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Annual Report
Contents
MyState values
Highlights
Group performance
Chairman’s report
Managing Director’s report
Our strategy
MyState Bank
Approach to risk
TPT Wealth
2022 ESG update
Board of Directors
Key Management Personnel
Directors’ report
Financial report
Shareholder information
Corporate directory
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Annual general meeting
MyState’s annual general meeting (AGM) will be held on
Wednesday 19 October 2022 commencing at 10.30 a.m.
(AEDT) at the Best Western Hotel, 156 Bathurst Street,
Hobart. Shareholders will also be able to attend online
via a digital meeting platform. The online platform will
enable shareholders to ask questions about the business
of the AGM and vote on resolutions.
In accordance with the Corporations Act 2001,
hard copies of the Notice of AGM (NoM) will not be sent
to shareholders unless they have previously requested
a hard copy. Instead, the NoM and other related
material, including an online meeting guide, can
be viewed and downloaded from our AGM website
accessible via mystatelimited.com.au
Corporate governance
The Board of MyState Limited is committed to upholding
the highest levels of corporate governance and
subscribes to the Corporate Governance Principles
and Recommendations published by the ASX Corporate
Governance Council to promote investor confidence in
the company and within the broader market. In addition,
the Australian Prudential Regulation Authority (APRA)
requires MyState Limited, as the non-operating holding
company of a bank, to comply with the prudential
obligations that apply directly to the bank. To this
end, the Board of MyState Limited has a governance
framework whereby the appropriate Board policies,
meeting the APRA prudential requirements, apply
across the Group.
MyState Limited’s Board-approved Corporate
Governance Statement is available on the Company’s
website at mystatelimited.com.au
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MyState Limited - Annual Report 2022
MyState values
Create customer ‘wow’
› We walk in our customers’
shoes and appreciate
their perspectives.
› We think and act in the best
interest of our customers.
› We are clear, concise and
trustworthy in our customer
interactions.
› We design and deliver exceptional
customer experiences, with
a human touch.
› We make things simpler and
easier for our customers.
Chase the better
› We are bold in our ambition.
› We seek out and embrace
the change that is required
to succeed.
› We have the courage to try
new things and grow from
our failures.
› We simplify (and digitise)
to deliver exceptional
customer experiences,
with a human touch.
› We seek industry-leading
productivity and always
drive for better outcomes.
Collaborate to win
› We care for each other,
our customers, partners
and community.
› We openly share information
so that everyone can make
informed decisions.
› We give our best, do the right
thing, and trust our colleagues
to do the same.
› We hold each other to account.
› We reach out across teams
to rapidly solve problems –
and celebrate our successes
and learnings.
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MyState Limited - Annual Report 2022
Highlights
Home loan book
+25.5%
from FY21
$6.8b
Home loan growth over
3x system in FY22
Customer deposits
+25.1%
$5.6b
from FY21
Strong deposit growth driving
favourable funding mix
Net profit after tax
2nd
highest
$32.0m
Second highest NPAT on record
New customer growth
+14.8%
+19,500
from FY21
New to bank customers
Strong organic growth from FY21
TPT Wealth
commercial
loan book
+33.9%
$354m
from FY21
Growth reflecting improved
distribution capability
30 day home loan
book arrears
-14 basis points
0.41%
from FY21
Well below industry benchmark
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+43 Net Promoter Score1
Strong customer advocacy
(1) As at 30 June 2022
MyState Limited - Annual Report 2022
Group performance
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2018
2019
2020
2021
2022
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2019
2020
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2022
2018
2019 2020
2021
2022
Net profit after tax
($ million)
Earnings per share
(cents)
Dividends – fully
franked per share
(cents)
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Return on average
equity (%)
Cost-to-income
ratio1 (%)
Net interest income
($ million)
(1) 2021 excludes restructure costs
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MyState Limited - Annual Report 2022
Chairman’s report
Statutory net profit after tax for
the 2022 financial year was the
second highest on record at
$32.0m
I am pleased and proud to present my first annual report
as chairman of MyState Limited.
Despite ongoing challenges presented by the COVID
pandemic, our company has continued to meet, and
in some areas exceed, key goals and objectives –
both financially and in terms of servicing the needs of
our growing customer base. We completed the 2022
financial year in a strong position, with increased market
share and sound underlying profitability.
As many shareholders will be aware, MyState has
in recent years undergone significant change in its
business model. From our historical roots as a solid
and trusted regional Tasmanian credit union, we are
now well advanced in our successful transformation
into a modern financial services company with a strong
home base in Tasmania, a digital online focus and an
expanding national customer base.
The changes have so far delivered gratifying results –
not least making MyState among the fastest growing
banks in Australia, as measured by home loan market
share, during the financial year.
A key driver of this expansion has been our building
of partnerships with independent mortgage brokers
– committed financial professionals who are uniquely
placed to meet the diverse needs of borrowers in their
local communities across Tasmania and in the mainland
states where we have been growing our business.
Through this approach we remain true to our company
ethos, which prioritises customer service.
I believe the results presented in this annual report
provide further vindication of our approach.
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MyState Limited - Annual Report 2022
Operating performance
Growth strategy
Statutory net profit after tax (NPAT) for the financial year
was the second highest on record at $32.0 million,
but down 11.9% from the previous financial year’s record
$36.3 million. The reduction was largely due to higher
operating costs associated with our strategic investment
in distribution capacity, marketing and brand building
to support our national growth strategy.
Earnings per share decreased 22.6% to 30.3 cents.
Core earnings (operating profit before restructure costs,
bad and doubtful debts expense and income tax) fell
by 17.4% to $44.3 million, with total operating income
up 1.2% and operating expenses up 12.9%, reflecting
the upfront investment in growth.
The cost-to-income ratio (excluding restructure costs
in FY21) rose by 710 bps to 68.4% for the full year.
The total loan book grew by 24.1% to $6.94 billion, and
home loan book growth of 25.5% equated to 3.1x system
growth (+8.15%). Customer deposits grew by 25.1% to
reach $5.6 billion.
TPT Wealth’s commercial loan book was up 33.9% to
$354 million, reflecting improved distribution capability
in our Tasmanian home market.
Dividend and capital
In the 2022 financial year, the Board determined
to pay a final dividend of 11.5 cents per share, fully
franked, equivalent to a payout ratio of 79.2% of
after-tax earnings. This decision is in line with our
current dividend guidance range and strikes the right
balance between pursuing our growth strategy and
rewarding shareholders with dividends. The Board also
elected to fully underwrite any shortfall in the Dividend
Reinvestment Plan to help support the next phase of
balance sheet growth.
On 23 August 2022, MyState announced it had
successfully priced $65 million of fully paid, mandatorily
convertible subordinated perpetual debt securities
that are eligible to be recognised as Additional Tier 1
regulatory capital. The funds raised from these capital
initiatives will be used to support future balance
sheet growth.
Our achievement of 14.8% growth in new bank
customers in the past financial year, including
12,827 new customers in the three eastern seaboard
mainland states, is testament to the success of our
multi-pronged expansion strategy in a highly
competitive banking landscape.
In addition to building and nurturing a network
of mortgage brokers in mainland states, we have
achieved consistently fast loan approval turnaround
times and enhanced our digital banking platforms –
while maintaining a highly visible and accessible
branch network across Tasmania.
TPT Wealth is also well placed for growth, following
completion of a major brand and strategy review
to take the 135-year-old wealth management business
into the future.
Our people
Since the easing of COVID restrictions, I’ve been able
to meet more frequently with staff in Tasmania. Our
employees continue to deliver for our customers and for
each other. I am particularly grateful to team members
for their feedback on ways in which we might further
improve customer experience.
Our customers
Through the outstanding efforts of employees in our
Hobart-based call centre and branch networks, and our
friendly customer support teams, we’ve maintained a
high level of customer advocacy, ending FY22 with an
internally measured net promoter score of +43, among
the highest in the sector.
We also received industry acknowledgement of our
recent achievements in the banking market, including
awards for our competitive range of banking products
and for our lending teams.
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MyState Limited - Annual Report 2022
From our historical roots as a solid and trusted regional
Tasmanian credit union, we are now well advanced in our
successful transformation into a modern financial services
company with a strong home base in Tasmania, a digital online
focus and an expanding national customer base.
Retirement of Chairman and
Managing Director
I would like to pay tribute to my predecessor, Miles
Hampton, who retired as Chair of MyState Limited in
March 2022, having served on the Board with distinction
for 13 years, including nine as Chair.
Together with former Managing Director and CEO
Melos Sulicich, Miles played a pivotal role in the bank’s
successful transition to a modern digital platform – without
compromising the high-quality customer service that has
made MyState Limited such a trusted and successful
brand over so many years.
Miles has left us with solid foundations to continue growing
this great business. I thank him for his friendship and
guidance in my new role as Chair.
Melos retired as Managing Director and CEO in December
2021 after seven years in the role. Having announced his
retirement in early 2020, he agreed to a request from
the Board to stay on and guide the business through the
challenges of the global pandemic. I thank him for this
commitment, and for his key role in driving the evolution of
MyState to a digital bank with a human touch.
Our bright future under a new
Managing Director and CEO
Our new Managing Director and CEO, Brett Morgan,
who assumed his role in January 2022, has a distinguished
and successful history in banking, including international
banking and Fintech experience. I know from personal
experience that Brett stands for what he believes in,
challenges the status quo and puts the customer at
the centre of his decisions.
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MyState Limited - Annual Report 2022
We have now built the platform for an ambitious growth
program that will ensure we can provide the services that
customers expect, career opportunities for our people and
acceptable shareholder returns which can be maintained
over the longer term.
We’re investing in branches and building a concept that
delivers on our brand promise – the human touch. We want
banking to be more personal, and we’re looking for ways to
evolve our traditional branches. Deposit gathering
is a key to our strategy and our branches play a leading
role in delivering this growth.
MyState’s investment in brand, customers, digital
capabilities and simple, straightforward customer-focused
processes puts us in a solid position to increase market
share in a competitive banking landscape.
I thank my fellow directors for their commitment,
contribution and support as we implement our
ambitious growth strategy.
Finally, and most importantly, I’d like to thank you,
our shareholders, for your continued support. I believe
we have much to look forward to together.
Vaughn Richtor
Chairman
Managing Director’s report
Total loan book
$6.9b
Home loan applications increased
89%
Home loan settlements increased
93%
Customer deposits grew
25.1%
With the support of our shareholders through a $55.5
million capital raise in June 2021, we have successfully
launched MyState’s 2025 growth strategy – an
ambitious yet financially prudent plan for sustained
expansion of our market share in deposits, lending and
funds under management to 2025 and beyond.
Having completed a full year since the launch of the
growth strategy, the FY22 results detailed in this report
confirm that the strategy is on track. While operating
conditions remained highly competitive, we performed
strongly, growing our customer base and significantly
increasing our home loan book and customer deposits.
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In line with our strategy to increase direct lending into
our funds, our TPT Wealth commercial loan book also
grew by 33.9%. We are continuing to build the wealth
management side of the business and have seen some
early positive momentum in our home market
of Tasmania.
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MyState Limited - Annual Report 2022
Our internally measured Net Promotor Score (NPS)
of +43 reflects our commitment to putting positive
customer experiences at the core of everything we do,
and proves we are delivering the best possible customer
service.
To support the execution of our growth strategy, we
invested in additional marketing and distribution
capacity and capability, as well as key digital
and operational initiatives – while preserving and
maintaining our company culture focused on delivering
positive and intuitive customer experiences.
This focus, together with our recent issue of Additional
Tier 1 capital, will enable us to continue to build on
our current growth momentum and create value for
shareholders. Our strategy will also build on our strong
financial position, demonstrated execution capability
and leading customer advocacy to access growth
opportunities from an increasingly geographically
diverse customer base.
Financial overview
Our financial results for FY22 were pleasing in the context
of the major investments undertaken in our growth
strategy – our net profit after tax of $32 million was the
second highest on record.
Total operating income was up 1.2% and other banking
and wealth management-related income up 12.6%.
While total loan book grew to $6.94 billion, net interest
income dipped by 1.5%. This reduction was due primarily
to a lower net interest margin reflecting above-system
home loan book growth and a more competitive
landscape, particularly for fixed rate home loans. These
factors were partly offset by lower funding costs and a
higher average balance sheet.
The upfront investment in our growth strategy resulted
in an increase in the cost-to-income ratio to 68.4%, and
pre-provision operating profit was 17.4% lower than the
prior year. As foreshadowed at the time of the capital
raise in June 2021, this investment in growth has led to
dilution in earnings per share and return on equity for
the year.
Accelerating home loan and
retail deposit growth
Despite an increasingly competitive home lending
environment, we achieved strong lending growth
throughout FY22, with home loan applications up
89% and settlements up 93%. MyState has also
continued to provide strong customer service with no
deterioration in home loan approval times despite the
significant increase in application volumes.
Customer deposits grew 25.1% in the 12 months to
June 2022, and we achieved 14.8% growth in new-
to-bank customers. Our customer funding ratio
remained stable, decreasing slightly from 73.4% to
73.1%. Growth in retail customer numbers will continue
underpin the competitive positioning of the business.
MyState Bank’s reliance on securitisation reduced
during the year as a result of the increase in customer
deposits but will remain an important source of
funding and additional capital flexibility.
TPT Wealth transformation
now allows scale
TPT Wealth’s operating income was up 8.8% on
the prior year, driven by trustee services-related
revenue. While funds under management dipped by
3.9% to $1.062 billion, TPT Wealth has enhanced its
distribution capacity and seen growth of 33.9% in the
commercial lending book, the key asset class for our
income funds.
In FY22, TPT Wealth became a signatory to the
United Nations-supported Principles for Responsible
Investment, a prerequisite to growing funds under
management in target segments of the wealth market.
Customer experience
We remain very pleased with our customer engagement.
In short, our customers trust us. MyState staff seek
to deliver a positive customer experience with every
interaction, and deliver a human way to bank, enabled
by technology.
Our NPS remains among the highest in the sector. It
reflects our efforts to empower customers both through
digital services and care with a human touch.
Culture and community
Our unique and positive culture has been a key enabler
of our results. While we have always been very customer-
focused, our culture of continuous improvement provides
the capacity to adapt to new challenges and meet our
customers’ evolving needs.
The Tasmanian community is an integral part of
MyState’s DNA. It defines who we are, what we stand for
and our attitude, tone and style. In another big year for
our community programs, we continued our sponsorship
of Football Tasmania, the MyState Bank Student Film
Festival and the MyState Bank Arena, while also joining
the Tasmania JackJumpers as a major partner for their
inaugural successful season.
I am very proud of the whole MyState team and want
to especially thank our frontline branch and Tasmanian
contact centre teams for the way they continue to serve
our customers so brilliantly in these challenging times.
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MyState Limited - Annual Report 2022
Building on our strong financial position and the trust of our
customers, we are well placed to continue to simplify financial
services and make our products and services easier and
more intuitive for our customers to use. We are focused on
improving customers’ digital and human experience across
both MyState Bank and TPT Wealth and will continue to simplify
our products, processes and systems.
Looking ahead
While the financial services environment continues to be
competitive and will operate under increasing regulation,
MyState’s ambition of increasing our market share
across deposits, lending and funds under management
does not change.
Building on our strong financial position and the trust of
our customers, we are well placed to continue to simplify
financial services and make our products and services
easier and more intuitive for our customers to use. We
are focused on improving customers’ digital and human
experience across both MyState Bank and TPT Wealth
and will continue to simplify our products, processes
and systems.
We have built a culture that continually innovates
and improves services to deliver accelerated growth,
while maintaining asset quality. As we grow, we will
deliver operating leverage as well as return-on-equity
accretion and growth in earnings per share over the
medium term, thereby creating value for shareholders
and all our stakeholders.
This marks my first report to MyState shareholders.
I have thoroughly enjoyed my first eight months at
MyState, meeting and working with our wonderful
staff and engaging with our customers, shareholders
and community. The business is in a strong position to
deliver on the 2025 strategy. I am excited about what
the future holds.
Brett Morgan
Managing Director and CEO
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MyState Limited - Annual Report 2022
Our strategy
Our ambition is to grow our share in deposits, lending and
funds under management
To help
people achieve
their dreams
Everyday banking
Lending
Asset management
Trustee services
Transaction accounts
Home loans
Saving accounts
Investment loans
Term deposits
Digital
Brokers
Branches (Tas)
Mobile lenders (Tas)
Contact centre
Digital
Contact centre
Core offering
Key channels
Distribution and service
Mortgage funds
Commercial lending
Wills and estate planning
Estate administration
Charitable trusts
Relationship managers
Direct
Digital
Asset consultants
Our people and values underpin our strategy
Create customer ‘wow’ Chase the better Collaborate to win
We are executing the boldest strategy in our history with
an overarching ambition to grow our share in deposits,
lending, and funds under management.
