is underpinned
by a set of design principles; Strategy Led Reward, Reward
balanced outcomes, Recognise people for their impact,
Transparent and simple metrics, Embedded risk management.
From the start of FY23 the executive reward framework
consists of fixed remuneration, a short-term incentive award
and a long-term incentive plan. There will be no more grants
made under the previous Loan Funded Share Plan, while the
historic FY21 and FY22 grants will continue per their original
terms, reinforcing the alignment between executive and
Features
Short-term Incentive
shareholders. The reintroduction of an annual incentive plan
creates the potential for an overlap in measurement, with
the FY22 Loan Funded Share Plan and the FY23 Short-term
incentive both being assessed against the FY23 CTI and
cash-earnings results, noting the cash earnings measure in the
Loan Funded Share Plan is assessed over the FY22 and FY23
period. The Board will consider this overlap when determining
performance outcomes to ensure that executive reward
outcomes are aligned with shareholder expectations.
The proposed framework rewards executives if they deliver
on our strategy, creating value for all our stakeholders, across
shareholders, customers, community, people, planet and
regulators. Atleast 70 percent of the variable reward will be
delivered in equity, creating strong alignment with shareholders.
We will continue to strengthen our approach to incorporating
risk and conduct issues into remuneration decisions, including
through the recent adoption of a new Consequence
Management Policy.
The framework has been designed so that it is consistent
with the incoming APRA Prudential Standard CPS 511
Remuneration and is designed to be fit for purpose for the
coming years.
A high-level summary of the variable reward components of
the new framework is outlined below.
Delivered through
A mix of cash (50%) and deferred rights (50%)
Maximum Incentive
opportunity (% of
fixed remuneration)
Managing Director and Executive in the range between 60%-30%
Group STI
scorecard
Category
Measure
Weighting
Financial
Measures
Customer &
Community
People &
Planet
Cost-to-Income ratio
Cash earnings
Profit after capital charge
Customer experience and satisfaction
Social impact through our Community Bank network
Employee experience and diversity
Implementation of the climate change action plan
Capability
Risk and Governance uplift
20%
20%
10%
20%
10%
20%
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 3 9
Outcomes can be adjusted based on individual performance. This is to allow for recognition of
exceptional individual contribution, as well as providing a mechanism for downward adjustment. The
assessment will consider:
•
•
•
The range of the modifier is 0 – 120%, meaning that individual STI outcomes can be reduced to zero,
or increased to 120% of the scorecard outcome (capped at the maximum incentive opportunity).
Individual performance and delivery of key strategic objectives
Individual risk performance
Broader cultural considerations
One year
One year following completion of performance period, but will be adjusted to meet regulatory
requirements
Individual
modifier
Performance
Period
Deferral period
Adjustments
Incentives are subject to downward adjustments through a risk assessment and/or consequence
management process and the Clawback and Malus Policy applies
Features
Long-term Incentive
Delivered through
Performance rights (100%)
Maximum Incentive
opportunity (% of
fixed)
Managing Director and Executive in the range between 60%-40%
The scorecard is a mixture of financial and non-financial measures. The performance targets and
assessment against those targets will be included when the grant is tested. Further details on
Managing Director’s FY23 grant can be found in the 2022 Notice of Meeting.
Measure
LTI scorecard
Relative TSR - against ASX S&P100 Financials
ROE over the period
Relative customer NPS
Reputation index
Performance
period
Four years
Weighting
40%
25%
20%
15%
Deferral period
One to two years following completion of performance period, depending on the executive
Adjustments
Incentives are subject to downward adjustments through a risk assessment and/or consequence
management process and the Clawback and Malus Policy applies
The structure and time horizon of the new framework for the Managing Director and other executive KMP is illustrated below.
R
F
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I
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S
I
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S
I
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Base salary
+ super
50% is paid as cash at
the end of year 1
Rights
50% is deferred into rights
until the end of year 2
Annual grant of performance rights which
are performance tested over four years
One third vests
immediately
One third subject
to a 1 year disposal
restriction
One third
subject to a 2
year disposal
restriction
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Base salary
+ super
50% is paid as cash at
the end of year 1
Rights
50% is deferred into rights
until the end of year 2
Annual grant of performance rights which
are performance tested over four years
50% vests
immediately
50% is subject to
a 1 year disposal
restriction
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Additional details will be provided in the FY22 Notice of Meeting and FY23 Remuneration Report.
40 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Section 4: Remuneration governance
4.1 Risk and remuneration consequences
The Bank is committed to effective remuneration practices
that reward performance in a manner that is appropriate and
consistent with shareholder and regulatory expectations,
including the requirements under APRA Prudential Standard CPS
510 Governance, the incoming APRA Prudential Standard CPS
511 Remuneration and the Banking Executive Accountability
Regime (BEAR).
The Clawback and Malus Policy sets out some of the
circumstances in which the Board may seek to reduce or recoup
“at risk” remuneration (whether vested or unvested) or take other
actions to ensure remuneration outcomes are appropriate in
light of all the circumstances, including those which arise or
come to light after “at risk” remuneration has been granted or
delivered. The policy applies to all employees of any Group
Company who receive “at risk” remuneration, meaning the portion
of an employee’s remuneration that is subject to performance
conditions, vesting conditions or a real risk of forfeiture. It
includes all variable remuneration, one-off or special incentive
arrangements in place, provided in cash or equity.
Taking into account the provisions of the Clawback and
Malus Policy, the Board has discretion, having regard to the
recommendations of the People, Culture and Transformation
Committee, to adjust variable remuneration (including Annual
Variable Reward and equity incentives) to reflect the following:
a. The outcomes of business activities.
b. The risks, including non-financial risks, related to the
business activities taking into account, where relevant, the
cost of the associated capital.
c. The time necessary for the outcomes of those business
activities to be reliably measured.
This includes adjusting performance-based components of
remuneration downwards, to zero if appropriate, in relation to
particular persons or classes of persons, if such adjustments
are necessary to:
•
Protect the financial soundness of the regulated institution;
or
Respond to significant unexpected or unintended
consequences that were not foreseen by the Board.
•
4.2 Remuneration governance
During the year, the Board established a new Committee, the
People, Culture and Transformation Committee, which took
on the responsibilities of the Governance and HR Committee
and some aspects of the Technology Committee. The
People, Culture and Transformation Committee (Committee)
assists the Board in relation to the Group’s remuneration
arrangements. The Board makes all final decisions in relation to
those arrangements. The current members of the Committee
are all independent Non-executive Directors:
a. Vicki Carter (Chair)
b.
Jacqueline Hey
c. David Foster
d. David Matthews
A summary of the Committee’s remuneration responsibilities is
presented below and the Committee Charter is available from the
Corporate Governance section of the Bank’s website at
https://www.bendigoadelaide.com.au/esg/governance/
The Committee’s remuneration responsibilities include
In these circumstances, this may involve the Board deciding,
having regard to the recommendation of the People, Culture
and Transformation Committee, to clawback the deferred
component of an Annual Variable Reward award or equity
incentives during the deferral period. This may include the
deferred component and the awarded or granted component.
To support the application of the Clawback and Malus Policy
a Consequence Management Policy has been adopted by
the Board in July 2022. The Consequence Management
Policy provides the People, Culture and Transformation
Committee with more detailed guidance on the circumstances
when remuneration adjustments should be made, and what
factors should be considered in determining the quantum of
remuneration adjustment.
The Board also has discretion to adjust positively in cases
where the organisation has mitigated high-risk events and
demonstrated a successful risk culture.
The accountability obligations for accountable persons are
outlined in the Bank’s BEAR policy. As outlined in the BEAR
Policy, the Board may determine that the accountable person
has breached their accountability obligations. If the Board
makes such a determination, the Bank may not pay some or
all of the accountable person’s variable remuneration, including
deferred remuneration, as it sees fit.
Hedging and margin loan restrictions
The Remuneration Policy mandates that executives, and
their closely related parties, may not enter into a transaction
designed to remove the at-risk element of equity-based pay
before it has vested, or while it is subject to a trading restriction.
The restriction is contained in the Remuneration Policy. The
Bank treats compliance with the requirement as important and
at the end of each year requires the individuals to confirm they
have complied with the restriction. If the restriction is breached
the individual will forfeit all equity-based remuneration that is
subject to the prohibition at the time of the breach.
The Bank’s Trading Policy also prohibits KMPs from using the
Bank’s securities as collateral in any margin loan arrangements.
conducting regular reviews of, and making recommendations
to the Board on, the remuneration strategy and policy
taking into account the Group’s objectives, risk profile,
shareholder interests, regulatory requirements and market
developments. The Committee is also responsible for making
recommendations to the Board on:
•
•
the remuneration arrangements for executives, including
the terms on which performance-based remuneration will
be provided;
the performance-based remuneration outcomes for the
executives; and
the annual bonus pool.
•
The Committee makes recommendations to the Board on
the exercise of the Board’s discretion to adjust incentive and
performance-based remuneration to reflect the outcomes of
business activities and the risks relating to those activities.
The Committee is also responsible for recommending to the
Board the remuneration matters specified by the Australian
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 4 1
Prudential Regulation Authority under Prudential Standard
CPS 510 Governance relating to other designated responsible
persons, risk and financial control personnel and material risk
takers.
The Committee also has responsibility for providing input
into the Group’s risk management framework in relation to
remuneration risk, in particular, recommending to the Board the
remuneration arrangements for the executives.
The Committee may consult a professional adviser or
expert, at the cost of the Bank, if the Committee considers it
Section 5: Executive shareholdings and contracts
5.1 Minimum Shareholding Policy
The Minimum Shareholding Policy (MSP) aims to further align
the interests of executives and Non-executive Directors with
those of shareholders. The MSP supports a focus on long-term
shareholder value by requiring executives and Non-executive
Directors to build a minimum shareholding in BEN shares and
maintain it during their tenure.
With effect from 25 August 2020 the MSP requires the
Managing Director to accumulate shares equal to 150 percent
of Fixed Base and other executives to accumulate shares equal
to 75 percent of Fixed Base over a five-year period (from the
later of 25 August 2020 or the date of their appointment).
necessary to carry out its duties and responsibilities. During
FY22, the Committee engaged KPMG to provide support
as part of the Bank’s review of the executive remuneration
framework. KPMG provided market practice, remuneration
data, trends and assistance with other ad-hoc tax, governance
and legal matters. KPMG did not provide any remuneration
recommendations as defined in the Corporations Act 2001
(Cth) to the Committee during FY22.
Once the minimum shareholding level has been assessed as
met for the first time, the executive or Non-executive Director
will be deemed to have met the policy requirements. The Board
may, at any time and in its sole discretion, amend the minimum
shareholding levels and/or timing requirements.
Compliance with our minimum shareholding requirement is
assessed at the end of each financial year. Based on their
shareholding as at 30 June 2022, all executives have either
met their MSR, or are on track to meet this, within the required
timeframes. See Section 1.1 for the status of each executive.
5.2 Executive employment arrangements
The remuneration and other terms of employment for executives are contained in formal employment contracts.
The material terms of the executive contracts at the date of this report are set out below.
Issue
Description
Applies to
What is the duration of the
contracts?
On-going until notice is given by either party.
All executives
What notice must be provided by
an Executive to end the contract
without cause? 2
Between 6 and 12 months’ notice. No notice
period required if material change in duties or
responsibilities.
All executives
What notice must be provided by
the Bank to end the contract without
cause? 1
6 months’ notice or payment in lieu.2
M Baker, T Corolis,
R Brosnahan, A Morgan
12 months’ notice or payment in lieu.
B Speirs, R Fennell
What payments must be made by
the Bank for ending the contract
without cause? 1
Payment of gross salary in lieu of period of notice
(including payment of accrued/unused leave
entitlements calculated to end of relevant notice
period).
What are notice and payment
requirements if the Bank ends the
contract for cause?
Termination for cause does not require a notice
period. Payment of pro-rata gross salary
and benefits (including payment of accrued/
unused leave entitlements) is required to date of
termination.
All executives
All executives
Are there any post-employment
restraints?
12-month non-competition and non-solicitation
(employees, customers and suppliers) restriction.
Chief Executive Officer and
Managing Director
12-month non-solicitation (employees, customers
and suppliers) restriction.
Other executives
1
In certain circumstances, such as a material diminution of responsibility, the Bank may be deemed to have ended the employment of an executive and will
be liable to pay a termination benefit as outlined at the row titled “What payments must be made by the Bank for ending the contract without cause”.
2 A review of the executive employment contract was completed in 2019 having regard to market practice. Changes to the contract included reducing the
relevant notice period from 12 months to 6 months. The 12-month notice period for existing KMPs has been grandfathered.
42 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Section 6: Executive statutory remuneration
6.1 Statutory remuneration details
The following table sets out the statutory executive remuneration disclosures which have been prepared in accordance with the
Corporations Act 2001 and the Australian Accounting Standards.
Executive
Short-term benefits
Cash
salary 1
Non-
monetary 2
Super-
annuation
benefits 3
Other
long-term
benefits 4
Other
Remun-
eration
Share-based payments 5
Rights 6 Deferred
Shares
Loan
Funded
Shares
Total
Perfor-
mance
Related 7
M Baker
2022 $1,095,265 $6,027
$23,568
$19,677
-
$176,711 $233,100 $364,110
$1,918,458
28%
2021 $1,174,871 $7,980
$22,529
($16,554)
R Brosnahan
2022 $693,243
$12,573
$22,729
$11,735
2021 $717,825
$10,049
$21,694
$12,185
T Corolis
2022 $648,873
2021 $633,583
R Fennell
2022 $855,701
-
-
-
$23,568
$15,911
$22,529
$16,019
$23,568
$11,408
2021 $873,350
$9,727
$22,529
($17,596)
A Morgan8
2022 $12,919
2021 -
-
-
$1,292
-
-
-
B Speirs
2022 $563,440
$6,525
$23,568
$16,683
2021 $594,196
$6,525
$22,529
$8,953
Former executive KMP
T Crouch
2022 $515,924
$28,564
$28,688
($29,263)
2021 $581,652
$30,741
$28,136
($33,887)
-
-
-
-
-
-
-
-
-
-
-
-
-
$155,747 $405,767 $176,611
$1,926,951
17%
$111,400 -
$107,091
$958,771
23%
$102,151 $51,199 $51,944
$967,047
16%
$31,097
-
$103,664
$823,113
$55,761
$42,665 $50,282
$820,839
16%
13%
$47,446
-
$185,268
$1,123,391
21%
$94,186
$70,397 $89,864
$1,142,457
16%
$8,052
-
$28,701
-
-
-
-
-
$22,263
-
$94,240
$733,157
$52,055
$42,665 $45,711
$772,634
$30,375
-
$98,952
$673,240
$55,410
$42,665 $47,996
$752,713
n/a
-
17%
13%
19%
14%
7%
A Gartmann9 2022 $327,329
2021 $588,361
-
-
$41,153
$9,638
$407,936 $7,398
-
$48,529
$841,983
$22,529
$9,676
-
$52,055
$42,665
$45,711
$760,997
13%
Totals
2022 $4,712,694 $53,689
$188,134 $55,789
$407,936 $441,180 $233,100 $1,001,854 $7,094,376
2021 $5,163,838 $65,022
$162,475 ($21,204)
-
$567,367 $698,023 $508,119
$7,143,638
-
-
1 Cash salary amounts include the net movement in the annual leave accrual for the year.
2 Non-monetary relates to sacrifice components of salary such as motor vehicle costs.
3 Company superannuation contributions form part of fixed remuneration and are paid up to the statutory maximum contribution base.
4 The amounts relate to movements in long service leave accruals.
5 The share-based payments expense is inclusive of adjustments that may be made in the current period in relation to unvested awards including those related to cessation
of employment. The fair value of performance rights as at the grant date has been calculated under AASB 2 Share-based Payment applying a Black-Scholes-Merton
valuation method incorporating a Monte Carlo simulation option pricing model to estimate the probability of achieving the Total Shareholder Return hurdle and the number of
performance rights that vest. The assumptions underpinning these valuations are set out in Section 6.5.
6 The rights share-based payment expenses includes performance tested awards held by the KMP with the exception of Mr Morgan whose sign-on equity award was
delivered in serviced based deferred share rights.
7 The performance related percentage comprises the amortised fair value of performance right grants and the amortised fair value of loan funded share grants.
8 Remuneration for FY22 is disclosed to the extent that it relates to Mr Morgan’s employment in the capacity as an Executive which commenced on 24 June 2022. Mr Morgan
received a sign-on equity award which was delivered in deferred share rights to compensate for incentive arrangements with his previous employer that were forgone. The
amount provided reflects the portion of the award expensed from 24 June to year end. Refer to ‘Remuneration outcomes for FY22’ on page 30 for further details.
9 Remuneration is disclosed to the extent that it relates to Ms Gartmann’s employment in the capacity as an executive, which will cease on 22 October 2022. In accordance
with contractual terms, Ms Gartmann did not receive a payment in lieu of a reduced notice period and all unvested equity awards lapsed.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 4 3
6.2 Loans and other transactions
Details on the aggregate loans provided to KMP and their related parties are as follows. The loans occur within a normal
employee, customer or supplier relationship on terms and conditions no more favourable than those that it is reasonable to
expect the Bank would have adopted if dealing at arms-length with an unrelated person.
2022
Balance on
1 July 2021
Interest
charged 1
Interest not
charged
Write-off
Balance on
30 June 2022
Number at
year end
Non-executive Directors
Executives
$’000
6,451
4,879
Total Directors and Executives
11,330
$’000
$’000
$’000
133
102
235
-
-
-
-
-
-
$’000
7,748
4,745
8
7
12,493
15
Details of KMP (including their related parties) with an aggregate of loans above $100,000 in the reporting period are as follows:
2022
Balance on
1 July 2021
Interest
charged 1
Interest not
charged
Write-off
Balance on
30 June 2022
Highest
owing in
period 2
$’000
$’000
$’000
$’000
$’000
$’000
Non-executive Directors
J Hey
D Matthews
Executives
M Baker
R Fennell
3
3,945
754
2,328
Former Non-executive Directors and Executives
A Robinson3
T Crouch
A Gartmann4
2,503
524
1,273
11
100
22
58
22
8
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,556
3,689
830
2,199
2,503
498
1,218
1,646
3,959
1
2,358
-
528
1,273
Interest charged may include the impact of interest off-set facility.
1
2 Represents aggregate highest indebtedness of the KMP during the financial year. All other items in this table relate to the KMP and their related parties.
3 Part year represented for A Robinson to 9 November 2021.
4 Part year data represented for Ms Gartmann is disclosed up to 1 February 2022.
44 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
6.3 Executive equity instrument grants
Executive
KMP
Equity Instrument
Grant
Date
Granted
1
Granted
1
Prior years’
awards
vested
2,3,4,5
Prior
years’
awards
vested
Forfeited
/ Lapsed
3,4
Forfeited /
Lapsed
Units1
$
Units
$
Units
$
50,000
518,000
M Baker
Deferred Shares
19.12.2018
Deferred Shares
08.04.2019
Deferred Shares
03.10.2019
Deferred Shares
03.04.2020
Deferred Shares
08.04.2021
-
-
-
-
-
Deferred Shares
06.10.2021
2,406
Deferred Shares
06.04.2022
2,230
-
-
-
-
-
-
-
1,362
1,194
1,933
1,164
1,203
1,115
Loan Funded Shares 16.11.2021 277,777
749,998
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance Rights
19.12.2018
-
-
17,500
141,050
32,500
174,200
Performance Rights
16.11.2021
24,519
83,855
R Brosnahan
Loan Funded Shares 16.11.2021
81,699
220,587
Performance Rights
17.12.2019
-
-
Performance Rights
16.11.2021
10,817
36,994
T Corolis
Loan Funded Shares 16.11.2021
79,084
213,527
Performance Rights
17.12.2019
-
-
Performance Rights
16.11.2021
9,519
32,555
R Fennell
Loan Funded Shares 16.11.2021 141,339
381,615
Performance Rights
17.12.2019
-
-
Performance Rights
16.11.2021
12,475
42,665
A Morgan6
Deferred Share Rights 24.06.2022
66,888
524,322
B Speirs
Loan Funded Shares 16.11.2021
71,895
194,117
Performance Rights
17.12.2019
-
-
Performance Rights
16.11.2021
8,653
29,593
Former executive KMP
T Crouch
Loan Funded Shares 16.11.2021
75,490
203,823
Performance Rights
17.12.2019
-
-
Performance Rights
16.11.2021
9,086
31,074
A Gartmann7 Loan Funded Shares 04.11.2020
-
-
Loan Funded Shares 16.11.2021
71,895
194,117
Performance Rights
17.12.2019
Performance Rights
04.11.2020
-
-
-
-
Performance Rights
16.11.2021
8,653
29,593
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,487
11,038
-
-
-
-
4,487
11,038
-
-
-
-
7,852
19,316
-
-
-
-
-
-
4,207
10,349
-
-
-
-
4,487
11,038
-
-
97,777
182,843
71,895
194,117
12,942
57,096
12,838
28,115
8653
29,593
1 The price used to calculate any performance right and deferred share
awards granted is the fair value on the grant date. Refer to Section 6.5 for
further details.
2 Ms Baker was granted 200,000 of deferred base pay shares in FY2018/19,
in four tranches of 50,000, each with a varying deferral period, vesting
annually from the time of grant. Any dividends received on these grants
are reinvested into ordinary shares and allocated in tranches. The dividend
reinvested deferred base pay shares also vested and were released
in 2022. Performance rights awarded to Ms Baker in FY2018/19 were
tested on 30 June 2022 resulting in 100% lapsing of the TSR hurdle and
100% vesting of the NPS hurdle. The award has reached the four-year
performance period and the NPS vested component of the grant was
released. For further details on testing outcomes, refer to Section 2.2.
3 Performance rights awarded to executives in FY2019/20, measured for the
period 1 July 2019-30 June 2022, were tested on 30 June 2022 resulting
in a full lapse of the TSR hurdle and 100% of the NPS hurdle was achieved.
Details of the award will be included in the FY23 remuneration report
following an additional one-year service condition. Further details on testing
outcomes, refer to Section 2.2.
4 The Loan Funded Share Plan grant awarded in FY2020/21 was tested
on 30 June 2022 and outcomes were achieved. Vesting outcomes will
be provided in the FY2024 remuneration report following an additional
two-year service condition and subject to a risk assessment by the Board.
Further details on testing outcomes, Section 2.2.
5 The value of each instrument on the date it lapses or is forfeited is
calculated using the fair value of the instrument. Performance rights lapse
where the applicable performance and service conditions are not satisfied.
6 Deferred share rights granted to Mr Morgan were awarded as part of his
sign-on equity award to replace incentive arrangements that were forgone
with his previous employer.
7 All unvested equity awards held by Ms Gartmann at the time of her
resignation were lapsed in full.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 4 5
6.4 Movements in Executive KMP equity holdings
Executive
KMP
Equity Instrument 1
Number at
1 July
2021
Granted
during the
year
Vested or
released
2,3,4
Lapsed or
expired 3,4
Net
change
other
Number at
30 June
2022
M Baker5
Deferred shares
111,304
4,636
(57,971)
Loan Funded shares
377,777
277,777
-
Ordinary shares
589,722
Preference shares
100
-
-
75,471
-
-
-
-
-
Performance rights
136,376
24,519
(17,500)
(32,500)
R Brosnahan
Loan Funded shares
111,111
81,699
Ordinary shares
8,628
-
Performance rights
75,639
10,817
T Corolis
Loan Funded shares
107,555
79,084
Ordinary shares
Performance rights
59,048
27,927
-
9,519
R Fennell
Loan Funded shares
192,222
141,339
Ordinary shares
102,475
-
Performance rights
42,667
12,475
A Morgan6
Deferred Share Rights
-
B Speirs
Loan Funded shares
97,777
Ordinary shares
Performance rights
25,502
25,780
66,888
71,895
-
8,653
Former executive KMP
T Crouch
Loan Funded shares
102,666
75,490
Ordinary shares
Performance rights
33,424
17,368
-
9,086
A Gartmann7
Loan Funded shares
97,777
71,895
Ordinary shares
Performance rights
56,164
25,780
-
8,653
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,487)
-
-
(4,487)
-
-
(7,852)
-
-
-
(4,207)
-
-
(4,487)
(169,672)
-
(34,433)
-
-
57,969
655,554
33,028
698,221
100
110,895
192,810
8,628
81,969
186,639
64,801
32,959
333,561
-
-
-
-
-
5,753
-
-
(1,111)
101,364
-
-
-
5
-
-
(1,672)
-
-
-
-
47,290
66,888
169,672
25,507
30,226
178,156
31,752
21,967
-
56,164
-
1 No equity holdings are held nominally.
2 Ms Baker was granted 200,000 of deferred base pay shares in FY2018/19, in four tranches of 50,000, each with a varying deferral period, vesting annually
from the time of grant. Any dividends received on these grants are reinvested into ordinary shares and allocated in tranches. The dividend reinvested
deferred base pay shares also vested and were released in 2022. Performance rights awarded to Ms Baker in FY2018/19, measured for the period 1
July 2018-30 June 2022, were tested on 30 June 2022 resulting in 100% lapsing of the TSR hurdle and 100% vesting of the NPS hurdle. The award has
reached the four-year performance period and the NPS vested component of the grant was released. For further details on testing outcomes, refer to
Section 2.2.
3 Performance rights awarded to executives in FY2019/20, measured for the period 1 July 2019-30 June 2022, were tested on 30 June 2022 resulting in a
full lapse of the TSR hurdle and 100% of the NPS hurdle was achieved. Details of the award will be included in the FY23 remuneration report following an
additional one-year service condition. For further details on testing outcomes, refer to Section 2.2.
4 No performance rights held at year end had vested and were exercisable. The Loan Funded Share Plan grant awarded in FY2020/21 was tested on 30
June 2022 and outcomes were achieved. Vesting outcomes will be included in the FY2024 remuneration report following an additional two-year service
condition and subject to a risk assessment by the Board. For further details on testing outcomes, refer to Section 2.2.
5 The closing balance of Ms Baker’s ordinary shares as disclosed in the FY21 remuneration report was overstated by 33,341 shares. The opening balance in
the table above has been reduced by the overstated amount.
6 Deferred share rights granted to Mr Morgan were awarded as part of his sign-on equity award to replace incentive arrangements that were forgone with
his previous employer.
7 Any unvested equity awards held by Ms Gartmann upon her resignation were lapsed in full.
46 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
6.5 Equity plan valuation inputs
Performance rights
Terms & Conditions for each Grant
Equity Instrument
Grant date
Fair
value 1
Share
price
Exer-
cise
price
Risk
free
interest
rate
Divi-
dend
yield
Ex-
pected
volatility
Ex-
pected
life
Perfor-
mance
period end
/ expiry
date 2
Performance Rights – Sleeve 1
17.12.2018 $8.60
$10.37 -
1.89% 6.73% 23.40% 3 years 30.06.2021
Performance Rights – Sleeve 2
17.12.2018 $5.57
$10.37 -
1.89% 6.73% 23.40% 3 years 30.06.2021
Performance Rights – Sleeve 1 (MD)
19.12.2018 $8.06
$10.40 -
1.99% 6.73% 23.40% 4 years 30.06.2022
Performance Rights – Sleeve 2 (MD)
19.12.2018 $5.36
$10.40 -
1.99% 6.73% 23.40% 4 years 30.06.2022
Performance Rights - Sleeve 1
17.12.2019 $7.61
$9.89
Performance Rights - Sleeve 2
17.12.2019 $7.61
$9.89
Performance Rights - Sleeve 3
17.12.2019 $2.46
$9.89
Performance Rights - Sleeve 4
17.12.2019 $2.92
$9.89
Performance Rights – Sleeve 1 (MD)
17.12.2019 $7.61
$9.89
Performance Rights – Sleeve 2 (MD)
17.12.2019 $2.92
$9.89
Performance Rights - Transformation 17.12.2019 $7.61
$9.89
Performance Rights
04.11.2020 $2.19
$6.83
Performance Rights - Transformation 04.11.2020 $5.74
$6.83
Performance Rights
16.11.2021 $3.42
$9.18
-
-
-
-
-
-
-
-
-
-
0.88% 7.08% 21.23% 4 years 30.06.2022
0.88% 7.08% 21.23% 4 years 30.06.2023
0.88% 7.08% 21.23% 4 years 30.06.2022
0.88% 7.08% 21.23% 4 years 30.06.2023
0.88% 7.08% 21.23% 4 years 30.06.2023
0.88% 7.08% 21.23% 4 years 30.06.2023
0.88% 7.08% 21.23% 4 years 30.06.2023
0.19% 4.54% 29.21% 4 years 30.06.2024
0.19% 4.54% 29.21% 4 years 30.06.2024
1.23% 6.02% 30.85% 4 years 30.06.2025
1 The fair value is calculated as at grant date in accordance with AASB 2 Share-based Payment using an independent valuation.
2 The Board will test the performance condition as soon as practical after the performance period has been reached. Any performance rights that do not
vest will lapse at 5.00pm on the date the Board determines the vesting outcome of the grant.
Deferred Share Rights
Terms & Conditions for each Grant
Equity Instrument1
Grant date
Issue price /
Fair value 2
Share price at
grant date
Deferred Share Rights (Tranche 1)
24.06.2022
Deferred Share Rights (Tranche 2)
24.06.2022
$8.35
$7.06
$8.97
$8.97
Restriction
period end /
test date
Vest /
Expiry date
30.09.2023
30.09.2023
30.09.2026
30.09.2026
1 Mr Morgan received a sign-on equity award delivered in deferred share rights, vesting in two tranches over four years to replace incentive arrangements
that were forgone with his previous employer. Refer to ‘Remuneration outcomes for FY22’ on page 30 for further details.
2 The fair value is calculated as at grant date in accordance with AASB 2 Share-based Payment using an independent valuation.
Deferred Shares
Terms & Conditions for each Grant
Equity Instrument
Grant date
Issue price /
Fair value 1
Share price at
grant date
Restriction
period end /
test date
Vest /
Expiry date
Deferred Shares Base Pay (MD)
19.12.2018
$10.36
$10.40
30.06.2021
30.06.2021
1 The fair value is calculated using the volume weighted average closing price of the Bank’s shares for the five-day period ending on the grant date.
Loan Funded Share Plan
Equity
Instrument
Grant date
Fair
value 1
Share
price $
Exercise
price
Risk free
interest
rate
Dividend
yield
Expected
volatility
Expected
life
Performance period end
/ expiry date
Terms & Conditions for each Grant
Loan Funded
Share Plan
Loan Funded
Share Plan
04.11.2020 $1.87
$6.83
$6.75
0.26%
0.00%
27.92%
16.11.2021 $2.70
$9.18
$9.18
1.44%
0.00%
28.93%
4 – 6
years
4 – 6
years
30.06.2022
(performance)
30.06.2024 (vesting)
30.06.2026 (expiry)
30.06.2023
(performance)
30.06.2025 (vesting)
30.06.2027 (expiry)
1 The Loan Funded Share Plan grant awarded in FY2020/21 was tested on 30 June 2022 and outcomes were achieved. Vesting outcomes will be included
in the FY2024 remuneration report following an additional two-year service condition and subject to a risk assessment by the Board. For further details on
testing outcomes, refer to Section 2.2.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 4 7
6.6 Details of unvested and untested grants
The following summary details the current LTI plans that remain on-foot, are untested and are not eligible for vesting.
All plans are subject to a risk and compliance gateway and the Clawback and Malus policy.
Grant
Grant Date Measures Weighting
Performance
Period
Vesting Schedule
Performance Rights
2020 MD LTI
17.12.2019
2020 LTI Senior
Executives
(Tranche 2)1
19.12.2019
2021 MD LTI
26.11.2020
NPS
TSR
NPS
TSR
NPS
TSR
35%
65%
17.5%
32.5%
35%
65%
2021 LTI Senior
Executives
04.11.2020
TSR
100%
2022 MD LTI
16.11.2021
TSR
100%
2022 LTI Senior
Executives
16.11.2021
TSR
100%
2020 - Transformation2
19.12.2019
Service
100%
2021 -Transformation2
04.11.2020
Service
100%
Loan Funded Shares
2022 Loan
Funded Shares
16.11.2021
Cost to
Income
Cash
Earnings
Market
Growth
Customer
Advocacy
(NPS)
25%
25%
25%
25%
01.07.2019 –
30.06.2023
01.07.2019 –
30.06.2023
01.07.2020 –
30.06.2024
01.07.2020 –
30.06.2024
01.07.2021 –
30.06.2025
01.07.2021 –
30.06.2025
04.11.2019 –
04.11.2023
01.07.2020 –
30.06.2024
01.07.2021 –
30.06.2023
plus 2 year
holding lock
If target met 100%
If not met 0%
NPS: 20 points above industry
average over performance period
•
•
TSR: Compared to peer group
of ASX100 companies (excluding
property trust and resources) over
performance period
•
If less than or equal to 50th
percentile: 0%
If between 50.1th & 75th
percentile: straight line
vesting starting at 60% up
to 100%
If greater than 75th
percentile: 100%
•
•
100% subject to:
•
•
Individual performance; and
Risk and compliance
gateway
CTI: substantive progress to
medium term target of 50%
Cash Earnings: Performance
against the FY22 and FY23
targets which has been set in line
with our growth agenda
Market Growth: deposits and
lending above system; and market
growth
NPS: 20 points above industry
average over performance period
If target met or exceeded
•
100%
If target not met 0%
•
1 Tranche 1 performance was tested on 30.06.2022. The Loan Funded Share Plan grant awarded in FY2020/21 was tested on 30 June 2022 and outcomes
were achieved. Vesting outcomes will be included in the FY2024 remuneration report following an additional two-year service condition and subject to a
risk assessment by the Board. For further details on testing outcomes, refer to Section 2.2.
2 The Transformation Alignment Rights granted in previous years is held by R Brosnahan.
48 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Section 7: Non-executive Director arrangements
7.1 Non-executive Director fees
The remuneration of Non-executive Directors is based on the
following principles and arrangements. There is no direct link
between Non-executive Director fees and the annual results of
the Group. Non-executive Directors do not receive bonuses or
incentive payments, nor receive equity-based pay.
Shareholders approved an aggregate fee pool for Non-
executive Directors of $2,500,000 at the 2011 Annual
General Meeting. This fee pool covers payments (including
superannuation) for the main Board and Committees (from
FY22) and payments to the Bank’s Non-executive Directors
appointed to subsidiary boards and the Community Bank
National Council.
The People, Culture and Transformation Committee (the
“Committee”) recommends to the Board the remuneration
arrangements for Non-executive Directors. The fees are
reviewed annually by the Committee and the following
considerations are taken into account in setting the fees:
a. The scope of responsibilities of Non-executive Directors
and time commitments. This includes consideration
of significant changes to the Group’s operations and
industry developments which impact workloads and
responsibilities at the Board and committee level.
b.
Fees paid by peer companies and companies of similar
market capitalisation and complexity, including survey
data and peer analysis to understand the level of Director
fees paid in the market, particularly in the banking and
finance sector.
Non-executive Directors fees are inclusive of superannuation
contributions at 10 percent. In relation to the superannuation
contributions, Non-executive Directors can elect to receive
amounts above the maximum contributions limit as cash.
During the year the Bank undertook a review of the Non-
executive Director fee structure. Historically, the Bank has
paid an all-inclusive fee, which compensated Non-executive
Directors for their time on the main board and committees.
Following a review of the fee structure it was determined it
would be appropriate to introduce committee fees in line with
market practice. These changes were effective from 1 January
2022. There was no change to the Board Chair’s fee in FY22.
The Chair receives a higher base fee in recognition of the
additional time commitment and responsibilities and does not
receive separate committee fees.
The following table shows the annual fees in FY22 for the
Board and committees (inclusive of company superannuation
contributions).
Board/Committee
Board
Committees
Fee (up until 31 December 2021)
Fee (from 1 January 2022)
Chair1
$479,230
N/A
Member
$201,780
N/A
Chair1
$479,230
$30,000
Member
$165,000
$20,000
1. Chair fees are all inclusive i.e. a separate committee member fee is not paid.
Additional fees are paid to Non-executive Directors appointed
to the Community Bank National Council.
The Directors contribute $5,000 each to the Bank’s
scholarship program. The program was established to assist
disadvantaged students from regional areas meet tertiary
education accommodation and direct study costs. The
contributions are deducted from Base Board fee payments.