Our people and values underpin
our strategy
The strategy will see us seeking to take advantage of
our position as a respected and established digital
challenger brand with demonstrated capability in
making financial things simpler for our customers.
The unique combination of services offered by MyState
Bank and TPT Wealth means we can help people across
all life stages. We do this through our core offerings of
everyday banking products, home and investment loans,
asset management and commercial lending, and our
trustee services business.
These products and services are delivered through our
key channels. For MyState, this encompasses digital,
mortgage brokers, mobile lenders in Tasmania, and our
Tasmanian branches and contact centre. For our TPT
Wealth business, our key channels include digital and
relationship managers.
Having the right culture and capability is fundamental
to the success of our growth strategy. We have invested
in working with our people to develop and embed three
core values to position ourselves to execute the 2025
strategy:
› ‘Create customer wow’ where we are designing
and delivering exceptional customer experiences
with a human touch. We can do this because we
think and act in the best interests of our customers,
appreciate their perspectives and are clear and
trustworthy.
› ‘Chase the better’ is being bold so we can
embrace the change that is continually required to
succeed and always drive better outcomes. We are
simplifying and digitising to deliver things faster
and more accurately.
› ‘Collaborate to win’ is about openly sharing
information so we can collectively make informed
decisions, while caring for each other, our
customers and other stakeholders.
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MyState Limited - Annual Report 2022
We have reduced the number of administration and
process-oriented roles and increased staff numbers in
customer facing, servicing, and marketing roles to cater
for increasing customer numbers at the service levels
they want – in order to create ‘customer wow’.
We are undertaking several programs to train and upskill
staff, develop team capabilities and grow a company-
wide culture of continuous improvement and innovation
– ‘chase the better’. This will attract new talent that
promotes our growth objectives and ensures operational
excellence focused on the value of ‘collaborate to win’.
In FY22, through our commitment to culture and
capability and new core values, we have increased our
employee engagement score from 64% to 71%.
Our strategy is also supported by a strong risk culture
that is embedded into the values of MyState employees,
all of whom have undertaken risk management training.
This allows us to stay true to our human approach to
banking and wealth management, backed by a strong
digital capability and enhanced by our customer-facing
digital proposition.
Executing on our growth
strategy
We have achieved much in the first year of our growth
strategy. We have grown our home loan book by 25.5%
and broadly matched this with growth in customer
deposits of 25.1% over the year. We also increased new
to bank customers by 14.8%.
Alongside this, and in line with our strategy to increase
direct lending into our funds, our TPT Wealth commercial
loan book grew by 33.9%.
Our investment in the growth strategy is delivering.
The investment into our distribution capability and
capacity has delivered great momentum across both
the MyState Bank and TPT Wealth lending books.
The investment in marketing has supported the
acceleration in customer and customer deposit growth.
The growth in TPT Wealth lending has directly
contributed to improved returns for TPT Wealth
investors.
We have also won a number of awards, reflecting the
quality of our products and services, and the value we
deliver to our customers and partners.
Increasing investment in ESG
For MyState, sustainability across our operations is about
how we create value for all stakeholders over the long-
term. We are making a conscious effort to integrate
tangible changes to the way we operate our business in six
key areas.
The most pertinent to us are governance, sustainability,
digital enablement and data security, supporting our
customers, helping people be their best, and community
investment.
During FY22 we calculated our baseline scope 1, 2 and 3
greenhouse gas emissions footprint, as well as identifying
and prioritising MyState’s climate change risks and
opportunities in the short, medium and long term.
We are also committed to calculating the financed
emissions from our loan book in future periods. Once
we understand our combined operational and financed
emissions impact, we will explore appropriate emissions
reduction targets and initiatives.
During the year TPT Wealth also become a signatory of the
Principles for Responsible Investment – or PRI. As a new
signatory, TPT is fully committed to adopting the Principles
and we expect to increase transparency in our use of ESG
data over the next few years.
Outlook
As we look to the future, we will continue to execute
our 2025 growth strategy , centred on increasing our
market share across deposits, lending and funds under
management.
We are very focused on improving our customers’ digital
and human experience across MyState Bank and TPT
Wealth. And we will continue to simplify our products,
processes and systems.
Though we are in uncertain times and a highly competitive
market environment, we believe these conditions play to
our strengths.
We are a unique, proven business, with a strong brand and
position in Tasmania which has consistently delivered in the
past, and is now delivering on the early stages of our 2025
growth strategy.
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MyState Limited - Annual Report 2022
MyState Bank
Over the course of its 64-year history, MyState Bank has built an
enviable reputation as one of Tasmania’s most trusted financial
institutions. Our status is built not just on dependability and strong
financial performance, but on our attention to the individual needs
and wants of our customers.
The human way to bank
Today, as we enter the next phase of our
transformation into a modern nationwide banking
operation centred on a digital offering, we have not
forgotten the fundamental ‘human’ elements of our
traditional business model that have underpinned our
success in Tasmania over so many decades.
The pursuit of our 2025 growth strategy into the
mainland is predicated on bringing our large, loyal
local customer base with us. This includes maintaining
and constantly improving our traditional bank branch
network across Tasmania, as well as our Hobart
contact centre.
Beyond Tasmania, MyState is using the strength of
its ‘human’ approach to expand nationally, with a
particular focus on better online and app experiences
for new and existing customers. We have also
created valuable relationship-based partnerships
with mortgage brokers across the eastern seaboard,
building on the trust in our brand, people and
products.
The MyState approach, succinctly conveyed in
our campaign slogan ‘the human way to bank’,
is producing impressive results on many levels –
not least in the rapid expansion of our home loan
business. We’re now one of Australia’s fastest growing
home loan lenders, with a fast loan approvals process
that is consistently delivering conditional approval
turnaround times of two
business days.
The bank ended the FY22 with close to 160,000
customers, including 19,500 who joined us over the
previous 12 months. Our efforts are also reflected in
strong industry recognition and customer surveys.
In the past year we received industry awards for our
competitive banking products, broker relations and
excellence in our mortgage and lending teams.
Though we remain a challenger brand with a
traditional ‘human’ approach, we are proudly making
big strides in a highly competitive banking industry.
Customer-focused innovation
Over the past five years, MyState Bank has invested
heavily in digital banking capabilities to automate back-
end processes and accelerate applications, providing a
more seamless customer banking experience.
We’ve introduced AI and have over 30 robotics
processes at work in our back office. Together, these
changes have significantly improved customer wait
times and accuracy and provided a platform for us to
further scale up our operations.
Our increasing visibility in alternative channels, including
mobile app and online, allows us to fuel growth outside
our traditional core branch network, and is yielding
strong results. More than 74% of our customers are now
registered to use internet and mobile banking, while 58%
of all customers are opting to receive their statements
electronically.
Our technology is helping
customers save money and time
Now in its second year, MyState Bank’s real-time
data analytics tool, Insights, has provided 330,000
personalised messages to customers. The messages
predict when bills are due, tell customers whether they
have enough funds to cover upcoming expenses,
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Beyond Tasmania, MyState is using the strength of its ‘human’
approach to expand nationally, with a particular focus on better
online and app experiences for new and existing customers.
We have also created valuable relationship-based partnerships
with mortgage brokers across the eastern seaboard, building on
the trust in our brand, people and products.
Home loan book growth
We have successfully deployed the majority of the
additional capital raised in June 2021, recording home
loan book growth of 25.5%, which is significantly
above industry average, and settlements up 93% on
the previous corresponding period. MyState Bank’s
continued focus on low-risk, owner-occupied lending
underpins our balance sheet strength.
Customer deposits growth
Customer deposits grew 25.1% to $5.6 billion during the
year, as our increased marketing initiatives and brand
presence on the mainland started to take effect.
Marketing investment in
Tasmania and the mainland
While we have strong brand presence in our home
state of Tasmania, we have significantly expanded our
marketing activities across Australia.
Our sponsorship of the MyState Bank Arena and
partnership with breakthrough National Basketball
League team the Tasmania JackJumpers ensured our
brand reached new audiences across Australia, with an
overriding strategy of driving new customers, deposits
and lending opportunities.
and also provide people with the ability to automatically
move their money between accounts when
conditions allow.
MyState Bank’s auto-savings tool has found and
automatically saved almost $2 million for customers in
the past year. On average, that works out at more than
$2,000 for each customer subscribed to the program,
with our best performer saving almost $15,000.
Strong customer advocacy
A major system upgrade has allowed MyState to
construct a leading support operation for customers
when they phone the bank, allowing for a more efficient
use of resources and intuitive and quicker outcomes for
customers.
Through the great efforts of both the Hobart contact
centre, our branch networks and friendly support teams,
we’ve maintained our strong customer advocacy scores.
Supported by our focus on the ‘human way to bank’, we
ended FY22 with an internally measured net promoter
score of +43, among the highest in the sector.
Investment in the broker
channel
Our focus on building and nurturing our mainland
mortgage broker network and on improving loan
approval turnaround times (which are among the best in
the industry) has helped us to improve market share in a
highly competitive banking landscape.
The geographic diversification of our home loan book
continues to improve, with 71.5% of settlements and
64.5% of our home loan book being from outside
of Tasmania.
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Approach to risk
Our risk management frameworks ensure risks are identified, managed
and mitigated on a timely basis. We undertake regular reviews of the
risk frameworks to meet our regulatory obligations and deliver the best
outcomes for our customers and stakeholders.
have further strengthened our risk frameworks and
enhanced the integrity of our commitments to our
customers.
We also continued to build a culture of risk
accountability among our employees, facilitating
training programs, alerting employees to indicators
of risk, initiating timely closure of risk incidents, and
providing recognition for employees who championed
our risk principles. The maturity of our ‘3 lines of
defence’ framework was also enhanced through the
operation of Divisional Risk Committees.
Throughout the year, we also kept our Pandemic
Response Plan active, serving our customers without
disruption, while continuing to support employees
during periods of absence. Vulnerable customers
were supported via our customer contact centre and
branches, and we remained conscious of our duty of
care to customers who need
additional assistance.
The MyState loan portfolio grew strongly during the
year within Board approved risk limits, and this has
been a key factor in maintaining the quality of the loan
portfolio. The Bank’s prudent lending practices helped
us deliver arrears outcomes considerably below the
benchmark of our regional peers and the major banks.
Management of financial and non-financial risks is a
key focus of our business, and an integral part of the
platform upon which we’ve built our 2025
growth strategy.
Throughout FY22, we continued to embed a strong
culture of risk awareness and accountability across
the organisation.
The risk strategy for the past year was built on
three pillars:
› Promotion of risk management principles to
support a healthy risk culture
› A Risk Framework that is appropriate to the
size and complexity of the business, and that is
dynamic, iterative and responsive to change
› Digitisation and simplification of risk management
processes to support business growth and
productivity
Our risk management frameworks ensure risks are
identified, managed and mitigated on a timely basis.
We undertake regular reviews of the risk frameworks
to meet our regulatory obligations and deliver the
best outcomes for our customers and stakeholders.
We continue to enhance our risk controls to manage
our information security, cyber and fraud risks while
supporting and protecting our customers.
During the past year, we implemented significant
initiatives in response to a changing regulatory
environment. The initiatives included new design and
distribution principles, enhanced customer complaints
processes, anti-hawking controls and enhanced
breach reporting obligations. These measures
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TPT Wealth
Our commercial lending business had an outstanding year, with
the commercial loan book growing by 33.9%, following further
investment in distribution capacity.
TPT Wealth delivered a solid performance in FY22,
with an 8.8% increase in operating income to
$14.8 million achieved amid the implementation of
significant positive changes across the business.
TPT Wealth is now well positioned for further
growth through operational efficiencies, product
enhancements and an expansion of business
development resources across Tasmania and eastern
seaboard states.
Our managed funds division was strengthened after
investors voted in November 2021 to approve changes
to the Select Mortgage Fund, resulting in a more
differentiated offering of income funds to investors.
The quality of these funds was acknowledged by the
independent SQM Research, which gave all three of
our income funds four-star ‘superior’ ratings
during FY22.
In line with the mainland digital growth strategy for
MyState Bank, TPT Wealth continued to expand its
presence online with growing investor appetite for
digital interactions leading to the increasing uptake of
the self-serve investor portal.
TPT Wealth also responded during the year to
increasing investor demand for consideration of
ESG (environmental, social and governance) issues
in investment. We were pleased to formally commit
to an ESG agenda, becoming a signatory to the
United Nations-supported Principles for Responsible
Investment.
Our commercial lending business had an outstanding
year, with the commercial loan book growing by
33.9%, following further investment in distribution
capacity. The business was successfully relaunched
into the Tasmanian market with a series of innovative
new commercial lending products, and an expansion
of our client relationship team across our Hobart,
Launceston and Burnie offices.
Our Trustee Services business also experienced strong
growth, with a 40% increase in the number of
estates managed.
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2022 ESG update
Our approach
As a proud Tasmanian company, we understand
the importance of our operations mitigating our
environmental, social and governance impacts.
Our materiality assessment represents the ESG
issues that matter most to our organisation.
In 2021, six key materiality issues were validated
and prioritised by MyState.
In 2022, with support from internal stakeholders,
we have further explored these material issues to
better understand how we are creating value for our
stakeholders over the long-term, and to integrate
tangible changes to the way we operate our business
in these areas.
This has meant an increased ability to more accurately
understand and calculate the impact our business
How we listen and engage
operations have on the environment – the ‘E’ in ESG
- through our inaugural Task force on climate-related
financial disclosures (TCFD). TCFD is a globally
recognised standard set of recommendations used
by more than 3,000 leading organisations that either
prepare or use financial disclosures, with the aim of
building a more resilient financial system through
climate-related disclosure.
Importantly, this focus has not been at the exclusion
of social and governance considerations– the ‘S’ and
‘G’ –as our stakeholders also want to know what we
are doing to address matters such as human rights,
customer vulnerability and the communities in which
we operate.
The quantitative measures of ESG will provide the
foundations for us to integrate them into our
business operations.
MyState’s stakeholder groups include customers, shareholders, investors, our people, communities, regulators,
government and suppliers. In FY22 we continued to capture the voices of our stakeholders through formal and
informal feedback methods.
Supporting customers
To help customers make good choices and putting things right if they go wrong
How we engage
What we have been focusing on
Metrics at 30 June 2022
financial hardship
› Customer surveys
› Assist customers experiencing
› Customer panel collaboration to
shape the future of MyState
› Participation in the Federal
Government’s First Home Loan
Deposit Scheme (FHLDS)
› Assistance to vulnerable
customers
› Continuing to enhance
our support for customers
experiencing vulnerability due to
circumstances such as financial
hardship, family violence, elder
abuse and scams
› Promptly resolving customer
complaints and interactions with
our customer relations specialists
and MyState’s Customer
Advocate.
› Account-keeping fee
simplification and reduction
across all products
› Customer communications in
plain english
› 157,350 bank customers
› Customer NPS +43
› 74% of bank customers registered
for internet and mobile banking
› 2,993 complaints handled in FY22
› 87% of complaints resolved in
› 360 applications supported for
financial hardship over the year
› 1,076 basic transaction accounts
under 5 days
opened
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Governance, conduct and culture
Our principles of governance, conduct and culture provide the foundations of conducting our
business in an ethical, responsible and transparent way including driving the right behaviours
that put the needs of stakeholders first.
How we engage
What we have been focusing on
Metrics at 30 June 2022
› Compliance with Banking Code
› Key vendors screened for
of Practice
modern slavery assessment over
the year
› Diversity ratios:
• 46% of all leadership roles
filled by women
• 33% of non-executive
Directors are women
• 38% of the executive team
(direct reports to the CEO)
are women
• 57% of all roles filled
by women
› Membership and active
participation with Australian
Banking Association
› Ongoing prudential reporting
› TPT Wealth membership of
and engagement with regulators
the United Nations-supported
Principles for Responsible
Investment (PRI)
› Culture survey to measure and
enhance organisational risk
culture
of Practice
investor presentations
› MyState subscribes to the
ASX Corporate Governance
Council’s 4th Edition Corporate
Governance Principles and
Recommendations and publishes
an annual Corporate Governance
Statement and Appendix 4G in
compliance with ASX Listing Rules
› Full and half-year reporting and
› Regular briefings and meetings
with investors and analysts
› Signatories to the Banking Code
› Modern slavery statements
› Human rights statement
› Supplier code of conduct
› Risk Management Strategy and
› ESG Committee and supporting
› Measuring and evolving our
organisational culture and risk
› Diversity and inclusion program
with board oversight
› Whistle-blower policy
(StandUp program)
working groups
Framework
Helping our people be their best
To drive a culture of customer centricity and execution excellence we rely on our people being
at their best.
How we engage
What we have been focusing on
Metrics at 30 June 2022
› Employee experience 71%
› Clear expectations for
workplace behaviour
› Development of our people leaders
› Wellbeing program
› Flexible and inclusive work
practices to assist in difficult
times, including access to paid
parental leave
› Enhancing the employee
experience to provide meaningful
and rewarding opportunities to
our people
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centric capabilities
› Leadership development
› Evolving our change maturity
› Identifying and assessing human
› Measuring and understanding
› Living the MyState values
› Reward and recognition
› Increased focus on empowering
our people to manage their
wellbeing
our culture
› Connecting our people with our
strategic ambitions
Digital enablement and data security
We continue to evolve our systems and products to meet our customers’ increasing
expectations, keep their money safe and protect their data.
How we engage
What we have been focusing on
Metrics at 30 June 2022
origination
› Online deposit product
› Internet and mobile banking
› Digital cards and payment
methods (e.g. Apple Pay,
real time payments)
capability
› Open Banking according to the
Consumer Data Right
› Cyber security framework
› Information security policy
› Privacy policy
e-statements
› 58% of customers on
› 74% of bank customers are
registered for internet and
mobile banking
› 96% of transactions completed
digitally
› Keeping customers and their
data and accounts safe through
strengthening our systems and
educating our customers in
relation to data security and
being aware of scams
› Encouraging customer take-
up of digital solutions and the
migration of customers to digital
channels
› Making our digital products
helpful (e.g reminding customers
when bills are due), intuitive and
easy to use
Environmental sustainability
Helping us transition to a low-carbon economy.
How we engage
What we have been focusing on
Metrics at 30 June 2022
› e-statements
› Significant emphasis on digital
communication with customers
› Our inaugural TCFD report.
See following section.
› MyState’s Year 1 TCFD carbon
footprint was assessed to be
4,690 tonnes of carbon dioxide
equivalent or CO2-e (Scope 1,2
and limited Scope 3 emissions)
Community investment
Enabling us to make a difference and support our communities.
How we engage
What we have been focusing on
Metrics at 30 June 2022
› Through the MyState Foundation,
we help young Tasmanians reach
their full potential
› Through our sponsorship of
MyState Bank Arena we are
bringing quality sports and
entertainment experiences to
Tasmania
› Distributing our grants and
refining the grants process to
make sure the support is going
where it will have the most impact
› Working with the team at
MyState Bank Arena to make
the venue the heart of sport and
entertainment for all Tasmanians
› Over $143,000 in community
grants provided through the
MyState Foundation in 2021/22
and over $2.5 million since
inception
› 18 charities supported through
the MyState Foundation
› 9,070 Tasmanian youth engaged
via the MyState Foundation.
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Task force on climate-related financial disclosures (TCFD) report
Climate change position
Strategy
MyState acknowledges that climate change is a global
This year, MyState progressed its understanding of the
issue with significant implications for the environment,
potential impact climate change could have on our
society, and the economy. MyState supports the
business and the impact we have on climate change.
recommendations of the TCFD.
This is our first disclosure in line with the TCFD
recommendations. It allows us to progressively enhance
Using FY21 as our baseline year, we calculated our scope
1, 2 and 31 greenhouse gas (GHG) emissions footprint
and undertook a preliminary climate risk and opportunity
our approach to managing climate-related risk and
identification and prioritisation assessment. We derived
opportunities, understand our impact on climate change
potential climate risks and opportunities through
and contribute to enhancing long-term climate resilience.
engagement with key stakeholders across MyState’s
Governance
The governance structure for oversight of climate
and ESG-related risks continues to evolve as our
TCFD journey matures, with the Board overseeing the
development and approval of the strategy.
business and performed desktop research that included
an internal document review and peer benchmarking.
Risks and opportunities were prioritised according to their
potential level of consequence and impact on MyState.
Preliminary prioritised risks and opportunities (R/O)
(see table) will inform our FY23 climate scenario analysis
The MyState executive leadership team (ELT) is
which will use the latest climate science and related
accountable for the endorsement of the ESG strategy
modelling to assess the resilience of our business model
to the Board. The ELT is ultimately responsible for the
and potential finance-related impacts of climate change
identification, management and monitoring of climate-
on MyState’s business.
related risks, opportunities, and impacts.
R/0
Prioritised risks and
opportunities
Physical or
transition
Timeframe Potential impacts on MyState /
Physical
(acute)
Short to
long term
MyState’s stakeholders
› Damage to assets causing
devaluation of collateral
› Rise in insurance premiums and
restricted ability to gain insurance
Transition
Long term
› Revenue from new market
› Reduced carbon intensity of loan book
Increase in frequency and severity
of extreme weather events
including flooding associated
with rain, cyclones, storms and
bushfires, and its impact on the
lending portfolio
Support customers to transition
to the low-carbon economy and
build climate resilience through
innovative services and product
offerings.
Disruption of carbon-intensive
sectors and associated value
chains
Transition
Short to
medium
term
› Devaluation of collateral
› Obsolete assets
› Credit risk - increased arrears,
hardship and impairments
Build business processes to
better capture relevant customer
climate data
More ambitious government
climate policies (e.g. carbon
taxes and cross border tariffs)
and increased regulations from
governing bodies (APRA and
ASIC)
Transition
Short term
› Increased understanding of relevant
customer risks and mitigants
Transition
Short term
› Increased operating costs /
complexity
› Decreased value of assets
(1) Included within the total scope 3 emissions boundary are purchased goods and services, capital goods, fuel, and energy related activities
(not included in scope 1 and 2), upstream transportation and distribution, waste generated in operations, business travel, employee computing,
upstream leased assets, and working from home. It does not include financed emissions.
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R
O
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Risk management
MyState reviews existing and emerging climate-related regulatory requirements as part of our overall
risk management processes.
In future years, we will focus on integrating climate risks and opportunities into these risk management
processes.
Metrics and targets
Credit risk exposure
At 30 June 2022 the MyState Bank loan book size was $6.9b and TPT Wealth had funds under management of $1.06b.
We do not lend to coal, oil or gas projects.
Scope 1, 2 and 3 emissions
This year, MyState calculated its baseline Scope 1, 2 and 3 GHG emissions associated with the activities and facilities
that support the business’ everyday operations.
FY21 emissions calculations were prepared in accordance with Australian government standards, namely the Climate
Active Carbon Neutral Standard for Organisations, and reflect the consolidated group (excluding the MyState
Foundation). This calculation does not include financed emissions.
MyState recognises the importance of understanding the emissions associated with our lending portfolio and
investments and will be calculating our financed emissions in future periods. Once we understand our combined
operational and financed emissions impact, we will explore appropriate emissions reduction targets and initiatives.
As our response to climate change evolves, we will identify metrics to track performance against climate commitments
and most material climate risks and opportunities.
Greenhouse gas emissions - tonnes carbon dioxide equivalent (tCO2-e)
Scope 1 emissions
Scope 2 emissions
Scope 3 emissions
Total emissions
2021
54
271
4,365
4,690
Included within the total scope 3 emissions boundary are purchased goods and services, capital goods, fuel, and
energy related activities (not included in scope 1 and 2), upstream transportation and distribution, waste generated
in operations, business travel, employee computing, upstream leased assets, and working from home.
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Board of Directors
Vaughn Richtor
Independent Non-Executive Chairman
BA (Hons), MAICD
MyState Bank Limited,
TPT Wealth Ltd
Group Audit Committee, Group Risk
Committee, Group People and Remuneration
Committee, Group Digital and Marketing
Committee
Vaughn was appointed as a Non-Executive Director in September 2019 and was appointed
Chairman on 1 April 2022. He has held CEO roles in Asia and is the former CEO of ING
DIRECT Australia and CEO Challenger and Growth Countries – Asia, ING Group after
joining ING in London in 1991 as Deputy General Manager UK and Ireland. Vaughn is a
Non-Executive Director of Rest Super and also a current adviser to both Rhizome, Spriggy,
Wyvern Health and the Strategy Implementation Institute in Singapore. He is a prior Board
member of TMB Bank in Thailand, ING Vysya Bank in India, Kookmin Group in Korea, and a
Non-Executive Director, and later Chairman, of Ratesetter Australia. In addition, he writes and
speaks extensively on leadership, corporate culture, customer centricity and digital banking.
Brett Morgan
Managing Director and
Chief Executive Officer
BEc, MAppFin
MyState Bank Limited, TPT Wealth Ltd,
MyState Community Foundation Limited,
Connect Asset Management Pty Ltd
Brett commenced with the MyState Group on 17 January 2022. He was previously Chief
Executive Officer, Banking and Wholesale at ASX listed BNK Banking Corporation Limited
(ASX:BBC) and has extensive digital banking experience having held a number of key
executive roles over 15 years at ING DIRECT.
Stephen Davy
Independent Non-Executive Director
BSc (Hons)
MyState Bank Limited,
TPT Wealth Ltd ,
MyState Community Foundation Limited
Group Risk Committee, Group People
Remuneration and Nominations Committee,
Group Audit Committee
Stephen was appointed as a Non-Executive Director in July 2021. He was formerly Chief
Executive Officer and Director of Hydro Tasmania, a position he held from 2013 to 2020.
Prior to that role he held senior executive roles at Hydro Tasmania, Eraring Energy, Societe
General and Bankers Trust and started his banking career at Macquarie Bank. Stephen is
also a Director at Sonic Civil Investments and at Volunteering Tasmania.
Robert Gordon
Independent Non-Executive
Deputy Chairman
BSc, MIFA, MAICD, FAMI
MyState Bank Limited,
TPT Wealth Ltd, MyState
Community Foundation Limited
(Chair)
Group Risk Committee (Chair), Group People
Remuneration and Nominations Committee,
Group Digital and Marketing Committee
Robert has been a Non-Executive Director since February 2009 and prior,
a Director of MyState Bank Limited, (previously connectfinancial), from July 1998. He is
the current President of the Institute of Foresters of Australia (IFA) and Football Federation
Tasmania and Chair of the Supported Affordable Accommodation Trust.
He is the former Managing Director of Forestry Tasmania and has previously served on the
Board of a number of companies in the tourism, research and development, construction
and infrastructure industries.
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Sibylle Krieger
Independent Non-Executive Director
LLB (Hons), LLM, FAICD, MBA
MyState Bank Limited,
TPT Wealth Ltd
Group People Remuneration & Nominations
Committee (Chair), Group Risk Committee
Sibylle has been a Non-Executive Director since December 2016 and has over 40 years
of broad commercial experience as a lawyer, economic regulator, company director and
independent consultant. She was a partner in two large commercial law firms for 22 years
and has over 15 years’ experience as a Non-Executive Director and Chair across listed and
unlisted companies in multiple sectors. Her current portfolio includes financial services,
fintech, essential infrastructure services and energy.
Sibylle is currently a Non-Executive Director of Openpay Group Limited (ASX:OPY), AEMO
Services Limited and Ventia Services Group Limited (ASX:VNT). She is also a member
of the advisory board of Law Squared, a challenger “new law” firm. She has previously
served as Chair of Xenith IP Group Limited (ASX:XIP) and as a Director of Sydney Ports
Corporation, Allconnex Water, TasWater, Vector Limited (NZX:VCT), the Australian Energy
Market Operator Ltd, and as a trustee of the Royal Botanic Gardens and Domain Trust and
of Sydney Grammar School. In addition, for six years Sibylle served as a Tribunal member
of the principal NSW economic regulatory tribunal.
Warren Lee
Independent Non-Executive Director
BCom, CA
MyState Bank Limited,
TPT Wealth Ltd
Group Digital and Marketing Committee
(Chair), Group Audit Committee,
Group Risk Committee
Warren was appointed as a Non-Executive Director in October 2017. He has extensive
experience in the international financial services industry, including 15 years at AXA in senior
management positions within the company’s Australian and Asian businesses.
Warren was previously the Chief Executive Officer of the Victorian Funds Management
Corporation and Chief Executive Officer, Australia and New Zealand for AXA Asia Pacific
Holdings Limited. He has previously served as a Director of Avenue Hold Limited and
Avenue Bank Limited.
Warren is currently a Non-Executive Director of Tower Limited (ASX:TWR), MetLife Limited,
Warakirri Asset Management Limited and Flinders Investment Partners Pty Ltd and is a
member of Chartered Accountants Australia and New Zealand.
Andrea Waters
Independent Non-Executive Director
BCom, FCA, GAICD
MyState Bank Limited,
TPT Wealth Ltd
Group Audit Committee (Chair), Group Risk
Committee, Group Digital and Marketing
Committee
Andrea was appointed as a Non-Executive Director in October 2017. She is an experienced
non-executive director, auditor and accountant with over 35 years’ experience in financial
services. She is a Fellow of Chartered Accountants Australia & New Zealand, and both a
member and accredited facilitator of the Australian Institute of Company Directors. She is
a former partner with KPMG, specialising in financial services audit.
Andrea is a Director of Bennelong Funds Management Group, Citywide Service Solutions
Pty Ltd, Colonial Foundation, Genworth Mortgage Insurance Australia Limited (ASX:GMA)
and Grant Thornton Australia Ltd. Prior, she was a Director of The Lord Mayor’s Charitable
Foundation, Chartered Accountants Australia & New Zealand, Cancer Council Victoria,
CareSuper and Cash Converters International Limited (ASX:CCV).
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Key Management
Personnel
Huw Bough
General Manager, Banking
Appointed June 2021
DipFS(FP), DipF&MB, MAICD
Huw is the General Manager, Banking and has responsibility for the banking
division which includes retail branches, call centre, business banking and the
mortgage broker channel.
Huw has recently returned to MyState after two years having previously served
for four years as the Group’s General Manager Retail Banking, Business Banking
and Broker. Most recently he consulted to Avant, helping establish a specialist JV
for medical professionals. His prior roles include various general management
positions at RAMS Financial Group and Westpac.
Gary Dickson
Chief Financial Officer
Appointed October 2019
BCom, MBA (Executive), FCA
As Chief Financial Officer, Gary is responsible for managing the finance, treasury,
regulatory reporting, strategy and property functions for MyState. Gary is also a
Director of Connect Asset Management Pty Ltd.
Gary has over 25 years of experience in a variety of financial roles, with 12 years
of CFO experience. His most recent position was at ME Bank as CFO, where
he drove strong growth in key financial metrics during his six-year tenure. Prior
to this, Gary held the position of CFO for AXA Australia for five years. His prior
financial services roles include senior positions with the Colonial First State Group,
the Investments & Insurance Services division at Commonwealth Bank and
Portfolio Partners Limited.
Alan Logan
General Manager, Wealth Management
Appointed August 2021
MBA, GAICD, AdDipFS
Alan is responsible for the strategic, financial and ongoing management of the
MyState Limited Group’s Wealth Management division, TPT Wealth Limited,
which specialises in Asset Management and Trustee Services.
With over 25 years’ experience in the financial services sector, Alan was previously
the General Manager for Godfrey Pembroke and MLC Connect and prior to this,
General Manager of ANZ Advice and Distribution and ANZ Financial Planning.
He has also held roles with BT Funds Management, Sealcorp and National
Mutual. Alan is also a Non-Executive Director for the Prior Family Foundation and
Director, Royal Botanic Gardens Victoria Foundation.
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MyState Limited - Annual Report 2022
Mandakini (Mandy)
Khanna
Chief Risk Officer
Appointed December 2015
BCom, GAICD, FGIA
Mandy is responsible for the management of the financial and non-financial
risks of the MyState Limited Group. Mandy and her team are responsible
for strengthening risk culture and risk frameworks, building a culture of
accountability and sharpening the focus on customer outcomes at MyState.
Mandy has over 20 years’ experience in banking and retail financial and has
held senior risk management positions in GE Capital across Asia Pacific. Prior to
joining MyState, Mandy was the Chief Credit Officer for GE Capital in
Asia Pacific.