7.2 Non-executive Director minimum
shareholding requirements
From FY21 the Board introduced a minimum shareholding
requirement of 100 percent of annual Base Board fee for all
Non-executive Directors. Directors have five years from the
introduction of the policy or their date of appointment to meet
the shareholding requirements. Once the minimum shareholding
level has been assessed as met for the first time, the Director
will be deemed to have met the policy requirements. The policy
was introduced on 25 August 2020. See Section 1.1 for the
status of each Non-executive Director as at 30 June 2022.
7.3 Rights to Shares plan
A fee sacrifice Rights to Shares Plan was introduced in FY21
for Non-executive Directors, to be offered annually, on an
opt-in basis under the terms of the BEN Omnibus Equity Plan.
Participants can nominate to sacrifice a minimum of $10,000
of fees, up to a maximum of 100 percent, to be issued as
Rights to Shares. The Rights to Shares are allocated after the
announcement of year-end results, Appendix 4E. The number
of Rights to Shares is allocated on a face value methodology,
with the nominated fee sacrificed amount divided by the five-
day volume weighted average closing price from the date of
the Appendix 4E announcement for that plan year.
The Rights to Shares are allocated in two tranches, with
the first tranche vesting after that plan year’s Appendix 4D
announcement and the second tranche vesting post the
Appendix 4E announcement for the following financial year.
Vested shares must be held for the earlier of 15 years or the
Non-executive Director’s retirement from the Board.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 4 9
7.4 Non-executive Director statutory remuneration
Non-executive
Director
Short-term benefits
Post-employment
benefits
Year
Fees 1
Rights to
Shares plan 2
Non-monetary
benefits 3
Superannuation
contributions
Total
J Hey (Chair)
2022
$411,867
$45,559
V Carter
2021
2022
2021
R Deutsch
2022
(part year)
D Foster
J Harris
J Hazel
2021
2022
2021
2022
2021
2022
2021
D Matthews 4
2022
V Weekes
2021
2022
(part year)
2021
$389,718
$190,176
$175,820
$149,956
-
$190,176
$175,820
$160,176
$145,823
$185,615
$175,820
$197,965
$184,333
$70,245
-
Former Non-executive Directors
R Hubbard
2022
(part year)
$66,324
$45,748
-
-
-
-
-
-
$30,000
$29,997
-
-
-
-
-
-
-
2021
$130,543
$49,999
-
-
-
-
-
-
-
-
-
-
-
-
$5,696
$5,696
-
-
-
-
-
-
$23,042
$480,468
$21,694
$457,160
$19,018
$209,194
$16,838
$192,658
$14,996
$164,952
-
-
$19,018
$209,194
$16,838
$192,658
$19,018
$209,194
$16,838
$192,658
$18,562
$204,177
$16,838
$192,658
$19,976
$223,637
$18,198
$208,227
$7,024
$77,269
-
-
$6,632
$72,956
$12,115
$192,657
$6,819
$73,143
$16,842
$192,712
$154,105
$1,924,184
$136,201
$1,821,388
A Robinson
2022
(part year)
Totals
2021
2022
2021
$66,324
$175,870
-
$1,688,824
$75,559
$1,553,747
$125,744
$5,696
$5,696
1 Fee amounts include the $5,000 Director contribution to the Bank’s scholarship program. From 1 July 2020 the Chair elected to an ongoing reduction in
their fee of 5% to $479,230, inclusive of superannuation. In addition, the Non-executive Directors nominated to reduce base fees by 10% for the period 1
November 2020 through to 30 April 2021 inclusive, in recognition of the performance of the Bank during the difficult 2020 year. All fees were reinstated in
FY22.
Includes fee sacrifice component of the Base Board fee sacrificed as part of the FY22 NED Rights to Shares Plan.
Includes fee sacrifice component of the Base Board fee paid as superannuation.
2
3
4 The fees paid to Mr Matthews include $15,500 as a member of the Community Bank National Council.
50 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
7.5 Shares and other securities held by Non-executive Directors
Non-Executive
Director
Equity Instrument
Number
at start of
year
Granted
during the
year 1
Vested or
released 2
Lapsed or
expired
Net
change
other
Number
at end of
year
J Hey (Chair)
Ordinary shares
V Carter
R Deutsch
Preference Shares
Rights to Shares
Ordinary shares
Preference Shares
Rights to Shares
Ordinary shares
Preference Shares
Rights to Shares
46,844
250
3,524
17,858
-
-
-
-
-
D Foster
Ordinary shares
7,526
Preference Shares
Rights to Shares
-
-
J Harris
Ordinary shares
10,311
J Hazel
Preference Shares
Rights to Shares
Ordinary shares
Preference Shares
Rights to Shares
-
2,311
38,885
-
-
D Matthews
Ordinary shares
38,371
V Weekes
Preference Shares
Rights to Shares
Ordinary shares
Preference Shares
Rights to Shares
-
-
-
-
-
Former Non-executive Directors
R Hubbard
Ordinary shares
31,113
A Robinson
Preference Shares
Rights to Shares
Ordinary shares
Preference Shares
Rights to Shares
-
3,852
43,140
-
-
-
-
5,807
-
4,565
(5,807)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,814
-
3,006
(3,814)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,852
-
(3,852)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,426
55,077
-
-
250
2,282
6,992
24,850
-
-
-
-
3,000
3,000
-
-
-
-
2,513
10,039
-
-
-
-
-
1,785
-
-
-
-
14,125
-
1,503
40,670
-
-
2,149
40,520
-
-
-
-
5,500
5,500
-
-
-
-
761
35,726
-
-
-
-
-
-
-
43,140
-
-
1 Ms Hey and Ms Harris elected to participate in the FY22 Rights to Shares Plan. Rights to Shares were allocated on 23 August 2021 using a volume
weighted average closing price of $9.98 in two tranches.
2 The FY22 Rights to Shares Plan first tranche vested on 4 March 2022 coinciding with the Bank’s half yearly results.
This Directors’ Report is signed in accordance with a resolution of the Board of Directors.
Jacqueline Hey
Chair
5 September 2022
Marnie Baker
Chief Executive Officer and Managing Director
5 September 2022
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 1
Financial highlights
The following table provides a summary of the last five
years' key metrics. Note some of the key indicators in the
table below are non-IFRS measures and are unaudited.
Financial performance
Net interest income
Other revenue
Operating expenses
Credit reversals/(expenses)
Income tax expense
Net profit attributable to owners of the Bank
Add back: total non-cash and specific items 2
Cash earnings after income tax 3
Financial position
Net loans and other receivables
Total assets
Deposits
Total liabilities
Total equity
Risk weighted assets
Common Equity Tier 1 capital ratio
Total capital ratio
Share information (per ordinary share)
Net tangible assets
Earnings per share (statutory basis)
Earnings per share (cash basis) 3
Total fully franked dividend
Shareholder ratios
Return on average tangible equity (cash basis) 3
Return on average assets (cash basis) 3
Return on average ordinary equity (cash basis) 3
Return on average ordinary equity (statutory basis)
Key trading indicators
Number of staff (excluding Community Banks)
Assets per staff member
Asset quality
Impaired loans
Individually assessed provisions
Net impaired loans
Net impaired loans % of gross loans
Individually assessed provision for impairment
Individually assessed provision % of gross loans
Collectively assessed provision
General reserve for credit losses (GRCL)
Collectively assessed provision & GRCL % of
risk-weighted assets
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
($m)
(%)
(%)
($)
(¢)
(¢)
(¢)
(%)
(%)
(%)
(%)
(FTE)
($m)
($m)
($m)
($m)
(%)
($m)
(%)
($m)
($m)
(%)
June 2022 June 2021 June 2020 June 20191 June 2018
Group
1,416.8
1,422.5
1,333.8
1,289.6
1,305.2
293.0
382.9
300.6
(1,035.6)
(1,033.7)
(1,179.8)
27.2
(213.3)
(18.0)
(229.7)
(168.5)
(93.3)
277.9
(965.2)
(50.3)
(175.2)
338.3
(938.4)
(70.6)
(200.0)
488.1
524.0
192.8
376.8
434.5
12.3
500.4
(66.8)
457.2
108.9
301.7
38.9
10.6
415.7
445.1
77,610.4
71,920.6
64,980.4
61,822.2
61,601.8
95,243.7
86,577.2
76,008.9
72,435.3
71,439.8
74,583.9
66,217.1
58,912.4
56,897.5
55,663.5
88,531.8
80,223.7
70,210.7
66,969.1
65,819.5
6,711.9
6,353.5
5,798.2
5,631.6
5,620.3
42,197.9
40,469.3
38,215.2
37,483.1
38,256.4
9.68
13.60
9.57
13.81
9.25
13.61
8.92
13.14
8.62
12.85
8.71
87.5
89.8
53.0
8.66
98.1
85.6
50.0
10.28
10.27
0.60
7.67
8.79
7.98
38.1
59.7
35.5
7.42
0.42
5.36
3.43
8.03
77.1
85.0
70.0
8.16
89.9
92.1
70.0
10.73
11.52
0.61
7.55
6.84
0.65
8.23
8.03
0.59
7.72
7.53
4,652
20.5
133.1
(57.1)
76.0
0.10
58.1
0.07
225.7
87.8
4,483
19.3
4,776
15.9
4,540
16.0
4,426
16.1
208.8
(93.0)
115.8
0.16
94.3
0.13
246.7
104.7
240.5
(77.5)
163.0
0.25
78.4
0.12
263.2
86.6
310.9
(127.6)
183.3
0.29
128.5
0.21
157.0
77.3
335.8
(118.3)
217.5
0.35
119.3
0.20
48.2
140.3
0.74
0.87
0.92
0.63
0.49
1
2
3
The Group applied AASB 9 Financial Instruments from 1 July 2018. Further information can be found in the Group's 2019 Annual Financial Report.
Specific items are those items that are deemed to be outside of the Group's core activities and hence these items are not considered to be
representative of the Group's ongoing financial performance.
Cash earnings is an unaudited, non-IFRS financial measure. It is considered by management to be a key indicator of the underlying performance of
the core business activities of the Group. The basis for determining cash earnings is net profit after tax, adjusted for specific items, amortisation on
acquired intangibles and Homesafe net realised income. All adjustments are net of tax.
52 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Financial Statements
Primary Statements
Income statement
Funding and Capital Management
21 Share capital
Statement of comprehensive income
22 Retained earnings and reserves
Balance sheet
Statement of changes in equity
Cash flow statement
Basis of Preparation
1 Corporate information
Other Assets and Liabilities
23 Investment property
24 Goodwill and other intangible assets
25 Other assets
26 Other payables
2 Summary of significant accounting policies
27 Provisions
Results for the Year
3 Profit
4
Income tax expense
5 Segment results
Other Disclosure Matters
28 Cash flow statement reconciliation
29 Subsidiaries and other controlled entities
30 Related party disclosures
6 Earnings per ordinary share
31 Involvement with unconsolidated entities
7 Dividends
Financial Instruments
8 Cash and cash equivalents
9 Loans and other receivables
10 Impairment of loans and advances
32 Fiduciary activities
33 Share-based payment plans
34 Commitments and contingencies
35 Remuneration of Auditor
36 Leases
37 Business combinations
11 Financial assets at fair value through profit or loss
38 Events after balance sheet date
12 Financial assets at amortised cost
Directors’ declaration
13 Financial assets at fair value
through other comprehensive income
Independent Auditor's Report
14 Deposits
15 Other Borrowings
16 Loan capital
17 Securitisation and transferred assets
18 Derivative financial instruments
19 Financial instruments
20 Risk management
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 3
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 3
A N N UA L F I N A N C I A L R E P O R T 2 0 2 1 5 3
Primary Statements
Income statement
For the year ended 30 June 2022
Group
Bank
June 2022
June 2021
June 2022
June 2021
Note
$m
$m
$m
$m
Net interest income
Interest income
Interest expense
Total net interest income
Other revenue
Fees
Commissions and management fees
Other income
Total other revenue
Total income
Credit expenses
Credit reversals/(expenses)
Bad and doubtful debts recovered
Total credit reversals/(expenses)
Operating expenses
Staff and related costs
Occupancy costs
Amortisation and depreciation costs
Fees and commissions
Other operating expenses
Total operating expenses
Profit before income tax expense
Income tax expense
Net profit attributable to owners of the Bank
Earnings per share
Basic
Diluted
1,749.1
(332.3)
1,867.8
(445.3)
1,731.0
(284.8)
1,846.6
(400.7)
1,416.8
1,422.5
1,446.2
1,445.9
141.2
57.6
94.2
293.0
158.7
53.5
170.7
382.9
126.1
18.1
138.0
282.2
144.2
16.1
56.2
216.5
1,709.8
1,805.4
1,728.4
1,662.4
23.4
3.8
27.2
(20.7)
2.7
(18.0)
24.6
3.8
28.4
(16.9)
2.2
(14.7)
(604.1)
(589.8)
(588.5)
(573.8)
(35.7)
(90.9)
(19.4)
(35.9)
(92.0)
(20.2)
(35.7)
(90.1)
(6.8)
(35.6)
(90.9)
(8.6)
(285.5)
(295.8)
(281.8)
(319.4)
(1,035.6)
(1,033.7)
(1,002.9)
(1,028.3)
753.9
(203.6)
550.3
619.4
(191.7)
427.7
701.4
(213.3)
488.1
cents
87.5
77.6
753.7
(229.7)
524.0
cents
98.1
82.6
3
3
3
3
4
6
6
54 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Statement of comprehensive income
For the year ended 30 June 2022
Group
Bank
June 2022
June 2021
June 2022
June 2021
Profit for the year
Note
$m
488.1
$m
524.0
$m
550.3
$m
427.7
304.0
-
32.5
(420.6)
0.1
46.1
120.8
(101.0)
Items which may be reclassified subsequently to profit or loss:
Revaluation (loss)/gain on debt securities at FVOCI
Impairment of debt securities at FVOCI
Gains on cash flow hedge instruments
Tax effect on items taken directly to or transferred from
equity
22
22
22
22
(84.8)
0.1
46.1
20.2
(0.5)
-
32.5
(9.6)
Total items that may be reclassified to profit or loss
(18.4)
22.4
(253.6)
235.5
Items which will not be reclassified subsequently to profit or loss:
Revaluation gain on equity investments at FVOCI
Actuarial loss on defined benefit superannuation plan
Tax effect on items taken directly to or transferred from
equity
22
22
22
Total items that will not be reclassified to profit or loss
4.7
-
(1.4)
3.3
13.5
(0.9)
(3.9)
8.7
5.4
-
(1.6)
3.8
12.7
(0.9)
(3.7)
8.1
Total comprehensive income for the year
473.0
555.1
300.5
671.3
Total comprehensive income for the year attributable to:
Owners of the Bank
473.0
555.1
300.5
671.3
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 5
Balance sheet
As at 30 June 2022
Assets
Cash and cash equivalents
Due from other financial institutions
Financial assets at fair value through profit or loss
(FVTPL)
Financial assets at amortised cost
Financial assets at fair value through other
comprehensive income (FVOCI)
Derivatives
Net loans and other receivables
Investments accounted for using the equity method
Shares in controlled entities
Property, plant and equipment
Deferred tax assets
Investment property
Goodwill and other intangible assets
Other assets
Total Assets
Liabilities
Due to other financial institutions
Deposits
Other borrowings
Derivatives
Amounts payable to controlled entities
Loans payable to securitisation trusts
Income tax payable
Provisions
Other payables
Loan capital
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Retained earnings
Total Equity
Group
Bank
June 2022
June 2021
June 2022
June 2021
Note
$m
$m
$m
$m
8
8
11
12
13
18
9
29
4
23
24
25
8
14
15
18
17
4
27
26
16
21
22
22
3,541.0
188.0
30.5
861.7
7,086.3
173.4
1,678.7
351.5
3,082.3
188.0
30.5
603.9
6,631.6
173.4
1,678.7
135.5
9,618.1
2,186.1
23,300.4
15,060.7
59.9
59.1
59.9
59.1
77,610.4
71,920.6
77,118.4
71,304.1
14.5
-
179.6
48.6
920.3
1,808.3
362.8
9.7
-
205.9
42.2
901.7
1,631.9
330.1
14.5
112.8
179.5
184.6
-
1,741.9
1,397.9
9.7
103.7
205.2
81.1
-
1,564.8
1,394.6
95,243.7
86,577.2
108,014.6
98,402.2
178.8
74,583.9
11,703.0
34.8
-
-
50.6
122.2
492.4
175.4
178.8
175.4
66,217.1
74,589.7
66,229.3
11,736.3
7,863.0
8,138.6
45.3
-
-
44.2
120.5
501.7
34.8
408.3
45.3
394.3
16,686.7
15,328.5
50.6
122.2
466.6
44.2
120.4
481.3
1,366.1
1,383.2
1,366.1
1,383.2
88,531.8
80,223.7
101,766.8
92,340.5
6,711.9
6,353.5
6,247.8
6,061.7
5,219.5
105.9
1,386.5
5,049.5
138.0
1,166.0
5,219.5
5,049.5
67.2
961.1
329.8
682.4
6,711.9
6,353.5
6,247.8
6,061.7
56 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Statement of changes in equity
For the year ended 30 June 2022
Opening balance at 1 July 2021
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued
Purchase of Treasury shares
Movement in Executive Share plans
Reduction in employee share ownership plan (ESOP) shares
Movement in general reserve for credit losses (GRCL)
Movement in operational risk reserve
Share based payment
Equity dividends
Group
Attributable to owners of Bendigo and Adelaide Bank Limited
Issued
ordinary
capital
$m
Other
issued
capital 1
$m
Retained
earnings 2
$m
Reserves 2
$m
Total
equity
$m
5,053.1
(3.6)
1,166.0
138.0
6,353.5
-
-
-
178.1
(8.6)
(0.1)
-
-
-
-
-
-
-
-
-
-
-
0.6
-
-
-
-
488.1
-
488.1
-
(15.1)
(15.1)
-
-
-
-
16.9
4.2
0.9
(289.6)
-
-
-
-
(16.9)
(4.2)
4.1
-
488.1
(15.1)
473.0
178.1
(8.6)
(0.1)
0.6
-
-
5.0
(289.6)
Closing balance at 30 June 2022
5,222.5
(3.0)
1,386.5
105.9
6,711.9
For the year ended 30 June 2021
Group
Attributable to owners of Bendigo and Adelaide Bank Limited
Issued
ordinary
capital
$m
Other
issued
capital 1
$m
Retained
earnings 2
$m
Reserves 2
$m
Total
equity
$m
Opening balance at 1 July 2020
4,909.3
(4.3)
805.9
87.3
5,798.2
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued
Purchase of Treasury shares
Movement in Executive Share plans
Reduction in employee share ownership plan (ESOP) shares
Movement in general reserve for credit losses (GRCL)
Share based payment
Equity dividends
-
-
-
155.4
(11.8)
0.2
-
-
-
-
-
-
-
-
-
-
0.7
-
-
-
524.0
(0.8)
523.2
-
-
-
-
(18.1)
1.3
(146.3)
-
31.9
31.9
-
-
-
-
18.1
0.7
-
524.0
31.1
555.1
155.4
(11.8)
0.2
0.7
-
2.0
(146.3)
Closing balance at 30 June 2021
5,053.1
(3.6)
1,166.0
138.0
6,353.5
1 Refer to Note 21 for further details.
2 Refer to Note 22 for further details.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 7
Statement of changes in equity (continued)
For the year ended 30 June 2022
Attributable to owners of Bendigo and Adelaide Bank Limited
Bank
Opening balance at 1 July 2021
De-registered subsidiary companies
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued
Purchase of Treasury shares
Movement in Executive Share plans
Reduction in employee share ownership plan (ESOP) shares
Movement in general reserve for credit losses (GRCL)
Share based payment
Equity dividends
Issued
ordinary
capital
$m
5,053.1
Other
issued
capital 1
$m
(3.6)
-
-
-
-
178.1
(8.6)
(0.1)
-
-
-
-
-
-
-
-
-
-
-
0.6
-
-
-
Retained
earnings 2
$m
Reserves 2
$m
Total
equity
$m
682.4
0.2
329.8
6,061.7
-
0.2
550.3
-
-
(249.8)
550.3
(249.8)
550.3
(249.8)
300.5
-
-
-
-
-
-
-
-
16.9
0.9
(289.6)
(16.9)
4.1
-
178.1
(8.6)
(0.1)
0.6
-
5.0
(289.6)
Closing balance at 30 June 2022
5,222.5
(3.0)
961.1
67.2
6,247.8
For the year ended 30 June 2021
Attributable to owners of Bendigo and Adelaide Bank Limited
Bank
Opening balance at 1 July 2020
De-registered subsidiary companies
Comprehensive income
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Shares issued
Purchase of Treasury shares
Movement in Executive Share plans
Reduction in employee share ownership plan (ESOP) shares
Movement in general reserve for credit losses (GRCL)
Share based payment
Equity dividends
Issued
ordinary
capital
$m
4,909.3
Other
issued
capital 1
$m
(4.3)
-
-
-
-
155.4
(11.8)
0.2
-
-
-
-
-
-
-
-
-
-
-
0.7
-
-
-
Retained
earnings 2
$m
Reserves 2
$m
Total
equity
$m
427.6
(9.0)
427.7
(0.8)
426.9
-
-
-
-
(18.1)
1.3
(146.3)
66.6
5,399.2
-
(9.0)
-
244.4
244.4
-
-
-
-
18.1
0.7
-
427.7
243.6
671.3
155.4
(11.8)
0.2
0.7
-
2.0
(146.3)
Closing balance at 30 June 2021
5,053.1
(3.6)
682.4
329.8
6,061.7
1 Refer to Note 21 for further details.
2 Refer to Note 22 for further details.
58 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Cash flow statement
For the year ended 30 June 2022
Group
Bank
June 2022
June 2021
June 2022
June 2021
Note
$m
$m
$m
$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
Cash flows from operating activities before changes in
operating assets and liabilities
(Increase)/decrease in operating assets
Net increase in balance of loans and other receivables
Net (increase)/decrease in balance of investment securities
Increase/(decrease) in operating liabilities
Net increase in balance of deposits
Net (decrease)/increase in balance of other borrowings
1,812.5
(351.1)
257.6
1,927.8
(503.7)
250.4
1,568.0
(312.3)
199.7
(1,065.8)
(1,043.0)
(1,103.7)
5.2
(195.3)
0.5
(134.0)
89.5
(195.3)
1,819.1
(462.5)
206.0
(786.8)
25.9
(134.0)
463.1
498.0
245.9
667.7
(5,666.4)
(6,380.1)
(6,960.9)
2,330.4
(4,418.5)
(7,145.3)
(6,984.6)
2,191.2
8,366.8
10,173.0
(33.3)
94.2
8,360.4
(275.6)
10,187.8
-
Net cash flows (used in)/from operating activities
28
(3,249.9)
6,134.7
(3,233.1)
6,062.1
Cash flows related to investing activities
Cash paid for purchases of property, plant and equipment
Cash proceeds from sale of property, plant and equipment
Cash paid for purchases of investment property
Cash proceeds from sale of investment property
Cash proceeds from sale of equity investments
Cash paid for purchases of equity investments
Cash proceeds from return of capital/dividend from
JV partners
Net cash received on acquisition of a business
combination/acquisition
Net cash proceeds from sale of Insurance Broking
and Debtor Financing businesses
Net cash flows from/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Repayment of preference shares
Payment of share issue costs
Cash paid for purchases of treasury shares
Proceeds from issuance of capital notes
Repayment of loan capital
Payment of loan capital issue costs
Proceeds from issuance of subordinated debt
Repayment of subordinated debt
Equity dividends paid
Repayment of lease liabilities
Repayment of ESOP shares
(14.5)
2.9
(51.9)
71.0
0.8
(5.0)
1.9
0.5
4.0
9.7
-
-
-
(8.7)
-
(21.1)
(0.7)
125.0
(125.0)
(213.7)
(50.3)
0.6
(21.0)
7.5
(31.6)
48.7
-
-
-
-
-
(14.4)
1.1
-
-
0.8
(5.0)
1.9
0.5
4.0
(21.0)
6.1
-
-
-
-
-
-
-
3.6
(11.1)
(14.9)
105.8
(574.3)
(0.2)
(3.2)
502.5
-
(7.4)
146.9
(250.0)
(105.3)
(51.0)
0.7
-
-
-
(8.7)
-
(21.1)
(0.7)
125.0
(125.0)
(213.7)
(50.3)
0.6
105.8
(574.3)
(0.2)
(3.2)
502.5
-
(7.4)
146.9
(250.0)
(105.3)
(51.0)
0.7
Net cash flows used in financing activities
(293.9)
(235.5)
(293.9)
(235.5)
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of period
(3,534.1)
7,084.3
5,902.8
1,181.5
(3,538.1)
6,629.6
5,811.7
817.9
Cash and cash equivalents at the end of period
8
3,550.2
7,084.3
3,091.5
6,629.6
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 5 9
Basis of preparation
This section describes the Group's significant accounting policies that relate to the financial statements and
notes of the accounts. If an accounting policy relates to a particular note, the applicable policy is contained
within the relevant note.
This section also details new accounting standards, amendments and interpretations, and whether they are
effective in FY22 or later years. We explain how these changes are expected to impact the financial position
and performance of the Group.
1 Corporate information
The financial report of Bendigo and Adelaide Bank Limited
('the Bank') and its controlled entities ('the Group') for the year
ended 30 June 2022 was authorised for issue in accordance
with a resolution of the Board of Directors on 5 September
2022. The Directors have the power to amend and reissue the
financial statements.
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,
22 – 44 Bath Lane Bendigo, Victoria, Australia.
2 Summary of significant accounting policies
Basis of preparation
The financial report of Bendigo and Adelaide Bank Limited:
•
•
is a general purpose financial report;
has been prepared in accordance with Australian
Accounting Standards along with interpretations issued
by the Australian Accounting Standards Board (AASB)
and International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board
(IASB);
has been prepared in accordance with the requirements
of the Corporations Act 2001;
has been prepared in accordance with the requirements
for an authorised deposit-taking institution under the
Banking Act 1959 (as amended);
has been presented in Australian dollars, which is the
functional presentation currency of the Bank and each
of its subsidiaries, with all values rounded to the nearest
hundred thousand dollar ($'00,000) in accordance with
ASIC Corporations (rounding in Financial/Directors'
Reports) instrument 2016-191, unless otherwise stated;
includes foreign currency transactions that are translated
into the functional currency using exchange rates at the
date of the transaction; and
where necessary, presents reclassified comparatives for
consistency with current year disclosures.
•
•
•
•
•
Basis of measurement
The consolidated financial statements have been prepared on
a historical cost basis except for the following material items
that are measured at fair value in the Balance Sheet:
•
Financial assets and liabilities at fair value through profit or
loss (FVTPL)
Derivative financial instruments
Debt and equity instruments measured at fair value
through other comprehensive income (FVOCI)
•
•
60 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Significant accounting judgements, estimates and assumptions
In preparing these consolidated financial statements,
management has made judgements, estimates and
assumptions that affect the application of the Group’s
accounting policies and the reported amounts of assets,
liabilities, revenues, expenses and the accompanying
disclosures, as well as the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities in future periods.
Estimates and underlying assumptions are reviewed on an
ongoing basis.
Further information on these judgements, estimates and
assumptions that are considered material to the financial
statements have been included within the following notes:
•
•
•
Note 10 Impairment of loans and advances
Note 23 Investment property
Note 24 Goodwill and other intangible assets
Events subsequent to reporting date
On 7 July 2022, Bendigo and Adelaide Bank Limited entered
into an agreement to acquire the ANZ Investment Lending
portfolio, with the transaction expected to be completed in
the first half of the 2023 calendar year. The acquisition will
allow the Group to further grow its margin lending business,
Leveraged Equities Limited. The value of the portfolio being
acquired is approximately $715 million and is subject to
movements in the underlying portfolio up until the completion
date. The Group will pay an immaterial premium over book
value.
No other matters or circumstances have arisen since the end of
the financial year to the date of this report which significantly
affected or may significantly affect the operations of the
Group, the results of those operations, or the state of affairs of
the Group in subsequent financial periods.
Changes in accounting policies
New and amended standards and interpretations
Interest Rate Benchmark Reform - Phase 2 (Amendments to
AASB 9, IAS39, AASB 7, AASB 4, and AASB 16)
In September 2020, the AASB issued AASB 2020-8
Amendments to Australian Accounting Standards – Interest
Rate Benchmark Reform – Phase 2, which has an effective
date for the Group of 1 July 2021. This standard addresses
issues that may affect the Group at the point of transition from
an existing IBOR to a RFR and provides relief from applying
specific requirements related to hedge accounting and the
modification of financial assets and financial liabilities if certain
criteria are met.
2 Summary of significant accounting policies (continued)
Changes in accounting policies (continued)
The Group has exposure to IBOR, mainly BBSW, through
its issuance of debt, holdings of investment securities, and
associated hedging activities.
The Group expects BBSW to exist as a benchmark rate for
the foreseeable future and, therefore, does not expect to be
directly impacted by IBOR reform.
Recently issued or amended standards not yet effective
The following recently issued or amendments to existing
standards are not expected to result in significant changes to
the Group’s accounting policies:
•
•
AASB 17 Insurance Contracts;
Classification of liabilities as current or non-current
(Amendments to AASB 101);
Amendments to AASB 17;
Disclosure of Accounting Policy (Amendments to AASB
101 and IFRS Practice Statement 2);
Definition of Accounting Estimate (Amendments to AASB
108); and
Deferred Tax Related to Assets and Liabilities Arising from
a Single Transaction / Amendments to IAS 12 Income
Taxes.
•
•
•
•
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 61
Results for the year
This section outlines the performance of the Group in more detail. Further analysis has been provided for the
following key areas: revenue and expenses, income tax, segment results, earnings per share and dividends.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Note
$m
$m
$m
$m
0.9
0.9
16.0
1.8
0.7
1,728.8
1,749.1
0.5
18.6
1.7
0.3
1.2
1,845.5
1,867.8
0.9
0.9
199.9
1.8
0.7
1,526.8
1,731.0
0.5
18.6
159.6
0.3
1.2
1,666.4
1,846.6
(163.1)
(36.9)
(268.8)
(35.5)
(163.0)
(36.9)
(268.9)
(35.5)
(33.6)
(47.4)
(7.5)
(4.9)
(38.9)
(37.0)
(44.7)
(5.0)
(5.9)
(48.4)
(33.6)
-
(7.5)
(4.9)
(38.9)
(37.0)
-
(5.0)
(5.9)
(48.4)
(332.3)
1,416.8
(445.3)
1,422.5
(284.8)
1,446.2
(400.7)
1,445.9
81.4
55.5
4.3
141.2
57.6
198.8
24.3
0.6
(0.7)
38.5
4.9
26.6
94.2
293.0
85.0
70.0
3.7
158.7
53.5
212.2
19.1
1.0
1.7
137.7
0.4
10.8
170.7
382.9
69.7
55.3
1.1
126.1
18.1
144.2
24.3
0.6
(0.7)
-
89.5
24.3
138.0
282.2
73.7
69.9
0.6
144.2
16.1
160.3
19.1
1.0
1.7
-
25.9
8.5
56.2
216.5
23
3 Profit
Interest income
Effective interest income
Cash and cash equivalents
Assets held at FVTPL
Assets held at FVOCI
Assets held at amortised cost
Reverse repurchase agreements
Loans and other receivables
Total interest income
Interest expense
Deposits
- Customer
- Wholesale
Wholesale borrowings
- Other wholesale borrowings - domestic
- Notes payable
- Repurchase agreements
Lease liability
Loan capital
Total interest expense
Total net interest income
Other revenue
Fee income
Assets
Liabilities and other products
Trustee, management and other services
Total fee income
Commissions and management fees
Total revenue from contracts with customers
Other income
Foreign exchange income
Factoring products income
Trading book (loss)/income
Homesafe revaluation gain
Dividend income
Other
Total other income
Total other revenue
62 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Note
10
10
24
24
3 Profit (continued)
Expenses
Credit expenses
Individually assessed provision
Collectively assessed provision
Bad debts written off
Bad debts recovered
Total credit reversals/(expenses)
Operating expenses
Staff and related costs
Salaries, wages and incentives
Superannuation contributions
Other staff related costs
Total staff and related costs
Occupancy costs
Operating lease rentals
Depreciation of leasehold improvements
Other
Total occupancy costs
Amortisation and depreciation
Amortisation of acquired intangibles
Amortisation of software intangibles
Depreciation of property, plant and equipment
Total amortisation and depreciation costs
Fees and commission expense
Other operating expenses
Communications, postage and stationery
Computer systems and software costs
Advertising and promotion
Other product and services delivery costs
Consultancy fees
Non-credit losses
Insurance costs
Other expenses
Total other operating expenses
Total operating expenses
Recognition and measurement
Interest income or expense on financial instruments that are
recognised at amortised cost or fair value through other
comprehensive income are measured using the effective
interest rate method. The effective interest rate is the rate
that exactly discounts estimated future cash receipts or
payments through the expected life of the financial instrument
or, when appropriate, a shorter period, to the gross carrying
amount of the financial instrument. Calculation of the effective
interest rate takes into account fees receivable (i.e. origination
and application fees) or payable that are an integral part of
the instrument's yield, premiums or discounts on acquisition
or issue, early redemption fees and transaction costs. All
contractual terms of a financial instrument are considered
when estimating future cash flows. Where the Group acts as
a lessee, and a lease liability has been recognised, the interest
expense associated with the lease liability is recognised as an
interest expense.
Trading book (loss)/income represents the fair value
adjustments for financial assets measured at FVTPL.
Group
Jun-22
$m
1.7
21.0
0.7
3.8
27.2
(519.0)
(48.2)
(36.9)
(604.1)
(6.3)
(8.3)
(21.1)
(35.7)
(6.0)
(33.4)
(51.5)
(90.9)
(19.4)
(33.8)
(87.0)
(22.9)
(17.0)
(32.3)
(13.2)
(12.4)
(66.9)
Jun-21
$m
(34.2)
16.5
(3.0)
2.7
(18.0)
(510.5)
(44.6)
(34.7)
(589.8)
(5.8)
(8.2)
(21.9)
(35.9)
(3.0)
(27.9)
(61.1)
(92.0)
(20.2)
(33.4)
(79.4)
(28.3)
(22.8)
(59.9)
(7.9)
(10.8)
(53.3)
Bank
Jun-22
$m
1.9
21.0
1.7
3.8
28.4
(505.7)
(46.8)
(36.0)
(588.5)
(6.3)
(8.3)
(21.1)
(35.7)
(5.3)
(33.3)
(51.5)
(90.1)
(6.8)
(33.7)
(86.2)
(22.7)
(17.0)
(31.4)
(13.2)
(12.4)
(65.2)
Jun-21
$m
(34.2)
16.6
0.7
2.2
(14.7)
(496.7)
(43.2)
(33.9)
(573.8)
(5.8)
(8.2)
(21.6)
(35.6)
(1.9)
(27.9)
(61.1)
(90.9)
(8.6)
(35.5)
(76.5)
(27.5)
(22.8)
(59.4)
(7.9)
(10.8)
(79.0)
(285.5)
(295.8)
(281.8)
(319.4)
(1,035.6)
(1,033.7)
(1,002.9)
(1,028.3)
Commissions and management fees are earned by the
Group from a diverse range of financial services provided
to customers. Fees, commissions and management fees are
recognised at an amount that reflects the consideration
to which the Group expects to be entitled in exchange for
providing the services. The performance obligations, as well as
the timing of their satisfaction, are identified, and determined,
at the inception of the contract. When the Group provides a
service to its customers, consideration is invoiced and generally
due immediately upon satisfaction of a service provided at a
point in time or over the contract period for a service provided
over time.
Dividend income is recognised by the Group when the right to
receive a payment is established.
Homesafe revaluation gain reflects the gains arising from
changes in the fair value of investment property and are
recognised in the year in which they arise.
Refer to Note 23 for further information.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 6 3
3 Profit (continued)
Recognition and measurement (continued)
Operating expenses are recognised as the relevant service is
rendered, or once a liability is incurred.
Credit expenses are measured as the difference between the
carrying amount and the value of the estimated future cash
flows, discounted at the financial instrument's original effective
interest rate. Refer to Note 10 for more information on the
impairment of loans and advances.
Staff and related costs are recognised over the period in which
the employees provide the service.
Refer to Note 27 for more information relating to provisions for
employee entitlements.