Paul Moss
General Manager, Technology,
Operations and Product
Appointed May 2015
BEng (Hons)
As General Manager, Technology, Operations and Product, Paul is responsible
for the strategic direction and delivery of MyState Limited Group’s back office
processing, technology and products.
Paul was previously a Director of IT Advisory at KPMG, following 11 years
at Betfair in the UK and Australia as Director of Information Systems
and Operations, focusing on strategy development, global infrastructure
deployments and customer experience. Prior, Paul occupied technical
leadership positions in UK-based investment banks.
Janelle Whittle
General Manager, People and Culture
Appointed January 2018
BCom, MHRM
Janelle has overall responsibility for MyState Limited Group’s human resources
function, including remuneration and benefits, health and safety, recruitment and
employee relations.
People and Culture leads internal communications and has a key role in
developing and fostering organisational culture and capability to support
MyState’s growth aspirations. Janelle has over 20 years’ experience in human
resource management across a number of industries including aquaculture,
utilities and higher education. Her previous senior leadership positions in human
resources include General Manager People and Culture at Aurora Energy, and
Director Organisational Design and Change at the University of Tasmania.
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MyState Limited - Annual Report 2022
Directors’ report
Your Directors present their report for MyState Limited and its
controlled entities (the Group) for the year ended 30 June 2022.
Directors
› Vaughn Richtor BA (Hons), MAICD
Chairman and Independent Non-Executive Director.
(Appointed Chairman 1 April 2022)
› Miles Hampton BEc (Hons), FAICD
TPT Wealth delivers asset management and trustee
services through relationship managers, digital channels
and an Australian based support team.
There have been no significant changes in the nature
of the principal activities of the Group during the year.
Chairman and Independent Non-Executive Director.
(Retired 31 March 2022)
Dividends
› Brett Morgan BEc, MAppFin
Managing Director and Chief Executive Officer
– Executive Director. (Commenced 17 January 2022)
› Stephen Davy BSc (Hons)
Independent Non-Executive Director.
(Commenced 1 July 2021)
› Robert Gordon BSc, MIFA, MAICD, FAMI
Independent Non-Executive Deputy Chairman.
› Sibylle Krieger LLB (Hons), LLM, FAICD, MBA
Independent Non-Executive Director.
› Warren Lee BCom, CA
Independent Non-Executive Director.
› Andrea Waters BCom, FCA, GAICD
Independent Non-Executive Director.
› Melos Sulicich BBus, GAICD, SA FIN
Managing Director and Chief Executive Officer.
(Retired 31 December 2021)
Company Secretary
› Scott Lukianenko Ad Dip BMgmt, Grad Dip BA,
GIA (Cert).
Principal activities
MyState Limited (MyState) provides banking, trustee
and managed fund products and services through
its wholly-owned subsidiaries MyState Bank Limited
(MyState Bank) and TPT Wealth Limited (TPT Wealth).
MyState Bank delivers home lending, savings and
transactional banking solutions through digital and
branch channels, an Australian based contact centre,
mobile lenders and mortgage brokers.
Dividends paid in the full year ended 30 June 2022
were as follows:
› For the year ended 30 June 2021, a fully franked
dividend of 13.00 cents per share, amounting to
$13.69m was paid on 21 September 2021.
› For the half year ended 31 December 2021,
a fully franked dividend of 12.50 cents per share,
amounting to $13.19m was paid on 15 March 2022.
The Directors have declared a fully franked final dividend
of 11.5 cents per share. The dividend will be payable on
7 September 2022 to shareholders on the register at the
record date of 19 August 2022, taking the dividend for
the full year to 24.0 cents per share.
Operating and financial review
Financial performance
The Group recorded a net profit after income tax for
the year ended 30 June 2022 of $32.0m, a decrease of
11.9% on the prior corresponding period (pcp) to 30 June
2021 of $36.3m.
Earnings per share (EPS) was 30.34 cents per share
(FY21: 39.18 cents per share) and return on equity (ROE)
was 7.7%. In June 2021, ordinary share capital of $55.5m
was raised to rapidly accelerate MyState’s growth
strategy. At the time, the Board indicated that EPS
and ROE would be diluted in FY22 as the new capital
is deployed to support home loan book growth and
operating expenses would increase to support customer,
lending and deposit growth.
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MyState Limited - Annual Report 2022
MyState Limited - Annual Report 2022
Group net profit after tax ($m)
Total loan book composition ($m)
36.3
32.0
30.1
FY20
FY21
FY22
The total loan book (excluding capitalised acquisition
costs) grew $1,347m or 24.1% on pcp. The home loan
book grew $1,390m (25.5% or 3.1 times system growth)
during the period. MyState will continue to target
home loan portfolio growth momentum with continued
discipline and focus on asset quality.
Pre-provision operating profit of $44.3m decreased
17.4% on pcp, largely driven by an increase in operating
costs of $11.0m or 12.9%. MyState’s 2025 strategy to
accelerate growth and create scale led to increased
investment in distribution capacity, investment in
building the MyState brand on the mainland and
customer acquisition-focused marketing. The strategy to
grow market share in deposits, lending and funds under
management (FUM) continues to gain momentum, as
evidenced by loan book and customer deposit growth,
and a 14.8% uplift in new customers joining MyState in
the past 12 months.
The Momentum Intelligence’s 2022 Third Party
Lending annual survey of 1,050 residential mortgage
brokers ranked MyState Bank as the strongest third-
party provider of 14 small banks, testament to the
trusted relationship MyState has built with the broker
community. MyState was also awarded Mozo’s
‘Expert’s Choice Award’ in the ‘First Home Buyer Loan’
category and for the ‘Bonus Saver’ product, further
acknowledging the successful execution of the strategy
combined with a relentless focus on customers.
Despite a period of significant change and the
challenges presented by COVID-19 over the last
two years, MyState’s internally measured customer
net promoter score was +43 at 30 June 2022 and
remains strong.
MyState Bank
Exceptional lending growth and high
credit quality maintained in FY22
MyState Bank’s loan portfolio grew 24.1% from 30 June
2021, reaching $6,939m at 30 June 2022.
6,939
101
6,838
5,592
5,276
145
5,447
174
5,102
June 20
June 21
June 22
Housing Loans
Other Loans (personal / business / overdrafts)
Impairment recoveries were $0.2m lower than pcp,
reflecting the reduction in the forward looking
economic overlay at 30 June 2021, as a result of the
improved economic outlook at that time.
MyState’s 30 and 90-day arrears remain below industry
benchmarks at 0.41% and 0.20% respectively (30 June
2021: 0.55% and 0.24%).
Central banks globally have a fine balancing act ahead,
to manage inflation down without stalling economic
activity and pushing economies into recession.
While arrears are lower than 12 months ago, the flow on
effect of recent increases in the official cash rate, and
expected future increases, may not become visible for
months. Consequently, at 30 June 2022, the forward
looking economic overlay of $0.9 million (forms part
of the collective provision for impairment) remains
unchanged from 31 December 2021.
The Bank remains focused on low-risk, owner-
occupied lending with a loan to valuation ratio (LVR)
of less than 80%.
Exposure to investor and interest-only lending remains
relatively low compared to sector averages.
The increase in loans with an LVR greater than 90%
since June 2020 reflects the success of the Bank’s
participation in the Federal Government’s First
Home Loan Deposit Scheme (FHLDS) which is all
owner-occupied lending. The FHLDS is an Australian
Government initiative to support eligible customers
purchase their first home sooner with as little as
a 5% deposit.
The National Housing Finance and Investment
Corporation (NHFIC) provides a guarantee of up to
a maximum amount of 15% of the value of a property
(as assessed by MyState) purchased under the scheme.
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MyState Limited - Annual Report 2022
Home loan book – LVR profile ($m)
354
372
343
4,033
507
411
339
4,190
752
467
298
5,321
>90%
85-90%
80-85%
22%
<80%
78%
June 20
June 21
June 22
Net interest margin (NIM) trend
Net interest income was down $1.7m or 1.5% on pcp
with the fall in NIM reflecting competition in the market
for new home loans, partly offset by lower funding costs
and above-system loan book growth. Average NIM
decreased by 29 bps to 1.67% on pcp. NIM in the month
of June 2022 was 1.57% (30 June 2021: 1.89%), in line
with average NIM for the second half.
1.86%
1.96%
1.77%
1.57%
1.67%
Customer deposits increased by 25.1% in the period
driven by growth in the award winning Bonus Saver
Account with the majority of customers acquired via
digital and online channels.
Importantly, the Bank’s online originated deposit
portfolio grew an additional $92m to $901m (11.4%)
from 30 June 2021.
MyState Bank’s reliance on securitisation funding
reduced during the period as a result of the increase
in customer deposits, but remains an important source
of funding.
Non-interest income from banking activities increased
by $2.2m or 16.6% on pcp, as a result of loan related
transaction fees, reflecting the accelerated growth of
the loan book.
TPT Wealth
Funds under management ($m)
1,069
1,105
1,062
FY20
FY21
1H22
2H22
FY22
The recent and expected increases in the official
cash rate are expected to be positive for NIM moving
forward with overall NIM outcomes also subject to the
competitiveness of the home loan market and funding
cost pressures.
Customer deposits ($m)
5,552
3,401
3,942
2,940
4,437
1,987
1,955
2,151
1,497
June 20
June 21
June 22
Customer deposits at term
Customer deposits at call
June 20
June 21
June 22
Income from wealth management activities increased
by $1.2m or 8.8% on pcp, with managed funds fee
income in line with last year and Trustee Services
related income up 29.4%. Funds under management
were marginally below the previous year.
The ongoing transformation of the TPT Wealth business
is seeing distribution capacity enhanced in the home
market of Tasmania, coupled with strategic investments
in digital capabilities and a new cloud lending platform.
FUM decreased $43m from 30 June 2021 with the
Income Funds declining by $34m and the Growth
Funds by $15m, partly offset by an increase in the
At Call Fund ($6m).
The TPT Fixed Term Fund, Select Mortgage Fund
and Long Term Fund have been awarded a 4.0 Star
‘superior’ rating by independent research house SQM
Research, recognising TPT Wealth’s highly experienced
investment team, strong credit credentials and more
than 40-year track record of funds management.
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MyState Limited - Annual Report 2022
Capital position
The Group’s total capital ratio decreased to 12.41% at 30 June 2022 and the Group’s Common Equity Tier 1 ratio
decreased to 10.53%, as the $55.5 million of capital raised in June 2021 was deployed to support lending growth.
Tier 2 capital was bolstered by the issue of $25 million of 10-year subordinated notes in November 2021.
MyState expects further capital flexibility will be provided by the inaugural issue of Additional Tier 1 capital and
further securitisation.
The Group is on track to meet the Australian Prudential Regulation Authority’s (APRA) finalised new bank capital
framework requirements, effective from 1 January 2023 onwards. Using the 30 June 2022 capital position, on a pro-
forma basis, the Group expects a net uplift in the Common Equity Tier 1 ratio of 30 to 40 bps and the total capital
ratio of 60 to 70 bps, net of the 1% increase in the counter-cyclical capital buffer.
Capital
1.76%
13.08%
Tier 1 capital
Tier 2 capital
Increase
Decrease
0.38%
0.72%
1.26%
1.20%
3.23%
0.20%
0.56%
1.88%
10.53%
June 21
Capital
initiatives
Securitised
assets
Profit
Dividends
paid
Secured
mortgage
lending
Capitalised
intangibles
Other
asset growth
June 22
Community
Rounding of amounts
MyState seeks to make a genuine difference
to customers and the communities within which
they operate.
Since 2001, the MyState Foundation has awarded more
than $2.5 million in grants to help more than 90 not-for-
profit organisations in Tasmania with a focus on helping
young Tasmanians reach their full potential.
Outlook
The Board-endorsed plan to accelerate the growth in
lending has gained early momentum. In the medium
term, the business expects to realise the benefits from
its investment in digital capabilities, distribution and
marketing to grow the customer base, while maintaining
a strong risk culture to manage the risks associated
with an uncertain economic environment.
Lead auditor’s independence declaration
under section 307C of the Corporations
Act 2001
The lead auditor’s independence declaration is set out
on page 39 and forms part of the Directors’ Report for
the year ended 30 June 2022.
In accordance with applicable financial reporting
regulations and current industry practices, amounts
in this report have been rounded-off to the nearest
one thousand dollars, unless otherwise stated. Any
discrepancies between totals and sums of components
in charts contained in this report are due to rounding.
Events subsequent to balance date
On 8 August 2022, the MyState Limited Group
announced that it had mandated Westpac and Ord
Minnett to engage with investors with the aim to
investigate the prospect of issuing a capital note that
will qualify as Additional Tier 1 regulatory capital.
In the opinion of the Directors, other than as noted
above, there has not arisen, in the period between the
year ended 30 June 2022 and the date of this report,
any other material item, transactions or event that is
likely to significantly affect the operations of the Group.
Environmental regulation
The Group is not subject to any significant
environmental regulation. TCFD report outlining
MyState’s baseline scope 1, 2 and 3 greenhouse
gas (GHG) emissions associated with the activities
and facilities that support the businesses’ everyday
operations, is included as an ESG update in MyState’s
annual report.
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MyState Limited - Annual Report 2022
Directors’ meetings
The number of meetings of Directors (including meetings of the Committees of Directors) held during the year and
the number of meetings attended by each director are as indicated in the following table:
Directors’ Meetings
MYS Directors
MYS Board
Meetings
Group Audit
Committee
Group Risk
Committee
Group People,
Remuneration
& Nominations
Committee*
Group
Nominations
& Corporate
Governance
Committee*
Group Digital
and Marketing
Committee
S Davy
(appointed 1/7/21)
R Gordon
M Hampton
(retired 31/3/22)
S Krieger
W Lee
B Morgan
(appointed 17/1/22)
V Richtor
M Sulicich
(retired 31/12/21)
A Waters
A
13
13
9
13
13
5
13
8
13
B
13
13
10
13
13
5
13
8
13
A
1
B
1
n/a
n/a
3
n/a
4
n/a
4
3
n/a
4
n/a
4
A
7
7
5
7
7
B
7
7
6
7
7
n/a
n/a
7
7
n/a
n/a
n/a
n/a
4
4
7
7
A
2
1
2
4
n/a
n/a
4
n/a
n/a
B
2
1
2
4
n/a
n/a
4
n/a
n/a
A
B
A
B
n/a
n/a
n/a
n/a
3
3
3
n/a
n/a
n/a
n/a
n/a
3
3
3
n/a
n/a
n/a
n/a
n/a
4
3
n/a
4
n/a
4
4
3
n/a
4
n/a
4
n/a
n/a
1
1
A Number of meetings attended. B Number of meetings eligible to attend.
* The Group People and Remuneration Committee merged with the Group Nominations & Corporate Governance Committee on 1 June 2022
to become the Group People, Remuneration & Nominations Committee.
Indemnification and Insurance of Directors and Officers
The Company has paid, or agreed to pay, a premium in relation to a contract insuring the Directors and Officers
listed in this report against those liabilities for which insurance is permitted under Section 199B of the Corporations
Act 2001.
The Company has not otherwise, during or since the relevant period, indemnified or agreed to indemnify an Officer
or Auditor of the Company or of any related body corporate against a liability incurred as such an Officer or Auditor.
Non-Audit Services
During the year, Wise Lord & Ferguson, the Company’s auditor has performed certain other services in addition
to their statutory duties. Further details are set out in note 8.2 to the financial statements.
The Board has considered the non-audit services provided during the year by the auditor and, in accordance with
written advice provided by the Group Audit Committee, is satisfied that the provision of those non-audit services
during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements
of the Corporations Act 2001, for the following reasons:
› All non-audit services were subject to the corporate governance procedures adopted by the Company and
have been reviewed by the Group Audit Committee, to ensure that they do not impact the integrity and
objectivity of the auditor; and
› The non-audit services provided do not undermine the general principles relating to auditor independence
as they related to technical disclosure issues.
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MyState Limited - Annual Report 2022
Auditor’s independence declaration to the Directors
AAuuddiittoorr’’ss IInnddeeppeennddeennccee DDeeccllaarraattiioonn ttoo tthhee DDiirreeccttoorrss ooff MMyySSttaattee LLiimmiitteedd
In relation to our audit of the financial report of MyState Limited for the financial year ended
30 June 2022, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct.
WWIISSEE LLOORRDD && FFEERRGGUUSSOONN
DDAANNNNYY MMCCCCAARRTTHHYY
Partner
Wise Lord & Ferguson
Date: 15 August 2022
Liability limited by a scheme approved under Professional Standards Legislation.
1st Floor 160 Collins Street, Hobart TAS 7000
GPO Box 1083 Hobart TAS 7000
03 6223 6155
Move Forward
email@wlf.com.au
www.wlf.com.au
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MyState Limited - Annual Report 2022
Remuneration Report
Letter from the Chair of the Group People, Remuneration and Nominations Committee
Dear Shareholder,
The 2022 financial year (FY22) marked a significant year of change for MyState Limited, the first year of a multi-
year growth strategy. In May 2021, the company announced a substantial capital raise to accelerate its growth,
with implications in the short, medium and longer term for the financial performance of MyState. The capital raise
in 2021 received strong support from shareholders, with the accelerated growth strategy and its performance
implications forming the backdrop to executive remuneration arrangements and outcomes at MyState for several
years to come. On behalf of the Board, I present to you the Company’s Remuneration Report (Report) for FY22.
In broad terms, the purpose of MyState’s Executive remuneration framework has always been to facilitate long-
term sustainable growth for MyState’s shareholders. This includes ensuring levels of remuneration are market-
competitive to attract, motivate and retain suitably qualified individuals focused on MyState’s strategic priorities.
The performance conditions and measurement timeframes are consistent with the objective of long-term
sustainable growth, and our performance targets are designed to be challenging. The payment vehicles and
ownership requirements are designed to align executive and shareholder interests, with the deferral and vesting
periods designed for appropriate risk management and to be consistent with the regulatory frameworks in which
MyState conducts business.
The Report describes the Group’s Director and Executive remuneration frameworks and how they contribute
to the execution of our business strategy and support our values and desired culture.
Our financial performance for FY22 assessed against our key financial metrics was solid in the context of a long
period of COVID-related uncertainty, together with investment in capacity and capability to drive our accelerated
growth strategy. In the end result, however, the company-wide financial measures which are gateways for the
payment of short term incentives were not met.
FY22 Executive remuneration framework
It may be helpful to recap the design principles that
underlie the MyState Executive remuneration framework,
further details of which are set out in the Report:
› Executive remuneration arrangements should be
fit-for-purpose for MyState, supporting MyState’s
overall business strategy and appropriate for the size
and complexity of the business.
› Remuneration should be competitive in the market to
ensure that MyState is able to attract, motivate and
retain talented executive leaders.
› Remuneration, particularly MyState’s incentive
arrangements, should be aligned to the interests
of MyState’s shareholders.
› Executive remuneration should drive appropriate
behaviours and support the desired culture.
› Remuneration should be simple and transparent.
› Short-term incentive: STI performance is measured
over a single financial year. STI payments are subject
to financial and non-financial gateways and are also
subject to overriding Board discretion.
› Long-term incentive: MyState has a long-term
incentive (LTI) arrangement that has been designed
to align executives with long-term value creation for
shareholders. The LTI design also aims to provide
executives with a simple, transparent and meaningful
incentive. LTI performance is measured over three
years with an additional holding lock of a further two
years.
› Minimum shareholding requirements: consistent with
ASX practice, MyState has minimum shareholding
requirements for its Non-executive Directors and
Chief Executive Officer, such that each individual
is required to build and maintain a minimum level
of shareholding in MyState to align their interests
with shareholders. The minimum shareholding
requirement is determined by reference to base fees
or fixed reward.
We hope that you find this brief overview helpful in understanding the context in which the Report was prepared.
We welcome your feedback. Please email any comments to secretariat@mystatelimited.com.au
Sibylle Krieger
Chair - Group People, Remumeration and Nominations Committee
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MyState Limited - Annual Report 2022
MyState Limited - Annual Report 2022
Our people and our company
Key Management Personnel and Directors who served our company in the year ended 30 June 2022 were:
Name
Role
Commenced
Vaughn Richtor
Chairman
01 September 2019
Stephen Davy
Non-executive Director
01 July 2021
Robert Gordon
Non-executive Director
12 February 2009
Group, People,
Remuneration
& Nominations
Committee
Sibylle Krieger
Non-executive Director
01 December 2016
Chair
Warren Lee
Non-executive Director
Andrea Waters
Non-executive Director
19 October 2017
19 October 2017
Brett Morgan
Managing Director, Chief Executive Officer
17 January 2022
Gary Dickson
Chief Financial Officer
Mandakini Khanna
Chief Risk Officer
19 October 2019
12 December 2015
Alan Logan
General Manager Wealth Management
30 August 2021
Paul Moss
Chief Operating Officer
Huw Bough
General Manager Banking
13 May 2015
01 June 2021
Janelle Whittle
General Manager People, Community & Public Affairs
22 January 2018
Name
Role
Ceased
Miles Hampton
Chairman
31 March 2022
Retired
Melos Sulicich
Managing Director, Chief Executive Officer
31 December 2021
Retired
Heather McGovern
General Manager Digital and Marketing
13 July 2022
Resigned
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MyState Limited - Annual Report 2022
Our remuneration framework
Philosophy and principles
Directors’ remuneration
MyState’s non-executive directors (NEDs) are paid
annual fixed fees, including statutory superannuation, for
their services. They are also entitled to reimbursement of
reasonable expenses. Unlike executives, non-executive
directors do not receive short-term or long-term
incentive payments. The Board determines the level of
fees paid to non-executive directors according to two
main criteria:
› The level of skill and experience required to
conduct their roles
› The level of fees needed to attract and retain
talented non-executive directors.
The Board also obtains independent advice from
remuneration consultants to guide its deliberations
on director fees. The aggregate remuneration paid
to all NEDs, including statutory superannuation, may
not exceed the amount fixed by shareholders, which is
currently $950,000 per year. This total amount has now
remained unchanged for 10 years.
Each NED currently receives a base fee of $110,000
per annum, and the Chairman receives $236,500
per annum. Chairs of Board committees (other than
the Board Chair) receive an additional $10,000
per annum, the Deputy Chair receives an additional
$10,000 per annum.
MyState Limited’s remuneration policy is founded
on a company-wide commitment to transparency,
ethical practices and the creation of long-term value.
The framework is designed to encourage and reward
actions by executives that deliver positive results
for both customers and shareholders through good
discipline and strong financial performance, prudent risk
management, and the maintenance and enhancement
of our company’s earned and valued reputation for
trustworthiness in the market for financial services.
The remuneration policy is designed to support these
objectives through:
› Appropriately structured performance-based
pay for executives and other eligible employees,
including short-term and long-term incentive plans
› Recognition and reward for strong performance
linked to both favourable customer experiences
and positive sustainable returns to shareholders
› A thoughtful balancing of the company’s capacity
to pay and our need to attract and retain excellent
staff at all levels
› Careful structuring of remuneration for our
risk and financial control managers, including
performance-based payments, to preserve their
independence in carrying out their important roles
› Board discretion over variable remuneration
generally, including discretion to apply malus
(reduction or forfeiture) to executive incentives,
when appropriate, to preserve the interests of
shareholders and customers and avoid unexpected
or unjust outcomes
› Enhancement of risk management and
governance by maintaining separate structures
for non-executive director remuneration and
executive remuneration.
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MyState Limited - Annual Report 2022
Managing Director and executive remuneration
Executive remuneration mix
MyState Limited’s remuneration packages for the Managing Director and executives who report directly to the
Managing Director are structured to support the company’s ability to attract and retain talented and experienced
leaders, and to provide incentives and rewards for high performance and achievement of the company’s goals and
objectives over the short, medium and long-term. Executive remuneration packages comprise three elements: total
fixed reward (TFR), cash-based short-term incentives (STI) and equity-based long-term incentives (ELTIP).
1. Total fixed reward TFR
2. Cash-based short-term
incentives STI
3. Equity-based long-term
incentives ELTIP
Total fixed reward (TFR) for executives,
including the Managing Director,
comprises a fixed base salary,
superannuation contributions and
optional salary sacrifice. The level of
payment is set with reference to:
importance of the role
› The relative strategic value and
› The complexity and breadth of the
› Experience and skills required
› External market considerations for
role
comparable positions
Base salary rates are set with a view
to attracting and retaining talented
and culturally aligned executives,
while delivering value to shareholders.
Executive salaries are periodically
reviewed to take into account external
market conditions, the business-critical
nature of the role, and individual
performance.
Long-term incentive payments to
executives, in the form of company
shares or performance rights, under
the Executive Long-Term Incentive
Plan (ELTIP), exist to encourage and
culturally embed long-term thinking and
risk management among our company
leaders. Long-term planning plays an
indispensable role in preparing the
company to meet future challenges in an
evolving financial services marketplace,
and to take advantage of new
opportunities as they arise. MyState’s
ongoing transition to a national,
digital business model exemplifies this
approach – one designed to meet the
ever-changing needs of customers
and to sustain long-term value for
shareholders.
Cash-based short-term incentives
(STIs) provide appropriate rewards to
executives for meeting or exceeding
performance targets and achieving our
core company goals – both financial
and non-financial. To this end, STI
performance measures and associated
targets are set with reference to the
drivers of annual company performance
and the roles of individual executives in
achieving positive business outcomes.
The level of STI assigned to executives
is calculated annually using an STI
‘scorecard’, which comprises multiple
performance elements. These include
financial, growth, cultural, risk and
compliance, reputational, customer and
stakeholder measures. Financial and
non-financial gateways serve to balance
reward with MyState’s profitability
and to avoid rewarding conduct that
is inconsistent with our values and risk
framework. The STI is calculated as a
percentage of TFR for each role, and the
maximum percentage of TFR payable as
an STI is determined by the Board.
Executive remuneration breakdown
Managing Director & CEO Total Target Reward
Total Fixed Remuneration 44%
Maximum STI 26%
Maximum ELTIP 30%
Paid as cash. Performance assessed
against business and individual
performance for the financial year.
Paid as shares or performance rights.
Total Shareholder
Return (TSR) 50%
Return on Equity
(ROE) 50%
60% of Total Fixed Reward
70% of Total Fixed Reward
Executive Total Target Reward
Total Fixed Remuneration 62%
Maximum STI 19%
Maximum ELTIP 19%
Paid as cash. Performance assessed
against business and individual
performance for the financial year
Paid as shares or performance rights.
Total Shareholder
Return (TSR) 50%
Return on Equity
(ROE) 50%
30% of Total Fixed Reward
30% of Total Fixed Reward
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MyState Limited - Annual Report 2022
Remuneration governance
Company performance
A Group People, Remuneration and Nominations
Committee – appointed by the MyState Board and
comprising four non-executive directors – assists the
Board in discharging its remuneration governance
responsibilities. Among a range of functions,
the committee reviews and makes recommendations
to the Board on:
› Remuneration arrangements for directors, the
Managing Director and other executives
› Executive incentives, including setting gateways,
performance measures and targets at the
commencement of the performance period,
and assessing performance outcomes against
these measures and targets at the conclusion
of the performance period, and making
recommendations for payment or otherwise
› The appropriate exercise of Board discretion on
variable remuneration matters.
The committee assists the Board to meet
remuneration obligations required by APRA Prudential
Standards and the Banking Executive Accountability
Regime (BEAR). The committee also aims to eliminate
conflicts of interest from decisions concerning
executive remuneration. To this end, no executive is
directly involved in deciding their own remuneration.
MyState’s financial performance in recent years
has helped to inform the level of incentive-based
remuneration – both short-term and long-term –
provided to the Managing Director and other key
executives in the year to 30 June 2022.
As shown below, the company has performed
consistently across various financial indicators in the
period from FY18 to FY22.
In May 2021, the company announced a substantial
capital raise and announced its intention to accelerate
growth. At the time of the capital raising the company
explained the anticipated effects of the growth strategy
on short, medium and longer term financial measures:
The 2021 - 2025 strategy has the following objectives:
› Accelerated home loan and retail deposit growth
over the medium term, while maintaining asset
quality
› Improved operating leverage (cost to income ratio)
in line with business growth
› ROE accretion as capital is deployed
› Sustainable growth in EPS over the medium term.
In FY22, ROE and EPS are expected to be diluted as
capital is deployed and increased operating expenses
continue to deliver balance sheet growth.
Indicator
2018
2019
2020
2021
2022
Statutory profit after income tax ($’000)
Statutory earnings per share (EPS) (cents)
Dividends paid ($’000)
Share price (dollar)
Statutory average return on equity (%)
Statutory cost-to-income ratio (5)
31,461
34.97
25,794
5.01
10.1
64.0
30,987
30,060
36,341
32,026
34.17
26,016
4.49
9.7
64.8
32.86
26,241
3.93
9.2
62.8
39.18
11,508
4.68
10.3
63.1
30.34
26,874
4.08
7.7
68.4
The company has performed strongly across
various financial indicators in FY22.
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Home loans book
$6.84b – up
25.5% on the
PCP, comprised
of 14.4% growth
in Tasmania and
32.6% growth
for the rest of
Australia
Home loan
settlements
up 93%
on PCP
Geographical
spread with 60%
of the home loan
book on mainland
Australia
Customer
deposits $5.55b
– up 25.1%
on PCP
19,346 new
customers –
up 15% on PCP
Strong customer
advocacy
(NPS +43)
Transformation
to a national
digital business
model with 96%
of transactions
completed
digitally
PCP - Previous Corresponding Period NPS - Net Promoter Score
MyState Limited - Annual Report 2022
Short-term incentive (STI) payments
How STI payments are calculated
Each year, the Group People, Remuneration and
Nominations Committee (the Committee) recommends
to the Board key performance indicators (KPIs) for
the Managing Director with reference to short-term
incentive payments. The Managing Director, in turn,
recommends KPIs for executives to the Committee,
which then makes a recommendation to the Board.
KPIs for STI payments include both financial and non-
financial metrics that are considered consistent with the
business plans of the Group and also supportive of the
desired culture of the Group.
At the end of each financial year, the Managing Director
assesses the performance of the executives against their
KPIs and makes a recommendation for each executive
to the Committee. Simultaneously, the Committee
assesses the performance of the Managing Director
against the relevant KPIs. After consultation with the
chairs of the Group Audit Committee and the Group Risk
Committee, the Committee recommends STI payment
amounts for approval by the Board.
The Board retains complete discretion over STI
payments, including the right to reduce or forfeit
payments as it sees fit. The annual STI component may
be reduced or forfeited if the company, or an individual
executive, does not meet the ‘gateway’ criteria approved
by the Board at the start of the financial year.
Threshold performance levels for risk and compliance,
executive behaviour standards and profit must be met
or exceeded for payments to be made under the STI
program. Executives are assessed as a group with
The 3 Cs - MyState Values
reference to performance on net profit, and on risk
and compliance – including corporate reputational
matters. Individual executive behaviours are assessed
against the MyState values, and individual executives’
risk and compliance accountabilities are measured via a
scorecard comprising several indicators. The Board has
the discretion to reduce the STI (including to zero) if any
of these gateways are not met.
The STI scorecard includes a mix of financial and non-
financial metrics, with the relative weightings varying
between different executive roles. In FY22, the highest
weighting for financial metrics – 65% – has been
applied to the Managing Director, Chief Financial Officer
and General Manager Banking, while the lowest financial
metrics weighting – 40% – has been applied to the
Chief Risk Officer. The scorecard comprises a diverse
list of both quantitative and qualitative performance
measures (or criteria), which have been chosen with a
view to driving positive outcomes not just for MyState
shareholders but also for customers, employees and
other key stakeholders of the organisation.
Quantitative performance measures include earnings
per share, net interest margin, funds under management,
loan book growth, net customer growth and employee
engagement. Executives are also individually assessed
with reference to their performances as leaders in their
specific roles, and to their individual contributions to the
future development of the organisation. The Board has
the discretion to vary STI outcomes to reflect differing
levels of performance.
Create customer ‘wow’
Chase the better
Collaborate to win
› We walk in our customers’
shoes and appreciate their
perspectives.
› We think and act in the best
interest of our customers.
› We are clear, concise and
trustworthy in our customer
interactions.
› We design and deliver
exceptional customer
experiences, with a human
touch.
› We make things simpler and
easier for our customers.
› We are bold in our ambition.
› We seek out and embrace
the change that is required
to succeed.
› We have the courage to try
new things and grow from our
failures.
› We simplify (and digitise)
› We seek industry-leading
to deliver.
productivity and always drive
for better outcomes.
› We care for each other,
our customers, partners
and community.
› We give our best, do the right
thing, and trust our colleagues
to do the same.