Incentive payments are recognised to the extent that the
Group has a present obligation. Refer to Note 33 for further
information on share based payments.
•
Depreciation of Property, Plant and Equipment includes
depreciation expenses associated with operating leases,
which are recognised as Right of Use Assets (ROUA). Refer to
Note 36 for further information on the depreciation of leased
assets.
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.
Superannuation contributions are made to an employee
accumulation fund and are expensed when they become
payable.
Occupancy costs includes operating lease expenses relating
to low value assets and short-term leases, being leases with a
term of 12 months or less.
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.
Amortisation
Refer to Note 24 for information on the amortisation of
intangibles.
64 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
4 Income tax expense
Major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge
Franking credits
Adjustments in respect of current income tax of previous years
Deferred income tax
Adjustments in respect of deferred income tax of previous years
Relating to origination and reversal of temporary differences
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
$m
$m
$m
(209.2)
(200.1)
(197.7)
(197.5)
2.8
5.7
(4.6)
(8.0)
0.8
3.6
(1.8)
(32.2)
2.8
7.0
(5.7)
(10.0)
0.8
3.8
(2.0)
3.2
Income tax expense reported in the Income Statement
(213.3)
(229.7)
(203.6)
(191.7)
Statement of changes in equity
$m
$m
$m
$m
Deferred income tax related to items charged or credited
directly in equity
Net gain on cash flow hedges
Net loss/(gain) on financial assets at FVOCI
Actuarial loss on superannuation defined benefits plan
Income tax charged or credited in equity
(5.3)
24.1
-
18.8
(9.8)
(3.8)
0.1
(5.3)
124.5
-
(9.8)
(95.0)
0.1
(13.5)
119.2
(104.7)
A reconciliation between income tax expense and the product of accounting profit before income tax multiplied by the
Group's applicable income tax rate is as follows:
Accounting profit before income tax
Income tax expense comprises amounts set aside as:
Provision attributable to current year at statutory rate, being:
$m
$m
$m
$m
701.4
753.7
753.9
619.4
Prima facie tax on accounting profit before tax
(210.4)
(226.1)
(226.2)
(185.8)
Under provision in prior years
Tax credits and adjustments
Expenditure not allowable for income tax purposes
Other non assessable income
Tax effect of tax credits and adjustments
Dividends received
Other
1.1
2.8
(7.5)
1.9
(0.8)
-
(0.4)
1.8
0.8
(9.3)
3.5
(0.2)
-
(0.2)
1.3
2.8
(7.5)
1.8
(0.8)
25.3
(0.3)
1.8
0.8
(16.5)
0.8
(0.2)
7.6
(0.2)
Income tax expense reported in the Income Statement
(213.3)
(229.7)
(203.6)
(191.7)
Deferred income tax
Deferred income tax at 30 June relates to the following:
Deferred income tax at 30 June relates to the following:
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Gross deferred tax assets
Derivatives
Employee benefits
Provisions
Lease liability
Financial assets at FVOCI
Other
Gross deferred tax assets
Set-off of deferred tax assets and deferred tax liabilities
Net deferred tax assets
$m
44.4
31.6
89.4
44.7
19.5
34.9
264.5
(215.9)
48.6
$m
13.8
31.2
106.5
54.1
-
24.9
230.5
(188.3)
42.2
$m
44.4
31.6
89.1
44.7
36.1
33.9
279.8
(95.2)
184.6
$m
13.8
31.2
106.4
53.9
-
24.4
229.7
(148.6)
81.1
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 6 5
4 Income tax expense (continued)
Deferred income tax (continued)
Gross deferred tax liabilities
Net gain on financial assets at FVOCI
Derivatives
Intangible assets
Investment property
Property, plant and equipment
Other
Gross deferred tax liability
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
-
53.6
15.0
120.6
19.1
7.6
215.9
$m
4.5
17.8
5.5
122.2
26.8
11.5
188.3
$m
-
53.6
14.9
-
19.1
7.6
95.2
$m
88.4
17.8
5.0
-
26.6
10.8
148.6
Set-off of deferred tax assets and deferred tax liabilities
(215.9)
(188.3)
(95.2)
(148.6)
Net deferred tax liabilities
-
-
-
-
Income tax payable
Tax payable attributable to members of the tax
consolidated group
$m
50.6
50.6
$m
44.2
44.2
$m
50.6
50.6
$m
44.2
44.2
At 30 June 2022, there is no unrecognised deferred income tax
liability (June 2021: Nil) for taxes that would be payable on the
unremitted earnings of certain subsidiaries or joint ventures of
the Group, as the Group has no liability for additional taxation
should such amounts be remitted.
At 30 June 2022, the Group had unused capital losses of
$9.7 million (June 2021: Nil). The amount includes an estimate
of tax losses on the disposal of assets from the debtor finance
business. A deferred tax asset has not been recognised in
respect of these losses as the utilisation is not regarded as
probable.
Recognition and measurement
Current taxes
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.
Deferred taxes
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.
For amounts directly recognised in equity, the associated
current and deferred tax balances are also recognised directly
in equity.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax credits 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 credits 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.
Tax consolidation
Bendigo and Adelaide Bank Limited and its 100% owned
subsidiaries form the tax consolidated Group. Members of the
Group entered into a tax sharing agreement to allocate income
tax liabilities to the wholly-owned subsidiaries 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.
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 stand alone calculation, while deferred taxes
are calculated by members of the tax consolidated Group in
accordance with AASB 112 Income Taxes.
66 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
5 Segment results
Segment reporting
An operating segment is a component of the Group that
engages in business activities from which it earns revenues and
incurs expenses. Segment reporting reflects the information
that is used by the Managing Director for the purposes of
resource allocation and performance assessment, hence it is
consistent with the internal reporting provided to the Managing
Director and the Executive Team.
Changes to the management structure of the Group can
cause the Group's operating segments to change. Where this
occurs, prior period segment results are restated.
To support the next phase of the Group's growth and
transformation strategy, on 1 February 2022 the Group
announced the aggregation of the Business and Agribusiness
customer groups. The restructure triggered a review of the
Group's operating segments. The Group's revised reportable
segments are Consumer, Business and Agribusiness and
Corporate.
Consumer
The Consumer division focuses on engaging with and servicing
our consumer customers and includes the branch network
(including Community Banks and Alliance Banks), Up digital
bank, mobile relationship managers, third party banking
channels, wealth services, Homesafe, and customer support
functions.
Business and Agribusiness
The Business and Agribusiness division is focused on
servicing business customers, particularly small and medium
businesses who are seeking a relationship banking experience
and includes portfolio funding, Delphi Bank and all banking
services provided to agribusiness, rural and regional Australian
communities through the Rural Bank brand.
Corporate
Corporate includes the results of the Group's support functions
including treasury, technology, property services, strategy,
finance, risk, compliance, legal, human resources, and investor
relations.
Accounting policies and inter-segment
transactions
Measurement of segmental assets, liabilities, income and
expenses is in accordance with the Group's accounting
policies. Segment results are determined by including all
revenue and expenses associated with each business.
Transactions between business segments are conducted at
arm's length, and are eliminated on consolidation.
Segment net interest income is recognised based on an
internally set funds transfer pricing policy, based on pre-
determined market rates of return on the assets and liabilities
of the segment.
Major customers
Revenues from no individual customer amount to greater than
10% of the Group's revenue.
Geographic information
The allocation of revenue and assets is based on the
geographic location of the customer. The Group operates in
all Australian states and territories, providing banking and other
financial services.
30 June 2022
Consumer
Business &
Agribusiness
Corporate
Net interest income
Other income
Total segment income
Operating expenses
Credit reversals
Total segment expenses
$m
917.4
220.0
1,137.4
(433.6)
4.4
(429.2)
$m
478.5
61.6
540.1
(132.7)
14.6
(118.1)
Net profit before income tax expense (cash basis)
708.2
422.0
Income tax expense
Net profit after income tax expense (cash basis)
Non-cash net interest income items
Non-cash other income items
Non-cash operating expense items
(216.0)
492.2
(0.5)
0.4
(8.4)
(128.9)
293.1
-
1.7
(4.5)
Net profit after income tax expense (statutory basis)
483.7
290.3
(285.9)
Total
$m
1,417.4
292.5
1,709.9
$m
21.5
10.9
32.4
(450.0)
(1,016.3)
8.2
(441.8)
(409.4)
27.2
(989.1)
720.8
124.5
(220.4)
(284.9)
-
-
(1.0)
500.4
(0.5)
2.1
(13.9)
488.1
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 67
5 Segment results (continued)
30 June 2021
Consumer
Business &
Agribusiness
Corporate
Net interest income
Other income
Total segment income
Operating expenses
Credit (expenses)/reversals
Total segment expenses
$m
904.1
204.5
1,108.6
(446.1)
(8.3)
(454.4)
$m
486.0
66.1
552.1
(138.9)
(25.2)
(164.1)
$m
33.7
8.1
41.8
Total
$m
1,423.8
278.7
1,702.5
(442.4)
(1,027.4)
15.5
(18.0)
(426.9)
(1,045.4)
Net profit before income tax expense (cash basis)
654.2
388.0
(385.1)
657.1
Income tax expense
Net profit after income tax expense (cash basis)
Non-cash net interest income items
Non-cash other income items
Non-cash operating expense items
(199.1)
455.1
(0.9)
72.9
(4.3)
(118.2)
269.8
-
-
(0.9)
117.4
(199.9)
(267.7)
457.2
-
-
-
(0.9)
72.9
(5.2)
Net profit after income tax expense (statutory basis)
522.8
268.9
(267.7)
524.0
Reportable segment assets
Reportable segment assets
and liabilities
and liabilities
For the year ended 30 June 2022
Reportable segment assets
Reportable segment liabilities
For the year ended 30 June 2021
Reportable segment assets
Reportable segment liabilities
Reconciliation of reportable segments to
consolidated assets and liabilities
Total assets for operating segments
Total assets
Total liabilities for operating segments
Notes payable 1
Total liabilities
1 Refer to Note 15
Consumer
Business &
Agribusiness
Total
operating
segments
Corporate
$m
$m
$m
$m
Total
$m
58,206.9
19,743.8
77,950.7
17,293.0
95,243.7
52,957.3
18,075.8
71,033.1
13,658.8
84,691.9
52,594.7
19,591.9
72,186.6
14,390.6
86,577.2
47,293.8
16,115.3
63,409.1
13,216.9
76,626.0
Jun-22
Jun-21
$m
$m
95,243.7
86,577.2
95,243.7
86,577.2
84,691.9
76,626.0
3,839.9
3,597.7
88,531.8
80,223.7
68 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
6 Earnings per ordinary share
Basic
Diluted
Group
Jun-22
Jun-21
Cents per share Cents per share
87.5
77.6
98.1
82.6
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share (EPS) are
as follows:
Reconciliation of earnings used in calculation of earnings per ordinary share
Net profit after tax
Total statutory earnings
Earnings used in calculating statutory earnings per ordinary share
Add back: dividends accrued and/or paid on dilutive loan capital
Total diluted earnings
$m
488.1
488.1
488.1
15.9
504.0
$m
524.0
524.0
524.0
19.1
543.1
Reconciliation of weighted average number of ordinary shares (WANOS)
No. of shares
used in earnings per share calculations
WANOS used in the calculation of basic earnings per share
Effect of dilution - executive performance rights
Effect of dilution - loan capital
WANOS used in the calculation of diluted earnings per share
Potentially dilutive instruments
Jun-22
Jun-21
557,537,515
534,373,747
3,829,073
1,619,192
88,235,194
121,148,692
649,601,783
657,141,631
The following instruments are potentially dilutive during the reporting period:
Dilutive instruments
Loan capital instruments
Executive share options
Executive performance rights
Subordinated note (with non viability clause)
Recognition and measurement
Basic earnings per share (EPS) is calculated as net profit after
tax, divided by the weighted average number of ordinary
shares.
Diluted EPS is calculated as net profit after tax, add back
dividends on dilutive loan capital instruments, divided by the
weighted average number of ordinary shares and potentially
dilutive ordinary shares, including loan capital instruments and
share based payment plan rights and shares.
Executive performance rights and Loan Funded Share Plan
shares - classification of securities
Executive performance rights and Loan Funded Share Plan
shares 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 would be reduced to the number that
would have been issued if the end of the period was the end of
the contingency period.
Jun-22
Jun-21
Yes
No
Yes
No
Yes
No
Yes
No
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 6 9
7 Dividends
Ordinary shares (ASX: BEN)
Group
Bank
Dividends
paid
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
¢
$m
¢
$m
¢
$m
¢
$m
Jun-21 final dividend
Jun-20 final dividend
Jun-21 final dividend
Jun-20 final dividend
Sep 2021 26.5 144.0 Mar 2021
4.5
23.5 Sep 2021
26.5 144.0 Mar 2021
4.5
23.5
Dec-21 interim dividend
Dec-20 interim dividend
Dec-21 interim dividend
Dec-20 interim dividend
Mar 2022 26.5
145.6 Mar 2021
23.5
122.8 Mar 2022
26.5 145.6 Mar 2021
23.5 122.8
53.0 289.6
28.0 146.3
53.0 289.6
28.0 146.3
Final dividend June 20221
Dividends proposed since the reporting date, but not recognised as a liability:
Sep 2022
¢
26.5
$m
146.7
Sep 2022
¢
26.5
$m
146.7
All dividends paid were fully franked at 30% either from existing franking credits or from franking credits arising from payment of
income tax provided for in the financial statements for the year ended 30 June 2022.
1 Dividend amount payable is indicative as it is based on expected Bonus Share Scheme participation recorded at reporting date and is subject to
finalisation upon confirmation by shareholders electing to participate in the Group’s Bonus Share Scheme.
Preference shares and Capital notes
Group
Bank
2022
2021
2022
2021
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
Date
paid
Cents
per
share
Total
amount
¢
$m
¢
$m
¢
$m
¢
$m
Convertible preference shares (CPS2) (recorded as debt instruments) (ASX: BENPE) 1
Nov 2020 117.28
117.28
3.4
3.4
Convertible preference shares (CPS3) (recorded as debt instruments) (ASX: BENPF) 2
Dec 2020 146.35
Jun 2021 140.31
286.66
4.1
4.0
8.1
Nov 2020 117.28
117.28
Dec 2020 146.35
Jun 2021 140.31
286.66
Converting preference shares (CPS4) (recorded as debt instruments) (ASX: BENPG)
Sep 2021 65.15
2.1 Sep 2020 67.19
2.2 Sep 2021 65.15
2.1 Sep 2020 67.19
Dec 2021 65.65
2.1 Dec 2020 67.02
2.2 Dec 2021 65.65
2.1 Dec 2020 67.02
Mar 2022 67.25
2.2 Mar 2021 65.80
2.1 Mar 2022 67.25
2.2 Mar 2021 65.80
Jun 2022 68.14
2.2 Jun 2021 66.81
2.1 Jun 2022 68.14
2.2 Jun 2021 66.81
266.19
8.6
266.82
8.6
266.19
8.6
266.82
Capital notes (recorded as debt instruments) (ASX: BENPH) 3
Sep 2021 67.48
Dec 2021 66.51
3.4
3.3
Sep 2021 67.48
Dec 2021 66.51
3.4
3.3
Mar 2022 66.66
3.4 Mar 2021 76.92
3.9 Mar 2022 66.66
3.4 Mar 2021 76.92
Jun 2022 69.77
3.5 Jun 2021 67.70
3.4 Jun 2022 69.77
3.5 Jun 2021 67.70
270.42
13.6
144.62
7.3
270.42
13.6
144.62
1 Convertible preference shares (CPS2, ASX: BENPE) were redeemed in November 2020. Final dividend payment was made in November 2020.
2 Convertible preference shares (CPS3, ASX: BENPF) were redeemed in June 2021. Final dividend payment was made in June 2021.
3 Capital notes (ASX: BENPH) were issued in November 2020. First dividend payment was made in March 2021.
3.4
3.4
4.1
4.0
8.1
2.2
2.2
2.1
2.1
8.6
3.9
3.4
7.3
70 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
7 Dividends (continued)
Dividend franking account
Balance of franking account as at the end of the financial year
Franking credits that will arise from the payment of income tax
provided for in the financial report
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 1
Closing balance
Group
Jun-22
Jun-21
$m
628.1
50.6
$m
561.2
44.2
(63.4)
(63.2)
615.3
542.2
1
Impact of dividends is indicative as it is based on expected Bonus Share Scheme participation recorded at reporting date and
is subject to finalisation upon confirmation by shareholders electing to participate in the Group’s Bonus Share Scheme.
Ordinary share dividends 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 1
Satisfied by issue of shares 2
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
213.7
75.9
289.6
$m
105.3
41.0
146.3
$m
213.7
75.9
289.6
$m
105.3
41.0
146.3
1 Refers to cash paid to shareholders who did not elect to participate in the Dividend Reinvestment Plan.
2 Represents the value of shares issued to participating shareholders under the Dividend Reinvestment Plan.
Dividend Reinvestment Plan
Bonus Share Scheme
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 seven
trading days commencing 8 September 2022. Shares issued
under this Plan rank equally with all other ordinary shares.
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 seven trading
days commencing 8 September 2022. 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 2022 final dividend is 7 September 2022.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7 1
Financial Instruments
This section covers the financial instruments held by the Group including: loans and advances, derivatives,
deposits and other borrowings. This section outlines how the fair value of financial instruments is determined and
the associated methodology.
Business model assessment
The Group determines its business model at the level that best
reflects how it manages groups of financial assets to achieve
its business objectives. While judgement is used in determining
the business model, consideration is given to relevant, objective
evidence including:
•
•
The business purpose of the portfolio;
The risks that affect the performance and the way those
risks are managed;
The basis on which the performance of the portfolio is
evaluated; and
The frequency and significance of sales activity.
•
•
If cash flows after initial recognition are realised in a way
that is different from the Group’s original expectations, the
Group does not change the classification of the remaining
financial assets held in that business model, but incorporates
such information when assessing newly originated or newly
purchased financial assets going forward.
The SPPI test
The Group assesses financial assets to evaluate if their
contractual cashflows are comprised of solely payments of
principal and interest (the SPPI test). ‘Principal’ for the purpose
of this test is defined as the fair value of the financial asset at
initial recognition and may change over the life of the financial
asset (for example, if there are repayments of principal or
amortisation of the premium/discount). ‘Interest’ for the purpose
of this test is defined as the consideration for the time value of
money and credit risk, which are the most significant elements
of interest within a lending arrangement. Principal amounts
include repayments of lending and financing arrangements,
and interest primarily relates to basic lending returns, including
compensation for credit risk and the time value of money
associated with the principal amount outstanding. In contrast,
contractual terms that introduce a more than de minimis
exposure to risks or volatility in the contractual cash flows that
are unrelated to a basic lending arrangement do not give rise
to contractual cash flows that are solely payments of principal
and interest on the amount outstanding.
Initial recognition and measurement
Financial assets and liabilities are initially recognised on the
date on which the Group becomes a party to the contractual
provisions of the instrument, or, in the case of loans and
advances, when funds are transferred to the customers'
account.
At initial recognition, the Group measures a financial instrument
at its fair value plus or minus transaction costs that are
incremental and directly attributable to the acquisition or issue
of the financial instrument, such as fees and commissions.
Transaction costs of financial instruments carried at FVTPL are
expensed in profit or loss.
Classification of financial assets
Subsequent to initial recognition, the measurement of the
Group’s financial assets is dependent on the business
model in which it is managed and the contractual cash flow
characteristics. There are four measurement classifications,
being:
•
•
amortised cost;
fair value through other comprehensive income (FVOCI)
with recycling;
fair value through other comprehensive income (FVOCI)
without recycling; and
fair value through profit or loss (FVTPL).
•
•
The Group measures financial assets at amortised cost if
the financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows, and the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal
amount outstanding, unless the financial asset has been
designated as FVTPL. The details of these conditions are
outlined below.
Financial assets with contractual terms that meet the SPPI
test and that are held within a business model where the
objective is to both collect contractual cashflows and sell
the financial assets are measured at FVOCI with subsequent
reclassification to the Income Statement, unless the financial
asset has been designated as FVTPL. Non-traded equity
instruments have been designated at FVOCI with no
subsequent reclassification to the Income Statement. All other
assets are measured at FVTPL.
72 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
8 Cash and cash equivalents
Notes and coins
Cash at bank
Reverse repurchase agreements
Total cash and cash equivalents
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
133.4
2,836.4
571.2
$m
137.1
5,211.1
1,738.1
$m
133.4
2,377.7
571.2
$m
137.1
4,756.4
1,738.1
3,541.0
7,086.3
3,082.3
6,631.6
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
Recognition and measurement
$m
3,541.0
188.0
(178.8)
$m
7,086.3
173.4
(175.4)
$m
3,082.3
188.0
(178.8)
$m
6,631.6
173.4
(175.4)
3,550.2
7,084.3
3,091.5
6,629.6
Cash and cash equivalents include notes and coins at branches, unrestricted balances held with other financial institutions,
reverse repurchase agreements and highly liquid financial assets with original maturities of three months or less and are subject
to an insignificant risk of changes in their fair value. These assets are generally used by the Group in managing its short-term
commitments.
Cash and cash equivalents are carried at amortised cost in the Balance Sheet.
Cash at bank earns interest at variable rates based on daily bank and short-term deposit rates. Interest is recognised in the
Income Statement using the effective interest method.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7 3
9 Loans and other receivables
Overdrafts
Credit cards
Term loans
Margin lending
Lease receivables
Factoring receivables
Other
Note
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
1,290.7
314.7
$m
1,573.5
313.3
$m
1,290.5
314.7
$m
1,573.3
313.3
73,952.9
67,951.7
74,893.2
68,815.6
1,433.2
693.7
-
136.1
1,480.6
695.8
45.2
172.5
-
693.5
-
136.1
-
695.3
45.2
172.5
Gross loans and other receivables
77,821.3
72,232.6
77,328.0
71,615.2
Individually assessed provision
Collectively assessed provision
Unearned income
Total provisions and unearned income
Deferred costs paid
Net loans and other receivables
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
10
10
(58.1)
(225.7)
(71.3)
(355.1)
(94.3)
(246.7)
(82.4)
(423.4)
(57.8)
(224.8)
(71.2)
(353.8)
(94.3)
(245.8)
(82.4)
(422.5)
144.2
111.4
144.2
111.4
77,610.4
71,920.6
77,118.4
71,304.1
$m
3,872.4
1,499.5
2,823.8
10,062.6
59,563.0
$m
4,337.8
1,134.8
3,034.9
10,145.6
53,579.5
$m
2,439.2
1,499.5
2,823.8
10,062.4
60,503.1
$m
2,857.1
1,134.8
3,034.9
10,145.2
54,443.2
Gross loans and other receivables
77,821.3
72,232.6
77,328.0
71,615.2
1 Balances exclude individually assessed and collectively assessed provisions, unearned revenue, and deferred costs and are categorised by the
contracted maturity date of each loan facility.
Deferred costs include costs associated with the acquisition,
origination or securitisation of loan portfolios. These costs are
amortised through the Income Statement over the average life
of the loans in these portfolios.
All loans are subject to continuous management review to
assess whether there is any objective evidence of impairment.
For further details regarding impairment of loans refer to Note
10.
Unearned income on the Group's personal lending and leasing
portfolios is brought to account over the life of the contracts
on an actuarial basis.
Recognition and measurement
Loans and other receivables are debt instruments recognised
initially at fair value, which represent the cash advanced to
the borrower plus direct and incremental transaction costs on
settlement date, when funding is advanced to the customer.
Loans are subsequently measured in accordance with the
Group’s Classification of financial assets policy. Most loans are
carried at amortised cost, which represents the gross carrying
amount less allowances for credit losses. Interest on loans is
recognised using the effective interest method. The estimated
future cash flows used in the calculation of the effective
interest rate include those determined by the contractual term
of the asset, and includes all fees, transaction costs and all
other premiums or discounts.
For loans carried at amortised cost, impairment losses are
recognised in accordance with the three-stage expected
credit loss (ECL) impairment model outlined in Note 10.
Finance leases, where the Group acts as lessor, are included in
loans and other receivables. Finance leases are those where
substantially all the risks and rewards of ownership of the asset
have been transferred to the lessee. Lease receivables are
recognised at an amount equal to the net investment in the
lease.
74 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
10 Impairment of loans and advances
Summary of impaired financial assets
Impaired loans
Loans - without individually assessed provisions
Loans - with individually assessed provisions
Restructured loans
Less: individually assessed provisions
Net impaired loans
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
$m
$m
$m
19.7
110.6
2.8
(57.1)
40.6
168.0
0.2
(93.0)
19.7
110.6
2.8
(57.1)
40.6
168.0
0.2
(93.0)
76.0
115.8
76.0
115.8
Net impaired loans to gross loans
0.10%
0.16%
0.10%
0.16%
Portfolio facilities - past due 90 days, not well secured
Less: individually assessed provisions
Net portfolio facilities
Loans past due 90 days
Accruing loans past due 90 days, with adequate security balance
Net fair value of properties acquired through the enforcement of security
Recognition and measurement
2.0
(1.0)
1.0
$m
256.9
41.8
2.9
(1.3)
1.6
$m
282.9
35.3
2.0
(1.0)
1.0
$m
256.9
41.8
2.9
(1.3)
1.6
$m
282.9
35.3
A facility is classified as impaired regardless of whether it is
90 days or more past due (arrears) when there is doubt as to
whether the full amounts due (interest and principal) will be
received in a timely manner. This is the case even if the full
extent of the loss cannot be clearly determined.
Impairment losses are calculated by discounting the expected
future cash flows of a loan, which includes expected future
receipts of contractual interest, at the loan's original effective
interest rate, and comparing the resultant present value with
the loan's current carrying amount.
Losses for impaired loans are recognised when there is
objective evidence that impairment of a loan, or portfolio of
loans, has occurred. Impairment losses that are calculated on
individual loans, or on groups of loans assessed collectively, are
recorded in the Income Statement.
Restructured loans
Restructured loans are facilities in which the original
contractual terms have been modified for reasons related to
the financial difficulties of the customer. Restructuring may
consist of reduction of interest, principal or other payments
legally due, or an extension in maturity.
Group
Stage 1 Stage 2
Stage 3
12
month
ECL
Lifetime
ECL
Collectively
assessed -
Lifetime ECL
Individually
assessed -
Lifetime ECL
General
reserve for
credit losses
Movements in provisions and reserve
$m
$m
Balance as at 1 July 2021
126.3
86.8
Transfers during the period to:
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New/increased provisions
Write-back of provisions no longer required
Change in balances
1.2
(1.2)
(18.6)
19.3
(8.7)
(5.4)
-
(0.4)
13.5
3.9
(2.8)
(5.8)
(9.9)
(3.7)
$m
33.6
-
(0.7)
14.1
(1.4)
0.5
(8.3)
(6.6)
Total
$m
$m
$m
94.3
104.7
445.7
-
-
-
1.8
(3.5)
-
-
-
-
-
-
-
-
(16.9)
-
-
-
-
14.4
(21.0)
(33.0)
Bad debts written off previously provided for
-
-
-
(34.5)
-
(34.5)
Total provision for doubtful debts as at 30 June 2022
105.1
89.4
31.2
58.1
87.8
371.6
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7 5
Stage 1 Stage 2
Stage 3
12
month
ECL
Lifetime
ECL
Collectively
assessed -
Lifetime ECL
Individually
assessed -
Lifetime ECL
General
reserve for
credit losses
10 Impairment of loans
and advances (continued)
Group
Balance as at 1 July 2020
Transfers during the period to:
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New/increased provisions
$m
$m
116.6
107.7
1.7
(1.6)
(18.6)
20.8
(5.0)
(7.0)
-
(0.3)
12.6
2.6
Write-back of provisions no longer required
(5.7)
(4.6)
Change in balances
24.7
(30.8)
$m
38.9
(0.1)
(2.2)
12.0
(0.9)
0.4
(6.2)
(8.3)
$m
78.4
-
-
-
1.2
33.0
-
-
Total
$m
$m
86.6
428.2
-
-
-
-
-
-
-
-
-
-
48.6
(16.5)
18.1
3.7
Bad debts written off previously provided for
-
-
-
(18.3)
-
(18.3)
Total provision for doubtful debts as at 30 June 2021
126.3
86.8
33.6
94.3
104.7
445.7
Bank
Movements in provisions and reserve
$m
$m
Balance as at 1 July 2021
125.5
86.7
Transfers during the period to:
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New/increased provisions
Write-back of provisions no longer required
Change in balances
1.2
(1.2)
(18.6)
19.3
(8.7)
(5.4)
-
(0.4)
13.5
3.9
(2.8)
(5.9)
(9.9)
(3.6)
$m
33.6
-
(0.7)
14.1
(1.4)
0.5
(8.3)
(6.6)
$m
$m
$m
94.3
104.7
444.8
-
-
-
1.8
(3.7)
-
-
-
-
-
-
-
-
(16.9)
-
-
-
-
-
14.2
(21.0)
(33.0)
(34.6)
Bad debts written off previously provided for
-
-
-
(34.6)
Total provision for doubtful debts as at 30 June 2022
104.2
89.4
31.2
57.8
87.8
370.4
Balance as at 1 July 2020
Transfers during the period to:
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New/increased provisions
$m
$m
115.8
107.7
1.7
(1.6)
(18.6)
20.8
(5.0)
(7.0)
-
(0.3)
12.6
2.6
Write-back of provisions no longer required
(5.7)
(4.6)
Change in balances
24.7
(30.9)
$m
38.9
(0.1)
(2.2)
12.0
(0.9)
0.4
(6.2)
(8.3)
$m
78.2
-
-
-
1.2
33.0
-
-
$m
$m
86.6
427.2
-
-
-
-
-
-
-
-
-
-
48.6
(16.5)
18.1
3.6
Bad debts written off previously provided for
-
-
-
(18.1)
-
(18.1)
Total provision for doubtful debts as at 30 June 2021
125.5
86.7
33.6
94.3
104.7
444.8
76 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
10 Impairment of loans
and advances (continued)
Summary of provisions and reserve
Individually assessed provision
Opening balance
Bad debts written off previously provided for
(Released)/charged to Income Statement
Closing balance Individually assessed provision
Collectively assessed provision
Opening balance
Released to Income Statement
Closing balance Collectively assessed provision
General reserve for credit losses (GRCL)
Opening balance
(Decrease)/increase in GRCL
Closing balance GRCL
Total provisions and reserve
Ratios
Individually assessed provision to gross loans
Total provisions and reserves to gross loans
Collectively assessed provision and GRCL to risk-weighted
assets
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
$m
$m
$m
94.3
(34.6)
(1.9)
57.8
245.8
(21.0)
224.8
104.7
(16.9)
87.8
370.4
78.2
(18.1)
34.2
94.3
262.4
(16.6)
245.8
86.6
18.1
104.7
444.8
94.3
(34.5)
(1.7)
58.1
246.7
(21.0)
225.7
104.7
(16.9)
87.8
371.6
0.07%
0.48%
0.74%
78.4
(18.3)
34.2
94.3
263.2
(16.5)
246.7
86.6
18.1
104.7
445.7
0.13%
0.62%
0.87%
Provision coverage 1
279.19%
213.46%
1 Provision coverage is calculated as total provisions and reserves for doubtful debts divided by total gross impaired assets.
Recognition and measurement
Scope
The Group applies a three-stage approach to measure
the allowance for expected credit losses for the following
categories of financial assets that are not measured at
FVTPL:
•
•
• Off-Balance Sheet loan commitments; and
•
Amortised cost financial assets;
Debt securities at FVOCI;
Financial guarantee contracts.
Expected credit loss impairment model
The Group's allowance for credit losses calculations are
outputs of credit risk models with a number of underlying
assumptions regarding the choice of variable inputs and
their interdependencies. The expected credit loss impairment
model reflects the present value of all cash shortfalls related
to default events either (i) over the following twelve months
or (ii) over the expected life of a financial asset depending on
credit deterioration from inception.
The allowance for credit losses reflects an unbiased,
probability-weighted outcome which considers multiple
economic scenarios based on reasonable and supportable
forecasts.
This impairment model measures credit loss allowances
using a three-stage approach based on the extent of credit
deterioration since origination:
•
Stage 1 – Where there has not been a significant
increase in credit risk (SICR) since initial recognition of a
financial asset, an amount equal to 12 months expected
credit loss is recorded. The expected credit loss is
computed using a probability of default occurring over
the next 12 months. For those assets with a remaining
maturity of less than 12 months, a probability of default
corresponding to the remaining term to maturity is used.
•
•
Stage 2 – When a financial asset experiences a SICR
subsequent to origination but is not considered to be
in default, it is included in Stage 2. This requires the
computation of expected credit loss based on the
probability of default over the remaining estimated life of
the financial asset.
Stage 3 – Financial assets that are considered to be
in default are included in this stage. Similar to Stage 2,
the allowance for credit losses captures the lifetime
expected credit losses.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7 7
10 Impairment of loans and advances (continued)
Recognition and measurement (continued)
Expected credit loss impairment model (continued)
Interest income is recognised on gross carrying amounts for
financial assets in Stage 1 and Stage 2, and gross carrying
value net of provisions for financial assets in Stage 3.
Financial assets in Stage 1 and Stage 2 are assessed for
impairment collectively, whilst those in Stage 3 are subjected
to either a collective or individual impairment assessment. The
Group uses the following collective provisioning models for the
purpose of calculating expected credit loss:
•
•
Retail lending: residential mortgages model, personal
loans model, credit cards model, retail small and medium
enterprise (SME) model;
Non-retail lending: corporate model, commercial real
estate model, agribusiness model.
Measurement of expected credit loss
The probability of default (PD), exposure at default (EAD), and
loss given default (LGD) inputs used to estimate expected
credit losses are modelled based on macroeconomic variables
that are most closely related with credit losses in the relevant
portfolio.
Details of these statistical parameters/inputs are as follows:
•
•
•
PD – The probability of default is an estimate of the
likelihood of default over a given time horizon. A default
may only happen at a certain time over the remaining
estimated life, if the facility has not been previously
derecognised and is still in the portfolio.
EAD – The exposure at default is an estimate of the
exposure at the point of default, taking into account
expected changes in the exposure after the reporting
date, including repayments of principal and interest,
whether scheduled by contract or otherwise, expected
drawdowns on committed facilities, and accrued interest
from missed payments.
LGD – The loss given default is an estimate of the loss
arising in the case where a default occurs. It is based
on the difference between the contractual cash flows
due and those that the lender would expect to receive,
including from the realisation of any collateral. It is usually
expressed as a percentage of the EAD.
Forward-looking information
The estimation of expected credit losses for each stage and
the assessment of significant increases in credit risk consider
information about past events and current conditions as well
as reasonable and supportable forecasts of future events
and economic conditions. The estimation and application
of forward-looking information may require significant
judgement, particularly during periods of economic uncertainty.
In assessing the forward-looking information, the Group has
considered the potential impacts of the conflict in Europe,
escalating inflation and increasing interest rates. The Group's
expectations of future events have been based on a range
of plausible scenarios and are believed to be reasonable and
supportable.
Under the circumstances, however, it is recognised that
uncertainty still exists and actual results may differ from these
estimates.
Macroeconomic factors
In its models, the Group relies on a broad range of
forward-looking economic information as inputs, such as:
Gross Domestic Product (GDP) growth, unemployment rates,
central-bank interest rates, and house-price growth. The inputs
and models used for calculating expected credit losses may
not always capture all characteristics and available data of
the market at the date of the financial statements. To reflect
this, qualitative adjustments or management overlays may be
made using expert credit judgement.
The Group’s Economic Outlook Committee (EOC) is responsible
for reviewing and approving the macroeconomic forecasts.
Economic scenarios are discussed and approved by the EOC,
and any management overlays or adjustments required to
account for identified risks that have not been considered
in the modelling process are determined after consultation
with business representatives. At each reporting period the
modelled outcomes and any key areas of judgement are
reported to the Group’s Board Audit Committee and the Board
Financial Risk Committee.
Multiple forward-looking scenarios
The Group determines its allowance for credit losses using five
probability-weighted forward-looking scenarios. The Group
considers both internal and external sources of information and
data in order to achieve unbiased projections and forecasts.
The forecasts are based on consensus forecasts and expert
judgement to formulate a ‘base case’ view of the most
probable future direction of relevant economic variables as well
as a representative range of other possible forecast scenarios.