› We hold each other to account.
› We openly share information
so that everyone can make
informed decisions.
› We reach out across teams
to rapidly solve problems –
and celebrate our successes
and learnings!
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MyState Limited - Annual Report 2022
2021-2022 ‘gateway’ criteria for short-term incentive payments
Gateway
Assessment measures
1. Group risk
STI may be reduced or forfeited at the Board’s discretion if MyState Limited does not meet compliance
and risk management obligations, if its reputation is materially damaged,
if capital adequacy and liquidity fall below prudential requirements, or if an executive does not meet their
personal accountability BEAR obligations.
2. Individual risk
If an individual’s Risk Scorecard does not meet the standard required, then STI may be reduced or
forfeited.
3. Net profit after
tax (NPAT)
4. Values and
behaviours
(individual)
If NPAT is below FY22 budget, STI may be reduced or forfeited.
If an individual fails to meet or exceed expectations as assessed against the MyState values,
the Board may exercise its discretion for STI to be reduced or forfeited.
The Board retains the residual discretion not to award or pay STIs even if the criteria have been met if, in its
reasonable view, the needs of the Group require this.
STI outcomes for 2021-2022
The following key performance measures for the STI component and the level of achievement were assessed by the
Board for the 2021-2022 financial year:
Area
Drivers
Measures
Performance
Performance
Financial
Earnings
Increasing earnings per share
Net interest
margin
Funds under
management
Managed in accordance with Board expectations
Growing funds under management in our Wealth Business
Balance sheet
Growing the size of our loan book
People
Employee
experience
Positive employee experience score
Leadership
Lifting the bar on leadership
Individual contribution to delivery of strategically significant
projects
Culture
Evolving our customer-centric culture
Customer
Growth
Net customer and investor growth
Exceeded or met target
Below target
Partially met target
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MyState Limited - Annual Report 2022
STI outcomes for 2021-2022 continued
The Board has determined that the gateway criteria
for payment of the STIs for NPAT have not been met
for FY22. Performance against three company wide
performance measures – earnings per share, net
interest margin and funds under management have
also not been met. However, it was pleasing to note that
the following key non-financial measures – employee
experience score (which uses the results of our annual
employee engagement survey) and net customer
growth were both higher than the previous year.
It is important to note that MyState’s growth strategy
is on track, with strong growth in customer numbers
and significant above system growth in our home loan
portfolio. NPAT has been impacted by a decline in
net interest margin driven by strong competition for
new home loans and customer preference for lower
margin fixed rate loans in the first half of the financial
year. In addition, the market has seen elevated levels
of refinancing activity for most of the year leading
to retention discounting and a range of cash back
incentives for new lending.
As foreshadowed at the time of the capital raise in June
2021, as capital has been deployed both earnings per
share and return on equity have been diluted in FY22.
Management and the Board remain confident that
return on equity and earnings per share will grow over
the medium term.
If the results on which any STI reward was based are
subsequently found by the Board to have been the
subject of deliberate management miss-statement,
error, misrepresentation or act or omission, which the
Group People and Remuneration Committee or the
Board (acting reasonably) considers would have resulted
in the KPIs not being satisfied, or there is otherwise
a reward decision incorrectly made, the Board may
require repayment of the whole or part of the relevant
STI, in addition to taking any other disciplinary actions.
Payment offers
Details of STI payment offers for the 2021/2022 financial
year and the 2020/2021 financial year are set out below.
The following key performance measures for the STI
component and the level of achievement were assessed
by the Board for FY22:
Key Management Personnel
% max.
(of TFR)
Max.
payable
% awarded
% forfeited
$ amount paid
% which is not
yet assessed
for payment
2021/2022
Brett Morgan(1)
Gary Dickson
Mandakini Khanna
Heather McGovern
Huw Bough
Alan Logan(1)
Paul Moss
Janelle Whittle
Melos Sulicich(1)
2020/2021
Melos Sulicich
Gary Dickson
Mandakini Khanna
Heather McGovern
Anthony MacRae
Craig Mowll(1)
Paul Moss
Janelle Whittle
60%
30%
30%
30%
30%
30%
30%
30%
60%
50%
30%
30%
30%
30%
30%
30%
30%
$169,521
$120,000
$117,000
$99,000
$117,000
$92,130
$109,500
$94,500
$187,500
$312,500
$120,000
$117,000
$99,000
$117,000
$113,153
$109,500
$90,750
0%
0%
0%
0%
0%
0%
0%
0%
0%
89.30%
90.65%
94.90%
86.40%
0%
0%
92.45%
88.65%
100%
100%
100%
100%
100%
100%
100%
100%
100%
$0
$0
$0
$0
$0
$0
$0
$0
$0
10.70%
$279,063
9.35%
5.10%
$108,780
$111,033
13.60%
$85,536
100%
100%
7.55%
$0
$0
$101,233
11.35%
$80,450
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1) Pro-rata max payable based on commencement and cessation dates as applicable.
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MyState Limited - Annual Report 2022
Executive Long-Term Incentive Plan (ELTIP)
How the ELTIP works
The Executive Long-Term Incentive Plan (ELTIP) was
established by the Board to encourage and motivate
the Managing Director and other eligible executives
by rewarding them with company shares for helping to
create long-term value for the company’s shareholders.
Until 30 June 2021, participating executives were
allocated fully paid ordinary shares in the company,
without payment, if performance criteria specified by the
Board were satisfied in a set period. Since 1 July 2021,
the allocations have been in the form of ‘performance
rights’ which, on vesting, deliver one share for each
vested performance right.
Each year, the Board has the discretion to offer
executives shares/performance rights worth up to a
specified percentage of their total fixed reward (salary).
In FY22, the offers have been equal to 70% of total fixed
reward for the Managing Director, and 30% of total fixed
reward for eligible executives. The number of shares or
performance rights allocated is based on the volume
weighted average price (VWAP) of shares calculated
over the 20 trading days to 30 June immediately prior to
the commencement of the performance period for the
relevant offer.
For the shares or performance rights to vest, certain
performance criteria must be satisfied within the
specified performance period.
Both the performance criteria and the performance
period are set by the Board alone. ELTIP performance
measures are weighted equally between relative total
shareholder return (TSR) and return on equity (ROE).
The relative TSR incorporates both dividends paid and
movements in share prices, while the ROE is a measure
of corporate profitability.
Currently, the Board has set three financial years,
commencing with the year in which an offer is
made, as the performance period, with relative
TSR and post-tax underlying ROE for the 2018 and
2019 offers. Relative TSR and statutory ROE have
been set as the performance criteria for the 2020,
2021 and 2022 offers. The Board may adjust the
statutory ROE performance criteria for one-off
items for the 2020 and subsequent offers.
The performance criteria are assessed following
the completion of each performance period. Under
the ELTIP rules, an assessment is made against the
performance criteria to determine the number of
shares or performance rights awarded to the Managing
Director and each participating executive.
Shares or rights cannot be allocated for a further two
years. This means a total period of five years will elapse
from the commencement of the performance period
to the time when shares are vested. Any ELTIP reward
is subject to reassessment and possible reduction
or forfeiture. This enables the Board to adjust share
allocations (potentially to zero) to protect the financial
soundness of the company or respond to significant
unforeseen or unexpected consequences. In addition,
if the Managing Director or a participating executive is
an accountable person under the BEAR, allocating the
shares will be subject to the Board being satisfied that
the accountable person has met their accountability
obligations. The number of shares allocated (and/or
value of any associated payment) may be reduced or
cancelled to the extent that the Board determines that
the accountability obligations have not been met.
Allocation of shares to the Managing Director and
eligible executives is ultimately at the complete
discretion of the Board. The ELTIP rules provide that
an independent trustee, acting at the direction of the
company, may acquire and hold allocated shares on
behalf of executives. The participating executive cannot
transfer or dispose of shares before they have been
allocated to them. Any shares or performance rights to
be allocated to the Managing Director under this plan
require shareholder approval in accordance with ASX
listing rules. Participating executives are required to not
hedge their economic exposure to any allocated non-
vested entitlement.
Failure to comply with this directive will constitute
breach of duty and may result in forfeiture of the offer
and/or dismissal.
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MyState Limited - Annual Report 2022
Commencement of employment during
a financial year
Subject to Board approval, a pro-rata ELTIP offer can
be made to an executive who commences employment
during the financial year, but before 1 April. The terms
of the offer must be consistent with all other offers
for that year, irrespective of the date of employment
commencement.
Cessation of employment
Executives who cease employment with the company
will be eligible to receive shares only if the cessation is
due to a Qualifying Reason, as defined by the ELTIP
Plan Rules. Qualifying reasons include death, total and
permanent disability, retirement at normal retirement
age, redundancy or other such reason as the Board
may determine. Where an ELTIP participant ceases
employment, their ELTIP offer will be assessed by the
Board at the end of the performance period along with
all other participants, subject to meeting the 12-month
employment hurdle that applies to any ELTIP offer. If the
separated employee is an accountable person under
BEAR, any awarded shares will not be allocated until all
BEAR requirements are satisfied, including the variable
remuneration deferral period.
Entitlement to dividend income
When shares allocated to an executive are held by a
trustee, the executive is entitled to receive dividend
payments on the allocated shares and to have the
trustee exercise the voting rights on those shares in
accordance with the executive’s instructions. However,
executives have no entitlements to dividends or voting
rights for shares or performance rights during the
deferral period.
ELTIP outcomes 2021-2022
Payment offers
Details of offers made under the Executive Long-Term Incentive Plan (ELTIP) are detailed in the following table:
Offer
2019
2020
2021
Performance period
1 July 2019 to
30 June 2022
1 July 2020 to
30 June 2023
1 July 2021 to
30 June 2024
The comparator group
Members of the S&P/ASX300
Fair value of shares on offer date(1)
› Managing Director
› Other Executives
Offer date
› Managing Director(3)
› Other Executives(3)
Value of offer(2)
› Managing Director
› Other Executives
Managing Director $2.49
Other Executives $2.49
Managing Director $3.36
Other Executives $3.36
Managing Director $3.10
Other Executives $3.10
28 October 2019
28 October 2019
16 November 2020
16 November 2020
17 January 2022
23 September 2021
$312,500
$787,664
$312,500
$649,500
$197,774
$750,699
1)
2)
3)
The fair value of offers that are assessed and awarded on market-based conditions is determined on the grant date in accordance with AASB
2. The fair value is used to recognise an expense over the performance period for the TSR component of offers. The fair value attached to
Managing Director will be subject to valuation review upon shareholder approval of “2021” Offer at FY22 Annual General Meeting, but deemed
to be materially correct as at reporting date.
The value of the offer is the maximum value calculated as at the date of offer at that time. As such, it may include the value of offers made to
individuals who are no longer executives of the company.
Pro-rata offer made in respect of the “2019” Offer to Gary Dickson on 16 March 2020. Pro-rata offer made in respect of the “2021” Offer to Alan
Logan and Brett Morgan on 23 September 2021 and 17 January 2022. Noting that the “2021” Offer to Brett Morgan is subject to shareholder
approval at the 2022 AGM.
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MyState Limited - Annual Report 2022
Calculation of the reward TSR component
Calculation of the reward ROE component
The ELTIP offers TSR components will vest on the
following basis.
The performance period for the ROE component for the
ELTIP reward will be based upon the Company’s post-
tax ROE and will be payable on the following basis.
TSR component
For the 2020 offer:
MYS TSR relative
to the ASX 300:
ROE component
For the 2020 offer:
Percentage of the
applicable reward
that will vest:
MYS aggregate statutory ROE,
which may be adjusted for one-off
items at the discretion of the Board,
for the performance period:
Percentage of the
applicable reward
that will vest:
Below the 25th percentile:
0
At the 25th percentile
25%
Below 27.00%
27.00%
0%
25%
Between the 25th and 75th
percentile
Straight line basis
between 25% and 100%
27.00% to 30.00%
Straight line from
25% to 100%
Above the 75th percentile
100%
30.00% or above
100%
For the 2021 offer:
MYS TSR relative
to the ASX 300:
For the 2021 offer:
Percentage of the
applicable reward
that will vest:
Statutory ROE with Board
discretion to adjust for one-
off items:
Percentage of the
applicable reward that
will vest:
Below the 50th percentile
0
At the 50th percentile
50%
Between the 50th percentile
and the 75th percentile
Straight line basis
between 50% and 100%
Below 30.00%
30.00%
30% to 31.50%
0%
50%
Straight line basis from
50% to 100%
At or above the 75th percentile
100%
31.50% or above
100%
For the 2022 offer:
MYS TSR relative
to the ASX 300:
For the 2022 offer:
Percentage of the
applicable reward
that will vest:
Statutory ROE with Board
discretion to adjust for one-
off items:
Percentage of the
applicable reward that
will vest:
Below the 50th percentile
0
At the 50th percentile
50%
Between the 50th percentile
and the 75th percentile
Straight line basis
between 50% and 100%
Below 30.00%
30.00%
30% to 31.50%
0%
50%
Straight line basis
between 50% and 100%
At or above the 75th percentile
100%
31.50% or above
100%
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MyState Limited - Annual Report 2022
Actual and potential ELTIP share allocations
The following table details, for current and former KMP, the status of offers made under the ELTIP. The ‘2018’
offer performance period was completed on 30 June 2021. The ‘2019’ offer performance period was completed on 30
June 2022.
2019 Offer
Component
Maximum offer
Forfeited /
lapsed
Awarded in the
2021/22
financial year
Not yet
assessed
for vesting
Key Management Personnel
Number of shares
Melos Sulicich(1)
Gary Dickson(2)
Mandakini Khanna
Heather McGovern
Anthony MacRae
Paul Moss
Craig Mowll
Janelle Whittle
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
34,036
34,035
9,570
9,570
12,743
12,743
10,783
10,782
12,743
12,743
11,926
11,926
12,743
12,743
9,476
9,475
17,199
34,035
3,866
9,570
5,148
12,743
10,783
10,782
12,743
12,743
4,818
11,926
12,743
12,743
3,828
9,475
16,837
-
5,704
-
7,595
-
-
-
-
-
7,108
-
-
-
5,648
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2018 Offer
Component
Maximum offer
Forfeited /
lapsed
Awarded in the
2020/21
financial year
Not yet
assessed
for vesting
Key Management Personnel
Number of shares
Melos Sulicich
Anthony MacRae
Heather McGovern
David Harradine
Mandakini Khanna
Paul Moss
Craig Mowll
Janelle Whittle
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
32,188
32,187
4,590
4,589
2,934
2,933
11,742
11,742
11,124
11,124
10,506
10,506
11,556
11,555
8,961
8,961
16,062
32,187
4,590
4,589
1,464
2,933
11,742
11,742
5,551
11,124
5,242
10,506
11,556
11,555
4,472
8,961
16,126
-
-
-
1,470
-
-
-
5,573
-
5,264
-
-
-
4,489
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1) The awarding of the 2019 offer is subject to shareholder approval subsequent to the publishing of this report.
2) Pro-rata offer made for “2019”.
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MyState Limited - Annual Report 2022
The 2020, 2021 and 2022 offers have not been assessed for vesting. The following table shows the maximum number
of shares available under each of these offers:
Component
2020 offer
2021 offer
2022 offer (4)
Key Management Personnel
Number of shares
Melos Sulicich (1)
Brett Morgan(2)
Gary Dickson
Mandakini Khanna
Heather McGovern
Anthony MacRae
Paul Moss
Craig Mowll
Janelle Whittle
Huw Bough
Alan Logan(3)
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
TSR
ROE
38,676
38,675
-
-
14,852
14,851
14,480
14,480
12,252
12,252
14,480
14,480
13,552
13,552
14,480
14,480
10,767
10,767
-
-
-
-
-
-
20,602
20,601
12,500
12,500
12,188
12,187
10,313
10,312
-
-
11,407
11,406
-
-
9,844
9,844
12,188
12,187
9,630
9,630
-
-
52,458
52,458
14,389
14,388
14,029
14,029
-
-
-
-
13,130
13,129
-
-
11,331
11,331
14,029
14,029
13,310
13,309
1) There was no “2021” offer made to Melos Sulicich due to the announcement of his retirement.
2) Pro-rata offer made for “2021”. Subject to shareholder approval.
3) Pro-rata offer made for “2021”.
4) The Board has made the decision, subject to shareholder approval for the MD & CEO and acceptance of the offers by relevant participants,
to award up to 265,349 performance rights under the 2022 ELTIP and that such offer will be notified to the market if and when shareholder
approval/acceptances are received.