The process involves the development of four additional
economic scenarios and consideration of the relative
probabilities of each outcome. The ‘base case’ represents
the most likely outcome and is aligned with information used
by the Group for other purposes such as strategic planning
and budgeting. Two downside and two upside scenarios are
also generated in addition to the base case. The Group has
identified and documented key drivers of credit risk and credit
losses for each portfolio of financial instruments and, using an
analysis of historical data, has estimated relationships between
macroeconomic variables, credit risk and credit losses.
The assessment and determination of forward-looking
assumptions in the current environment is challenging given the
inherent uncertainties surrounding the European conflict and
increasing interest rates.
The Group’s base case economic forecast used for the
collectively assessed provision assessment as at 30 June
2022 reflects a slowing of growth following a strong recovery
from the peak of the pandemic. GDP growth is forecasted
to slow to around 2 percent in 2023 and 1.5 percent towards
the end of 2024. Inflation is expected to continue to increase,
resulting in higher interest rates which is forecasted to peak at
4.5 percent. The labour market is expected to remain strong
with the unemployment rate forecasted to remain below 4
percent up to mid-2027. As interest rates continue to increase,
house prices are projected to fall by nearly 13 percent by the
end of 2023. Commercial property prices are expected to
remain under pressure, with especially CBD properties primarily
impacted. The Group’s significant deterioration scenario was
based on Moody’s 96th percentile scenario, adjusted in line
with the base forecast.
78 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
10 Impairment of loans and advances (continued)
Recognition and measurement (continued)
Multiple forward-looking scenarios (continued)
In this scenario, GDP growth is projected to be negative for 4
quarters while the unemployment rate peaks at 7.3 percent by
March 2024. House prices are projected to fall by 24 percent
and commercial property prices by 26 percent on average
over the next 2 years.
The table below illustrates the weightings applied to the
scenarios for the purpose of calculating the collectively
assessed provisions:
Weightings
Base scenario
Significant improvement
Mild improvement
Mild deterioration
Significant deterioration
30 June 2022
30 June 2021
50.0%
0.0%
0.0%
27.5%
22.5%
50.0%
0.0%
5.0%
27.5%
17.5%
It was decided to increase the probabilities to the downside
given the uncertainty of the current economic environment.
The probabilities for the agricultural lending portfolio were also
increased to the downside to reflect the risks associated with
price pressures, higher input costs and inflated farmland values.
Given the strength of this market, the probabilities are still
more optimistic than for the rest of the Group with 50 percent
base scenario, 10 percent mild improvement, 35 percent mild
deterioration, and 5 percent significant deterioration (June
2021: 53 percent base scenario, 25 percent mild deterioration,
20 percent mild improvement, and 1 percent each to
the remaining two scenarios).
The table below discloses the collectively assessed provision
outcomes assuming a 100 percent weighting is applied to the
relevant scenario, all other assumptions held constant.
30 June 2022
30 June 2021
Scenario Outcomes
100% Base scenario
100% Significant
improvement
100% Mild improvement
100% Mild deterioration
100% Significant
deterioration
($m) 1
206.6
189.8
196.0
229.2
266.2
1 These outcomes exclude the GRCL.
($m) 1
217.0
203.0
207.2
247.5
347.6
Assessment of significant increase in credit risk (SICR)
The Group assesses whether there has been a SICR for
exposures since initial recognition by comparing the current
probability of default (PD) and the PD at the date of initial
recognition. The assessment also considers borrower-specific
quantitative and qualitative information including arrears status
and hardship arrangements.
Quantitative models may not always be able to capture all
reasonable and supportable information that may indicate a
SICR. Qualitative factors may be assessed to supplement the
gap. Examples of situations include changes in adjudication
criteria for a particular group of borrowers; changes in
portfolio composition; and natural disasters impacting certain
portfolios. With regards to delinquency and monitoring, there
is a rebuttable presumption that the credit risk of the financial
instrument has increased since initial recognition when
contractual payments are more than 30 days overdue.
For retail portfolios, a 50 basis point increase in PDs combined
with a doubling of the PD since origination will result in a loan
transitioning to Stage 2.
The Group uses an internal rating system for its non-retail
exposures. All non-retail exposures have a rating assigned
that reflects the probability of default of the borrower. SICR is
evaluated based on the movement in the ratings of customers,
i.e. a two notch downgrade in the internal rating since
origination will trigger a transfer to Stage 2.
The thresholds used for PD migration are reviewed and
assessed at least annually unless there is a significant change
in credit risk management practices in which case the review is
brought forward.
Expected life
When measuring expected credit loss, the Group considers the
maximum contractual period over which the Group is exposed to
credit risk. All contractual terms are considered when determining
the expected life, including prepayment, and extension and rollover
options. For certain revolving credit facilities, such as credit cards,
the expected life is estimated based on the period over which
the Group is exposed to credit risk and how the credit losses are
mitigated by management actions.
•
Presentation of allowance for credit losses in the Balance Sheet
Financial assets measured at amortised cost: as a deduction
•
from the gross carrying amount of the financial assets;
Debt instruments measured at fair value through other
comprehensive income: no allowance is recognised in the
Balance Sheet because the carrying value of these assets
is their fair value. However, the allowance determined is
presented in the accumulated other comprehensive income;
Off-Balance Sheet credit risks include undrawn lending
commitments, letters of credit and letters of guarantee as a
provision in other liabilities.
•
Definition of default
The definition of default used in measuring ECL is aligned to
the definition used for internal credit risk management and
regulatory purposes.
The Group considers a financial instrument to be in default as
a result of one or more loss events that occurred after the date
of initial recognition of the instrument and the loss event has
a negative impact on the estimated future cash flows of the
instrument that can be reliably estimated. This includes events
that indicate:
•
•
•
significant financial difficulty of the borrower;
default or delinquency in interest or principal payments;
high probability of the borrower entering a phase of
bankruptcy or a financial reorganisation;
measurable decrease in the estimated future cash flows
from the loan or the underlying assets that back the loan.
•
The Group considers that default has occurred when
a financial asset is more than 90 days past due, unless
reasonable and supportable information demonstrates that
a more lagging default criterion is appropriate. Impairment
is recognised when it is determined that all principal and
interest amounts which are due are unlikely to actually be fully
recovered.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 7 9
Purchased loans
All purchased loans are initially measured at fair value on
the date of acquisition. As a result no allowance for credit
losses would be recorded in the Balance Sheet on the date
of acquisition. Purchased loans may fit into either of the two
categories: Performing loans or Purchased Credit Impaired
(PCI) loans.
Purchased performing loans follow the same accounting as
originated performing loans and are reflected in Stage 1 on
the date of the acquisition. They will be subject to a 12-month
allowance for credit losses which is recorded as a provision
for credit losses in the Income Statement. The fair value
adjustment set up for these loans on the date of acquisition is
amortised into interest income over the life of these loans.
PCI loans are reflected in Stage 3 and are always subject
to lifetime allowance for credit losses. Any changes in the
expected cash flows since the date of acquisition are recorded
as a charge/recovery in the provision for credit losses in
the Income Statement at the end of all reporting periods
subsequent to the date of acquisition.
General reserve for credit losses (GRCL)
The General reserve for credit losses was initially established to
meet the requirements of APRA Prudential Standard, APS 220
Credit Quality, which required a reserve to be held to recognise
estimated future credit losses which may arise over the life of
the Group's lending portfolio. This requirement was removed
from 1 January 2022, however, the Group has prudently
maintained this reserve pending further clarification.
10 Impairment of loans and advances (continued)
Recognition and measurement (continued)
Write-off policy
The Group writes off an impaired financial asset (and the
related impairment allowance), either partially or in full, when
there is no realistic prospect of recovery. Where financial assets
are secured, write-off is generally after receipt of any proceeds
from the realisation of security. In circumstances where the
net realisable value of any collateral has been determined and
there is no reasonable expectation of further recovery,
write-off may be earlier. In subsequent periods, any recoveries
of amounts previously written off are credited to the provision
for credit losses in the Income Statement.
Modified financial assets
If the terms of a financial asset are modified or an existing
financial asset is replaced with a new one, an assessment
is made to determine if the existing financial asset should
be derecognised. Where a modification does not result in
derecognition, the date of origination continues to be used to
determine SICR. Where a modification results in derecognition,
the new financial asset is recognised at its fair value on the
modification date. The modification date is also the date of
origination for this new asset.
The Group may modify the contractual terms of loans for
either commercial or credit reasons. The terms of a loan in
good standing may be modified for commercial reasons
to provide competitive pricing to borrowers. Loans are also
modified for credit reasons where the contractual terms are
modified to grant a concession to a borrower that may be
experiencing financial difficulty.
For all financial assets modifications of the contractual terms
may result in derecognition of the original asset when the
changes to the terms of the loans are considered substantial.
These terms include interest rate, authorised amount, term, or
type of underlying collateral. The original loan is derecognised
and the new loan is recognised at its fair value. The difference
between the carrying value of the derecognised asset and
the fair value of the new asset is recognised in the Income
Statement.
For all loans, performing and credit-impaired, where the
modification of terms did not result in the derecognition of
the loan, the gross carrying amount of the modified loan is
recalculated based on the present value of the modified cash
flows discounted at the original effective interest rate, and any
gain or loss from the modification is recorded in the provision
for credit losses line in the Income Statement.
80 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
11 Financial assets at fair value
through profit or loss
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Floating rate notes
Government securities
Total financial assets at fair value through profit or loss
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
Longer than 5 years
Total financial assets at fair value through profit or loss
$m
-
30.5
30.5
$m
-
-
-
30.5
30.5
$m
320.5
1,358.2
1,678.7
$m
1,171.0
137.6
182.9
187.2
1,678.7
$m
-
30.5
30.5
$m
-
-
-
30.5
30.5
$m
320.5
1,358.2
1,678.7
$m
1,171.0
137.6
182.9
187.2
1,678.7
The reduction in financial assets at fair value through profit or loss is due to the transition of liquid assets to the Banking Book in FY22.
Recognition and measurement
Financial assets that do not meet the criteria for amortised
cost or fair value through other comprehensive income are
measured at fair value through profit or loss.
These financial instruments are recorded in the Balance Sheet
at fair value with revaluation gains or losses being recognised in
the Income Statement.
In addition, on initial recognition, the Group may irrevocably
designate a financial asset that otherwise meets the
requirements to be measured at amortised cost or at fair value
through other comprehensive income as at fair value through
profit or loss if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
Interest earned is accrued in interest income using the effective
interest rate method, taking into account any discount or
premium and qualifying transaction costs being an integral part
of the instrument.
Fair value measurement is outlined in Note 19.
12 Financial assets at amortised cost
Collateral and security deposits
Other deposits
Bonds
Reverse repurchase agreements 1
Total financial assets at amortised cost
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
Longer than 5 years
Total financial assets at amortised cost
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
470.3
7.2
184.0
200.2
861.7
$m
42.1
200.2
0.1
619.3
861.7
$m
325.4
7.0
19.1
-
351.5
$m
33.5
-
0.1
317.9
351.5
$m
219.6
0.1
184.0
200.2
603.9
$m
42.1
200.2
0.1
361.5
603.9
$m
116.3
0.1
19.1
-
135.5
$m
33.5
-
0.1
101.9
135.5
1 Reverse repurchase agreements have an original maturity date of greater than 90 days.
Classification and measurement
A financial asset is measured at amortised cost only if both of
the following conditions are met:
•
the asset is held within a business model whose objective
is to hold assets in order to collect contractual cash flows;
and
the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
•
The carrying amount of these assets is adjusted by any
expected credit loss allowance recognised and measured as
described in Note 10.
Interest income from these financial assets is included in
interest income using the effective interest rate method.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 8 1
13 Financial assets at fair value through
other comprehensive income
Debt securities (with recycling)
Discount securities
Floating rate notes
Government securities
Mortgage backed securities
Other debt securities
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
-
974.6
8,589.9
8.7
0.5
$m
300.0
229.3
1,602.0
13.6
0.5
$m
-
974.6
8,589.9
$m
300.0
229.3
1,602.0
13,699.7
12,897.6
0.5
0.5
Total debt securities (with recycling)
9,573.7
2,145.4
23,264.7
15,029.4
Managed Fund investments (without recycling)
Unlisted Managed Fund investments
Total managed fund investments (without recycling)
Equity investments (without recycling)
Listed share investments
Unlisted share investments
Total equity investments (without recycling)
Total financial assets at fair value through
other comprehensive income
8.7
8.7
0.1
35.6
35.7
9.4
9.4
0.1
31.2
31.3
-
-
0.1
35.6
35.7
-
-
0.1
31.2
31.3
9,618.1
2,186.1
23,300.4
15,060.7
The increase in financial assets at fair value through other comprehensive income is due to the transition of liquid assets to
the Banking Book in FY22.
$m
6,676.9
1,564.2
792.9
539.7
44.4
$m
205.3
824.4
1,125.1
$m
6,912.2
1,564.2
738.1
$m
480.7
824.4
1,396.8
-
14,050.2
12,327.5
31.3
35.7
31.3
9,618.1
2,186.1
23,300.4
15,060.7
Equity instruments
The Group has irrevocably elected to measure all equity
investments that are not held for trading at fair value through
other comprehensive income.
Subsequent changes to the fair value are recognised in
other comprehensive income and are not transferred to the
Income Statement, including upon disposal. Dividend income
is recognised in the Income Statement unless the dividend
represents a recovery of part of the cost of the investment.
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
Non-maturing
Total financial assets at fair value through other
comprehensive income
Recognition and measurement
A financial asset will be measured at fair value through other
comprehensive income if:
•
the Group's intent is to hold the asset in order to collect
contractual cash flows and/or to sell the asset; and
the cash flows solely represent principal and interest.
•
These assets are initially recognised at fair value including
directly attributable transaction costs. Subsequent
measurement is at fair value with any revaluation gains or
losses being included in other comprehensive income. Upon
disposal, the cumulative gain or loss previously recognised
in other comprehensive income is transferred to the Income
Statement.
82 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Financial liabilities
Classification and measurement of financial liabilities
Financial liabilities are classified into one of the following
measurement categories:
•
•
•
Fair value through profit or loss (FVTPL);
Amortised cost; or
Designated at FVTPL.
Financial liabilities designated at FVTPL
Financial liabilities classified in this category are those that
have been designated by the Group upon initial recognition,
and once designated, the designation is irrevocable. The
FVTPL designation is available only for those financial liabilities
for which a reliable estimate of fair value can be obtained.
Financial liabilities measured at FVTPL
Financial liabilities measured at FVTPL are held principally for
the purpose of repurchasing in the near term, or form part of a
portfolio of identified financial instruments that are managed
together and for which there is evidence of a recent actual
pattern of short-term profit-taking. Financial liabilities are
recognised on a trade date basis and are accounted for at
fair value, with changes in fair value and any gains or losses
recognised in the Income Statement as part of the non-interest
income. Transaction costs are expensed as incurred.
Financial liabilities measured at amortised cost
Deposits, subordinated notes and debentures are accounted
for at amortised cost. Interest on deposits, calculated using
the effective interest rate method, is recognised as interest
expense. Interest on subordinated notes and capital notes,
including capitalised transaction costs, is recognised using the
effective interest rate method as interest expense.
14 Deposits
At call
Term
Certificates of Deposit
Total deposits
Concentration of deposits
Customer deposits 1
Wholesale deposits 2
Total deposits
Financial liabilities are designated at FVTPL when one of the
following criteria is met:
•
The designation eliminates or significantly reduces an
accounting mismatch which would otherwise arise; or
A group of financial liabilities are managed and their
performance is evaluated on a fair value basis, in
accordance with a documented risk management
strategy; or
The financial liability contains one or more embedded
derivatives which significantly modify the cash flows
otherwise required.
•
•
Financial liabilities designated at FVTPL are recorded in the
Balance Sheet at fair value. Any changes in fair value are
recognised in non-interest income in the Income Statement,
except for changes in fair value arising from changes in
the Group's own credit risk which are recognised in other
comprehensive income.
Changes in fair value due to changes in the Group’s own credit
risk are not subsequently reclassified to the Income Statement
upon derecognition/extinguishment of the liabilities.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
46,925.3
21,463.3
6,195.3
$m
39,304.4
21,697.9
5,214.8
$m
46,931.0
21,463.4
6,195.3
$m
39,316.6
21,697.9
5,214.8
74,583.9
66,217.1
74,589.7
66,229.3
$m
64,261.4
10,322.5
$m
57,915.7
8,301.4
$m
64,267.2
10,322.5
$m
57,927.9
8,301.4
74,583.9
66,217.1
74,589.7
66,229.3
1 Customer deposits represent the sum of interest bearing, non-interest bearing and term deposits from retail and corporate customers.
2 Wholesale deposits represent the sum of interest bearing, non-interest bearing and term deposits from Other Financial Institutions and certificates of
deposit.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 8 3
14 Deposits (continued)
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Deposits by geographic location
$m
$m
$m
$m
Victoria
New South Wales
Queensland
South Australia/Northern Territory
Western Australia
Australian Capital Territory
Tasmania
Overseas
Total deposits
Recognition and measurement
38,954.8
12,228.8
35,189.4
10,255.6
38,996.7
12,215.7
35,228.4
10,242.8
8,315.7
6,427.2
4,998.7
1,406.6
1,607.8
644.3
7,119.5
6,009.2
4,352.8
1,169.9
1,490.3
630.4
8,304.7
6,424.7
4,990.8
1,406.5
1,607.5
643.1
7,113.4
6,008.0
4,347.6
1,169.8
1,490.2
629.1
74,583.9
66,217.1
74,589.7
66,229.3
All deposits are initially recognised at cost, being the fair value of the consideration received net of issue costs. Subsequent to
initial recognition, interest-bearing borrowings are measured at amortised cost using the effective interest method. Amortised cost
includes any issue costs and any discount or premium on settlement.
For liabilities carried at amortised cost, gains and losses are recognised in the Income Statement when the liabilities are de-
recognised.
15 Other borrowings
Term Funding Facility
Medium-term notes
Notes payable
Repurchase agreements
Total other borrowings
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
4,730.4
3,132.7
3,839.9
-
$m
4,722.9
2,915.7
3,597.7
500.0
$m
4,730.4
3,132.6
-
-
$m
4,722.9
2,915.7
-
500.0
11,703.0
11,736.3
7,863.0
8,138.6
Term Funding Facility
The Term Funding Facility (TFF) was part of a package of
measures put in place by the Reserve Bank of Australia in
March 2020 to support the Australian economy. The TFF is a
three year facility. Prior to 4 November 2020, funding provided
under the TFF was at a fixed interest rate of 0.25 percent per
annum. From 4 November 2020, the fixed interest rate was
changed to 0.1 percent per annum. As at 30 June 2022, the
Group had drawn down on $4,718.3 million of funds under the
TFF (June 2021: $4,718.3 million).
Medium-term notes
The Group's medium-term notes include fixed and floating rate
notes issued under the $7.5 billion Debt Instrument Programme
(2020) and the $7.5 billion Debt Instrument Program (2018).
Notes payable
The Group conducts an asset securitisation program through
which it packages and sells asset-backed securities to
investors. Notes payable are predominately interest-bearing
financial instruments issued through these securitisation
programs. The notes are initially recognised at fair value less
directly attributable transaction costs and subsequently
measured at amortised cost using the effective interest
method. Interest is recognised in the Income Statement.
Repurchase agreements
Securities sold under agreement to repurchase are retained
in the Balance Sheet when the majority of the risks and
rewards of ownership remain with the Group. The counterparty
liability is included separately in the Balance Sheet when cash
consideration is received.
84 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
16 Loan capital
Tier 1 loan capital
Tier 2 loan capital
Total loan capital
Tier 1 loan capital
CPS4 (ASX Code: BENPG)
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
816.0
550.1
$m
813.8
569.4
$m
816.0
550.1
$m
813.8
569.4
1,366.1
1,383.2
1,366.1
1,383.2
$m
$m
$m
$m
December 2017: 3,216,145 fully paid $100 Converting
preference shares
Closing balance CPS4
Capital notes (ASX Code: BENPH)
November 2020: 5,024,446 fully paid $100 Capital notes
Closing balance capital notes
321.6
321.6
502.5
502.5
321.6
321.6
502.5
502.5
321.6
321.6
502.5
502.5
321.6
321.6
502.5
502.5
Total Additional Tier 1 regulatory capital
824.1
824.1
824.1
824.1
Unamortised issue costs
Total Tier 1 loan capital
(8.1)
816.0
(10.3)
813.8
(8.1)
816.0
(10.3)
813.8
Tier 1 capital instruments
Recognition and measurement
In accordance with Australian Prudential Regulation Authority's
Basel III capital adequacy framework, these instruments form
part of the Group's Additional Tier 1 capital.
Tier 1 loan capital instruments are classified as debt within
the Balance Sheet and dividends/distributions are treated as
interest expense in the Income Statement.
Nature of Tier 1 capital instruments
Tier 1 loan capital instruments are long term in nature and are
perpetual, hence they do not have a fixed maturity date. The
instruments may be redeemed at the discretion of the Group
for a price per security on the redemption date. Any securities
not already converted will be converted into ordinary shares
on the mandatory conversion date specified in the issue's
prospectus located at https://www.bendigoadelaide.com.au/
investor-centre/prospectus/
If the Group is unable to pay a dividend/distribution because of
insufficient profits, the dividend/distribution is non-cumulative.
The securities rank ahead of ordinary shares in the event
of liquidation. Under certain circumstances, ranking may be
affected resulting in shares being converted or written off.
These instruments are initially recognised at fair value less
charges associated with the issue of the instrument. They are
subsequently measured at amortised cost using the effective
interest rate method.
The preference shares carry a dividend which will be
determined semi-annually or quarterly and payable half yearly
or quarterly in arrears. The dividend rate will be the floating
Bank Bill Rate plus the initial fixed margin, adjusted for franking
credits.
The capital notes carry a discretionary distribution which will
be determined and payable quarterly in arrears. The distribution
rate will be based on the floating Bank Bill Swap Rate.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 8 5
16 Loan capital (continued)
Tier 2 loan capital
Floating rate capital notes
Floating rate subordinated notes
Total Tier 2 capital instruments
Accrued interest
Unamortised issue costs
Total Tier 2 loan capital
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
-
550.0
550.0
1.9
(1.8)
550.1
$m
21.1
550.0
571.1
1.1
(2.8)
569.4
$m
-
550.0
550.0
1.9
(1.8)
550.1
$m
21.1
550.0
571.1
1.1
(2.8)
569.4
Tier 2 loan capital instruments
In accordance with Australian Prudential Regulation Authority's
Basel III capital adequacy framework, these instruments form
part of the Group's Tier 2 capital. Tier 2 capital instruments
rank ahead of Additional Tier 1 capital instruments.
Recognition and measurement
These instruments are classified as debt within the Balance
Sheet and the interest expense is recorded in the Income
Statement. Tier 2 loan capital instruments are initially
recognised at fair value less charges associated with the
Maturity analysis 1
Longer than 3 and not longer than 12 months
Longer than 1 and not longer than 5 years
Over 5 years
No maturity date (instruments in perpetuity)
issue of the instrument. They are subsequently measured at
amortised cost using the effective interest rate method.
Amortised cost is calculated by taking into account any
discount or premium on acquisition over the period to maturity.
Gains and losses are recognised in the Income Statement
when the liabilities are derecognised.
Transactions that are in currencies other than in AUD are
restated to AUD equivalents each month with adjustments
taken directly to income.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
-
816.0
550.1
-
$m
-
444.0
918.1
21.1
$m
-
816.0
550.1
-
$m
-
444.0
918.1
21.1
1,366.1
1,383.2
1,366.1
1,383.2
1 Based on the final maturity date or, in the case of Additional Tier 1 capital securities, the optional exchange date (if any).
Capital management
Capital management strategy
Bendigo and Adelaide Bank Limited's key capital management
objectives are to:
• 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;
Optimise the level and use of capital resources to
enhance shareholder value through maximising financial
performance; and
Ensure that capital management is closely aligned with
the Group's business and strategic objectives.
•
•
Regulatory Capital
As an Authorised Deposit-taking Institution (ADI) in Australia,
Bendigo and Adelaide Bank Limited is regulated by Australian
Prudential Regulation Authority (APRA) under the Banking Act
1959.
The Group manages capital adequacy according to
the framework provided by the APRA Standards. These
requirements are summarised below:
Regulatory Capital consists of:
Common Equity Tier 1 Capital Tier 1 Capital
Tier 2 Capital
Total Capital
Shareholders equity less
goodwill and other prescribed
adjustments
Common Equity Tier 1 plus
other highly ranked capital
instruments acceptable to
APRA
Subordinated debt
instruments acceptable to
APRA
Tier 1 Capital plus Tier 2
Capital
Reporting Levels consist of:
Level 1
Level 2
Bendigo and Adelaide Bank Limited and certain controlled
entities that meet the APRA definition of extended licensed
entities.
Consolidated Group, excluding non-controlled subsidiaries
and subsidiaries involved in insurance, funds management,
non-financial operations and special purpose vehicles.
86 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
16 Loan capital (continued)
Capital management (continued)
Regulatory Capital (continued)
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 Limited is required
to maintain a minimum prudential capital ratio at both Level
1 and Level 2 as determined by APRA. As part of the Group'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 Group's
Internal Capital Adequacy Assessment Process (ICAAP).
The Group determines its regulatory capital requirements in
relation to credit risk, operational risk and market risk using the
Standardised Approach set by APRA. The Group satisfied its
minimum capital requirements at both Level 1 and 2 throughout
the financial year.
Capital Adequacy
The following table provides details of the Group's capital
adequacy ratios:
Risk-weighted capital adequacy ratios
June 2022
June 2021
Tier 1
Tier 2
Total capital ratio
Common Equity Tier 1
Regulatory capital
Contributed capital
Retained profits and reserves
Accumulated other comprehensive income (and other reserves)
Deductions
Total Common Equity Tier 1 capital
Additional Tier 1 capital
Total Tier 1 capital
Tier 2 capital
Total regulatory capital
Total risk-weighted assets
11.63%
1.97%
13.60%
9.68%
$m
5,222.5
1,078.2
17.6
11.61%
2.20%
13.81%
9.57%
$m
5,053.1
792.3
28.3
(2,235.4)
(2,000.6)
4,082.9
3,873.1
824.1
824.1
4,907.0
4,697.2
832.3
891.7
5,739.3
5,588.9
42,197.9
40,469.3
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 8 7
17 Securitisation and transferred assets
Group
Group
Carrying amount of transferred assets 1
Carrying amount of associated liabilities 2
Fair value of transferred assets
Fair value of associated liabilities
Net position
Bank
Carrying amount of transferred assets 1
Carrying amount of associated liabilities 3
Fair value of transferred assets
Fair value of associated liabilities
Net position
Repurchase agreements
Securitisation
Jun-22
Jun-21
Jun-22
Jun-21
$m
4,730.4
4,730.4
$m
5,222.9
5,222.9
$m
3,780.9
3,839.9
3,744.3
3,797.0
$m
3,564.0
3,597.7
3,556.4
3,633.2
(52.7)
(76.8)
Bank
Repurchase agreements
Securitisation
Jun-22
Jun-21
Jun-22
Jun-21
$m
4,730.4
4,730.4
$m
5,222.9
5,222.9
$m
$m
16,686.7
15,328.5
17,350.5
15,871.0
16,468.6
15,273.4
17,252.9
16,184.2
(784.3)
(910.8)
1 Represents the carrying value of the loans transferred to the trust.
2 Securitisation liabilities of the Group include RMBS notes issued by the SPEs and held by external parties.
3 Securitisation liabilities of the Bank include borrowings from SPEs including the SPEs that issue internally held notes for repurchase with central banks,
recognised on transfer of residential mortgages by the Bank.
Securitisation programs
The Group uses special purpose entities (SPEs) to securitise
customer loans and advances that it has originated, in order to
source funding, and/or for capital efficiency purposes. The loans
are transferred by the Group to the SPEs, which in turn issue debt
to investors. This transfer does not give rise to the de-recognition
of those financial assets for the Group. The Group holds income
and capital units in the trusts which entitle the Group to any
residual income of the SPEs after all payments to investors
and costs of the entity have been met. Trust investors have no
recourse against the Group if cash flows from the securitised
loans are inadequate to service the trust obligations. Liabilities
associated with the SPEs are accounted for on an amortised
basis using the effective interest rate method.
Repurchase agreements
Securities sold under agreement to repurchase are retained
in the Balance Sheet when the majority of the risks and
rewards of ownership remain with the Group. The counterparty
liability is included separately in the Balance Sheet when cash
consideration is received.
Consolidation
SPEs are consolidated by the Group where the Group has the
power to govern directly or indirectly decision making in relation
to financial and operational policies and receives the majority of
the residual income or is exposed to the majority of the residual
risks associated with the SPEs.
The Group enters into interest rate swaps and liquidity facilities
with the trusts which are all at arm's length to the SPEs.
Securitised and sold loans
The Group securitised loans totalling $6,436.4 million (June 2021:
$3,963.7 million) during the financial year. The Group invests in
some of its own securitisation programs by holding A and B
class notes equivalent to $13,745.8 million as at 30 June 2022
(June 2021: $12,602.9 million).
88 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
18 Derivative financial instruments
The Group uses derivative financial instruments primarily to
manage risk, including interest rate risk and foreign currency
rate risk. Note 20 outlines the risk management framework that
the Group applies.
Derivative instruments are contracts whose value is derived
from interest rates, foreign exchange rates, commodities, equity
prices or other financial variables. Most derivative instruments
can be characterised as interest rate contracts, foreign
exchange contracts, commodity contracts, equity contracts or
credit contracts. Derivative instruments are either exchange-
traded contracts or negotiated over-the-counter contracts.
Negotiated over-the-counter contracts include swaps,
forwards and options.
The Group enters into these derivative contracts for trading
purposes, as well as to manage its risk exposures (i.e. to
manage the Group's non-trading interest rate, foreign currency
and other exposures). Trading activities are undertaken to meet
the needs of the Group's customers, as well as for the Group’s
own account to generate income from trading operations.
All derivatives are recorded at fair value in the Balance Sheet.
The determination of the fair value of derivatives includes
consideration of credit risk, estimated funding costs and
ongoing direct costs over the life of the instruments.
Inception gains or losses on derivatives are only recognised
where the valuation is dependent only on observable market
data, otherwise, they are deferred and amortised over the life
of the related contract, or until the valuation inputs become
observable. Derivative financial instruments are valued in
accordance with Level 2 of the fair value hierarchy, as outlined
in Note 19.
The gains or losses resulting from changes in fair values of
trading derivatives and non-trading derivatives that do not
qualify for hedge accounting are included in the Income
Statement in Other revenue. Changes in the fair value of
derivatives that qualify for hedge accounting are recorded in
the Income Statement in Other revenue for fair value hedges
and are recorded in the Statement of Comprehensive Income
in gains on cash flow hedge instruments.
Fair value hedges principally consist of interest rate swaps
that are used to protect against changes in the fair value of
fixed rate long term financial instruments due to movements in
interest rates and exchange rates.
Cash flow hedges consist principally of interest rate swaps
that are used to protect against exposures to movements in
future interest cash flows on assets and liabilities which bear
interest at variable rates.
The following table describes the fair values and notional
values of derivatives held for trading purposes and for risk
management purposes by type of instrument:
Group 2022
Group 2021
Notional
amount
Fair value
assets
Fair value
liabilities
Net fair
value
Notional
amount
Fair value
assets
Fair value
liabilities
Net fair
value
Derivative category
$m
$m
$m
$m
$m
$m
$m
$m
Derivatives held
for trading
Futures
Interest rate swaps
Foreign exchange
contracts
Derivatives held as
fair value hedges
Interest rate swaps
Derivatives held as
cash flow hedges
31.5
338.0
-
5.5
977.2
10.5
-
(5.1)
(4.0)
-
0.4
6.5
159.0
5,778.0
474.0
-
11.0
5.0
-
(10.5)
(0.8)
1,346.7
16.0
(9.1)
6.9
6,411.0
16.0
(11.3)
-
-
-
-
-
-
-
-
0.6
0.6
-
-
-
-
Interest rate swaps
13,625.4
13,625.4
43.9
43.9
(25.7)
18.2
17,935.5
(25.7)
18.2
17,935.5
43.1
43.1
(34.0)
(34.0)
-
0.5
4.2
4.7
-
-
9.1
9.1
Total derivatives
14,972.1
59.9
(34.8)
25.1
24,347.1
59.1
(45.3)
13.8
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 8 9
-
0.5
4.2
4.7
-
-
9.1
9.1
18 Derivative financial instruments (continued)
Bank 2022
Bank 2021
Notional
amount
Fair value
assets
Fair value
liabilities
Net fair
value
Notional
amount
Fair value
assets
Fair value
liabilities
Net fair
value
$m
$m
$m
$m
$m
$m
$m
$m
Derivative category
Derivatives held
for trading
Futures
Interest rate swaps
Foreign exchange
contracts
Derivatives held as
fair value hedges
Interest rate swaps
31.5
338.0
-
5.5
977.2
10.5
-
(5.1)
(4.0)
-
0.4
6.5
159.0
5,778.0
474.0
-
11.0
5.0
-
(10.5)
(0.8)
1,346.7
16.0
(9.1)
6.9
6,411.0
16.0
(11.3)
-
-
-
-
-
-
-
-
0.6
0.6
-
-
-
-
Derivatives held as
cash flow hedges
Interest rate swaps
13,625.4
13,625.4
43.9
43.9
(25.7)
(25.7)
18.2
17,935.5
18.2
17,935.5
43.1
43.1
(34.0)
(34.0)
Total derivatives
14,972.1
59.9
(34.8)
25.1
24,347.1
59.1
(45.3)
13.8
The interest rate swaps that are settled through the central
clearing body, London Clearing House, have a minimal fair
value. Variation margin is paid or received on the daily mark to
market movements, with this payment being offset against the
fair value of the swap. The market valuation for the centrally
cleared derivatives totalled $20.4 million and $5.7 million
was received as variation margin as at 30 June 2022. The
difference represented variable margin receivable from London
Clearing House as at 30 June 2022, which is classified as Due
from other financial institutions in the Balance Sheet. The total
notional value of the centrally cleared derivatives as at
30 June 2022 is $11.87 billion (June 2021: $2.25 billion), which
is included in Derivatives held as cash flow hedges - Interest
rate swaps in the tables above for the Group and the Bank.
As at 30 June 2022 hedged cash flows are expected to occur
and affect the Income Statement as follows:
Group
2022
Forecast cash inflows
Forecast cash outflows
Forecast net cash inflows/(outflows)
2021
Forecast cash inflows
Forecast cash outflows
Forecast net cash inflows/(outflows)
Bank
2022
Forecast cash inflows
Forecast cash outflows
Forecast net cash inflows/(outflows)
2021
Forecast cash inflows
Forecast cash outflows
Forecast net cash inflows/(outflows)
Within 1 year
$m
27.9
(28.1)
(0.2)
$m
43.4
(54.1)
(10.7)
$m
27.9
(28.1)
(0.2)
$m
43.4
(54.1)
(10.7)
1 to 2
years
$m
34.1
(28.8)
5.3
$m
46.0
(38.6)
7.4
$m
34.1
(28.8)
5.3
$m
46.0
(38.6)
7.4
2 to 3
years
$m
23.1
(9.9)
13.2
$m
41.0
(24.2)
16.8
$m
23.1
(9.9)
13.2
$m
41.0
(24.2)
16.8
3 to 4
years
4 to 5
years
Greater
than 5 years
$m
5.3
(5.3)
-
$m
18.6
(10.8)
7.8
$m
5.3
(5.3)
-
$m
18.6
(10.8)
7.8
$m
0.5
(0.5)
-
$m
4.5
(5.1)
(0.6)
$m
0.5
(0.5)
-
$m
4.5
(5.1)
(0.6)
$m
-
-
-
$m
0.2
(0.2)
-
$m
-
-
-
$m
0.2
(0.2)
-
90 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
18 Derivative financial instruments (continued)
Revaluation movements arising from economic hedges
Revaluation movements arise from fair value hedges as well as derivatives that are not in a hedge relationship. The table below
summarises the amounts that were recognised in non-interest income - other revenue as a result of both fair value hedges and
economic derivatives that are not in a hedge relationship.
Revaluation gains /(losses) arising from economic hedges
$m
$m
$m
$m
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Revaluation gains /(losses) arising from fair value hedges
Gains on hedging instruments
Losses on the hedged items attributable to the hedged risk
Revaluation losses arising from economic
derivatives that are not in a hedge relationship
Losses on derivatives
-
-
-
-
0.1
(0.1)
(8.1)
(8.1)
-
-
-
-
0.1
(0.1)
(8.1)
(8.1)
Average price/rate of hedged instruments
The following table sets out the maturity profile and average price/rate of the hedging instruments used in the Group's non-dynamic
hedging strategies:
Maturity
June 2022
Less than
1 month
1 to 3
months
3 to 12
months
$m
$m
1 to 5
years
$m
Over 5
years
$m
Total
$m
Cash flow hedges - interest rate swaps
Notional principal
Average fixed rate (%)
$m
-
-
2,025.0
4,625.0
6,775.4
200.0
13,625.4
0.12%
0.33%
2.43%
1.99%
Maturity
June 2021
Less than
1 month
1 to 3
months
3 to 12
months
Cash flow hedges - interest rate swaps
Notional principal
Average fixed rate (%)
$m
-
-
$m
$m
2,000.0
6,785.0
9,150.5
0.75%
0.52%
0.53%
1 to 5
years
$m
Over 5
years
$m
-
-
Total
$m
17,935.5
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9 1
18 Derivative financial instruments (continued)
Offsetting financial assets and financial liabilities
Non Centrally Cleared Derivatives
Derivative financial instruments entered into by the Group are
subject to International Swaps and Derivatives Association
(ISDA) master netting agreements and other similar master
netting arrangements. These arrangements do not meet the
criteria for offsetting in the Balance Sheet. This is because
the right of set-off is only enforceable by the parties to
the agreement following an event of default, insolvency or
bankruptcy of the Group, or the counterparties, or following
other predetermined events. In addition, the Group and its
counterparties do not intend to settle on a net basis or to
realise the assets and settle the liabilities simultaneously.
Centrally Cleared Derivatives
Derivative amounts are only offset on the balance sheet
where the Group has a legally enforceable right to offset in
all circumstances and there is an intention to settle the asset
and liability on a net basis, or to realise the asset and settle
the liability simultaneously. The Group has applied offsetting
to centrally cleared derivatives and their associated collateral
amounts which were deemed to satisfy the AASB 132
Financial Instruments: Presentation requirements.
The following table sets out the effect of netting arrangements
on derivative financial assets and derivative financial liabilities if
they were to be applied:
Subject to enforceable master netting or similar agreements
Amounts offset on the Balance Sheet
Amounts not offset on the Balance Sheet
Gross
Balance
Sheet
amount
Amount
offset 1
Net amounts
recognised
on the
Balance
Sheet
$m
$m
$m
Financial
instruments
Financial
collateral
(received)/
pledged 2 Net amount
Not
subject
to netting
agree-
ments
Total
Balance
Sheet
amount
$m
$m
$m
$m
$m
Group
30 June 2022
191.5
(131.7)
59.8
(19.6)
(32.2)
(142.1)
111.3
(30.8)
19.6
8.4
30 June 2021
62.6
(5.3)
57.3
(29.0)
(45.3)
-
(45.3)
29.0
(6.7)
14.0
Bank
30 June 2022
191.5
(131.7)
59.8
(19.6)
(32.2)
(142.1)
111.3
(30.8)
19.6
8.4
30 June 2021
62.6
(5.3)
57.3
(29.0)
(45.3)
-
(45.3)
29.0
(6.7)
14.0
8.0
(2.8)
21.6
(2.3)
8.0
(2.8)
21.6
(2.3)
0.1
59.9
(4.0)
(34.8)
1.8
59.1
-
(45.3)
0.1
59.9
(4.0)
(34.8)
1.8
59.1
-
(45.3)
Derivative
assets
Derivative
liabilities
Derivative
assets
Derivative
liabilities
Derivative
assets
Derivative
liabilities
Derivative
assets
Derivative
liabilities
Includes net variation receivable of $14.7m (June 2021: $0.2m) reflected in Due from other financial institutions in the Balance Sheet.
1
2 For the purpose of this disclosure, financial collateral not set off in the Balance Sheet have been capped by relevant netting agreements so as not to
exceed the net amounts of financial assets/(liabilities) reported in the Balance Sheet (i.e. over-collateralisation, where it exists, is not reflected in the
tables)
92 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
19 Financial instruments
All financial instruments are initially recognised at fair value on the date of initial recognition depending on the classification of the
asset and liability.
a) Measurement basis of financial assets and liabilities
The following table details the carrying amount of the financial assets and liabilities by classification in the Balance Sheet.
Financial assets
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or
loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other com-
prehensive income (FVOCI)
Net loans and other receivables
Derivatives
Total financial assets
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Derivatives
Loan capital
Total financial liabilities
Financial assets
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or
loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other
comprehensive income (FVOCI)
Net Loans and other receivables
Derivatives
Total financial assets
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Derivatives
Loan capital
Total financial liabilities
Group
30 June 2022
Fair value through
profit or loss
Fair value
through other
comprehensive
income
Amortised cost
$m
$m
-
-
-
-
3,541.0
188.0
-
861.7
Total
$m
3,541.0
188.0
30.5
861.7
9,618.1
-
9,618.1
-
43.9
77,610.4
77,610.4
-
59.9
9,662.0
82,201.1
91,909.6
-
-
-
25.7
-
25.7
178.8
74,583.9
11,703.0
-
1,366.1
178.8
74,583.9
11,703.0
34.8
1,366.1
87,831.8
87,866.6
30 June 2021
$m
$m
$m
-
-
-
-
7,086.3
173.4
-
351.5
7,086.3
173.4
1,678.7
351.5
2,186.1
-
2,186.1
-
43.1
71,920.6
71,920.6
-
59.1
$m
-
-
30.5
-
-
-
16.0
46.5
-
-
-
9.1
-
9.1
$m
-
-
1,678.7
-
-
-
16.0
1,694.7
2,229.2
79,531.8
83,455.7
-
-
-
11.3
-
11.3
-
-
-
34.0
-
34.0
175.4
66,217.1
11,736.3
-
1,383.2
175.4
66,217.1
11,736.3
45.3
1,383.2
79,512.0
79,557.3
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9 3
19 Financial instruments (continued)
a) Measurement basis of financial assets and liabilities (continued)
Bank
30 June 2022
Fair value through
profit or loss
Fair value
through other
comprehensive
income
Amortised cost
$m
$m
-
-
-
-
3,082.3
188.0
-
603.9
Total
$m
3,082.3
188.0
30.5
603.9
23,300.4
-
23,300.4
-
43.9
77,118.4
77,118.4
-
59.9
23,344.3
80,992.6
104,383.4
-
-
-
25.7
-
25.7
178.8
74,589.7
7,863.0
-
1,366.1
178.8
74,589.7
7,863.0
34.8
1,366.1
83,997.6
84,032.4
30 June 2021
$m
$m
$m
-
-
-
-
6,631.6
173.4
-
135.5
6,631.6
173.4
1,678.7
135.5
15,060.7
-
15,060.7
-
43.1
71,304.1
71,304.1
-
59.1
$m
-
-
30.5
-
-
-
16.0
46.5
-
-
-
9.1
-
9.1
$m
-
-
1,678.7
-
-
-
16.0
1,694.7
15,103.8
78,244.6
95,043.1
-
-
-
11.3
-
11.3
-
-
-
34.0
-
34.0
175.4
66,229.3
8,138.6
-
1,383.2
175.4
66,229.3
8,138.6
45.3
1,383.2
75,926.5
75,971.8
Financial assets
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or
loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other com-
prehensive income (FVOCI)
Net loans and other receivables
Derivatives
Total financial assets
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Derivatives
Loan capital
Total financial liabilities
Financial assets
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or
loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other
comprehensive income (FVOCI)
Net Loans and other receivables
Derivatives
Total financial assets
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Derivatives
Loan capital
Total financial liabilities
94 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
19 Financial instruments (continued)
b) Fair value measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Wherever possible, fair values have been calculated using
unadjusted quoted market prices in active markets for identical
instruments. A quoted market price in an active market
provides the most reliable evidence of fair value. For all other
financial instruments, the fair value is determined by using other
valuation techniques.
Valuation of financial assets and liabilities
Various valuation techniques are used to measure the fair value
of financial instruments. The technique adopted is dependent
upon the inputs available.
As part of the fair value measurement, the Group classifies its
assets and liabilities according to a hierarchy that reflects the
observability of significant market inputs. The three levels of the
hierarchy are defined as follows:
Level 1 - Quoted market prices
Financial instruments that have been valued by reference to
unadjusted quoted prices for identical financial assets in active
markets. Government bonds issued by the Commonwealth of
Australia have been included in this category.
Level 2 - Valuation technique using observable inputs
The fair value is determined using models whose inputs are
observable in an active market.
Level 3 - Valuation technique using significant unobservable
inputs
The fair value is calculated using significant inputs that are not
based on observable market data but that are most reflective
of the market conditions at the measurement date.
Financial assets and liabilities carried at fair value
The table below details financial instruments carried at fair
value, by Balance Sheet classification and hierarchy level:
Financial assets
Financial assets FVTPL
Financial assets FVOCI
Derivatives
Financial liabilities
Derivatives
Financial assets
Financial assets FVTPL
Financial assets FVOCI
Derivatives
Financial liabilities
Derivatives
Financial assets
Financial assets FVTPL
Financial assets FVOCI
Derivatives
Financial liabilities
Derivatives
Financial assets
Financial assets FVTPL
Financial assets FVOCI
Derivatives
Financial liabilities
Derivatives
Group
30 June 2022
Level 1
Level 2
Level 3
$m
$m
30.5
237.3
-
-
9,345.3
59.9
$m
-
35.5
-
Total
fair value
Total
carrying value
$m
$m
30.5
9,618.1
59.9
30.5
9,618.1
59.9
-
34.8
-
34.8
34.8
30 June 2021
$m
$m
187.2
561.4
-
1,491.5
1,593.5
59.1
$m
-
31.2
-
$m
$m
1,678.7
2,186.1
59.1
1,678.7
2,186.1
59.1
-
45.3
-
45.3
45.3
Bank
30 June 2022
$m
$m
30.5
237.6
-
-
23,027.3
59.9
$m
-
35.5
-
$m
$m
30.5
23,300.4
59.9
30.5
23,300.4
59.9
-
34.8
-
34.8
34.8
30 June 2021
$m
$m
187.2
561.4
-
1,491.5
14,468.1
59.1
$m
-
31.2
-
$m
$m
1,678.7
15,060.7
59.1
1,678.7
15,060.7
59.1
-
45.3
-
45.3
45.3
Transfers between levels are deemed to have occurred at the beginning of the reporting period in which instruments are
transferred. There were no transfers between levels during the year for the Group or Bank.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9 5
19 Financial instruments (continued)
Valuation methodology
Financial instruments - debt securities
Each month, independent valuations are determined by the
Group's Financial Risk & Modelling function. This involves an
analysis of independently sourced data that is deemed most
representative of the market. From this independent data which
is made available by other financial institutions, market average
valuations are calculated, and the value of debt securities are
updated.
Financial instruments - equity investments
Level 1 - Listed investments relates to equities held that are on
listed exchanges.
Level 2 - Unlisted investments are equity holdings in unlisted
managed investment schemes. For managed scheme
investments the most recent prices provided by the fund
manager are used.
Level 3 - Unlisted investments are equity holdings in small
unlisted entities. Given there are no quoted market prices and no
observable inputs, assumptions reflective of market conditions
at the measurement date are used to approximate fair value.
Derivatives
Where the Group's derivative assets and liabilities are not traded
on an exchange, they are valued using valuation methodologies,
including discounted cash flow and option pricing models as
appropriate. The most significant inputs into the valuations are
interest rate yields which are developed from publicly quoted
rates.
Movements in Level 3 portfolio
The following table provides a reconciliation from the beginning
balances to the ending balances for financial instruments which
are classified as Level 3:
Financial assets - equity investments
Jun-22
Jun-21
Jun-22
Jun-21
Group
Bank
Opening balance
Revaluations
Sales
Closing balance
$m
31.2
5.4
(1.0)
35.6
$m
18.6
12.6
-
31.2
$m
31.2
5.4
(1.0)
35.6
$m
18.6
12.6
-
31.2
Financial assets and liabilities carried at amortised cost
Valuation hierarchy
The table below details financial instruments carried at amortised cost, by Balance Sheet classification and hierarchy level:
Group
30 June 2022
Level 1
Level 2
Level 3
Total
fair value
Total carrying
amount
$m
$m
$m
$m
$m
Financial assets
Cash and cash equivalents 1
Due from other financial institutions
Financial assets amortised cost
Net loans and other receivables
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Loan capital
-
-
-
-
-
-
-
3,407.6
188.0
861.7
-
-
-
3,407.6
3,407.6
188.0
861.7
188.0
861.7
-
77,008.6
77,008.6
77,610.4
178.8
74,339.1
11,412.6
817.1
549.8
-
-
-
-
178.8
74,339.1
11,412.6
1,366.9
178.8
74,583.9
11,703.0
1,366.1
1 Cash and cash equivalents excludes the balance of Notes and Coins.
96 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
19 Financial instruments (continued)
Financial assets and liabilities carried at amortised cost (continued)
Valuation hierarchy (continued)
Group
30 June 2021
Level 1
Level 2
Level 3
Total
fair value
Total carrying
amount
$m
$m
$m
$m
$m
Financial assets
Cash and cash equivalents 1
Due from other financial institutions
Financial assets amortised cost
Net loans and other receivables
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Loan capital
Financial assets
Cash and cash equivalents 1
Due from other financial institutions
Financial assets amortised cost
Net loans and other receivables
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Loan capital
Financial assets
Cash and cash equivalents 1
Due from other financial institutions
Financial assets amortised cost
Net loans and other receivables
Financial liabilities
Due to other financial institutions
Deposits
Other wholesale borrowings
Loan capital
-
-
-
-
-
-
-
6,949.2
173.4
351.5
-
-
-
6,949.2
173.4
351.5
6,949.2
173.4
351.5
-
71,985.9
71,985.9
71,920.6
175.4
66,269.2
11,703.8
850.3
568.1
-
-
-
-
175.4
66,269.2
11,703.8
1,418.4
175.4
66,217.1
11,736.3
1,383.2
Bank
30 June 2022
$m
$m
$m
$m
$m
-
-
-
-
-
-
-
817.1
2,948.9
188.0
603.9
-
-
-
2,948.9
188.0
603.9
2,948.9
188.0
603.9
-
76,514.3
76,514.3
77,118.4
178.8
74,344.9
7,615.5
549.8
-
-
-
-
178.8
74,344.9
7,615.5
1,366.9
178.8
74,589.7
7,863.0
1,366.1
30 June 2021
$m
$m
$m
$m
$m
-
-
-
-
-
-
-
850.3
6,494.5
173.4
135.5
-
-
-
6,494.5
173.4
135.5
6,494.5
173.4
135.5
-
71,369.4
71,369.4
71,304.1
175.4
66,281.4
8,106.1
568.1
-
-
-
-
175.4
175.4
66,281.4
66,229.3
8,106.1
1,418.4
8,138.6
1,383.2
1 Cash and cash equivalents excludes the balance of Notes and Coins.
Transfers between levels are deemed to have occurred at the beginning of the reporting period in which instruments are
transferred. There were no significant transfers between levels during the year for the Group or Bank.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9 7
19 Financial instruments (continued)
Valuation methodology
Cash and cash equivalents, due from/to other financial
institutions
The carrying value for these assets and liabilities are a
reasonable approximation of fair value.
Financial assets amortised cost
The fair values of financial assets held to maturity are
measured at amortised cost which approximates their fair
value given they are predominantly short-term in nature or have
interest rates which reprice frequently.
Net loans and other receivables
The carrying value of loans and other receivables is net of
individually assessed and collectively assessed provisions.
For variable rate loans, excluding impaired loans, the carrying
amount is a reasonable estimate of fair value.
The fair value for fixed-rate loans is calculated by utilising
discounted cash flow models, based on the maturity of the
loans. The discount rates used represent the rate the market
is willing to offer at arm's length for customers of similar credit
quality. The net fair value of impaired loans is calculated by
discounting expected cash flows using these rates.
Deposits
The carrying value of deposits at call is considered to represent
fair value given they are short-term in nature. The fair value for
all term deposits is calculated using a discounted cash flow
model applying market rates, or current rates for deposits of
similar maturities.
Other wholesale borrowings
The fair value for all wholesale borrowings is calculated using
a discounted cash flow model applying independent market
rates and margins for similar financial instruments.
Loan capital
The fair value of preference shares and capital notes is based
on quoted market rates for the issue concerned as at year end.
The fair value of subordinated debt is calculated based on
quoted market prices. 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.
98 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
20 Risk management
Nature of risk
Our business is exposed to a broad range of financial and non-
financial risks.
The Group has identified the following material financial
risks that have the potential to adversely impact its financial
performance and financial position:
•
• Market risk (traded & non-traded); and
•
Liquidity risk
Credit risk;
Non-financial risks, including operational risk and strategic risk
(including environmental, social and governance (ESG) risk),
are outlined in the Risk Management Framework, Material
Risks and Business Uncertainties section of the 2022 Annual
Financial Report.
The Board is ultimately responsible for the management of risk
which is achieved by establishing, reviewing and overseeing
the Group's Risk Management Framework including its risk
profile, risk appetite and risk strategy. The framework provides
a high-level description of the material risks faced by the Group
together with the policies and procedures implemented to
measure, monitor and manage those risks.
The Board's role is supported by Board Committees; Board
Risk Committee (BRC) and Board Financial Risk Committee
(BFRC) and Management Committees; Asset and Liability
Management Committee (ALMAC), Risk Models Committee
(RMC), Operational Risk Committee (ORC), Management
Credit Committee (MCC) and Rural Bank Management
Credit Committee (RB MCC). Further details regarding the
Group's material risks including our strategic approach to their
management is contained within the Directors' Report and
the Corporate Governance statement. Our Board committee
charters are available on our website.
Financial risk management
The Group's exposure to financial risks are considered
significant given financial instruments held by the Group
constitute the core contributors of financial performance
and position. An overview of the Group's key financial risks is
presented as follows.
Credit risk
The Group is predominantly exposed to credit risk as a result
of its lending activities. Credit risk is defined as the risk of loss
of principal, interest and/or fees and charges resulting from a
borrower otherwise failing to meet a credit commitment.
The Group is also exposed to counterparty credit risk, which
is the risk that a counterparty may default before the final
settlement of the transaction's cash flows. This risk is primarily
related to derivative instruments. Derivatives that are cleared
through a central clearing counterparty or an exchange
have less credit risk than over-the-counter derivatives and
are subject to relevant netting and collateral agreements. At
an operational level, business unit managers are responsible
for managing credit risks accepted in their business and for
maximising risk adjusted returns from their portfolios within the
approved Credit Risk Management Framework, risk appetite
and policies.
Authority to officers to approve credit risk exposures for
customers, is granted by the Chief Credit Officer in line with
the Delegated Lending Authority Policy. The Credit Risk
Management function is responsible for establishing policies,
monitoring trends impacting credit quality, setting credit limits
and authorising delegated lending authorities and where
required approving credit exposures. Financial Risk & Modelling
is responsible for monitoring Treasury counterparty credit limits
in line with the Group’s Counterparty Credit Limit Framework.
The Group utilises models to support the management of
credit risk. Governance of risk models is overseen by the RMC
and credit risk models are approved by the Group's MCC.
The Board has set a risk appetite for the maximum amount
of credit risk that it is willing to take, based on a percentage
of the Group's capital that has been allocated to credit risk.
The BFRC has articulated additional secondary risk appetite
settings that support this primary risk appetite setting through
a number of selected credit risk measures. Credit risk appetite
is reviewed and recommended by the MCC and/or RB MCC,
and ultimately approved by the BFRC and/or Board.
The Group maintains a Credit Risk Management Framework
and supporting policies to ensure and facilitate effective
management of credit risk and the maintenance of acceptable
asset quality. Stress testing is also undertaken on key portfolios
to support prudent management of credit risks.
Regular reporting provides confirmation of the effectiveness
of processes and highlights any trends or deterioration which
require attention. This enables portfolio monitoring by all levels
of management and the Board. Regular reporting is provided
to the Group's MCC, RB MCC and BFRC.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 9 9
20 Risk management (continued)
Credit risk (continued)
Maximum exposure to credit risk
The table below presents the maximum exposure to credit risk arising from Balance Sheet and off-Balance Sheet financial instruments.
The exposure is shown gross before taking into account any master netting, collateral agreements or other credit enhancements.
Gross maximum exposure
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other comprehensive
income (FVOCI)
Other assets
Derivative assets
Group
30 June 2022
Stage 1
Stage 2
Stage 3
$m
3,407.6
188.0
30.5
861.7
9,618.1
279.5
59.9
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
3,407.6
188.0
30.5
861.7
9,618.1
279.5
59.9
Gross loans and other receivables
70,981.9
6,047.6
791.8
77,821.3
Commitments and contingent liabilities
10,811.7
-
-
10,811.7
Total credit risk exposure
96,238.9
6,047.6
791.8
103,078.3
85,427.2
6,047.6
791.8
92,266.6
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other comprehensive
income (FVOCI)
Other assets
Derivative assets
30 June 2021
Stage 1
Stage 2
Stage 3
$m
6,949.2
173.4
1,678.7
351.5
2,186.1
255.8
59.1
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
6,949.2
173.4
1,678.7
351.5
2,186.1
255.8
59.1
Gross loans and other receivables
64,894.6
6,479.5
858.5
72,232.6
Commitments and contingent liabilities
10,701.3
-
-
10,701.3
Total credit risk exposure
87,249.7
6,479.5
858.5
94,587.7
76,548.4
6,479.5
858.5
83,886.4
100 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
20 Risk management (continued)
Credit risk (continued)
Maximum exposure to credit risk (continued)
Bank
30 June 2022
Stage 1
Stage 2
Stage 3
Gross maximum exposure
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other comprehensive
income (FVOCI)
Other assets
Derivative assets
$m
2,948.9
188.0
30.5
603.9
23,300.4
1,318.0
59.9
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
2,948.9
188.0
30.5
603.9
23,300.4
1,318.0
59.9
Gross loans and other receivables
70,489.7
6,047.6
790.7
77,328.0
Commitments and contingent liabilities
10,811.7
-
-
10,811.7
Total credit risk exposure
109,751.0
6,047.6
790.7
116,589.3
98,939.3
6,047.6
790.7
105,777.6
Cash and cash equivalents
Due from other financial institutions
Financial assets fair value through profit or loss (FVTPL)
Financial assets amortised cost
Financial assets fair value through other comprehensive
income (FVOCI)
Other assets
Derivative assets
30 June 2021
Stage 1
Stage 2
Stage 3
$m
6,494.5
173.4
1,678.7
135.5
15,060.7
1,326.7
59.1
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
6,494.5
173.4
1,678.7
135.5
15,060.7
1,326.7
59.1
Gross loans and other receivables
64,278.4
6,479.5
857.3
71,615.2
Commitments and contingent liabilities
10,701.3
-
-
10,701.3
Total credit risk exposure
99,908.3
6,479.5
857.3
107,245.1
89,207.0
6,479.5
857.3
96,543.8
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.
For financial assets recognised in the Balance Sheet, the maximum exposure to credit risk equals their carrying amount. For
contingent liabilities including financial guarantees granted, it is the maximum amount that the Group would have to pay if the
guarantees were called upon. For loan commitments and other credit-related commitments, it is generally the full amount of the
committed facilities.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 0 1
20 Risk management (continued)
Credit risk (continued)
Concentration of credit risk
Concentration risk is managed by client or counterparty,
by geographical region and by industry sector. The Group
implements certain exposure and concentration limits in order to
mitigate the risk.
The gross maximum credit exposure to any client or
counterparty (excluding sovereign/government exposures as at
30 June 2022 was $397.1 million (June 2021: $373.7million)
before taking to account collateral or other credit
enhancements.
Geographic - based on the location of the counterparty or
customer.
The table below presents the maximum exposure to credit risk
categorised by geographical region. The exposures are shown
gross before taking into account any collateral held or other
credit enhancements.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Geographic concentration
$m
$m
$m
$m
Victoria
New South Wales
Queensland
South Australia/Northern Territory
Western Australia
Australian Capital Territory
Tasmania
Overseas/other
Total credit risk exposure
38,630.7
24,368.6
12,880.0
9,379.0
8,105.6
6,972.0
2,098.1
644.3
36,314.6
24,929.6
11,685.9
8,113.2
7,646.4
3,497.7
1,847.0
553.3
40,295.2
27,142.2
12,626.5
19,055.4
7,959.7
6,912.1
2,080.4
630.6
38,243.0
28,979.1
11,419.5
15,385.3
7,481.1
3,471.9
1,829.4
539.5
103,078.3
94,587.7
116,702.1
107,348.8
Industry Sector - is based on the industry in which the customer or counterparty are engaged.
The table below presents the maximum exposure to credit risk categorised by industry sector. The exposures are shown gross
before taking into account any collateral held or other credit enhancements.
Industry concentration
Accommodation and food services
Administrative and support services
Agriculture, forestry and fishing
Arts and recreation services
Construction
Education and training
Electricity, gas, water and waste services
Financial and insurance services
Health care and social assistance
Information media and telecommunications
Manufacturing
Margin lending
Mining
Other
Other services
Professional, scientific and technical services
Public administration and safety
Rental, hiring and real estate services
Residential/consumer
Retail trade
Transport, postal and warehousing
Wholesale trade
Total credit risk exposure
102 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
$m
420.3
87.5
8,040.8
169.6
1,100.4
142.8
61.4
$m
383.6
53.7
7,856.9
111.4
904.6
72.0
35.7
$m
420.3
87.5
8,043.0
169.6
1,100.4
142.8
61.4
$m
396.3
53.7
7,858.9
111.4
902.7
72.0
35.7
12,178.2
12,301.8
27,116.6
26,526.8
603.2
50.4
401.9
702.9
28.9
276.2
1,433.2
1,480.6
33.4
316.6
344.5
395.7
5,329.2
5,101.1
23.2
286.4
258.0
290.3
2,111.9
4,293.9
604.8
50.4
401.9
-
33.4
318.0
344.5
508.5
704.5
28.9
276.1
-
23.2
288.9
257.9
290.3
5,328.8
5,101.1
2,111.5
4,293.9
65,756.4
62,351.0
65,757.4
62,351.4
692.9
246.1
172.7
426.6
159.6
178.5
692.9
246.1
172.7
426.6
159.6
178.5
103,078.3
94,587.7
116,702.1
107,348.8
20 Risk management (continued)
Credit risk (continued)
Credit quality
The table below discloses the effect of movements
in the gross carrying value of loans and other
receivables, other financial assets held at amortised
cost and contingent liabilities issued by the Group
on behalf of customers, to the different stages of
the ECL model:
Gross carrying amount as at 1 July 2021
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New financial assets originated or purchased
Financial assets derecognised or repaid
Change in balances
Amounts written off against provisions
Gross carrying amount as at 30 June 2022
Gross carrying amount as at 1 July 2020
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New financial assets originated or purchased
Financial assets derecognised or repaid
Change in balances
Amounts written off against provisions
Gross carrying amount as at 30 June 2021
Gross carrying amount as at 1 July 2021
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New financial assets originated or purchased
Financial assets derecognised or repaid
Change in balances
Amounts written off against provisions
Gross carrying amount as at 1 July 2020
Stage 1
Stage 2
Stage 3
Transfer from collectively assessed to individually
assessed provisions
New financial assets originated or purchased
Financial assets derecognised or repaid
Change in balances
Amounts written off against provisions
Stage 1
Stage 2
Stage 3
Stage 3
Group
Collectively assessed provisions
$m
$m
83,207.0
1,947.7
(3,055.2)
(236.9)
6,479.5
(1,915.3)
3,146.5
(220.0)
(2.6)
(9.0)
20,337.7
(11,911.3)
(3,902.0)
-
441.0
(1,617.1)
(258.0)
-
86,384.4
6,047.6
$m
$m
69,092.6
2,376.4
(2,991.5)
(142.6)
6,794.5
(2,295.0)
3,150.5
(231.0)
$m
652.8
(32.4)
(91.3)
456.9
(21.7)
9.2
(307.6)
(0.8)
-
665.1
$m
866.5
(81.4)
(159.0)
373.6
(3.3)
(11.4)
(42.0)
18,813.6
(9,629.0)
5,690.8
-
364.6
(1,045.4)
(247.3)
-
83,207.0
6,479.5
$m
$m
81,920.1
1,947.7
(3,055.2)
(236.9)
6,479.5
(1,915.3)
3,146.5
(220.0)
(2.6)
(9.0)
20,337.7
(11,911.3)
(3,823.8)
-
441.0
(1,617.1)
(258.0)
-
$m
$m
68,035.2
2,376.4
(2,991.5)
(142.6)
6,794.5
(2,295.0)
3,150.5
(231.0)
18,813.6
(9,629.0)
5,461.3
-
364.6
(1,045.4)
(247.3)
-
11.9
(256.8)
(60.0)
-
652.8
Bank
$m
652.8
(32.4)
(91.3)
456.9
(21.7)
9.2
(307.6)
(0.8)
-
665.1
$m
866.5
(81.4)
(159.0)
373.6
11.9
(256.8)
(60.0)
-
652.8
(3.3)
(11.4)
(42.0)
Individually
assessed
provisions
$m
205.7
-
-
-
33.3
-
-
(77.8)
(34.5)
Total
$m
90,545.0
-
-
-
-
20,787.9
(13,836.0)
(4,238.6)
(34.5)
126.7
93,223.8
$m
232.7
-
-
-
56.7
-
-
(65.6)
(18.1)
$m
76,986.3
-
-
-
-
19,190.1
(10,931.2)
5,317.9
(18.1)
205.7
90,545.0
$m
204.5
-
-
-
33.3
-
-
(77.8)
(34.4)
$m
89,256.9
-
-
-
-
20,787.9
(13,836.0)
(4,160.4)
(34.4)
125.6
92,014.0
$m
231.5
-
-
-
56.7
-
-
(65.5)
(18.2)
$m
75,927.7
-
-
-
-
19,190.1
(10,931.2)
5,088.5
(18.2)
204.5
89,256.9
Gross carrying amount as at 30 June 2022
85,175.7
6,047.6
Gross carrying amount as at 30 June 2021
81,920.1
6,479.5
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 0 3
20 Risk management (continued)
Credit risk (continued)
Credit quality (continued)
The table below discloses information about the credit quality of financial assets measured at amortised cost without taking into account
collateral or other credit enhancement. Unless specifically indicated, the amounts in the table represent gross carrying amounts.
Stage 1
Stage 2
Stage 3
Stage 3
Group
Collectively assessed provisions
Neither past due or impaired
> High grade
> Standard grade
> Sub-standard grade
> Unrated
Past due or impaired
$m
$m
59,078.3
28,970.9
806.7
6,997.6
539.4
298.1
3,445.4
1,434.3
78.8
626.1
Gross carrying amount as at 30 June 2022
96,392.9
5,882.7
$m
-
0.8
3.7
6.4
665.1
676.0
Individually
assessed
provisions
$m
Total
$m
-
-
-
-
126.7
59,376.4
32,417.1
2,244.7
7,082.8
1,957.3
126.7
103,078.3
$m
$m
$m
$m
$m
Neither past due or impaired
> High grade
> Standard grade
> Sub-standard grade
> Unrated
Past due or impaired
51,974.8
28,923.0
1,035.8
4,863.8
452.2
361.5
3,476.1
1,647.3
135.6
859.0
Gross carrying amount as at 30 June 2021
87,249.6
6,479.5
-
-
-
-
205.8
52,336.3
32,399.1
2,683.1
4,999.4
2,169.8
205.8
94,587.7
-
-
-
-
652.8
652.8
Bank
Stage 1
Stage 2
Stage 3
Stage 3
Collectively assessed provisions
Neither past due or impaired
> High grade
> Standard grade
> Sub-standard grade
> Unrated
Past due or impaired
$m
$m
72,702.1
28,970.9
806.7
6,997.6
539.5
298.1
3,445.4
1,434.3
78.8
626.0
Gross carrying amount as at 30 June 2022
110,016.8
5,882.6
$m
-
0.8
3.7
6.4
665.1
676.0
Individually
assessed
provisions
$m
Total
$m
-
-
-
-
126.7
73,000.2
32,417.1
2,244.7
7,082.8
1,957.3
126.7
116,702.1
$m
$m
$m
$m
$m
Neither past due or impaired
> High grade
> Standard grade
> Sub-standard grade
> Unrated
Past due or impaired
64,782.4
28,876.5
1,035.8
4,790.9
525.1
361.5
3,476.1
1,647.3
135.6
859.0
Gross carrying amount as at 30 June 2021
100,010.7
6,479.5
-
-
-
-
652.8
652.8
-
-
-
-
205.8
65,143.9
32,352.6
2,683.1
4,926.5
2,242.7
205.8
107,348.8
104 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
20 Risk management (continued)
Credit risk (continued)
Credit quality (continued)
The credit ratings range from high grade where there is a
very high likelihood of the asset being recovered in full to sub-
standard grade where there is concern over the obligor's ability
to make payments when due.
Credit risk stress testing is regularly performed to assess the
likelihood of loan default, to examine the financial strength of
borrowers and counterparties including their ability to meet
commitments under changing scenarios and to assess the
exposure and extent of loss should default actually occur.
Ageing
The following table presents the ageing analysis of past due
but not impaired loans and other receivables.
Loans and receivables which are 90 or more days past due
are not classified as impaired assets where the estimated net
realisable value of the collateral/security is sufficient to cover
the repayment of all principal and interest amounts due.
The exposures are shown net after taking into account any
collateral held or other credit enhancements.
Less than
30 days
31 to
60 days
61 to
90 days
More than
91 days
Group
Bank
2022
2021
2022
2021
$m
977.2
953.9
977.2
953.9
$m
240.3
274.6
240.3
274.6
$m
123.3
167.6
123.3
167.6
Total
$m
Fair value of
collateral
$m
$m
489.8
1,830.6
4,734.2
565.3
1,961.4
3,902.1
489.8
1,830.6
4,728.5
565.3
1,961.4
3,902.1
Climate change risk
Climate change risk includes the physical risks which cause
direct damage to assets, property and/or customers’ cash
flows as a result of rising global temperatures, as well as
transition risks which arise from the transition to a low-carbon
economy. The Group is predominantly exposed to climate
change risk through our lending activities whilst noting there is
also exposure through our supply chains and built assets such
as branches and offices.
The Group is currently two years into a three year climate
change action plan and our understanding of climate change
risks and its management is being enhanced as we execute the
plan. For further information refer to the Group’s 2022 Climate
Related Financial Disclosures.
Liquidity risk
Liquidity risk is defined as the risk that the Group is unable to
access funds, both anticipated and unforeseen, which may lead
to the Group being unable to meet its obligations in an orderly
manner as they arise or forgoing investment opportunities.
Liquidity risk is managed in line with the Board approved Risk
Appetite Statement and the Group Liquidity Risk Management
Framework. The principal objective of the Group’s Liquidity
Risk Management Framework is to ensure that all cash flow
commitments are met in a timely manner and prudential
requirements are satisfied.
The Group manages a portfolio of High Quality Liquid Assets
(HQLA) and Alternative Liquid Assets (ALA) to cover projected
net cash outflows over a 30 day period under the stress
scenario assumptions prescribed by the Liquidity Coverage
Ratio (LCR) in APRA Prudential Standard 210 Liquidity. APRA
requires LCR ADIs to maintain a minimum 100 percent LCR.
The Group also monitors the stability and composition of
funding, including the calculation of the Net Stable Funding
Ratio (NSFR), which APRA also requires LCR ADIs to maintain
at a minimum of 100 percent.
The Group continues to manage liquidity holdings in line with
the Board approved Funding Strategy, ensuring adequate levels
of HQLA, ALA and diversified sources of funding. In meeting our
liquidity requirement, the Group makes use of the Reserve Bank
of Australia (RBA) provided Committed Liquidity Facility (CLF),
and the RBA Term Funding Facility (TFF). Both the CLF and the
TFF contribute to the Groups LCR and NSFR positions.
The Group also maintains collateral in the form of internal
securitisation which could potentially be used to support
funding arrangements under the RBA Exceptional Liquidity
Assistance (ELA). The intent of ELA is to provide the RBA with
a facility that could be used to provide liquidity support to
a solvent bank experiencing acute liquidity difficulties where
the RBA considers it to be in the public interest to do so. The
provision of liquidity under ELA is at the absolute discretion of
the RBA.