Review of executive remuneration
During FY21, the Committee commissioned independent advice in respect of the structure and performance criteria
for executive variable remuneration. With the benefit of that advice, the Board decided to make a number of changes
that take effect from 1 July 2021. These changes have been implemented and include moving the Executive Long-
Term Incentive Program to a Performance Rights scheme, and reviewing the targets for threshold performance.
The details of the Executive Long-Term Incentive Program are provided in section 5. Our Executive remuneration
framework will be subject to further review following the introduction of the Financial Accountability Regime (FAR) and
the APRA prudential standard for Remuneration.
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Statutory tables
Financial
year
Salary
& fees
Cash
bonus(1)
Other
short-
term
benefits
Non-monetary
benefits(2)
Post-
employment
superannuation
Termination
benefits
Share-
based
payment(3)
Total
Non-Executive Directors
Miles Hampton
Robert Gordon
Vaughn Richtor
Sibylle Krieger
Warren Lee
Stephen Davy
Andrea Waters
2022
157,942
2021
209,004
2022
95,903
2021
89,849
2022
130,519
2021
97,211
2022
109,091
2021
106,049
2022
109,091
2021
106,049
2022
101,923
2021
-
2022
120,001
2021
116,124
Total NED
2022
824,470
2021
724,286
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,191
393
-
-
-
-
-
-
-
-
-
-
-
15,794
19,855
26,750
26,275
13,052
9,235
10,909
10,075
10,909
10,075
10,183
-
-
-
1,191
393
87,597
75,515
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
174,927
229,252
122,653
116,124
143,571
106,446
120,000
116,124
120,000
116,124
112,106
0
120,001
116,124
913,258
800,194
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MyState Limited - Annual Report 2022
Financial
year
Salary
& fees
Cash
bonus(1)
Other
short-
term
benefits
Non-
monetary
benefits(2)
Post-
employment
superannuation
Termination
benefits
Share-
based
payment(3)
Total
Executives
Melos Sulicich
Brett Morgan
David Harradine
Huw Bough
Mandakini Khanna
Anthony MacRae
Heather McGovern
Paul Moss
Craig Mowll
Janelle Whittle
Gary Dickson
Alan Logan
2022
358,105
-
2021
623,077
279,063
2022
282,663
2021
2022
2021
-
-
-
-
-
-
-
2022
362,500
20,000
2021
36,986
-
2022
362,500
40,000
2021
369,863
111,033
2022
13,500
2021
372,019
2022
302,500
-
-
-
2021
312,961
85,536
2022
337,500
-
2021
353,077
101,233
2022
-
2021
383,075
-
-
2022
279,396
30,000
2021
276,519
80,450
2022
374,622
-
2021
389,423
108,780
2022
293,760
2021
-
-
-
Total Executive
2022
2,967,046
90,000
2021
3,117,000 766,095
Total KMP
2022
3,791,516
90,000
2021
3,841,286 766,095
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,538
1,095
-
-
-
-
-
-
-
-
-
-
-
-
1,302
1,302
-
-
1,302
1,302
-
-
-
-
25,961
13,010
-
-
-
27,500
3,514
37,594
35,137
96
25,481
27,500
29,731
27,500
25,961
-
20,295
27,500
27,245
24,975
25,961
23,586
-
2,604
234,799
3,699
219,286
3,795
322,396
4,092
294,801
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(27,811)
355,832
156,698
1,085,894
32,869
328,542
-
-
-
-
4,046
4,046
23,416
433,416
-
40,500
42,695
482,789
56,434
572,467
(24,263)
(10,667)
50,573
448,073
36,129
366,129
42,132
470,360
39,959
406,261
52,892
534,465
(8,446)
(8,446)
24,390
427,760
33,251
371,449
42,505
428,021
42,623
442,220
43,532
567,696
17,692
335,038
-
-
208,114 3,502,563
473,202
4,579,282
208,114
4,415,821
473,202
5,379,476
1) The cash bonus shown in “2021” represents the actual amount awarded in respect to STI offers. The cash bonus shown in “2022” represents the
gratuity amount award in respect to performance for select KMP.
2) Non-monetary benefits consist of car parking expense, travel & accommodation and entertainment.
3) Share-based payment amounts have been calculated in accordance with the relevant accounting policy and Accounting Standard. The fair
value of the share grant is calculated at the date of grant and is allocated to each reporting period evenly over the period from grant date to
vesting date. This fair value will generally be different to the value of shares at the time they vest. The value disclosed is the portion of the fair
value of the share grant allocated to this reporting period. These amounts represent share grants which will only vest to the KMP when certain
performance and service criteria are met. In some circumstances all, or a portion, of the shares may never vest to the KMP. As these figures
are based on accrual accounting and not a reflection of actual cash paid or shares vested, negative figures can result in the event of accrual
reversals being recorded. Amounts stated are in respect of the period that the individual held a role of a KMP.
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MyState Limited - Annual Report 2022
Shareholdings of Key Management Personnel (KMP)
Non-executive Director minimum
shareholding
In the absence of approval from the Board to the
contrary, non-executive directors are required to acquire
and maintain, directly or indirectly, shares in MyState
Limited to the equivalent of one year’s pre-tax base
director’s fee or base Chair fee as the case may be.
The minimum requirement must be achieved within four
years of their appointment as NED or as Chair.
Managing Director minimum shareholding
requirement
In the absence of approval from the Board to the
contrary, the Managing Director will be required to
acquire and maintain shares in MyState Limited
equivalent to 50% of their total fixed reward (TFR) within
four years of appointment. Any shares subject to deferral
(including shares that may be allocated in respect
of awarded performance rights) will be recognised
for the purposes of the requirement. The shares in
MyState Limited may include shares obtained prior to
commencement of employment and/or shares acquired
through ELTIP or any other scheme.
Related parties of KMP shareholdings
Details of ordinary shares in the company held by
key management personnel and their related parties
are set out in the table below. Related parties include
close family members and entities under joint or
several control, or significant influence, of the KMP and
their close family members. No equity transactions
with the KMP, other than those arising as payment
for compensation, have been entered into with the
company.
Key Management
Personnel
Number of shares at
commencement
of financial year (1)
Number of shares
awarded but not
yet vested (2)
Net change
other (3)
No. of shares at
end of financial
year
1
2
3
1 + 2 + 3
Non-executive Directors
Of which:
No. of shares
at end of
financial year
held by ELTIP
Trustee(4)
Miles Hampton
Robert Gordon
Sibylle Krieger
Warren Lee
Vaughn Richtor
Andrea Waters
Sub Total
Executives
Melos Sulicich(5)
Brett Morgan
Gary Dickson
Heather McGovern
Mandakini Khanna
Paul Moss
Janelle Whittle
Huw Bough
Alan Logan
Sub Total
898,362
33,725
26,850
27,641
11,831
32,056
1,030,465
-
-
-
-
-
-
-
13,154
3,000
1,407
10,000
5,687
1,680
911,516
36,725
28,257
37,641
17,518
33,736
34,928
1,065,393
142,890
32,963
-
-
-
14,109
12,639
7,661
5,758
-
-
5,704
1,470
13,168
12,372
10,137
-
-
1,598
4,250
-
-
677
662
-
(5,758)
-
177,451
4,250
5,704
1,470
27,954
25,673
17,798
-
-
-
-
-
-
-
-
-
-
-
-
-
13,586
13,301
2,232
-
-
183,057
75,814
1,429
260,300
29,119
1)
2)
Number of shares at commencement of financial year does not agree to the closing position per FY21 Remuneration Report due to the transfer
of “2018” Offers awarded to column 2.
From the “2018” Offer onwards, under BEAR requirements, any shares awarded are “held” in suspension pending the additional Board
assessment (two years post) that there has been no subsequent forfeiture event.
3) KMP personal share purchase or participation in Dividend Reinvestment Plan (DRP).
4) These amounts are the shares awarded under the “2016 & 2017 Offer” or through participation in DRP. These shares have been issued to the
Trustee to hold on behalf of the Executives.
5)
“2014” - “2017” Offers awarded to Melos Sulicich and held in trust (pre-BEAR deferral requirements) were released to his personal account
during FY22. The shares awarded from the “2014” Offer exceeded the 4 year holding period in November 2021 and shares held in trust for the
“2015” - “2017” offers were released following the cessation of employment. The accumulated value of these shares was $231,543.
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Loans to Key Management Personnel
Loan transactions
Loans to KMP and their related parties (including close family members and entities over which the KMP and/or
their close family members have control, joint control or significant influence) are provided in the ordinary course of
business. Normal commercial terms and conditions are applied to all loans. Any discounts provided to KMP are the
same as those available to all employees of the Group. There have been no write-downs or amounts recorded as
provisions during FY22.
Details of loans held by KMP and their related parties during FY22, where the individual’s aggregate loan balance
exceeded $100,000 at any time in this period, are as follows:
Key Management
Personnel
Balance as
at 1 July 2021
Interest charged
during the year
Balance as at
30 June 2022
Highest balance
during the year
Brett Morgan(1)
0
$1,147
$967,147
$967,147
1) Loan funded on 14 June 2022. The balance as at 31 July 2022 is $451,678.
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Executive employment agreements
The Managing Director and executives are employed under individual open-ended employment contracts that set
out the terms of their employment, as detailed below.
Incumbent
Commenced
in role
Contract
term
TFR
Short Term
Incentive
(maximum)
ELTIP
(maximum)
Termination provisions in the event
of termination by the Company
Brett
Morgan1
17 January 22
Ongoing
$625,000
60% of TFR
70% of TFR
Notice:
30% of
TFR upon
invitation to
participate
30% of
TFR upon
invitation to
participate
The contract may be terminated by
the Company with 6 months’ notice
or payment in lieu of notice.
Entitlement:
• Pro-rata STI payment applied as
at the date of termination.
• Payment of STI if the
performance period is complete
but not yet paid.
• Pro-rata ELTIP allocation, in
accordance with the ELTIP rules.
Notice:
Each contract can be terminated
by the Company upon provision of
three months’ notice.
Entitlement:
• Pro-rata STI payment applied as
at the date of termination.
• Payment of STI if the
performance period is complete
but not yet paid.
• Pro-rata ELTIP allocation, in
accordance with the ELTIP rules.
Notice:
Each contract can be terminated
by the Company upon provision of
three months’ notice.
Entitlement:
• Payment of the equivalent of
six months TFR (inclusive of the
provision of three months’ notice).
• Pro-rata STI payment applied as
at the date of termination.
• Payment of STI if the
performance period is complete
but not yet paid.
• Pro-rata ELTIP allocation, in
accordance with the ELTIP rules.
Huw Bough
1 June 21
Ongoing
$390,000
30% TFR
Alan Logan
30 August 21
Ongoing
$370,000
Gary
Dickson
Mandakini
Khanna
Heather
McGovern
19 October 19
Ongoing
$400,000
30% TFR
1 December 15 Ongoing
$390,000
18 March 19
Ongoing
$330,000
Paul Moss
13 May 15
Ongoing
$365,000
Janelle
Whittle
22 January 18
Ongoing
$315,000
1) Required to hold shares to the value of 50% of TFR.
Signed in accordance with a resolution of the Directors.
Vaughn Richtor
Chairman
Brett Morgan
Managing Director and Chief Executive Officer
Hobart, dated this 15 August 2022
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Financial report
Contents
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Section 1 Corporate information and basis of accounting
1.1
1.2
1.3
1.4
Reporting entity
Basis of accounting
Use of estimates and judgement
Provisions (other than for impairment of financial assets)
Section 2 Financial performance
2.1
2.2
2.3
2.4
2.5
2.6
2.7
Net banking operating income
Income from wealth management activities
Income from other activities
Expenses
Earnings per share
Dividends
Segment financial information
Section 3 Capital and financial risk management
3.1
3.2
3.3
Capital management strategy
Financial risk management
Average balance sheet and sources of net interest income
Section 4 Financial assets and liabilities
4.1
4.2
4.3
4.4
4.5
4.6
4.7
Cash and liquid assets
Financial instruments
Loans and advances
Transfer of financial assets (securitisation program)
Deposits and other borrowings including subordinated notes
Other liabilities
Fair value of financial instruments
Section 5 Non-financial assets, liabilities and equity
5.1
5.2
5.3
5.4
5.5
Property, plant and equipment and right-of-use assets
Investment property
Intangible assets and goodwill
Employee benefits provisions
Share capital
Section 6 Income tax expense, current and deferred tax balances
6.1
Income tax expense, current and deferred tax balances
Section 7 Group structure and related parties
7.1
7.2
7.3
Parent entity information
Controlled entities and principles of consolidation
Related party disclosures
Section 8 Other notes
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MyState Limited - Annual Report 2022
8.1
8.2
8.3
8.4
Contingent liabilities and expenditure commitments
Remuneration of auditors
Events subsequent to balance date
Other significant accounting policies and new accounting standards and disclosures 99
59
60
60
61
62
63
63
63
64
64
65
65
66
67
67
68
71
73
79
80
81
81
84
84
85
85
87
88
89
91
92
93
95
96
97
98
98
99
Consolidated Income Statement
Interest income
Interest expense
Net interest income
Non-interest income from banking activities
Net banking operating income
Income from wealth management activities
Total operating income
Less: Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Restructure costs
Total operating expenses
Profit before impairment and tax expense
Impairment recovery / (expense) on loans and advances
Income from other activities
Profit before tax
Income tax expense
Profit for the year
Profit attributable to the:
Equity holders of MyState Limited
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
The accompanying notes form part of these financial statements.
Notes
30 June 2022
$’000
30 June 2021
$’000
2.1
2.1
2.1
2.2
2.4
2.4
2.4
2.4
4.3
2.3
6.1
2.5
2.5
159,749
164,336
(49,504)
(52,385)
110,245
15,103
111,951
12,951
125,348
124,902
14,820
13,618
140,168
138,520
42,841
17,759
17,706
4,294
10,297
2,985
-
39,615
15,346
16,200
4,763
6,394
2,580
2,559
95,882
87,457
44,286
51,063
762
854
45,902
13,876
32,026
995
-
52,058
15,717
36,341
32,026
36,341
30.34
30.34
39.18
39.18
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MyState Limited - Annual Report 2022
Consolidated statement of comprehensive income
Profit for the year
Other comprehensive income / (expense)
Items that may be reclassified subsequently to profit or loss
Cash flow hedges - Net gains / (losses) taken to equity
Income tax effect
Total other comprehensive income / (expense) for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Notes
30 June 2022
$’000
30 June 2021
$’000
32,026
36,341
9,966
(2,990)
6,976
39,002
434
(130)
304
36,645
Equity holders of MyState Limited
39,002
36,645
Consolidated statement of financial position
Notes
30 June 2022
$’000
30 June 2021
$’000
Assets
Cash and liquid assets
Due from other financial institutions
Other assets
Financial instruments
Loans and advances
Property, plant and equipment and right-of-use assets
Investment property
Current and deferred tax assets
Tax assets
Intangible assets and goodwill
Total assets
Liabilities
Due to other financial institutions
Deposits and other borrowings including subordinated notes
Employee benefits provisions
Other liabilities
Tax liabilities
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Reserves
Total equity
t
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o
p
e
r
l
4.1
4.2
4.3
5.1
5.2
6.1
5.3
4.5
5.4
4.6
6.1
5.5
119,215
40,924
9,831
80,266
31,859
7,032
842,926
707,166
6,971,375
5,607,300
10,453
-
6,278
78,845
11,678
3,801
9,896
83,478
8,079,847
6,542,476
22,982
18,821
7,598,184
6,079,794
5,585
17,213
5,970
5,240
20,605
2,802
7,649,934
6,127,262
429,913
415,214
211,167
209,788
8,958
208,196
207,282
(264)
429,913
415,214
The accompanying notes form part of these financial statements.