The Group has established a trigger framework to support
the liquidity risk management process, in particular, to alert
management of emerging or increased risk or vulnerability
in its liquidity position. This framework incorporates limits,
early warning indicators, triggers, monitoring and escalation
processes to ensure that sufficient liquidity is maintained.
The Group undertakes scenario analysis to examine liquidity
under both “business as usual” and stressed scenarios. In
addition, the Group’s Contingency Funding Plan (CFP) outlines
specific actions to deal with a liquidity related event. Regular
reporting is provided to ALMAC and BFRC.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 0 5
20 Risk management (continued)
Liquidity risk (continued)
Analysis of financial liabilities by remaining contractual
maturities
The table below categorises the Group's financial liabilities
into relevant maturity periods based on the remaining period
at the reporting date to the contractual maturity date. The
amounts disclosed in the table represent all cash flows, on an
undiscounted basis, including all future coupon payments, both
principal and interest, and therefore may not reconcile with the
amounts disclosed in the Balance Sheet.
For foreign exchange derivatives and cross currency interest
rate swaps, the amounts disclosed are the gross contractual
cash flows to be paid. For interest rate swaps, the cash flows
are the net amounts to be paid, and have been estimated
using forward interest rates applicable at the reporting date.
Group
30 June 2022
At call
$m
178.8
Not longer
than 3
months
3 to 12
months
1 to 5
years
$m
-
$m
-
$m
-
Longer
than 5
years
$m
-
Total
$m
178.8
46,930.6
12,751.4
14,520.8
411.9
0.5
74,615.2
-
-
312.2
-
500.6
1,288.3
7,413.3
2,500.8
11,703.0
3.8
2.3
12.1
21.0
8.2
36.2
10.9
137.0
1,006.9
-
8.9
550.0
35.7
468.6
1,605.2
Due to other financial institutions
Deposits
Other borrowings
Derivatives - net settled
Other payables
Loan capital
Total financial liabilities
47,421.6
13,270.2
15,874.5
8,980.0
3,060.2
88,606.5
Commitments and contingent liabilities
Total contingent liabilities and commitments
10,811.7
10,811.7
-
-
$m
-
-
-
30 June 2021
$m
-
-
-
$m
-
-
-
10,811.7
10,811.7
$m
-
$m
175.4
$m
175.4
39,300.6
12,530.6
13,884.1
552.5
0.4
66,268.2
-
-
270.4
-
532.3
591.8
7,678.2
2,934.0
11,736.3
11.9
20.4
8.9
21.8
29.4
26.6
27.1
142.8
456.8
-
-
1,117.9
60.8
463.0
1,610.2
Due to other financial institutions
Deposits
Other borrowings
Derivatives - net settled
Other payables
Loan capital
Total financial liabilities
39,746.4
13,104.1
14,553.7
8,857.4
4,052.3
80,313.9
Commitments and contingent liabilities
10,701.3
Total contingent liabilities and commitments
10,701.3
-
-
-
-
-
-
10,701.3
10,701.3
-
-
Bank
30 June 2022
Due to other financial institutions
Deposits
Other borrowings
Derivatives - net settled
Other payables
Loans payable to securitisation trusts
Loan capital
Total financial liabilities
$m
178.8
$m
-
$m
-
$m
-
$m
-
$m
178.8
46,936.4
12,751.4
14,520.8
411.9
0.5
74,621.0
-
-
286.4
-
-
500.6
1,232.0
6,130.4
3.8
2.3
-
21.0
8.2
-
10.9
137.0
-
-
8.9
7,863.0
35.7
442.8
12.1
36.2
1,006.9
550.0
1,605.2
-
16,686.7
16,686.7
47,401.6
13,270.2
15,818.2
7,697.1
17,246.1
101,433.2
Commitments and contingent liabilities
Total contingent liabilities and commitments
10,811.7
10,811.7
-
-
-
-
-
-
-
-
10,811.7
10,811.7
106 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
20 Risk management (continued)
Liquidity risk (continued)
Analysis of financial liabilities by remaining contractual maturities (continued)
Bank
30 June 2021
At call
$m
175.4
Not longer
than 3
months
3 to 12
months
1 to 5
years
$m
-
$m
-
$m
-
Longer
than 5
years
$m
-
Total
$m
175.4
39,312.7
12,530.7
13,884.1
552.5
0.4
66,280.4
500.1
536.1
7,102.4
-
-
249.8
-
-
11.9
20.4
-
8.9
-
-
-
8,138.6
60.8
442.4
21.8
29.4
-
27.1
142.8
-
15,328.5
15,328.5
26.6
456.8
1,117.9
1,610.2
39,737.9
13,072.0
14,498.0
8,281.6
16,446.8
92,036.3
Due to other financial institutions
Deposits
Other borrowings
Derivatives - net settled
Other payables
Loans payable to securitisation trusts
Loan capital
Total financial liabilities
Commitments and contingent liabilities
Total contingent liabilities and commitments
10,701.3
10,701.3
-
-
-
-
-
-
-
-
10,701.3
10,701.3
Market risk (including interest rate and currency risk)
Market risk is the risk that changes in market variables such
as interest rates, foreign exchange rates and equity prices will
impact the Group’s fair value or future cash flows of financial
instruments. The Group classifies its exposures to market risk
as either traded (the Trading Book) or non-traded (the Banking
Book).
Traded market risk is defined as the risk of loss owing to
changes in the general level of market prices or interest rates.
Traded market risk arises from positions held in the Group's
Trading Book, which consists of securities held for both
trading and liquidity purposes, and discretionary interest rate
and foreign exchange trading. Foreign currency trading is
undertaken primarily for the purpose of providing the Group's
customers with access to foreign exchange markets. The
trading book positions include approved financial instruments,
both physical and derivative. Traded market risk is managed in
line with the Risk Appetite Statement, Board approved Group
Traded Market Risk Management Framework and Group
Trading Book Policy.
Non-traded market risk primarily represents Interest Rate
Risk in the Banking Book (IRRBB). IRRBB is the risk of loss in
earnings or in the economic value in the Banking Book due
to movements in interest rates. Non-traded market risk arises
predominantly from the Group’s general balance sheet funding
and lending activities. The Group takes a prudent approach to
the management of IRRBB, balancing NII and EV within Board
risk appetite and aiming to reduce volatility in current and
future earnings.
IRRBB is managed in line with the Risk Appetite Statement,
Board approved Group Interest Rate Risk Management
Framework, and Group Interest Rate Risk in the Banking Book
Policy and Standard.
Market risk is primarily managed by Group Treasury, which
is responsible for ensuring that the Group’s exposures are in
compliance with market risk limits.
The Board has set a risk appetite for the maximum amount of
traded market risk and IRRBB that it is willing to take, based on
a percentage of the Group's capital.
Group Treasury monitors significant developments in market
structure and pricing as part of their established market risk
management process. The Financial Risk & Modelling function
provides independent oversight of market risk practices.
The Group utilises Value at Risk (VaR) as a key measure of
IRRBB. VaR measures the potential loss in the value of an asset
or portfolio to a 99 percent confidence level over a 12 month
timeframe due to interest rate changes.
The Group also models a variety of scenarios to analyse the
Group’s exposure to IRRBB and project the potential impact.
This includes scenarios that would potentially have an extreme
impact on earnings.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 0 7
20 Risk management (continued)
Market risk (including interest rate and currency risk) (continued)
The following table outlines the key measure for Traded Market Risk. EV Sensitivity is based on the impact of a 50bp parallel
movement in rates.
VaR
Economic Value (EV) Sensitivity
Exposure at
year end
Average
during the
year
Exposure at
year end
Average
during the
year
Jun-22
$m
(0.5)
$m
(0.5)
Jun-21
$m
(1.0)
$m
(4.9)
The following table outlines the key measures for Non-Traded Market Risk (IRRBB). EV and NII Sensitivity are based on a static
representation of the Balance Sheet and the impact of instantaneous 200bp parallel and non-parallel shifts in rates.
VaR
VaR
Economic Value (EV) Sensitivity
Net Interest Income (NII) Sensitivity
$m
45.1
(57.3)
(85.7)
$m
53.6
(73.7)
(96.5)
$m
60.2
(69.0)
(62.5)
$m
75.3
(116.6)
(67.5)
108 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
20 Risk management (continued)
Market risk (including interest rate and currency risk) (continued)
Interest Rate risk
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.
rates. The sensitivity of equity is analysed by the maturity of the
asset or swap, with sensitivity based on the assumption that
there are parallel shifts in the yield curve.
The sensitivity of the Income Statement is the effect of assumed
changes in interest rates on the net interest income for one
year, based on the floating rate financial assets and financial
liabilities held at 30 June 2022, including the effect of hedging
instruments. The sensitivity of equity is calculated by revaluing
fixed rate financial assets (including the effect of any associated
hedges), and swaps designated as cash flow hedges, at 30
June 2022 for the effects of the assumed changes in interest
Taking into account the fact that the official cash rate in
Australia has increased 1.0 percent in two months from 30 June
2022, the table below represents the change to the Group's
profit for the relevant financial year from a 150 basis point up
and 25 basis point down rate shock. Where a 25 basis point rate
shock would result in an interest rate which is below zero, the
interest rate has been assumed to be zero, that is, no negative
interest rates have been used.
Group
2022
2021
+150 basis
points
-25 basis
points
+150 basis
points
-25 basis
points
Net interest income
Revaluation (losses)/gains arising on economic hedges that
are not in a hedge relationship
Income tax effect at 30%
Effect on profit
Effect on profit (per above)
Cash flow hedge reserve
Income tax effect on reserves at 30%
Effect on equity
$m
99.0
-
(29.7)
69.3
69.3
(134.6)
40.4
(24.9)
Net interest income
Revaluation (losses)/gains arising on economic hedges that
are not in a hedge relationship
Income tax effect at 30%
Effect on profit
Effect on profit (per above)
Cash flow hedge reserve
Income tax effect on reserves at 30%
Effect on equity
$m
99.0
-
(29.7)
69.3
69.3
(134.6)
40.4
(24.9)
$m
(20.1)
-
6.0
$m
200.8
(12.2)
3.7
$m
(18.3)
0.2
5.4
(14.1)
192.3
(12.7)
192.3
8.8
(2.6)
198.5
(14.1)
22.4
(6.7)
1.6
Bank
$m
(20.1)
-
6.0
$m
200.8
(12.2)
3.7
(12.7)
(1.5)
0.4
(13.8)
$m
(18.3)
0.2
5.4
(14.1)
192.3
(12.7)
(14.1)
22.4
(6.7)
1.6
192.3
8.8
(2.6)
198.5
(12.7)
(1.5)
0.4
(13.8)
2022
2021
The movements in profit are due to higher/lower interest costs
from variable rate debt and cash balances. 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.
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 Group'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 $nil (June 2021: AUD $nil).
Retail and business banking foreign exchange transactions are
managed by the Group's Financial Markets unit, with resulting
risk constrained by Board approved spot and forward limits.
Adherence to limits is independently monitored by the Financial
Risk & Modelling function.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 0 9
Funding and Capital Management
21 Share capital
Group
Jun-2022
Bank
Jun-2022
Issued and paid up capital
No. of shares
$m No. of shares
$m
Ordinary shares fully paid (ASX Code: BEN)
563,077,445
5,222.5 563,077,445
5,222.5
Employee Share Ownership Plan shares
-
(3.0)
-
(3.0)
Total issued and paid up capital
563,077,445
5,219.5 563,077,445
5,219.5
Movements in ordinary shares on issue
No. of shares
$m No. of shares
$m
Opening balance 1 July 2021
Bonus share scheme 1
Dividend reinvestment plan 2
547,147,671
5,064.9 547,147,671
5,064.9
601,774
-
601,774
7,903,601
75.9
7,903,601
Shares issued for business acquisition 3
10,002,606
102.2
10,002,606
Executive performance rights
-
(0.1)
-
-
75.9
102.2
(0.1)
Closing balance (includes Treasury shares) 30 June 2022
565,655,652
5,242.9 565,655,652
5,242.9
Less: Treasury shares
Opening balance 1 July 2021
No. of shares
$m No. of shares
(1,637,293)
(11.8)
(1,637,293)
Net (acquisitions)/disposals during the period
(940,914)
(8.6)
(940,914)
$m
(11.8)
(8.6)
Closing balance (excludes Treasury shares) 30 June 2022
563,077,445
5,222.5 563,077,445
5,222.5
Movements in Employee Share Ownership Plan
No. of shares
$m No. of shares
Opening balance 1 July 2021
Reduction in Employee Share Ownership Plan
Closing balance 30 June 2022
-
-
-
(3.6)
0.6
(3.0)
-
-
-
$m
(3.6)
0.6
(3.0)
Total issued and paid up capital
563,077,445
5,219.5 563,077,445
5,219.5
1 The Group issued 339,228 shares @ $9.49 as part of the December 2021 interim dividend and issued 262,546 shares @ $9.70 as part of the
June 2022 final dividend under the Bonus Share Scheme.
2 The Group issued 3,989,562 shares @ $9.49 as part of the December 2021 interim dividend and issued 3,914,039 shares @ $9.70 as part of the
June 2022 final dividend under the Dividend Reinvestment Plan.
3 The Group issued 10,002,606 shares @ $10.22 as part of the Ferocia acquisition.
110 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
21 Share capital (continued)
Group
Jun-2021
Bank
Jun-2021
Issued and paid up capital
No. of shares
$m No. of shares
$m
Ordinary shares fully paid (ASX Code: BEN)
545,510,378
5,053.1 545,510,378
5,053.1
Employee Share Ownership Plan shares
-
(3.6)
-
(3.6)
Total issued and paid up capital
545,510,378
5,049.5 545,510,378
5,049.5
Movements in ordinary shares on issue
No. of shares
$m No. of shares
$m
Opening balance 1 July 2020
Bonus share scheme 1
Dividend reinvestment plan 2
Institutional placement
Underwriting issue 3
Shares issued for Loan Share Plan
Executive performance rights
530,779,195
4,909.3 530,779,195
4,909.3
232,760
-
232,760
4,213,290
41.0
4,213,290
71
-
71
-
41.0
-
10,624,730
105.7
10,624,730
105.7
1,297,625
-
8.7
0.2
1,297,625
-
8.7
0.2
Closing balance 30 June 2021
547,147,671
5,064.9 547,147,671
5,064.9
Less: Treasury shares
No. of shares
$m No. of shares
Opening balance 1 July 2020
Net acquisitions during the period
-
-
(1,637,293)
(11.8)
-
(1,637,293)
$m
-
(11.8)
Closing balance (excludes Treasury shares) 30 June 2021
545,510,378
5,053.1
545,510,378
5,053.1
Movements in Employee Share Ownership Plan
Opening balance 1 July 2020
Reduction in Employee Share Ownership Plan
Closing balance 30 June 2021
No. of shares
-
-
-
(4.3)
$m No. of shares
-
-
-
0.7
(3.6)
$m
(4.3)
0.7
(3.6)
Total issued and paid up capital
545,510,378
5,049.5 545,510,378
5,049.5
1 The Group issued 232,760 shares @ $9.72 as part of the December 2020 interim dividend under the Bonus Share Scheme.
2 The Group issued 4,213,290 shares @ $9.72 as part of the December 2020 interim dividend under the Dividend Reinvestment Scheme.
3 The Group issued 10,624,730 shares @ $9.95 as part of the June 2021 final dividend.
Nature of issued capital
Recognition and measurement
Ordinary shares (ASX code: BEN)
The Group does not have authorised capital. Ordinary shares
are fully-paid and have no par value. Each ordinary share
entitles the holder to one vote, either in person or by proxy, at
a shareholder meeting. Ordinary shares entitle the holder to
participate in dividends and, in the event of the Group winding
up, to a share of the proceeds in proportion to the number of
and amounts paid on the shares held.
Ordinary shares are classified as equity. Issued ordinary capital
is recognised at the fair value of the consideration received
net of transaction costs (net of any tax benefit). Dividends are
recognised as a distribution from equity in the year that they are
declared.
Employee Share Ownership Plan 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.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1 1
22 Retained earnings and reserves
Retained earnings movements
Opening balance
Profit for the year
Share-based payment
Operational risk reserve
Decrease/(increase) General reserve for credit losses
Dividends
Deregistration of subsidiary companies
Defined benefits actuarial adjustment (after tax)
Closing balance
Reserve movements
Employee benefits reserve
Opening balance
Net increase in reserve
Closing balance
Revaluation reserve - FVOCI without recycling
Opening balance
Net unrealised gains
Tax effect of net unrealised gains
Closing balance
Revaluation reserve - Debt Securities at FVOCI
Opening balance
Impairment
Net unrealised (losses)/gains
Tax effect of revaluations
Closing balance
Operational risk reserve
Opening balance
Movement operational risk reserve
Closing balance
Cash flow hedge reserve
Opening balance
Mark-to-market movements
Tax effect of mark-to-market movements
Closing balance
General reserve for credit losses (GRCL)
Opening balance
(Decrease)/increase in GRCL
Closing balance
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
1,166.0
488.1
0.9
4.2
16.9
(289.6)
-
-
$m
805.9
524.0
1.3
-
(18.1)
(146.3)
-
(0.8)
$m
682.4
550.3
0.9
-
16.9
(289.6)
0.2
-
$m
427.6
427.7
1.3
-
(18.1)
(146.3)
(9.0)
(0.8)
1,386.5
1,166.0
961.1
682.4
$m
9.6
4.1
13.7
$m
9.7
4.7
(1.4)
13.0
$m
0.7
0.1
(84.8)
25.5
(58.5)
$m
4.2
(4.2)
-
$m
9.1
46.1
(5.3)
49.9
$m
104.7
(16.9)
87.8
$m
8.9
0.7
9.6
$m
0.2
13.5
(4.0)
9.7
$m
1.0
-
(0.5)
0.2
0.7
$m
4.2
-
4.2
$m
(13.6)
32.5
(9.8)
9.1
$m
86.6
18.1
104.7
$m
9.6
4.1
13.7
$m
8.9
5.4
(1.6)
12.7
$m
197.5
0.1
(420.6)
126.1
(96.9)
$m
-
-
-
$m
9.1
46.1
(5.3)
49.9
$m
104.7
(16.9)
87.8
$m
8.9
0.7
9.6
$m
-
12.7
(3.8)
8.9
$m
(15.3)
-
304.0
(91.2)
197.5
$m
-
-
-
$m
(13.6)
32.5
(9.8)
9.1
$m
86.6
18.1
104.7
Total reserves
105.9
138.0
67.2
329.8
112 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
22 Retained earnings and reserves (continued)
Nature and purpose of reserves
Employee benefits reserve
The reserve records the value of equities issued to non-
executive employees under the Employee Share Ownership
Plan and the value of deferred shares and rights granted to
Executive employees under the Employee Salary Sacrifice,
Deferred Share and Performance Share Plan.
Further details regarding these employee equity plans are
disclosed within Note 33.
Revaluation reserve - FVOCI (without recycling)
The reserve records fair value changes in relation to
investments held at FVOCI.
Revaluation reserve - Debt Securities at FVOCI
The reserve records fair value changes in assets classified as
debt securities.
Operational risk reserve
The reserve is required to meet Sandhurst Trustees Limited
licence requirements.
Cash flow hedge reserve
The reserve records mark-to-market movements in relation to
derivatives that are determined to be in an effective cash flow
hedge relationship.
General reserve for credit losses
The General reserve for credit losses was initially established to
meet the requirements of APRA Prudential Standard, APS 220
Credit Quality, which required a reserve to be held to recognise
estimated future credit losses which may arise over the life of
the Group's lending portfolio. This requirement was removed
from 1 January 2022, however, the Group has prudently
maintained this reserve pending further clarification.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1 3
Other Assets and Liabilities
23 Investment property
Investment property values reflect the Group's investment in residential real estate through the Homesafe Trust. The investments
represent shared equity interest alongside the original home owners in Sydney and Melbourne residential properties.
Opening balance
Additions
Disposals
Homesafe revaluation gain 1
Total investment property
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
901.7
51.9
(63.1)
29.8
920.3
$m
779.8
31.6
(43.5)
133.8
901.7
$m
$m
-
-
-
-
-
-
-
-
-
-
1 Homesafe revaluation income in Note 3 of $38.5m (June 2021: $137.7m), includes Homesafe revaluation gain and the profit/(loss) recognised on each
contracts' completion.
Recognition and measurement
Investment properties are measured initially at cost, including
transaction costs and are then stated at fair value. Gains or
losses arising from changes in the fair values of investment
properties are recognised in the Income Statement in the year
in which they arise.
Valuation methodology
Subsequent to initial recognition, fair value is determined by
discounting the expected future cash flows of the portfolio,
taking into account the restrictions on the ability to realise the
investment property due to contractual obligations.
Assumptions used in the modelling of future cashflows are
sourced from market indices of property values (Residex) and
long term growth/discount rates appropriate to residential
property and historical experience of contracts that have
been closed out. The discounted cash flow model is prepared
on a monthly basis. Inputs that form part of the discounted
cash flow model include rates of property appreciation/
(depreciation), discount rates, selling costs, mortality rates and
future CPI increases.
The Group has revised the assumptions upon which the
Homesafe valuation is calculated to ensure consistency with the
Group’s forecasts for the property market as determined by the
Economic Outlook Committee, taking into account the specific
characteristics of the portfolio. The Group has applied a discount
rate of 5.75 percent (June 2021: 5.75 percent) and property
appreciation rates of -5.0 percent for the first year, -2.0 percent
for the second year, and 4.0 percent per annum thereafter (June
2021: 3.0 percent for the first year, 3.0 percent for the second year,
and 4.0 percent per annum thereafter).
Fair value measurement
There are different levels of fair value measurement. When
fair value is calculated using inputs that are not based on
observable market data, then assets will be considered as
Level 3 fair value. Investment property has been categorised as
a Level 3 fair value based on the inputs outlined above.
Sensitivity of Level 3 fair value measurements to reasonably possible alternative assumptions
Valuation
technique
Significant
unobservable inputs
Range of estimates for
unobservable inputs
Favourable
change
Unfavourable
change
Fair value
measurement
sensitivity to
unobservable inputs
Effect of reasonably
possible alternative assumptions
Favourable
change
Unfavourable
change
Rates of property
appreciation ~ short-
term growth rates:
Year 1: (5%) Year 2: (2%)
Year 1: (4%)
Year 2: (1%)
Year 1: (6%)
Year 2: (3%)
Discounted
cash flow
Rates of property
appreciation ~ long-
term growth rate 4%
5%
3%
Discount rates
~ 5.75%
4.75%
6.75%
Significant increases in
these inputs would result
in higher fair values.
Significant increases in
these inputs would result
in higher fair values.
Significant increases in
these inputs would result
in higher fair values.
17.8
(17.4)
79.2
(69.6)
99.1
(84.9)
Where valuation techniques use non-observable inputs that are
significant to a fair value measurement in its entirety, changing
these inputs will change the resultant fair value measurement.
The most significant inputs impacting the carrying value of the
investment property are the long-term growth rates and the
discount rates. There are interdependencies between a number
of the assumptions made which mean that no single factor is
likely to move independent of others, however, the sensitivities
disclosed above assume all other assumptions remain
unchanged.
114 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
24 Goodwill and other intangible assets
Group
Goodwill1 Software1
Software
under devel-
opment2
Customer
relationship
Other
acquired
intangibles3
Trustee
licence
$m
4.6
-
-
-
$m
3.5
-
-
-
(0.6)
(2.1)
Carrying amount as at 1 July 2021
Additions
Transfer to software
Write off on disposal
Amortisation of acquired intangibles
Amortisation of internally developed
intangibles
$m
1,437.5
91.3
-
(1.3)
-
-
$m
95.4
22.0
76.3
-
(3.3)
(33.4)
$m
82.5
103.8
(76.3)
-
-
-
Closing balance as at 30 June 2022
1,527.5
157.0
110.0
Carrying amount as at 1 July 2020
1,440.3
104.8
$m
$m
Additions
Transfer to software
Write off on disposal
Amortisation of acquired intangibles
Amortisation of internally developed
intangibles
-
-
(2.8)
-
-
-
18.5
-
-
(27.9)
$m
28.7
72.3
(18.5)
-
-
-
Closing balance as at 30 June 2021
1,437.5
95.4
82.5
Carrying amount as at 1 July 2021
Additions
Transfer to software
Write off on disposal
Amortisation of acquired intangibles
Amortisation of internally developed
intangibles
Bank
$m
1,380.4
91.3
-
(1.3)
-
-
$m
95.3
22.0
76.3
-
(3.3)
(33.3)
$m
82.5
103.7
(76.3)
-
-
-
Closing balance as at 30 June 2022
1,470.4
157.0
109.9
Carrying amount as at 1 July 2020
1,377.5
104.7
$m
$m
Additions
Transfer to software
Write off on disposal
Amortisation of acquired intangibles
Amortisation of internally developed
intangibles
5.7
-
(2.8)
-
-
-
18.5
-
-
(27.9)
$m
28.7
72.3
(18.5)
-
-
-
Closing balance as at 30 June 2021
1,380.4
95.3
82.5
-
4.0
$m
5.5
-
-
-
(0.9)
-
4.6
$m
4.6
-
-
-
-
1.4
$m
5.6
-
-
-
(2.1)
-
$m
2.0
-
-
-
(0.6)
(1.4)
-
4.0
$m
5.2
-
-
-
(0.6)
-
4.6
-
0.6
$m
3.3
-
-
-
(1.3)
-
2.0
3.5
8.4 1,631.9
Total
$m
1,631.9
217.1
-
(1.3)
(6.0)
(33.4)
$m
8.4
-
-
-
-
-
8.4 1,808.3
$m
8.4
$m
1,593.3
-
-
-
-
-
72.3
-
(2.8)
(3.0)
(27.9)
$m
$m
-
-
-
-
-
-
1,564.8
217.0
-
(1.3)
(5.3)
(33.3)
- 1,741.9
$m
$m
-
-
-
-
-
-
1,519.4
78.0
-
(2.8)
(1.9)
(27.9)
- 1,564.8
1 Goodwill and software additions in FY22 relate to the acquisition of Ferocia Pty Ltd. Goodwill disposals include disposals as part of the sale of
Community Insurance Solutions Pty Ltd and the debtor finance business.
2 Software under development was previously disclosed in 'other assets'.
3 These assets include customer lists, management rights and trade names.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1 5
24 Goodwill and other intangible assets (continued)
Intangible assets (other than goodwill)
Recognition and measurement
Intangible assets acquired separately are measured at cost
on initial recognition. Intangible assets acquired in a business
combination are measured at fair value at the date of
acquisition.
Following initial recognition, intangible assets are carried at
cost less accumulated amortisation and impairment losses.
Intangible assets with a finite life are amortised over their useful
life on a straight line basis or in line with the expected benefit
realisation and are tested at least annually for impairment or
when there is an indicator that impairment may exist. Intangible
assets with indefinite useful lives are tested for impairment
in the same way as goodwill. The amortisation period
and method are reviewed at each financial year end for all
intangible assets.
Software includes both purchased and internally generated
software. The cost of internally generated software comprises
all directly attributable costs necessary to create, produce and
prepare the software to be capable of operating in the manner
intended by management. Costs incurred in the ongoing
maintenance of software are expensed as incurred.
Gains or losses arising from the disposal of an intangible asset
are measured as the difference between the sale proceeds
and the carrying amount of the asset and are included in the
Income Statement in the year of disposal.
Software-as-a-Service (SaaS) arrangements
The Group enters into arrangements with software providers
which provide the Group with the right to access the suppliers'
cloud-based software over a contracted period. The Group
incurs ongoing access fees for use of the software, in addition
to costs in implementing the service. Ongoing access fees are
expensed over the contract period. Where implementation costs
relate to the development of software or code for on-premise
systems that the Group controls; the Group may capitalise
these costs to the extent they meet the recognition criteria for
an intangible asset. To the extent implementation costs relate to
configuring or customising a SaaS providers' software, the Group
will make an assessment of whether to expense the costs over
the contract period or as the configuration and customisation
services are performed based on:
1. Who performs the configuration and customisation
services; and (if applicable)
2. Whether the performance obligations in the contract are
distinct.
In completing the impairment tests for the Group’s intangibles,
management is required to make judgements, estimates
and assumptions that affect the recoverable amount of the
asset. Management make these judgements, estimates and
assumptions on information available when the financial
statements are prepared. Changes to these judgements,
estimates and assumptions may occur in the future which
are beyond the control of the Group. Such changes will be
reflected in the assumptions when they occur.
A summary of the policies applied to the Group's intangible
assets (excluding goodwill) are as follows:
Useful lives
Method used
Internally generated/
acquired
Trustee Licence
Indefinite
Not amortised or
revalued
Acquired
Software
Finite
Straight line or in line with
expected benefit realisation
over 2.5 to 10 years
Intangible assets acquired
in a business combination
Finite
Straight line over
life of asset (2 - 15yrs)
Internally generated
or acquired
Acquired
Impairment test/recover-
able amount testing
Annually and when an indicator
of impairment exists
When an indicator of
impairment exists
When an indicator of
impairment exists
Goodwill
Recognition and measurement
Goodwill acquired in a business combination is initially
measured at cost. Cost is measured as the consideration
paid for the business minus the fair value of the identifiable
net assets acquired. Following initial recognition, goodwill is
measured at cost less accumulated impairment losses. Where
a business is divested, goodwill attributable to the sale is
measured on the basis of the relative value of the operation
disposed of and the portion of the CGU retained.
Impairment of goodwill
Goodwill is allocated to cash generating units (CGUs) for
the purposes of impairment testing, which is undertaken at
the lowest level at which goodwill is monitored for internal
management purposes. Impairment testing is performed
at least annually, and whenever there is an indication of
impairment, by comparing the recoverable amount of a CGU
with its carrying amount. The carrying amount of a CGU is
based on its assets, liabilities and allocated goodwill. The
recoverable amount of a CGU is the higher of its fair value less
cost to sell and its value in use. If the recoverable amount is less
than the carrying value, an impairment loss is charged to the
Income Statement.
In FY21, the Group had three CGUs which aligned to
the Group's segments, namely; 'Consumer', 'Business' and
'Agribusiness'. To support the next phase of the Group's
growth and transformation strategy, the Group announced
the combination of the Business and Agribusiness divisions led
by a single Executive. Following these structural and executive
changes, the Group amended the CGUs to 'Consumer'
and 'Business and Agribusiness'. The goodwill attributable
to the former 'Business' and 'Agribusiness' CGUs have been
aggregated into the new consolidated CGU.
116 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
24 Goodwill and other intangible assets (continued)
Goodwill (continued)
Recognition and measurement (continued)
Key assumptions and estimates
Cash flows
The recoverable amount of each CGU is determined using
a value in use calculation. In determining value in use, the
estimated future cash flows for each CGU are discounted to
their present value using a post-tax discount rate. The basis
for estimated future cash flows is the Group's target which is
developed annually and approved by management and the
Board, and the Group's five year strategic plan. A terminal
growth rate is applied to extrapolate cash flows beyond
the initial five year period for each CGU. The value in use
calculations are compared against other valuations prepared
using various approaches to calculate the Group's fair value
less cost to sell.
The assumptions made in determining value in use have been
based on reasonable and supportable information as at
30 June 2022 and include the following:
•
•
Cash flows are based on the Group's FY23 target and
five-year strategic plan, with specific adjustments as
required by accounting standards, for non-cash items
and to account for inherent uncertainties in longer-term
forecasting. Cash flows are based on past performance,
established divisional strategies and management's
expectations of future conditions (including the expected
tangible benefits from the Board approved transformation
initiatives).
Terminal growth rate of 2.5 percent (June 2021: 2.5
percent), as a representation of long-term growth rates,
including inflation, in Australia.
Post-tax discount rate
The post-tax discount rate used is based on the weighted
average cost of capital for each CGU and reflects current
market assessments of the risks specific to the CGU for which
future estimates of cash flows have not been adjusted.
The table below contains the carrying value of goodwill
and other indefinite useful life intangible assets for each
CGU, together with the post-tax discount rates used in the
calculation of the recoverable amount.
Goodwill
Other indefinite useful life assets
Post-tax discount rate
Jun-22
Jun-21
Jun-22
Jun-21
Jun-22
Jun-21
$m
$m
1,285.1
1,194.8
242.4
-
-
-
152.1
90.6
$m
8.4
-
-
-
$m
8.4
-
-
-
$m
$m
10.15%
10.15%
10.27%
n/a
n/a
n/a
10.15%
10.45%
Consumer
Business and
Agribusiness
Business
Agribusiness
Management has determined that there is no impairment of goodwill for the year ended 30 June 2022.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1 7
25 Other assets
Accrued income
Prepayments
Sundry debtors
Accrued interest
Deferred expenditure1
Total other assets
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
24.5
54.1
154.4
125.1
4.7
362.8
$m
28.1
41.3
132.8
123.0
4.9
330.1
$m
21.3
53.9
$m
21.7
41.3
1,192.9
1,203.7
125.1
4.7
123.0
4.9
1,397.9
1,394.6
1 Upon review of the Group's Intangible Assets accounting policy, Software under Development has been reclassified from Other Assets to Intangible Assets.
Prior period comparatives have been restated.
Recognition and measurement
Prepayments and sundry debtors
Prepayments and sundry debtors are recognised initially at
fair value and then subsequently measured at amortised cost
using the effective interest rate method. Collectability of sundry
debtors is reviewed on an ongoing basis. Debts that are known
to be uncollectable are written off when identified.
Accrued interest
Accrued interest is interest that has been recognised as income
on an accrual basis using the effective interest rate method, but
is yet to be charged to the loan or receivable.
26 Other payables
Lease liability
Accrued expenses and outstanding claims
Accrued interest
Prepaid interest
Total other payables
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
148.9
290.7
31.3
21.5
492.4
$m
180.3
253.9
51.1
16.4
501.7
$m
148.9
286.4
31.3
-
466.6
$m
179.6
250.6
51.1
-
481.3
Recognition and measurement
Lease liability
A lease liability is recorded in the Balance Sheet at the
inception of a lease contract. The lease liability is initially
measured at the present value of the lease payments that
have not been paid at the commencement date, discounted
using the Group’s incremental borrowing rate. The lease
liability is subsequently measured at amortised cost using the
effective interest method. It is remeasured when there is a lease
modification that is not accounted for as a separate lease,
a change in index or rate applicable, a change in the amount
payable under a residual value guarantee, or if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option.
Accrued expenses
Accrued expenses are carried at amortised cost, which is the
fair value of the consideration to be paid in the future for goods
and services received.
Accrued interest
Accrued interest is the interest that is recognised as an
expense in the Income Statement but has yet to be paid to the
customers' liability account.
Interest is recognised using the effective interest rate method.
Prepaid interest
Prepaid interest is the interest received from customers in
advance. This interest is recognised in the Income Statement
using the effective interest rate method.
118 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
27 Provisions
Employee entitlements
Make good provision
Other 1
Closing balance
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
105.4
13.0
3.8
122.2
$m
104.1
12.9
3.5
120.5
$m
105.4
13.0
3.8
122.2
$m
104.1
12.9
3.4
120.4
1 Other provisions comprises of various other provisions including reward programs and dividends.
Movements in provisions (excluding employee entitlements)
Make Good Provision
Group
Other
Total
Jun-22
Jun-21
Jun-22
Jun-21
Jun-22
Jun-21
$m
12.9
0.8
(0.7)
13.0
$m
12.9
0.8
(0.7)
13.0
$m
13.5
0.2
(0.8)
12.9
$m
13.5
0.2
(0.8)
12.9
$m
3.5
$m
2.7
289.1
147.8
$m
16.4
289.9
$m
16.2
148.0
(288.8)
(147.0)
(289.5)
(147.8)
3.8
3.5
16.8
16.4
Bank
$m
3.4
$m
2.7
289.1
147.8
$m
16.3
289.9
$m
16.2
148.0
(288.7)
(147.1)
(289.4)
(147.9)
3.8
3.4
16.8
16.3
Opening balance
Additional provision recognised
Amounts utilised during the year
Closing balance
Opening balance
Additional provision recognised
Amounts utilised during the year
Closing balance
Employee benefits
The table below shows the individual balances for employee benefits:
Annual leave
Other employee payments
Long service leave
Sick leave bonus
Closing balance
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
37.5
10.0
52.2
5.7
$m
36.0
10.0
52.1
6.0
$m
37.5
10.0
52.2
5.7
$m
36.0
10.0
52.1
6.0
105.4
104.1
105.4
104.1
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 1 9
Make good provision
Upon initial recognition of a lease contract, to which the Group
acts as a lessee, a provision is recorded in the Balance Sheet.
The provision is to recognise the present value of the estimated
expenditure required to remove any leasehold improvements.
These costs have been capitalised as part of the cost of
leasehold improvements and are amortised over the shorter of
the term of the lease and the useful life of the assets.
Other
A provision for dividends payable is not recognised as a
liability unless the dividend is declared, determined or publicly
recommended on or before the reporting date.
The provision of rewards program is to recognise the liability
to customers in relation to points earned by them under the
program. Reward points expire after three years. The balance
will be utilised or forfeited during that period.
27 Provisions (continued)
Recognition and measurement
Provisions are recognised when the Group 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.
Employee entitlements
Annual leave and long service leave provisions are measured
as the present value of expected future payments for the
services provided by employees up to the reporting date. The
provision is measured at the amounts that are expected to be
paid when the liabilities are settled.
Expected future payments are discounted using corporate
bond rates.
Annual leave is accrued on the basis of full pro-rata entitlement
and amounts are estimated to apply when the leave is paid.
It is anticipated that annual leave will be paid in the ensuing
twelve months.
Long service leave has been assessed at full pro-rata
entitlement in respect of all employees with more than one
year of service. The assessment considers the likely number of
employees that will ultimately be entitled to long service leave,
estimated future salary rates and on-costs. Sick leave bonus
provides an entitlement dependent on an employee's years of
service and unused sick leave and is paid on termination. Other
employee payments include short-term incentives and are
expected to be paid in the ensuing twelve months.
120 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Other Disclosure Matters
28 Cash flow statement reconciliation
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
Profit after tax
Non-cash items
Credit (reversals)/expenses
Amortisation
Depreciation (including leasehold improvements)
Revaluation increment/(decrement)
Equity settled transactions
Share of net profit from joint arrangements and associates
Dividends received
Impairment write down
Fair value acquisition adjustments
Revaluation gains on derivatives
Changes in assets and liabilities
Increase in tax provision
(Increase)/decrease in deferred tax assets and liabilities
Decrease in derivatives
Decrease in accrued interest
Increase in accrued employee entitlements
(Increase)/decrease in other accruals, receivables
and provisions
Cash flows from operating activities before
changes in operating assets and liabilities
(Increase)/decrease in operating assets
$m
488.1
(23.4)
39.4
59.8
10.1
4.6
(1.4)
(4.9)
-
11.3
-
6.4
(6.4)
(11.3)
(16.8)
1.3
(93.7)
$m
524.0
20.7
30.9
69.3
(122.6)
3.0
(1.1)
(0.4)
2.8
9.8
8.1
44.2
46.1
(7.6)
(42.3)
5.9
(92.8)
$m
550.3
(24.6)
38.6
59.8
5.9
4.6
(1.4)
(89.5)
-
11.3
-
6.4
(103.5)
(11.3)
(21.9)
1.3
(180.1)
$m
427.7
16.9
29.8
69.3
6.0
3.0
(1.1)
(25.9)
2.8
9.8
8.1
44.2
102.0
(7.6)
(48.9)
5.9
25.7
463.1
498.0
245.9
667.7
Net increase in balance of loans and other receivables
Net (increase)/decrease of investment securities
(5,666.4)
(6,380.1)
(6,960.9)
2,330.4
(4,418.5)
(7,145.3)
(6,984.6)
2,191.2
Increase/(decrease) in operating liabilities
Net increase in balance of deposits
Net (decrease)/increase in balance of other borrowings
8,366.8
10,173.0
(33.3)
94.2
8,360.4
(275.6)
10,187.8
-
Net cash flows (used in)/from operating activities
(3,249.9)
6,134.7
(3,233.1)
6,062.1
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 other receivables, investment securities, deposits and other borrowings.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 2 1
29 Subsidiaries and other controlled entities
Subsidiaries
Bendigo and Adelaide Bank Limited consolidates a subsidiary
(including structured entities) when it controls it. Control is
achieved when the Bank is exposed, or has rights, to variable
returns from its involvement with the entity and has the ability
to affect those returns through its power over the entity.
When assessing whether the Bank has power over an
entity, and therefore, control over the variability of its returns,
consideration is given to all relevant facts and circumstances,
including:
•
•
•
voting rights currently exercisable;
the purpose and design of the entity;
the relevant activities and how decisions about those
activities are made and whether the Bank can direct
those activities;
contractual arrangements such as call rights, put rights
and liquidation rights.
•
Subsidiaries prepare financial reports for consolidation in
accordance with the Group's accounting policies. When
necessary, adjustments are made to bring their accounting
policies in line with the Group's accounting policies.
All inter-group assets, liabilities, equity, income, expenses and
cash flows relating to transactions between members of the
Group have been eliminated in full 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.
The following table presents the material subsidiaries of the
Group. A subsidiary has been considered to be material if it has
more than 0.5 percent of the total Group assets.
Chief entity and Ultimate parent
Bendigo and Adelaide Bank Limited
Other entities
Homesafe Trust
Leveraged Equities Ltd
Principal activities
Banking
Principal activities
Homesafe product financier
Margin lending
All entities are 100% owned and incorporated in Australia.
Investments in controlled entities
At cost
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
-
-
$m
-
-
$m
112.8
112.8
$m
103.7
103.7
Significant restrictions
Special Purpose Entities (SPE's)
The Group does not have any significant restrictions on its
ability to access or use its assets and settle its liabilities other
than those resulting from the supervisory frameworks within
which banking subsidiaries operate. The supervisory framework
requires banking subsidiaries to keep certain levels of regulatory
capital and liquid assets, limit their exposure to other parts of the
Group and comply with other ratios.
Recognition and measurement
The Group classifies all entities where it owns 100 percent of
the shares and in which it controls as subsidiaries. Investments in
subsidiaries are stated at cost.
The following table presents a list of the material SPEs. A SPE
has been considered to be material where the assets are more
than 0.5 percent of total Group assets. For further information
relating to SPEs refer to Note 17.
Entity
Principal activities
Torrens Series 2008-1 Trust
Securitisation
Torrens Series 2008-4 Trust
Securitisation
Torrens Series 2019-2 Trust
Securitisation
Torrens Series 2021-1 Trust
Securitisation
Torrens Series 2021-2 Trust
Securitisation
Torrens Series 2022-1 Trust
Securitisation
122 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
30 Related party disclosures
Subsidiary transactions
Transactions undertaken with subsidiaries are eliminated in the
Group's financial statements. Transactions between the Bank
and the subsidiary are funded through intercompany loans with
no fixed repayment date and are repayable upon demand.
A summary of material transactions (excluding dividends)
between the Bank and its subsidiaries during the period were:
Opening balance at beginning of
financial year
Net receipts and fees received
from/(paid to) subsidiaries
Jun-22
Jun-21
$m
$m
1,469.3
1,573.8
90.2
(37.6)
Supplies, fixed assets and services
charged to subsidiaries
(41.0)
(66.9)
Net amount owing to subsidiaries
1,518.5
1,469.3
A summary of material transactions excluding dividends
between the Group and joint arrangements and associates
during the period were:
Commissions and fees paid to
joint arrangements and associates
Supplies and services provided to
joint arrangements and associates
Amount owing to/(from) joint
arrangements and associates
Jun-22
Jun-21
$m
$m
23.7
21.6
0.3
0.6
15.3
(3.2)
Bendigo and Adelaide Bank Limited provides loans, guarantees
and/or overdraft facilities to joint arrangements and associates.
The loans have agreed repayment terms which vary according
to the nature of the facility. These loans are included in the net
amount owing from joint arrangements and associates in the
above table.
Bendigo and Adelaide Bank provides funding and guarantee
facilities to several subsidiary companies.
These facilities are provided on normal commercial terms and
conditions.
Key management personnel
Key management personnel (KMP) are those persons with
authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly.
Subsidiary
Facility
Sandhurst
Trustees Limited
Guarantee
Drawn/
issued at
30 June
2022
$m
-
Limit
$m
0.5
Limit
Jun-22
Jun-21
Dividends paid by subsidiaries
Sandhurst Trustees Limited
Adelaide Managed Funds
Bank Of Cyprus Australia
$m
84.6
-
-
$m
-
0.6
24.8
Other related party transactions
Joint arrangement entities and associates
Bendigo and Adelaide Bank Limited has investments in joint
arrangement entities and associates which are accounted for
using the equity method. The investments are initially recorded
at cost, and are subsequently adjusted by the Group's share of
the entity's profit or loss. Dividends received reduce the carrying
value of the investment.
Transactions entered into with these related entities principally
include commissions received and paid, services and supplies
procured and fees charged in relation to the provision of banking,
administrative and corporate services. These revenue and
expense items are included in the Group's Income Statement.
The transactions are conducted on the same terms as other
third party transactions.
The Group's KMP are those members of the Bendigo and
Adelaide Bank Group Executive Committee together with its
Non-executive Directors. Further details relating to KMP are
located in the Remuneration Report.
The table below details, on an aggregated basis, KMP
compensation:
Compensation
Salaries and other short-term
benefits
Post-employment benefits
Other long term benefits
Share-based payments
Total compensation
Jun-22
Jun-21
$'000's
$'000's
6,868.8
6,788.3
342.2
55.8
298.7
(21.2)
1,751.7
1,899.3
9,018.5
8,965.1
The table below details, on an aggregate basis, KMP equity
holdings. The holdings comprise ordinary shares, preference
shares, performance shares and deferred shares:
Equity holdings
Ordinary shares
(includes deferred shares)
Jun-22
Jun-21
No.
No.
1,317,053 1,253,656
Preference shares
350
350
Performance rights
325,306
351,537
Deferred share rights
66,888
-
Loan funded shares
1,716,392 1,086,885
Rights to shares
3,785
9,687
Closing balance of equity holdings 3,429,774 2,702,115
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 2 3
30 Related party disclosures (continued)
Other related party transactions (continued)
The table below details, on an aggregated basis, loan balances outstanding at the end of the year between the Group and its KMP:
Loans 1,2,3
Loans outstanding at the beginning of the year 2
Loans outstanding at the end of the year
Interest paid or payable
Interest not charged
Jun-22
$'000's
11,330.0
12,493.0
235.0
-
Jun-21
$'000's
9,562.0
11,330.0
269.0
-
1 The balance of loans outstanding includes the provision of a guarantee to the value of $20,000 which was provided to a KMP in the ordinary course of the
Group's business and on an arm's length basis.
2 The balance of loans outstanding excludes the value of loans provided to Executives under the Employee Share Ownership Plan.
3 The balance of loans outstanding relate to KMP who were in office at the start of, or appointed during, the financial year.
Loans to directors and senior executives are made in the ordinary course of the Group's business and on an arm's length basis.
The loans are processed and approved in accordance with the Bank's standard lending terms and conditions.
31 Involvement with unconsolidated entities
The table below describes the types of structured entities that the Group does not consolidate but in which it holds an interest.
Type of structured entity
Nature and purpose
Interest held by the Group
Securitisation vehicles -
for loans and advances
originated by third parties
To generate:
• external funding for third parties; and
•
These vehicles are financed through the issue of notes to
investors.
investment opportunities for the Group.
•
Investments in notes
issued by the vehicles
Managed investment
funds
To generate:
• a range of investment opportunities for external investors; and
•
fees from managing assets on behalf of third party investors for
the Group.
•
Investment in units
issued by the funds
• Management fees
Risks associated with unconsolidated structured entities
The following table summarises the carrying values recognised in the Balance Sheet in relation to unconsolidated structured entities,
together with the maximum exposure to loss that could arise from those interests.
Managed
investment
funds
Securitisation
vehicles
Managed
investment
funds
Securitisation
vehicles
Jun-22
Jun-22
Jun-21
Jun-21
$m
0.1
-
8.7
-
8.8
-
8.8
$m
-
184.0
8.7
2,104.9
2,297.6
29.6
2,327.2
$m
0.1
-
9.4
-
9.5
-
9.5
$m
-
19.1
13.6
1,646.0
1,678.7
22.4
1,701.1
Cash and cash equivalents
Financial assets amortised cost
Financial assets fair value through other comprehensive
income
Net Loans and other receivables
Total on-balance sheet exposures
Total off-balance sheet exposures 1
Total maximum exposure to loss
1 Relates to undrawn funding limits.
124 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
31 Involvement with unconsolidated entities (continued)
Maximum exposure to loss
For loans and other receivables, the maximum exposure to loss is the current carrying value of these interests representing the
amortised cost at reporting date, in addition to any undrawn funding limits.
The following table summarises the Group's maximum exposure to loss from its involvement with unconsolidated structured entities.
Carrying
amount
Maximum
loss exposure
Carrying
amount
Maximum
loss exposure
Jun-22
Jun-22
Jun-21
Jun-21
$m
0.1
$m
0.1
$m
0.1
$m
0.1
2,297.6
2,327.2
1,678.7
1,701.1
8.7
8.7
9.4
9.4
2,306.4
2,336.0
1,688.2
1,710.6
Managed Investment funds
Sandhurst Trustees Limited (STL), a subsidiary of the Group,
acts as a responsible entity for certain managed investment
funds. The decision-making rights of the fund are restricted to
the Product Disclosure Statements. The fees received by STL
are not variable, are commensurate with the services provided
and are consistent with similar funds in the market. Where
STL holds investments in the funds, an assessment of the
Group's power over the relevant activities of the Fund and the
significance of its exposure to variable returns is completed to
determine whether the Fund should be consolidated.
Community Banks
Community Banks are not consolidated by the Group as
the Group does not have power to govern decision making.
While the Group's returns are variable they are calculated
as a percentage of the gross margin. In some cases the
Group holds shares in Community Bank branches and has
representation on the Board. These shares are held as
investments and are accounted for using the equity method.
Consolidation of a Community Bank branch would occur when
the Group has power to affect returns through a majority
representation on the Board.
Alliance partners
Alliance partners are not consolidated by the Group as the
Group does not have power to govern decision making.
While the Group's returns are variable they are calculated
as a percentage of the gross margin. The Group has no
representation on the Board of these entities.
Cash and cash equivalents
Senior notes
Investment
Significant restrictions
There are no significant restrictions imposed by any
unconsolidated structured entity on the Group's ability to
access or use its assets or settle its liabilities.
Recognition and measurement
A structured entity is an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity.
Involvement with structured entities varies and includes debt
financing of these entities as well as other relationships.
A review is undertaken to determine the involvement the Group
has and whether the involvement with these entities results in
significant influence, joint control or control over the structured
entity. The structured entities over which control can be exercised
are consolidated. These entities are outlined in Note 29.
The Group has no contractual arrangements that would require
it to provide financial or other support to an unconsolidated
entity. The Group has not previously provided financial support,
and has no intention to provide such support to these entities.
Securitisation vehicles
The Group has exposure to a number of securitisation vehicles
through Residential Mortgage Backed Securities (RMBS).
Securitisations involve transferring assets into an entity
that sells interests to investors through the issue of debt or
equity notes. The notes are secured by the underlying assets
transferred to the vehicles, and generally hold a number of
levels of subordination, with the residual income paid to the
most subordinated investor. The Group does not hold any
mezzanine notes in the unconsolidated structured entities it
invests in, and does not receive any residual income. The Group
does not act as the primary trust manager or servicer of any of
its unconsolidated structured entities.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 2 5
32 Fiduciary activities
The Group conducts investment management and other fiduciary activities as responsible entity, trustee, custodian or manager
for a number of funds and trusts, including superannuation, unit trusts and mortgage pools.
The amounts of the funds concerned are:
Funds under trusteeship
Assets under management
Funds under management
Recognition and measurement
Group
Jun-22
$m
6,680.0
2,928.5
3,751.5
Jun-21
$m
6,872.2
2,809.7
4,062.5
The assets and liabilities of these trusts and funds are not
included in the consolidated financial statements as the Group
does not have direct or indirect control of the trusts and funds.
Commissions and fees earned in respect of the activities are
included in the Income Statement of the Group.
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 Group acts in more than one capacity in relation to those
funds (e.g. 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
will be required to settle them, the liabilities are not included in
the financial statements.
33 Share-based payment plans
The Group provides benefits to employees by offering share-
based compensation whereby employees render services in
exchange for shares or rights over shares.
These share-based incentive plans form an integral part of the
Group's remuneration framework with the objective of aligning
the interests of executives and other eligible employees to the
long term returns of shareholders.
Further detailed information associated with each plan are
included in the Remuneration Report.
Details of current plans
Employee Salary Sacrifice, Deferred Shares, Deferred Share
Rights and Performance Rights Plan
The Bank's plan was established in November 2008 to provide
for grants of Deferred shares, Deferred Share rights and
Performance rights to the Managing Director, Senior Executives
and key senior management (the Participants) as determined
by the Board.
Upon review of the executive remuneration framework the
plan was replaced with the Omnibus Equity Plan in the 2021
financial year. Consequently, all existing grants made within the
plan will either vest or lapse in accordance with the individual
grant's vesting as well as any service and or performance
conditions that may be relevant.
Performance rights
Under the Plan, Participants were granted performance
rights as part of their long-term incentive reward. Each right
represents an entitlement to one of the Bank's fully paid
ordinary share upon the right vesting and being exercised.
The number of performance rights granted to Participants was
determined by dividing the remuneration value of the proposed
grant by the volume weighted average closing price of the
Bank's shares for the last five trading days of the financial year
prior to the year of grant.
Deferred Share rights (non-market based hurdle)
Under the Plan, Participants were granted service based
rights as part of their long-term incentive reward, retention or
sign-on grants. Each right represents an entitlement to one
of the Bank's fully paid ordinary share upon the right vesting
and being exercised. The number of share rights granted
to Participants was determined by dividing the value of the
proposed grant by the volume weighted average price of the
Bank's shares for the five trading days preceding the allocation
date.
Deferred shares
Under the Plan, Participants were granted deferred shares
as part of their base remuneration and short-term incentive
payments. The number of deferred shares granted to Participants
is calculated by dividing the deferred remuneration value by the
volume weighted average closing price of the Bank's shares for
the last five trading days of the financial year prior to the year of
grant.
Omnibus Equity Plan
The Bank established the Omnibus Equity Plan (OEP) in
November 2020. Under the long-term incentive plan, eligible
executives are issued with performance rights. Each right
represents a promise to one fully paid ordinary share in the
Bank subject to performance and service conditions. The plan
provides for grants to be equity settled or cash settled at the
Board's discretion.
126 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
33 Share-based payment plans (continued)
Loan Funded Share Plan
The Bank established a Loan Funded Share Plan (LFSP) in
November 2020. Under the LFSP, awards granted since 2020,
eligible Executives are provided with a non-recourse loan for
the sole purpose of acquiring shares in the Bank. The full loan
term is six years.
The LFSP facilitates immediate share ownership by the senior
managers and links a significant proportion of their ‘at-risk’
remuneration to Bendigo and Adelaide Bank Limited’s ongoing
share price and returns to shareholders over the performance
period. It is designed to encourage senior managers to focus
on the key performance drivers that underpin sustainable
growth in shareholder value.
The shares must be paid for by the senior managers with cash
dividends after personal income tax being applied to repay
the loans. Eligible senior managers cannot exercise, dispose or
transfer the shares until the loan has been fully repaid.
The Loan Funded Share Plan will not be re-offered in financial
year 2023.
The table below outlines key terms and conditions associated
with the current plans:
Plan name
Employee Salary Sacrifice, Deferred Shares,
Deferred Share Rights and
Performance Rights Plan
Omnibus Equity Plan
Loan Funded
Share Plan
Type of share-based
payment
Performance rights
(allocated at no
cost) 1
Deferred shares
(allocated at no
cost) 2
Share rights
(allocated at no cost)
Bendigo and Adelaide
Bank Ltd's fully paid
ordinary shares
Eligibility
Eligible employees
including Managing
Director, Senior Exec-
utives and key senior
management
Eligible employees
including Managing
Director, Senior
Executives and key
senior management
Eligible employees
including an executive
director
Eligible employees
including an executive
director
Exercise price ($)
Nil
Nil
Nil
Performance hurdles
• Bank's Net
Promoter Score
over the perfor-
mance period to
be better than the
performance of
a peer group of
Australian banks.
• Relative Total
shareholder return
(TSR).
Measured over a 4
year period.
N/A
N/A
FY21 $6.75
FY22 $9.18
• Cost to Income
• Cash Earnings*
• Market Growth
• Customer
Advocacy
Service conditions
Continued employ-
ment over a 4 year
period.
Continued employ-
ment over a 4 year
period.
Continued employ-
ment over the vesting
period.
Continued employ-
ment over a 4 year
period.
Other conditions
Risk assessment and
behaviour gateway
at the end of year 4.
Risk assessment and
behaviour gateway
at the end of year 4.
Risk assessment and
behaviour gateway
at the end of the
vesting period.
Risk assessment and
behaviour gateway
at the end of year 4.
Vesting period (period
over which expenses
are recognised)
4 years
4 years
Various
4 years
Method of settlement
Equity-settled
Equity-settled
Equity-settled with
option of cash-set-
tlement at Board's
discretion.
Equity-settled with
option of cash-set-
tlement at Board's
discretion.
Dividends and voting
rights during the
vesting period
No
Yes
No
1 Performance and Deferred Share rights are granted within the Omnibus Equity Plan.
2 Deferred Base Pay Shares are no longer part of the executive remuneration framework. Final tranche will vest in FY23.
* The Cash Earnings measure only applies to the FY22LFSP award.
Yes, however
dividends must
be applied to
repayment of
outstanding non-re-
course loan balance.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 2 7
33 Share-based payment plans (continued)
Details of other plans
Employee Share Plan
The Bank established a loan based limited recourse Employee
Share plan in 2006. The plan is only available to full time and
part time employees of the Group (excluding Senior Executives
and the Managing Director).
The Plan provides employees with a limited recourse interest
free loan for the sole purpose of acquiring fully paid ordinary
shares in the Bank.
The shares must be paid for by the employee with cash
dividends after personal income tax being applied to repay the
loans. Employees cannot exercise, dispose of or transfer the
shares until the loan has been fully repaid.
The first issue to employees under this Plan was completed in
September 2006 with a further grant made in December 2007.
There have been no further issues under this plan.
Summary of details under the various plans
The following table details the number (No.) and movements in the various plans during the year. The rights and shares are granted at
no cost and have no exercise price.
Outstanding at beginning of year
Granted
Forfeited/lapsed
Vested/exercised
Outstanding at year end
Exercisable at year end
Rights1
Deferred shares2
Jun-22
Jun-21
Jun-22
Jun-21
No.
No.
No.
No.
460,667
678,310
111,304
251,371
1,429,004
177,525
4,636
3,493
(110,656)
(286,424)
-
-
(112,400)
(108,744)
(57,971)
(143,560)
1,666,615
460,667
57,969
111,304
-
-
-
-
Employee Share Plan
Loan Funded Share Plan
Jun-22
Jun-21
Jun-22
Jun-21
No. 3 WAEP ($)
No. WAEP ($)
No. WAEP ($)
No. WAEP ($)
Outstanding at beginning of year
705,054
5.12
815,524
5.31 1,635,527
6.95
-
Granted
Forfeited/lapsed
Vested/exercised
-
-
-
-
-
-
-
-
954,134
(181,126)
(74,171)
4.76 (110,470)
5.12
-
- 1,646,981
-
-
(11,454)
-
-
-
-
-
Outstanding at year end
630,883
4.74
705,054
5.12 2,408,535
7.45 1,635,527
6.95
Exercisable at year end
-
-
-
-
-
-
-
-
1 The rights share-based payment expenses includes performance tested and service based awards.
2 Closing balance of deferred shares and rights are exercisable up to June 2026, depending on the award meeting the required conditions.
3 The outstanding balance as at 30 June 2022 is represented by 630,883 (June 2021: 705,054) ordinary shares with a market value of $5,722,109
(June 2021: $7,396,016), exercisable upon repayment of the employee loan.
Recognition and measurement
The cost of the employee services received in respect of
shares or rights granted is recognised in the Income Statement
over the period the employee provides the services, generally
the period between the grant date and the vesting date of
the shares or rights. The overall cost of the award is calculated
using the number of shares or rights expected to vest and the
fair value of the shares or rights at the grant date.
Fair value methodology
The fair value of shares or rights granted under the various
Plans takes into account the terms and conditions upon which
the shares or rights were granted.
128 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
33 Share-based payment plans (continued)
Performance rights and loan shares - The fair value is determined using a Black Scholes Merton valuation method incorporating a
Monte Carlo Simulation option pricing model taking into account the terms and conditions upon which the rights were granted.
The following inputs are used in the models:
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of performance rights (years)
Exercise price ($)
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of performance rights (years)
Exercise price ($)
Performance Rights
Loan Shares - Executives
16 Nov 2021
16 Nov 2021
6.02%
30.85%
1.23%
4 years
nil
-
28.93%
1.44%
4 - 6 years
9.18
Deferred Share Rights
13 Sept 2021
Tranche 1
Tranche 2
Tranche 3
5.70%
30.87%
-
1 year
nil
5.70%
38.27%
-
2 years
nil
5.70%
33.25%
0.18%
3 years
nil
The expected life of the performance rights are based on
historical data, and are 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 fair value is determined by an independent valuation.
Deferred shares - The fair value is measured as at the date of
the grant using the volume weighted average closing price
of the Bank's shares traded on the ASX for five trading days
ending on the grant date.
Deferred Share Rights (non-market based hurdle) - The number
of share rights granted to Participants was determined
by dividing the value of the proposed grant by the volume
weighted average price of the Bank's shares for the five
trading days preceding the allocation date.
Rights are not eligible for dividends until converted into shares.
34 Commitments and contingencies
(a) Commitments and contingent liabilities
The following are outstanding expenditure and credit
related commitments as at 30 June 2022.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$m
$m
$m
$m
Commitment to provide credit
10,556.4
10,453.3
10,556.4
10,453.3
Guarantees
253.2
244.3
253.2
244.3
Documentary letters of credit and performance related
obligations
2.1
3.7
2.1
3.7
Recognition and measurement
Commitment to provide credit
The Group enters into arrangements with customers that
allows them to borrow money in line with specific terms and
conditions, these commitments are made for a fixed term or
subject to cancellation conditions. These arrangements expose
the Group to liquidity risk when they are called upon and/or
credit risk if the customer fails to repay the funds under the
terms of their agreement. The maximum exposure to credit
loss is the contractual or notional amount, which does not
reflect future cash requirements of the Group as it is expected
that a large portion of these values will not be drawn upon. All
commitments noted will expire within 12 months.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 2 9
34 Commitments and contingencies
(a) Commitments and contingent liabilities (continued)
Recognition and measurement (continued)
Guarantees, documentary letters of credit and performance
related obligations
Bank guarantees have been issued by the Group on behalf of
customers whereby the Group is required to make specified
payments to reimburse the holders for a loss they may incur
because the customer fails to make a payment.
Guarantees, documentary letters of credit and performance
related obligations are not recognised on the Balance Sheet.
The contractual term of the guarantee matches the underlying
obligations to which they relate.
The fair value of these contracts has been assessed using a
probability weighted discounted cash flow approach.
The guarantees issued by the Bank are fully secured and
the Bank has never incurred a loss in relation to the financial
guarantees it has provided. As the probability and value of
guarantees, documentary 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.
Legal claims
The Group is engaged in a range of litigation and court
proceedings at any point in time. However, no current
proceedings or claims are expected to have a material effect
on the business, financial condition or operating results of the
Group. For all litigation exposures where loss is probable and
can be reliably estimated an appropriate provision is made.
The Group has no material provisions raised for any current
legal proceedings.
Remediation and compensation claims
The Group undertakes ongoing compliance activities, including
review of products, advice, conduct and services provided to
customers, as well as interest, fees and premiums charged.
Some of these investigations and reviews have resulted in
remediation programs and where required the Group consults
with the respective regulator on the proposed remediation
action. There is a risk that where a breach has occurred,
regulators may also impose fines and/or sanctions.
Provisions are recognised when it is probable an outflow will be
required to address a past event and where a reliable estimate
is available. There remains a contingent liability with respect to
these matters however, the aggregate potential liability of the
above matters cannot be reliably estimated.
(b) Contingent assets
As at 30 June 2022, the economic entity does not have any
contingent assets.
130 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
35 Remuneration of Auditor
The Group's external auditor is Ernst & Young (EY). In addition to the audit and review of the Group's financial reports, EY has
provided other services throughout the year.
Group
Bank
Jun-22
Jun-21
Jun-22
Jun-21
$
$
$
$
Fees to Ernst & Young (Australia) 1
Category 1 - Fees to the group auditor for audit and review
of financial statements
1,818,400
1,983,100
1,725,700
1,885,300
Category 2 - Audit related services
382,000
333,900
382,000
333,900
Category 3 - Other assurance services
- Consolidated entities
- Non-consolidated entities
Category 4 - Non-audit (other) related fees
523,000
624,900
523,000
590,400
377,722
383,200
-
-
- Consolidated entities
400,000
382,988
400,000
382,988
Total fees to Ernst & Young (Australia)
3,501,122
3,708,088
3,030,700
3,192,588
1 Fees exclude goods and services tax (GST).
Category 1 - Fees to the Group's auditor for auditing the statutory financial reports of the Group and the Parent, and for auditing
the statutory financial reports of any controlled entities.
Category 2 - Fees for assurance services that are required by legislation to be provided by the external auditor. These services
include assurance of the Group's compliance with Australian Financial Services Licensing requirements.
Category 3 - Fees for other assurance and agreed-upon-procedures services under other legislation or contractual arrangements
where there is discretion as to whether the service is provided by the external auditor or another firm. These services include
regulatory compliance reviews, agreed-upon procedures, comfort letters, assurance of the Group's sustainability reporting,
systems assurance and controls reviews. This category also includes assurance services provided to non-consolidated trusts of
which a Group entity is trustee, manager, or responsible entity, and the non-consolidated Group superannuation fund.
Category 4 - Fees for other services.
The Group has processes in place to maintain the independence of the external auditor, including the nature of expenditure on
non-audit services.
Ernst & Young also has specific internal processes in place to ensure auditor independence.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3 1
36 Leases
A. Leases as lessee
Recognition and measurement
As a lessee the Group leases many assets including property, IT equipment, ATMs and motor vehicles. The Group records right-of-use
assets (ROUA) and lease liabilities for most of its lease contracts, with the exception of short-term and leases of low-value whereby
lease payments are expensed on a straight line basis over the lease term.
(i) Right-of-use assets (ROUA) relate to leased branch and office premises that are included in the balance of property, plant and
equipment in the Balance Sheet.
Properties
IT Equipment
Other
ROUA
Balance as at 1 July 2021
Depreciation charge
Additions
Remeasurements
Disposals
Balance as at 30 June 2022
Balance as at 1 July 2020
Depreciation charge
Additions
Remeasurements
Disposals
Balance as at 30 June 2021
(ii) Amounts recognised in the Income Statement
Depreciation charge of ROUA
Buildings
Equipment
Other
Total depreciation expense
Interest on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases of low-value assets,
excluding short-term leases of low value assets
(iii) Amounts recognised in the Cash Flow Statement
Total cash outflow for leases
B. Leases as lessor
Recognition and measurement
$m
133.6
(40.1)
13.8
6.8
-
114.1
$m
167.0
(41.8)
2.8
5.3
0.3
$m
7.2
(3.2)
-
(0.8)
(0.1)
3.1
$m
13.0
(5.8)
-
-
-
133.6
7.2
$m
3.9
(1.9)
0.8
-
-
2.8
$m
3.2
(2.0)
2.7
-
-
3.9
Group
Jun-22
Jun-21
$m
36.9
3.2
1.9
42.0
4.9
1.7
(0.2)
$m
41.8
5.8
2.0
49.6
5.9
1.3
0.1
Group
Jun-22
Jun-21
$m
50.3
$m
51.0
The Group sub-leases some of its properties. As of 1 July 2019, the Group accounts for its interests in the head lease and the sub-
lease separately and assesses the lease classification of a sub-lease with reference to the ROUA arising from the head lease, rather
than the underlying asset. The Group has defined the sub-leases to be operating leases and as a consequence recognises lease
income from the sub-lease in the Income Statement on a straight line basis over the lease term.
Rental income recognised by the Group during the year ended 30 June 2022 was $4.4m (June 2021: $4.0m).
132 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
36 Leases (continued)
Recognition and measurement (continued)
The following table sets out the maturity analysis of lease payments, showing the undiscounted lease payments to be received
after the reporting date.
Group
Bank
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
Total
37 Business combinations
Acquisition of Ferocia Pty Ltd
On 1 September 2021 the Group completed the acquisition
of 100 percent of the shares and voting interests in Ferocia Pty
Ltd (Ferocia), a Melbourne-based fintech company. The team
of technology engineers employed by Ferocia have sound
knowledge of the Australian Financial Services market and will
help to accelerate the Group’s transformation and digital strategy.
The acquisition will also drive better outcomes and experiences
for all customers providing the ability for the Group to connect
more easily with new customers, service customer needs better
through digital offerings, and reduce scale disadvantages.
The purchase price consisted of the following:
•
The Initial Purchase Price totalling $106.0 million. The initial
purchase price was adjusted for working capital to $102.2m.
The Earnout Payment which will be calculated and paid
annually in respect of each annual period, with the first
annual period ending on 30 June 2022 and the final
annual period ending on 30 June 2026 (5 payments).
•
$91.3 million of goodwill has been recognised in relation to
the acquisition. The goodwill is attributable to the skills and
technical talent of the Ferocia workforce and the efficiencies
created in the delivery of the Bendigo e-banking app and
Internet banking platform. None of the goodwill recognised is
expected to be deductible for tax purposes.
Recognition and measurement
The Group accounts for a business combination using the
acquisition accounting method when control is transferred. The
consideration transferred for the acquisition is measured at fair
value, including contingent consideration, given at the date of
acquisition. The acquired identifiable net assets are generally
measured at fair value. Goodwill will be recorded on the
Balance Sheet where the purchase price exceeds the fair value
of the identifiable net assets. Any gain on a bargain purchase is
recognised in the Income Statement immediately. Transaction
costs are expensed as incurred, except if related to the issue of
debt or equity.
Jun-22
Jun-21
Jun-22
Jun-21
$m
5.1
4.1
4.0
1.5
-
$m
5.2
4.8
4.3
4.0
1.5
$m
5.1
4.1
4.0
1.5
-
$m
5.2
4.8
4.3
4.0
1.5
14.7
19.8
14.7
19.8
Consideration transferred
Value of shares issued on 1 September 2021 1
102.2
Group
$m
Settlement of pre-existing finance
Contingent consideration 2
Replacement of employee share-based
payment agreements
Total consideration transferred
Net assets acquired
Fair value of assets acquired 3
Fair value of liabilities acquired
Net fair value of assets acquired
Goodwill
3.1
6.5
1.0
112.8
22.7
1.2
21.5
91.3
1 The fair value of the ordinary shares issued was calculated with
reference to the volume weighted average price of a BEN share
calculated over the 30 trading days ending on, and including, 30 August
2021. 10,002,606 Bendigo and Adelaide Bank Limited shares were
issued on 1 September 2021.
2 The contingent consideration is equal to 0.10% of the Up sourced
mortgage balance at the end of each year. An earnout payment will
be paid only if the aggregated earnout payments exceed $5 million.
The maximum aggregate amount of all earnout payments that may
be paid to the vendors is $10 million. The calculation of the contingent
consideration has been based on level 3 inputs.
3 The fair value of assets acquired included $22 million of software
intangible assets relating to the Up platform.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3 3
38 Events after balance sheet date
On 7 July 2022, Bendigo and Adelaide Bank Limited entered
into an agreement to acquire the ANZ Investment Lending
portfolio, with the transaction expected to be completed in the
first half of the 2023 calendar year. The acquisition will allow the
Group to further grow its margin lending business, Leveraged
Equities Limited. The value of the portfolio being acquired is
approximately $715 million and is subject to movements in the
underlying portfolio up until the completion date. The Group will
pay an immaterial premium over book value.
No other matters or circumstances have arisen since the end of
the financial year to the date of this report which significantly
affected or may significantly affect the operations of the
Group, the results of those operations, or the state of affairs of
the Group in subsequent financial periods.
134 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
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 and notes of the Company and the Bendigo and Adelaide Bank Group are in accordance
with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company's and the Bendigo and Adelaide Bank Group’s financial position as at
30 June 2022 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
Corporations Regulations 2001; and
b)
c)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note
2; and
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 2022.
On behalf of the Board
Jacqueline Hey
Chair
5 September 2022
Marnie Baker
Chief Executive Officer and Managing Director
5 September 2022
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3 5
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Page 2
Independent auditor’s report to the Members of Bendigo and Adelaide Bank
Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Bendigo and Adelaide Bank Limited (the Company) and its
subsidiaries (collectively the Group), which comprises:
► The Group consolidated and Company balance sheets as at 30 June 2022;
► The Group consolidated and Company income statements, statements of comprehensive income,
statements of changes in equity and cash flow statements for the year then ended;
► Notes to the financial statements, including a summary of significant accounting policies; and
► The Directors’ declaration.
In our opinion, the accompanying financial report is in accordance with the Corporations Act 2001,
including:
a. Giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2022
and of their financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Allowance for credit losses
Why significant
How our audit addressed the key audit matter
As described in Notes 3 Profit, 10 Impairment
In addressing the adequacy of the allowance for
of loans and advances and 20 Risk
credit losses for exposures assessed on a
management, the allowance for expected
collective basis, our audit procedures included
credit losses is determined in accordance
the following:
with Australian Accounting Standard - AASB
9 Financial Instruments (AASB 9).
• Assessed the Group’s calculation
methodology against the requirements of
This was a key audit matter due to the size of
AASB 9.
• assumptions used in the expected credit
• Assessed, through testing a sample, the
•
Involved our actuarial specialists to test the
mathematical accuracy of the models and
key assumptions, including probability of
default, exposure at default and loss given
default assumptions.
• Assessed the significant modelling and
macroeconomic assumptions, including the
reasonableness of forward-looking
information and scenarios, with reference to
relevant publicly-available macro-economic
information and the sensitivity of the
collective provision to changes in such
assumptions.
operating effectiveness of relevant controls
used to manage the flow of information
between systems and models related to the
determination of the allowance for credit
losses.
We assessed the basis for, and assumptions
used in, overlays recognised to capture current
and future market characteristics resulting from
current market uncertainty, with reference to
the provision (specific provision 30 June
2022: $58.1 million, collective provision 30
June 2022: $225.7 million), and the degree
of judgment and estimation uncertainty
associated with the calculations.
Key areas of judgment included:
•
the application of the impairment
requirements within AASB 9, which is
reflected in the Group’s expected credit
loss model;
•
the identification of exposures with a
significant deterioration in credit quality;
loss model (for exposures assessed on an
individual or collective basis) such as the
financial condition of the counterparty,
expected future cash flows, and forward-
looking macroeconomic factors (e.g. GDP
growth, unemployment rates, central-
bank interest rates, and house-price
indices) as disclosed in Note 10; and
related to current economic uncertainty,
both in the multiple forward-looking
scenarios and the probability weighting
determined for each of these scenarios as
disclosed in Note 10.
•
the incorporation of forward-looking
information to reflect current or future
market data and industry/geographic
external factors, specifically judgments
concentrations.
136 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Page 2
Independent auditor’s report to the Members of Bendigo and Adelaide Bank
Limited
Opinion
Report on the Audit of the Financial Report
We have audited the financial report of Bendigo and Adelaide Bank Limited (the Company) and its
subsidiaries (collectively the Group), which comprises:
► The Group consolidated and Company balance sheets as at 30 June 2022;
► The Group consolidated and Company income statements, statements of comprehensive income,
statements of changes in equity and cash flow statements for the year then ended;
► Notes to the financial statements, including a summary of significant accounting policies; and
► The Directors’ declaration.
including:
In our opinion, the accompanying financial report is in accordance with the Corporations Act 2001,
a. Giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2022
and of their financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
the Code.
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial report of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the
financial report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Allowance for credit losses
Why significant
As described in Notes 3 Profit, 10 Impairment
of loans and advances and 20 Risk
management, the allowance for expected
credit losses is determined in accordance
with Australian Accounting Standard - AASB
9 Financial Instruments (AASB 9).
This was a key audit matter due to the size of
the provision (specific provision 30 June
2022: $58.1 million, collective provision 30
June 2022: $225.7 million), and the degree
of judgment and estimation uncertainty
associated with the calculations.
Key areas of judgment included:
•
the application of the impairment
requirements within AASB 9, which is
reflected in the Group’s expected credit
loss model;
•
the identification of exposures with a
significant deterioration in credit quality;
• assumptions used in the expected credit
loss model (for exposures assessed on an
individual or collective basis) such as the
financial condition of the counterparty,
expected future cash flows, and forward-
looking macroeconomic factors (e.g. GDP
growth, unemployment rates, central-
bank interest rates, and house-price
indices) as disclosed in Note 10; and
•
the incorporation of forward-looking
information to reflect current or future
external factors, specifically judgments
related to current economic uncertainty,
both in the multiple forward-looking
scenarios and the probability weighting
determined for each of these scenarios as
disclosed in Note 10.
How our audit addressed the key audit matter
In addressing the adequacy of the allowance for
credit losses for exposures assessed on a
collective basis, our audit procedures included
the following:
• Assessed the Group’s calculation
methodology against the requirements of
AASB 9.
•
Involved our actuarial specialists to test the
mathematical accuracy of the models and
key assumptions, including probability of
default, exposure at default and loss given
default assumptions.
• Assessed the significant modelling and
macroeconomic assumptions, including the
reasonableness of forward-looking
information and scenarios, with reference to
relevant publicly-available macro-economic
information and the sensitivity of the
collective provision to changes in such
assumptions.
• Assessed, through testing a sample, the
operating effectiveness of relevant controls
used to manage the flow of information
between systems and models related to the
determination of the allowance for credit
losses.
We assessed the basis for, and assumptions
used in, overlays recognised to capture current
and future market characteristics resulting from
current market uncertainty, with reference to
market data and industry/geographic
concentrations.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3 7
Page 3
Page 4
Allowance for credit losses (cont.)
Why significant
How our audit addressed the key audit matter
Our audit procedures on the specific provision
included the following on a sample basis:
• Assessed the reasonableness of internal
credit quality assessments based on the
borrowers’ particular circumstances.
• Evaluated the associated provisions by
assessing the reasonableness of key inputs
into the calculation, with particular focus on
emerging trends within high-risk industries,
work out strategies, collateral values, and the
value and timing of recoveries.
We assessed the adequacy and appropriateness
of the disclosures associated with credit
impairment within the financial report.
Impairment assessment of goodwill
Why significant
How our audit addressed the key audit matter
The Group has recognised goodwill as part of
Our audit procedures included the following:
An impairment assessment is performed each
forecasts to actual results.
historical acquisitions. During the year,
additional goodwill of $91.3 million was
recognised arising from the acquisition of
Ferocia Pty Ltd.
Details on the methodology and assumptions
used in the impairment assessment of
goodwill are included in Note 24 Goodwill and
other intangible assets.
This was a key audit matter due to the size of
the goodwill balance held on the balance
sheet (30 June 2022: $1,527.5 million), and
the degree of judgment and estimation
uncertainty associated with the impairment
assessment.
year, comparing the carrying value of each
cash generating unit (CGU), inclusive of
goodwill balances, with its recoverable
amount. The recoverable amount of each CGU
was determined using a value in use
calculation. This calculation incorporated a
number of assumptions, including:
• future cash flows;
• discount rates; and
• terminal growth rates.
During the year, the Group aggregated its
previous Business and Agribusiness CGUs to
form one combined ‘Business and
Agribusiness’ CGU.
• Assessed whether the models used in the
impairment testing of goodwill met the
requirements of Australian Accounting
Standards.
allocated.
• Assessed the appropriateness of the CGUs
identified to which goodwill has been
• Agreed the forecast cash flows to the most
recent forecasts approved by management or
the Board, considered the reasonableness of
these forecasts based on the current
economic environment, and assessed the
accuracy of the Group’s previous forecasts by
performing a comparison of historical
•
Involved our valuation specialists to:
• Assess the key assumptions used in the
impairment assessment with reference
to market rates and historical
performance;
• Assess the market capitalisation of the
business as at 30 June 2022 and recent
trading history relative to net assets;
• Test the mathematical accuracy of the
impairment models; and
• Benchmark the implied valuations to
comparable company trading and control
valuation multiples.
• Assessed the adequacy of the disclosures
associated with the impairment assessment
of goodwill within the financial report.
138 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
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Liability limited by a scheme approved under Professional Standards Legislation
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Liability limited by a scheme approved under Professional Standards Legislation
Page 4
Impairment assessment of goodwill
Why significant
The Group has recognised goodwill as part of
historical acquisitions. During the year,
additional goodwill of $91.3 million was
recognised arising from the acquisition of
Ferocia Pty Ltd.
Details on the methodology and assumptions
used in the impairment assessment of
goodwill are included in Note 24 Goodwill and
other intangible assets.
This was a key audit matter due to the size of
the goodwill balance held on the balance
sheet (30 June 2022: $1,527.5 million), and
the degree of judgment and estimation
uncertainty associated with the impairment
assessment.
An impairment assessment is performed each
year, comparing the carrying value of each
cash generating unit (CGU), inclusive of
goodwill balances, with its recoverable
amount. The recoverable amount of each CGU
was determined using a value in use
calculation. This calculation incorporated a
number of assumptions, including:
• future cash flows;
• discount rates; and
• terminal growth rates.
During the year, the Group aggregated its
previous Business and Agribusiness CGUs to
form one combined ‘Business and
Agribusiness’ CGU.
How our audit addressed the key audit matter
Our audit procedures included the following:
• Assessed whether the models used in the
impairment testing of goodwill met the
requirements of Australian Accounting
Standards.
• Assessed the appropriateness of the CGUs
identified to which goodwill has been
allocated.
• Agreed the forecast cash flows to the most
recent forecasts approved by management or
the Board, considered the reasonableness of
these forecasts based on the current
economic environment, and assessed the
accuracy of the Group’s previous forecasts by
performing a comparison of historical
forecasts to actual results.
•
Involved our valuation specialists to:
• Assess the key assumptions used in the
impairment assessment with reference
to market rates and historical
performance;
• Assess the market capitalisation of the
business as at 30 June 2022 and recent
trading history relative to net assets;
• Test the mathematical accuracy of the
impairment models; and
• Benchmark the implied valuations to
comparable company trading and control
valuation multiples.
• Assessed the adequacy of the disclosures
associated with the impairment assessment
of goodwill within the financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 3 9
Page 5
How our audit addressed the key audit matter
Our audit procedures included the following:
• Assessed the design and operating
effectiveness of controls over new contracts,
maintenance and settlement processes
associated with this product.
• Agreed data used in the discounted cash flow
model for a sample of properties to signed
contracts.
• Performed cut-off procedures by agreeing
new contracts and settlements around 30
June 2022 to supporting documentation to
establish that the contracts were recorded
within the correct period.
•
Involved real estate and actuarial specialists
to assess the key assumptions used in the
valuation model with reference to market
rates, historical trends and settlements
during the year, as well as the model
mechanics and validation.
• Assessed the adequacy of the disclosures in
respect of the investment and associated
revaluation gains within the financial report.
Homesafe
Why significant
The Group controls Homesafe Trust.
Homesafe offers a debt-free equity release
product to allow customers to release the
equity in their homes in exchange for a
capped percentage share of the future sale
proceeds of the property. The investment is
accounted for as investment property.
As at 30 June 2022 there is significant
valuation uncertainty related to the residential
property market. This means that Level 3
residential investment property values may
change significantly and unexpectedly over a
relatively short period of time. In this
situation the disclosures in the financial
report provide particularly important
information about the assumptions made in
the asset valuations and the market
conditions at 30 June 2022. Details on the
methodology and assumptions used in the
calculation of the fair value of investment
properties are included in Note 23 Investment
property.
This is a key audit matter due to the size of
the Group’s investment in residential real
estate recognised within the Homesafe Trust
(30 June 2022: $920.3 million), the
revaluation loss recognised in the current year
from the Homesafe portfolio (30 June 2022:
$38.5 million), and the degree of judgment
and estimation uncertainty associated with
the assumptions, particularly the expected
rates of property appreciation assumption.
The Homesafe investment portfolio is
measured at fair value using a discounted
cash flow model. The valuation of the
portfolio is subject to judgment in relation to
key assumptions, including:
• expected rates of property appreciation;
• discount rates;
• mortality rates; and
• voluntary exit rates.
140 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
The Group controls Homesafe Trust.
Our audit procedures included the following:
Page 5
Page 6
Information Technology (IT) systems and controls over financial reporting
How our audit addressed the key audit matter
Why significant
A significant part of the Company’s and the
Group’s financial reporting process is
primarily reliant on IT systems with
automated processes and controls relating to
the capture, storage and extraction of
information.
A fundamental component of these IT controls
is ensuring that risks relating to inappropriate
user access management, unauthorised
program changes and IT operating protocols
are addressed.
• Assessed the design and operating
effectiveness of controls over new contracts,
maintenance and settlement processes
associated with this product.
• Agreed data used in the discounted cash flow
model for a sample of properties to signed
contracts.
• Performed cut-off procedures by agreeing
new contracts and settlements around 30
June 2022 to supporting documentation to
establish that the contracts were recorded
within the correct period.
•
Involved real estate and actuarial specialists
to assess the key assumptions used in the
valuation model with reference to market
rates, historical trends and settlements
during the year, as well as the model
mechanics and validation.
• Assessed the adequacy of the disclosures in
respect of the investment and associated
revaluation gains within the financial report.
How our audit addressed the key audit matter
We involved our IT specialists, as audit
procedures over IT systems and controls require
specific expertise.
We assessed the design and tested the operating
effectiveness of the Company’s and the Group’s
IT controls significant to financial reporting
processes, including those related to user
access, change management and data integrity.
Where we identified design and/or operating
deficiencies in the IT control environment, our
procedures included the following:
• Assessed the potential impact of the
deficiencies on the integrity and reliability of
the systems and data related to financial
reporting; and
• Where automated procedures were
supported by systems with identified
deficiencies, performed alternative controls
or substantive testing procedures.
Homesafe
Why significant
Homesafe offers a debt-free equity release
product to allow customers to release the
equity in their homes in exchange for a
capped percentage share of the future sale
proceeds of the property. The investment is
accounted for as investment property.
As at 30 June 2022 there is significant
valuation uncertainty related to the residential
property market. This means that Level 3
residential investment property values may
change significantly and unexpectedly over a
relatively short period of time. In this
situation the disclosures in the financial
report provide particularly important
information about the assumptions made in
the asset valuations and the market
conditions at 30 June 2022. Details on the
methodology and assumptions used in the
calculation of the fair value of investment
properties are included in Note 23 Investment
property.
This is a key audit matter due to the size of
the Group’s investment in residential real
estate recognised within the Homesafe Trust
(30 June 2022: $920.3 million), the
revaluation loss recognised in the current year
from the Homesafe portfolio (30 June 2022:
$38.5 million), and the degree of judgment
and estimation uncertainty associated with
the assumptions, particularly the expected
rates of property appreciation assumption.
The Homesafe investment portfolio is
measured at fair value using a discounted
cash flow model. The valuation of the
portfolio is subject to judgment in relation to
key assumptions, including:
• expected rates of property appreciation;
• discount rates;
• mortality rates; and
• voluntary exit rates.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 4 1
Page 7
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Company’s and
Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Company or Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit 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 Company’s or the Group’s internal control.
142 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Page 7
Page 8
► Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
► Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s or Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company or the Group to cease to continue as a going concern.
► Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
► Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2022 annual report, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon, with the exception of the Remuneration Report
and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the Company’s and
Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Company or Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
►
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
► Obtain an understanding of internal control relevant to the audit 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 Company’s or the Group’s internal control.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 4 3
Page 9
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 28 to 51 of the directors’ report for the
year ended 30 June 2022.
In our opinion, the Remuneration Report of Bendigo and Adelaide Bank Limited for the year ended 30
June 2022, complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
Ernst & Young
T M Dring
Partner
Melbourne
5 September 2022
Clare Sporle
Partner
144 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
year ended 30 June 2022.
In our opinion, the Remuneration Report of Bendigo and Adelaide Bank Limited for the year ended 30
June 2022, complies with section 300A of the Corporations Act 2001.
Responsibilities
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.
Ernst & Young
T M Dring
Partner
Melbourne
5 September 2022
Clare Sporle
Partner
Page 9
Shareholder Information
Substantial shareholders
The following parties and their associates have notified the Company that they have a substantial relevant interest in the ordinary
shares of the Company, as at 24 August 2022:
Substantial holder
Number or ordinary shares held
% of total shares issued*
Date of last notice
State Street Corporation
Vanguard Group
29,973,230
28,298,593
5.30%
5.003%
21/07/22
12/07/22
We have audited the Remuneration Report included in pages 28 to 51 of the directors’ report for the
* As at the date of the substantial shareholder’s last notice lodged with the ASX.
Twenty largest holders of fully paid ordinary shares as at 24 August 2022
Rank Name
Number of shares
% of shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
UBS NOMINEES PTY LTD
GRANT THOMAS NOMINEES PTY LTD
D AND F PYM FAMILY PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
MARNIE ANN BAKER
BNP PARIBAS NOMINEES PTY LTD BARCLAYS
CARLTON HOTEL LIMITED
NETWEALTH INVESTMENTS LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LTD
BOND STREET CUSTODIANS LIMITED
LEESVILLE EQUITY PTY LTD
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
NULIS NOMINEES (AUSTRALIA) LIMITED
JOHN PIERCE TOBIN
TERMZ PTY LTD
98,825,563
53,642,394
38,525,574
17,901,195
12,507,866
3,334,450
2,000,521
2,000,521
1,372,390
1,250,882
1,190,159
1,117,147
1,087,151
952,132
702,683
681,688
509,016
505,035
503,878
500,000
17.471%
9.483%
6.811%
3.165%
2.211%
0.589%
0.354%
0.354%
0.243%
0.221%
0.210%
0.197%
0.192%
0.168%
0.124%
0.121%
0.090%
0.089%
0.089%
0.088%
Total securities of Top 20 Holdings
239,110,245
42.271%
Equity Trustees Limited, trustee for the Bendigo and Adelaide Bank Employee Share Plan held 617,911 unquoted shares.
These shares have not been included in the above table but are included in the total of issued ordinary share capital.
Distribution of fully paid ordinary shares and employee shares as at 24 August 2022
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Fully Paid
Ordinary
Shares
Number of
holders
17,275,026
97,979,327
69,789,734
122,235,716
255,351,506
43,966
39,172
9,827
6,016
132
Total
562,631,309
99,113
Fully Paid Employee
Shares (BENAK,
AA and AB)
Number of
holders
348,526
248,570
5,815
15,000
0
757
162
1
1
0
617,911
921
%
3.07
17.41
12.4
21.73
45.39
100
%
56.4
40.23
0.94
2.43
0
100
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 4 5
Securities subject to voluntary escrow
4,001,042 fully paid ordinary shares are subject to 12 months voluntary escrow, expiring 1 September 2022.
Securities purchased on-market
During the reporting period, a total of 1,054,682 shares were purchased on-market for the purposes of an employee incentive
scheme at an average price of $9.14.
Marketable parcel
Based on a closing price of $9.04 on 24 August 2022 the number of holders with less than a marketable parcel of the Company’s
main class of securities (Ordinary Shares), as at 24 August 2022 was 6,201.
Unquoted securities
The number of unquoted equity securities that are on issue and the number of holders of those securities is shown in the above
table under the heading of Fully Paid Employee Shares (namely BENAK, BENAA and BENAB securities).
Twenty largest holders of fully paid Convertible Preference Shares 4
(CPS4) (ASX: BENPG) as at 24 August 2022
Rank
Name
Number of shares
% of shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
MUTUAL TRUST PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMINEES PTY LTD
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
BOND STREET CUSTODIANS LIMITED
NAVIGATOR AUSTRALIA LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
INVIA CUSTODIAN PTY LIMITED < SALES SETTLE A/C >
SOUTH BAY NOMINEES PTY LTD
SOUTH HONG NOMINEES PTY LTD
BT PORTFOLIO SERVICES LIMITED
INVIA CUSTODIAN PTY LIMITED
BERNE NO 132 NOMINEES PTY LTD <684168 A/C>
NULIS NOMINEES (AUSTRALIA) LIMITED
142,706
110,521
91,450
59,072
53,999
51,900
36,367
34,312
27,687
26,694
26,310
24,506
24,015
18,322
18,000
17,000
16,492
16,110
15,606
15,551
4.437%
3.436%
2.843%
1.837%
1.679%
1.614%
1.131%
1.067%
0.861%
0.830%
0.818%
0.762%
0.747%
0.570%
0.560%
0.529%
0.513%
0.501%
0.485%
0.484%
Total securities of Top 20 Holdings
826,620
25.702%
Distribution of fully paid Convertible Preference Shares 4 (CPS4) (ASX: BENPG) as at 24 August 2022
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Convertible Preference
Shares 4 (BENPG)
Number of holders
1,446,167
738,858
186,310
702,104
142,706
3,216,145
5,148
373
26
26
1
5,574
%
44.97
22.97
5.79
21.83
4.44
100
146 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Twenty largest holders of BEN Capital Notes (ASX: BENPH) as at 24 August 2022
Rank
Name
Number of shares
% of shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
INVIA CUSTODIAN PTY LIMITED < SALES SETTLE A/C >
BNP PARIBAS NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
NATIONAL NOMINEES LIMITED
DIOCESE DEVELOPMENT FUND - CATHOLIC DIOCESE OF PARRAMATTA
BNP PARIBAS NOMS PTY LTD
MUTUAL TRUST PTY LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
SANDHURST TRUSTEES LTD
BOND STREET CUSTODIANS LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
NAVIGATOR AUSTRALIA LTD
MEYER TIMBER CONSOLIDATED PTY LTD
THE TRUST COMPANY (AUSTRALIA) LIMITED
TRUSTEES OF CHURCH PROPERTY FOR THE DIOCESE OF NEWCASTLE
338,980
212,011
205,983
202,128
119,706
111,287
66,824
53,535
48,600
42,171
38,980
37,320
30,472
30,031
17,350
16,403
16,105
15,000
14,670
14,500
6.747%
4.220%
4.100%
4.023%
2.382%
2.215%
1.330%
1.065%
0.967%
0.839%
0.776%
0.743%
0.606%
0.598%
0.345%
0.326%
0.321%
0.299%
0.292%
0.289%
Total securities of Top 20 Holdings
1,632,056
32.482%
The Floating Rate Capital Notes (BENHB) were suspended from official quotation at the close of trading on 11 November 2021
and removed from official listing on 15 November 2021.
Distribution of BEN Capital Notes (ASX: BENPH) as at 24 August 2022
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Capital Notes (BENPH)
Number of holders
1,903,948
1,228,815
335,905
505,186
1,050,592
5,024,446
6,385
582
47
22
5
7,041
Distribution of BEN Performance Rights (ASX: BENAAA) and Rights to Shares
(ASX: BENAAC) as at 24 August 2022
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Performance
Rights
(BENAAA)
Number of
holders
0
94,900
6,471
440,345
160,895
702,611
0
30
1
10
1
42
Rights to
Shares
(BENAAC)
0
8,386
0
0
0
8,386
%
0
13.51
0.92
62.67
22.9
100
Number of
holders
0
2
0
0
0
2
%
37.89
24.46
6.69
10.05
20.91
100
%
0
100
0
0
0
100
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 4 7
Voting rights
Under the Company’s Constitution, each person who is a voting Shareholder and who is present at a general meeting of the
Company in person or by proxy, attorney or official representative is entitled to one vote on a show of hands or, on a poll, one
vote for each fully paid ordinary share held. In the case of an equality of votes the Chair has, on both a show of hands and at a
poll, a casting vote in addition to the vote to which the Chair may be entitled as a shareholder, proxy, attorney or duly appointed
representative of a shareholder.
With respect to each person that is a holder of preference shares under the Company’s Constitution each holder is not entitled to
vote at any general meeting of the Company except:
(a) on any resolution during a period in which a dividend or part of a dividend remains unpaid
(b) on any resolution:
•
•
•
•
to reduce the share capital of the Company (other than a resolution to approve a redemption of the holder’s class of
preference shares)
that affects rights attached to the holder’s class of preference shares
to wind up the Company
for the disposal of the whole of the property, business and undertaking of the Company
(c) on a resolution to approve the terms of a buy-back agreement (other than a resolution to approve a redemption of the
holder’s class of preference shares)
(d) during a winding-up of the Company, in which case a holder will have the same rights as to manner of attendance and voting
as a holder of ordinary shares with one vote per preference share.
148 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
Glossary
Australian Accounting Standards (AAS)
Refers to the Australian Accounting Standards issued by the
AASB. An accounting standard is a technical pronouncement
that sets out the required accounting, including measurement
and recognition requirements, for particular types of
transactions and events. The accounting requirements affect
the preparation and presentation of an entity’s financial
statements.
Australian Accounting Standards Board (AASB)
The Australian Accounting Standards Board (AASB) is the
Australian Government agency responsible for developing,
issuing and maintaining accounting standards that apply under
Corporations Act 2001.
Australian Prudential Regulation Authority (APRA)
Is the prudential regulator of the Australian financial services
industry. APRA is an independent statutory authority that
supervises institutions across banking, insurance and
superannuation and promotes financial system stability in
Australia.
Australian Prudential Standards (APS)
Refers to the Prudential and Regulatory Standards issued by
APRA.
Authorised deposit-taking institution (ADI)
A body corporate which is authorised under the Banking Act
1959, to carry on banking business in Australia. It includes
banks, building societies and credit unions.
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.
Cash earnings
Represents a non-statutory financial measure, is not presented
in accordance with AAS, and is not audited or reviewed in
accordance with Australian Auditing Standards. It is considered
by management to be a key indicator of the underlying
performance of the core business activities of the Group. Cash
earnings is defined as statutory net profit after tax adjusted
for specific items and non-cash items. Specific items are those
deemed to be outside of the Group’s core activities and hence
these items are not considered to be representative of the
Group’s ongoing financial performance.
Committed Liquidity Facility (CLF)
The RBA makes available to Australian Authorised Deposit-
taking institutions a CLF that, subject to qualifying conditions
set and approved by APRA, can be accessed to meet LCR
requirements under APS 210 Liquidity.
Common Equity Tier 1 Capital (CET1)
The highest quality of capital available to the Group reflecting
the permanent and unrestricted commitment of funds that are
freely available to absorb losses. It comprises ordinary share
capital retained earnings and reserves less specified regulatory
adjustments.
Cost to Income ratio
A performance measure which represents total operating
expenses before specific expenses and non-cash items as a
percentage of total income before specific income items and
non-cash items.
Credit risk
The risk that one party to a financial instrument will cause
a financial loss for the other party by failing to discharge an
obligation.
Dilutive earnings per share
An earnings measure calculated by dividing net profit after tax
attributable to owners of the Bank by the weighted average
number of fully paid ordinary shares on issue over the period
adjusted for the effect of all potentially dilutive instruments.
Dividend payout ratio
Dividends paid on ordinary shares divided by net profit after
tax attributable to owners of the Bank.
Dividend Reinvestment Plan
A plan which provides shareholders with the opportunity to
convert all or part of their entitlement to a dividend into new
shares.
Earnings per share
An earnings measure calculated by dividing net profit after tax
attributable to owners of the Bank by the weighted average
number of fully paid ordinary shares on issue over the period.
Expected Credit Loss (ECL)
Represents the probability-weighted present value of
expected cash shortfalls over the remaining expected life
of the financial instrument and considers reasonable and
supportable information about past events, current conditions,
and forecasts of future events and economic conditions that
impact the Bank's credit risk assessment.
Fair value
Is an amount at which an asset or liability could be exchanged
between knowledgeable and willing parties in an arm’s length
transaction.
Financial assets measured at amortised cost
Financial assets that are held within a business model whose
objective is to hold assets in order to collect contractual cash
flows; and the contractual terms of the financial asset give rise
on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Financial assets measured at fair value through other
comprehensive income (FVOCI)
Financial assets that are held in a business model whose
objective is achieved by both collecting contractual cash
flows and selling financial assets. Changes in fair value are
recognised in other comprehensive income.
Financial assets measured at fair value through profit or loss
(FVTPL)
Financial assets that are not held in one of the two business
models applicable to amortised cost or fair value through other
comprehensive income are measured at fair value through
profit or loss. Changes in fair value are recognised in the
Income Statement.
Full time equivalent (FTE)
Includes all permanent full-time staff and part-time staff
equivalents.
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Glossary (continued)
General Reserve for Credit Losses (GRCL)
The general reserve for credit losses was initially established to
meet the requirements of APRA Prudential Standard, APS 220
Credit Quality, which required a reserve to be held to recognise
estimated future credit losses which may arise over the life of
the Group's lending portfolio. This requirement was removed
from 1 January 2022, however, the Group has prudently
maintained this reserve pending further clarification.
Gross loans and other receivables
Is the principal amount of loans and advances provided,
gross of provisions and deferred fee income and including any
accrued interest.
Group
Is Bendigo and Adelaide Bank Limited ('the Bank') and the
entities it controlled at financial year end and during the
financial year ('the Group').
Hedging
The use of capital market contracts, namely derivatives, to
eliminate or minimise the Bank's exposure to fluctuations in
interest rates, foreign currency exchange rates, or other market
factors.
Impaired loan
A facility must be classified as impaired regardless of whether
it is 90 days or more past due (arrears) when there is doubt
as to whether the full amounts due (interest and principal) will
be achieved in a timely manner. This is the case even if the full
extent of the loss cannot be clearly determined.
Key Management Personnel (KMP)
Persons having authority and responsibility for planning,
directing and controlling the activities of an entity, directly
or indirectly, including any Director (whether Executive or
otherwise) of that entity.
Liquidity Coverage Ratio (LCR)
In January 2013 the Basel Committee introduced Basel III
Liquidity Coverage Ratio (LCR), with the objective of ensuring
each bank maintains an adequate level of high-quality liquid
assets that can be converted into cash to meet its liquidity
needs for 30 days under a liquidity stress scenario. APRA
adapted these requirements for Australian ADIs under APS
210 Liquidity. These requirements came into effect 1st January
2015.
Mark-to-Market valuation
A valuation that reflects current market rates as at the Balance
Sheet date for financial instruments that are carried at fair
value.
Net Interest Income (NII)
The amount of interest received or receivable on assets net of
interest paid or payable on liabilities.
Net Interest Margin (NIM)
Net interest income divided by average interest-earning assets.
This measure provides an indication of the profitability of the
Bank's interest earning assets less the cost of interest bearing
liabilities (i.e cost of funding).
Net Stable Funding Ratio (NSFR)
Following the Liquidity Coverage Ratio, the NSFR is the second
quantitative global liquidity standard introduced under the
Basel III Liquidity reforms with the intention of promoting more
stable funding of assets and off-balance sheet activities of
banking institutions. The aim of NSFR is to ensure that long-
150 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
term assets are financed with at least a minimum amount
of stable funding (APRA, 2016). NSFR came into effect from
January 2018. It is the ratio of the amount of available stable
funding (ASF) to the amount of required stable funding (RSF).
ASF is the portion of an Authorised Deposit-taking Institution's
(ADI) capital and liabilities expected to be a reliable source
of funds over a one year time horizon. RSF is the function of
the liquidity characteristics and residual maturities of an ADI's
assets and off Balance Sheet activities.
Net tangible assets
Net assets excluding intangible assets and other equity
instruments divided by ordinary shares on issue at the end of
the period (excluding Treasury Shares deduction).
Notional
Is the face value on which the calculations of payments for
derivative financial instruments is based.
Offset account
An Offset Account (RCA) is a savings account which
participates with a separate facility usually for a mortgage.
Instead of receiving interest on the savings account, the
interest payment due on the loan is calculated only on the
net balance of the facility balance less the savings account
balance.
Operating segment
An operating segment is a component of the Group that
engages in business activities from which it earns revenues and
incurs expenses. Segment reporting reflects the information
that is used by the Managing Director for the purposes of
resource allocation and performance assessment, hence it is
consistent with the internal reporting provided to the Managing
Director and the Executive Team.
Past due
A financial asset is past due when a counterparty has failed to
make a payment of principal, interest or other amount, when
contractually due.
Past Due 90 Days
For a loan subject to a regular repayment schedule:
•
At least 90 days has elapsed from the due date of a
contractual repayment which has not been satisfied in full;
and
Total amount of arrears is equivalent to at least 90 days
worth of Scheduled Payments.
•
For a loan not subject to a contractual repayment schedule
(e.g. overdrafts and revolving credit facilities) the facility remains
over the contractual limit amount for at least 90 days.
Residential Mortgage Backed Security (RMBS)
A debt security whose cash flow is backed by the principal and
interest payments from a specified pool of mortgage loans
that are secured by mortgages over residential property.
Restructured facility
A “Restructured Loan” is a facility in which the original
contractual terms have been modified to provide for
concessions of interest, or principal, or other payments due, or
for an extension in maturity for a non-commercial period for
reasons related to the financial difficulties of a customer and
would not be offered to new customers with similar risk.
Return on average ordinary equity (ROE)
Net profit attributable to owners of the Bank divided by
average ordinary equity, excluding Treasury shares.
Glossary (continued)
Return on average tangible equity (ROTE)
Net profit attributable to the owners of the Bank divided
by average ordinary equity, excluding Treasury shares less
goodwill and other intangible assets.
Right-of-use-asset
The right-of-use asset is a lessee’s right to use an asset over
the life of a lease.
Rights
Rights to ordinary shares in Bendigo and Adelaide Bank Limited
granted under Long Term Variable Remuneration award and
subject to performance, service and risk gateway conditions.
Risk-weighted assets (RWA)
Assets calculated by applying a regulatory risk-weight factor,
prescribed by APRA, to on and off-balance sheet exposures.
Share-based payments (SBP)
Arrangements whereby employees services are exchanged
for equity settled instruments namely options or shares.
These payments are accounted for under AASB 2 Share-
Based Payments where, in relation to employees and KMP,
the organisation receives in exchange for providing Equity
instruments (including shares and share options) of the
organisation with the ability to settle in cash at the Board's
discretion.
Special purpose entity (SPE)
A non-bank entity established for a narrowly defined purpose,
including for carrying on securitisation activities. The structure
of the SPE and its activities are intended to isolate its
obligations from those of the originator and the holders of the
beneficial interests in the securitisation.
Term Funding Facility (TFF)
In response to the difficult economic period resulting from
COVID-19, the Reserve Bank of Australia established a Term
Funding Facility (TFF) to offer three-year funding to authorised
deposit-taking institutions (ADIs).
Total Capital adequacy ratio
Total capital divided by total RWA calculated in accordance
with relevant APS.
Treasury shares
Are shares that the Bank has issued but are held by a trust
included within the Bank’s consolidated results. Treasury shares
are not considered shares outstanding and are not included in
‘per share’ calculations.
Value at risk (VaR)
A measure of the loss that could occur on risk positions as a
result of adverse movements in market risk factors (e.g. rates,
prices, volatilities) over a specified time horizon and to a given
level of confidence.
Weighted average number of shares
The calculation includes fully paid ordinary shares of the Bank
and excludes Treasury Shares related to investment in the
Bank's shares.
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152 A N N UA L F I N A N C I A L R E P O R T 2 0 2 2
About our front cover
This year’s cover page features Bendigo Bank customer
Nicole Davenport. Nicole and her family have acquired
a new home with the assistance of the Bank and the
Victorian Homebuyer Fund. Bendigo and Adelaide Bank,
in conjunction with the Victorian State Government
scheme and the Federal Government’s First Home Loan
Deposit Scheme, have now helped more than
3000 customers achieve their dream of home ownership.
Nicole takes comfort in the security that comes from
home ownership and the certainty that comes from
putting down roots in a community she knows. She also
enjoys the freedom to decorate her home in a way that
she, her family and her dog Coco love. Bendigo and
Adelaide Bank’s purpose is to feed into the prosperity
of the community, not off it, and stories like Nicole’s are
a good reminder of the important role we play, helping
more than a million Australians become homeowners
since 1858.
A N N UA L F I N A N C I A L R E P O R T 2 0 2 2 1 5 3
The better big bank.
Annual Financial Report 2022
Bendigo and Adelaide Bank Limited
ABN 11 068 049 178