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Consolidated statement of changes in equity
At 1 July 2020
Profit for the year
Other comprehensive income /
(expense)
Total comprehensive income for
the year
-
-
36,341
-
-
36,341
Equity issued under employee share
scheme
Equity issued under executive long
term incentive plan
5.5
5.5
84
167
Share
capital
$’000
Retained
earnings
$’000
Note
General
reserve
for credit
losses
$’000
Employee
equity
benefits
reserve
$’000
Hedging
reserve
$’000
Other
reserves
$’000
Total
$’000
152,775
175,688
6,761
704
(606)
(1,000)
334,322
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.5
1,397
5.5
31,280
5.5
24,203
-
(1,710)
5.5
2.6
2.6
-
-
523
(523)
(11,508)
-
-
-
32,026
-
-
32,026
5.5
62
5.5
3,000
-
-
-
-
-
238
-
3,981
(3,981)
5.5
(91)
-
-
(627)
2.6
-
(26,874)
-
-
-
-
-
-
-
(167)
-
-
-
501
-
-
-
-
304
304
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36,341
304
36,645
84
-
1,397
31,280
-
24,203
-
-
-
-
501
(1,710)
-
(11,508)
-
-
-
6,976
-
-
32,026
6,976
-
6,976
-
39,002
-
-
(238)
227
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
62
3,000
-
227
-
(91)
(627)
-
(26,874)
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208,196 201,044
6,238
1,038
(302)
(1,000)
415,214
208,196
201,044
6,238
1,038
(302)
(1,000)
415,214
Equity issued under dividend
reinvestment plan
Equity issued under institutional
placement and entitlement offer
Equity issued under retail
entitlement offer
Share based payment expense
recognised
Entitlement offer share issuance
costs, net of tax
Transfer to retained earnings
Dividends paid
At 30 June 2021
At 1 July 2021
Profit for the year
Other comprehensive income /
(expense)
Total comprehensive income for
the year
Equity issued under employee
share scheme
Equity issued under dividend
reinvestment plan
Transfer of unvested shares under
executive long term incentive plan
Share based payment expense
recognised
General reserve for credit losses
write back
Entitlement offer share issuance
costs, net of tax
Derecognition of capitalised costs
under SAAS arrangements
Dividends paid
At 30 June 2022
The accompanying notes form part of these financial statements.
211,167
209,788
2,257
1,027
6,674
(1,000)
429,913
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Consolidated statement of cash flows
Cash flows from operating activities
Interest received
Interest paid
Fees and commissions received
Other non-interest income received
Payments to suppliers and employees (i)
Income tax paid
(Increase)/decrease in operating assets:
Due from other financial institutions
Financial instruments
Loans and advances
Increase/(decrease) in operating liabilities:
Due to other financial institutions
Deposits and other borrowings excluding subordinated
notes and floating rate notes
Notes
30 June 2022
$’000
30 June 2021
$’000
177,087
178,286
(44,119)
(54,343)
27,351
1,688
(90,104)
(7,220)
25,777
2,027
(76,756)
(21,905)
(1,864)
3,336
(135,256)
(163,814)
(1,381,203)
(334,763)
1,706
(3,868)
1,402,550
323,729
Net cash flows from / (used in) operating activities
4.1
(49,384)
(122,294)
Cash flows from investing activities
Purchase of intangible assets
Proceeds from sale of non-current assets held for sale
Purchase of property, plant and equipment
Net cash flows from / (used in) investing activities
Cash flows from financing activities
Employee share issue
Entitlement and placement offer share issue
(Receipts)/payments for lease liabilities
Subordinated notes
Floating rate notes issue
Dividends paid net of dividend reinvestment plan
Net cash flows from / (used in) financing activities
Net increase / (decrease) in cash held
Cash at beginning of financial year
Closing cash carried forward
The accompanying notes form part of these financial statements.
(4,343)
(4,282)
4,765
(700)
(278)
62
-
(1,669)
15,097
99,709
(24,588)
88,611
-
(499)
(4,781)
84
55,339
(2,757)
(146)
49,976
(11,657)
90,839
38,949
(36,236)
80,266
119,215
116,502
80,266
2.6
4.1
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Notes to the consolidated financial statements
for the year ended 30 June 2022
1.1 Reporting entity
MyState Limited (the Company) is incorporated
and domiciled in Australia and is a company limited
by shares that are publicly traded on the Australian
Securities Exchange. The address of its registered
office and principal place of business is 137 Harrington
Street, Hobart Tasmania 7000. The consolidated
financial statements of MyState Limited and its
subsidiaries (the Group) were authorised for issue by
the Directors on 15 August 2022.
1.2 Basis of accounting
These consolidated financial statements are general
purpose financial statements which have been
prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and
Interpretations, and other requirements of the law. The
financial report complies with Australian equivalents to
International Financial Reporting Standards (“AIFRS”).
The financial statements comprise the consolidated
financial statements of the Group. For the purpose of
preparing the consolidated financial statements, the
Company is a for-profit entity.
Where necessary, comparative figures have been
re-classified and re-positioned for consistency with
current period disclosures.
The consolidated financial statements have been
prepared on the basis of historical cost, except for
certain properties and financial instruments that are
measured at revalued amounts or fair values at the
end of each reporting period, as explained in the
accounting policies.
Rounding of amounts
The Company is a company of the kind referred to
in Australian Securities and Investments Commission
(ASIC) Class Order 2016/191, and, in accordance with
that Class Order, amounts in the financial report are
rounded off to the nearest thousand dollars, unless
otherwise indicated. All amounts are presented in
Australian dollars.
1.3 Use of estimates and
judgements
The preparation of the financial report in conformity
with Australian Accounting Standards requires the
use of certain critical accounting estimates. It also
requires management to exercise judgment in the
process of applying the accounting policies. The notes
to the financial statements set out areas involving
a higher degree of judgment or complexity, or areas
where assumptions are significant to the financial
report such as:
› Loan origination cost amortisation, refer note 2.1;
› Impairment losses on loans and advances, refer note
4.3;
› Fair value of financial instruments, refer note 4.7;
› Impairment assessment of intangibles and goodwill,
refer note 5.3;
› Recoverability of deferred tax assets, refer note 6.1; and
› Assessment of right-of-use assets and lease
liabilities, refer notes 4.6 and 5.1.
Non-current assets held for sale
At 31 December 2021, a property was reclassified from
Investment property to Held for sale and disclosed
separately in the Consolidated Statement of Financial
Position, in line with AASB 5 Non-Current assets held
for Sale. Prior to reclassification, the property was
revalued and a gain on revaluation of $530,000 was
recognised in the Consolidated Income Statement
in line with the requirements of AASB 140 Investment
Property. The property was subsequently sold and
a gain of $324,000 on disposal has been disclosed
separately in the Consolidated Income Statement.
Software as a Service arrangement
Capitalised costs of configuring or customising a
supplier’s application software in a software as a
service arrangement have been derecognised in
the financials in line with the IFRS Interpretation
Committee’s (IFRIC) agenda decision in April 2021.
The impact has been recognised in the Group’s
retained earnings.
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1.4 Provisions (other than for impairment of financial assets)
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.
2.1 Net banking operating income
Interest income
Loans and advances
Investment securities
Total interest income
Interest expense
At call deposits
Fixed term deposits
Financing cost - leases
Total interest expense
Non-interest income from banking activities
Transaction fees
Loan fees
Banking commissions
Other banking operations income
Total non-interest income from banking activities
Income accounting policy
30 June 2022
$’000
30 June 2021
$’000
155,236
160,912
4,513
3,424
159,749
164,336
16,972
31,034
1,498
49,504
3,703
6,284
3,282
1,834
15,103
12,851
38,217
1,317
52,385
3,918
4,674
2,984
1,375
12,951
Income is recognised to the extent that it is probable that the economic benefits will flow to the entity and the
income can be reliably measured. The following specific recognition criteria must also be met before income is
recognised.
Interest
Interest income is accrued using the effective interest rate method, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument. Loan origination fees are
recognised as components of the calculation of the effective interest rate method in relation to originated loans,
and therefore effect the interest recognised in relation to this portfolio of loans. The average life of loans in the
relevant loan portfolios is reviewed annually to ensure the amortisation methodology for loan origination fees is
appropriate.
Interest expense is calculated on an accruals basis using the effective interest rate method. The effective
interest rate method is the rate that exactly discounts future payments through the expected life of the financial
instrument.
Non-interest income from banking activities
Refer to the “income accounting policy” in note 2.2.
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2.2 Income from wealth management activities
Funds management income
Other fees and commissions
Total income from wealth management activities
Funds management income and fiduciary activities
30 June 2022
$’000
30 June 2021
$’000
9,078
5,742
14,820
9,412
4,206
13,618
TPT Wealth Limited, a controlled entity of the Group, acts as Responsible Entity, Trustee and Funds Manager
for eight managed investment schemes. The investment schemes place monies with external wholesale fund
managers, direct mortgages and mortgaged backed securities, term deposits and other investments. The clients
include individuals, superannuation funds and corporate investors.
The assets and liabilities of these funds are not included in the Consolidated Financial Statements. Income
earned by the Group in respect of these activities is included in the Consolidated Income Statement of the Group
as “Funds management income”.
The following table shows the balance of the unconsolidated funds under management and funds under advice
that gives rise to funds management and other fees and commissions income respectively:
Funds under management
Funds under advice
Other fees and commissions
30 June 2022
$’M
30 June 2021
$’M
1,062
434
1,105
487
TPT Wealth Limited provides private client tax accounting services and acts as trustee and executor of estates.
“Other fees and commissions income” is the income earned from these activities.
Income accounting policy
The Group earns three main types of fees and commissions under contracts with customers. The first income type is
single performance obligation contracts, such as transaction services, where the performance obligation is performed
and consideration received in quick succession. Income from these contracts is recorded as the performance
obligations are satisfied. The second income type is where contracts with the customer are for the performance of
multiple obligations over time and the customer only benefits from delivery of all those obligations together over time,
for example the provision of trustee services and services to funds under management. For these contracts, income is
recognised over the service period. The third type of income is insurance intermediary income where the performance
obligations are satisfied substantially at the time of referring the customer and economic benefits flow to the Group
over time. The Group has estimated that nil income will be brought forward as a contract asset under these contracts
due to the insufficient probability of the timing and amount of future income that will flow from these contracts. This
income is therefore recorded when received.
2.3 Income from other activities
Gain on revaluation of non-current assets held for sale
Gain on disposal of non-current assets held for sale
Total income from other activities
30 June 2022
$’000
30 June 2021
$’000
530
324
854
-
-
-
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2.4 Expenses
The following items are included within each item of specified expenses:
Occupancy costs include:
Operating lease payments
Depreciation - right of use lease assets
Depreciation - buildings and leasehold improvements
Technology costs include:
Amortisation - computer software
Administration costs include:
30 June 2022
$’000
30 June 2021
$’000
185
2,728
281
(114)
2,934
362
5,625
5,275
Depreciation - furniture, equipment and computer hardware
282
276
Restructure costs include (i):
Depreciation - early termination of right-of-use lease assets
Termination payments
Loss on disposal of fit out costs
Other
Total restructure costs
-
-
-
-
-
1,215
952
248
144
2,559
(i) During the comparative period, branches in Queensland and Tasmania were closed and properties in Northern Tasmania were
consolidated. The restructure costs include early lease termination costs and redundancy costs related to impacted staff.
The Group’s leasing activities
(i) Real estate leases
The Group leases land and buildings for its office space and branch network. The leases of office space and
branches typically run for a period of between 3 and 10 years. Some leases include an option to renew the lease
for an additional period of the same duration after the end of the contract term.
(ii) Other leases
The Group leases vehicles, with lease terms of three to five years. In some cases, the Group has options to
purchase the assets at the end of the contract term; in other cases, it guarantees the residual value of the leased
assets at the end of the contract term.
There are no other convenants or restrictions on the Group’s leases other than those identified above.
Amount recognised in the Consolidated Income Statement
Expenses relating to short-term leases and low-value leases
101
128
Future cash outflows to which the Group, as a lessee, is exposed to:
30 June 2022
$’000
30 June 2021
$’000
FY22
FY23
FY24
FY25
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3,564
3,657
3,427
3,535
3,625
3,739
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Expense accounting policy
Depreciation and amortisation expense
The Group adopts the straight line method of depreciating property, plant and equipment and amortising
intangible assets over the estimated useful lives, commencing from the time the asset is held ready for use.
Leasehold improvements and right-of-use assets are depreciated over the shorter of either the unexpired
expected term of the lease or the estimated useful life of the improvements. Estimated useful lives are:
Buildings
Office furniture, fittings & equipment
Building fit-out
Computer hardware
Software
Right-of-use assets
40 years
4-7 years
4-15 years
3 years
3-10 years
2-15 years
Each year the useful life of assets are evaluated. The remaining useful life of select core banking systems has
been revised and extended in the current year as the Group has implemented significant increased functionality
and, in turn, longevity of these sytems over their initial capacity. The revised remaining useful life is within the
above stated parameters however the total life since original core system implementation is in excess of the
above stated lives in some instances.
2.5 Earnings per share
Basic earnings per share from continuing operations
Diluted earnings per share from continuing operations
Earnings per share accounting policy
30 June 2022
cents
30 June 2021
cents
30.34
30.34
39.18
39.18
Basic earnings per share is calculated by dividing the Group’s profit attributable to ordinary equity holders by the
weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share is
calculated by dividing the Group’s profit attributable to ordinary equity holders by the weighted average number
of ordinary shares that would be issued on the exchange of all the dilutive potential ordinary shares into ordinary
shares.
The following table details the weighted average number of shares used in the calculation of basic and diluted
earnings per share:
Weighted average number of ordinary shares used in calculating basic and
diluted earnings per share
Number
Number
105,570,983
92,761,685
2.6 Dividends
Dividends paid
2021 Interim dividend paid - 12.5 cents per share
2021 Final dividend paid - 13.0 cents per share
2022 Interim dividend paid - 12.5 cents per share
Total dividends paid
Date of
payment
30 June 2022
$’000
30 June 2021
$’000
16 Mar 2021
21 Sep 2021
15 Mar 2022
-
11,508
13,686
13,188
26,874
-
-
11,508
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2.6 Dividends (continued)
30 June 2022
$’000
30 June 2021
$’000
Franking credit balance
The amount of franking credits available for the subsequent financial year are:
Franking account balance as at the end of the period at 30%
82,170
82,890
Franking credits that will arise from the payment of income tax payable at
the end of the period
(638)
4,049
Dividends not recognised at the end of the financial year
On 15 August 2022, the Directors resolved to pay a final dividend for the 2022 financial year of 11.5 cents per
share or $12.179m total to be paid on 7 September 2022, fully franked at the 30% corporate tax rate. This
dividend has not been brought to account as the amount had not been determined at the reporting date. This
dividend will reduce the balance of the franking account by $5.22m.
2.7 Segment financial information
Operations of reportable segments
The Group has identified two operating divisions and a corporate division, which are its reportable segments.
These divisions offer different products and services and are managed separately. The Group’s management
committee review internal management reports for each of these divisions at least monthly.
Banking division
The Banking division’s product offerings include lending; encompassing home loans, personal, overdraft, line
of credit and commercial products, transactional savings accounts and fixed term deposits and insurance
products. It delivers these products and services through its branch network, digital channels and third party
channels. The Banking division comprises the MyState Bank Limited Group.
Wealth Management division
The Wealth Management division is a provider of funds management and trustee services. It operates
predominantly within Tasmania. It holds $1.062 billion (2021: $1.105 billion) in funds under management on behalf
of personal, business and wholesale investors as the responsible entity for eight managed investment schemes.
The Wealth Management division comprises TPT Wealth Limited which is a trustee company licensed within the
meaning of Chapter 5D of the Corporations Act 2001 and is the only private trustee company with significant
operations in Tasmania.
Corporate and consolidation division
The corporate division is responsible for the governance of the Group. The corporate division charges the
operating divisions on a cost recovery basis for costs it has incurred. This division is also where eliminations are
allocated between the Banking division and the Wealth Management division.
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2.7 Segment financial information
Year ended 30 June 2022
Interest income
Interest expense
Other income
Transaction fees
Loan fee income
Banking commissions
Other banking operations income
Funds management income
Other wealth management fees and commissions
Wealth
Management
$’000
Corporate
and
Consolidation
$’000
Total
$’000
Banking
$’000
159,721
(49,495)
3,703
6,284
3,282
1,834
22
(2)
-
-
-
-
-
-
9,078
5,742
6
159,749
(7)
(49,504)
-
-
-
-
-
-
3,703
6,284
3,282
1,834
9,078
5,742
Total operating income
125,329
14,840
(1)
140,168
Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Impairment expense / (recovery)
(Gain) / Loss on disposal of non-current assets
Income tax expense
Segment profit for the year
Segment balance sheet information
Segment assets
Segment liabilities
31,514
22,147
16,136
3,917
9,782
752
(755)
(854)
12,852
6,723
4,604
42,841
2,633
(7,021)
1,577
95
420
189
(7)
-
967
17,759
17,706
4,294
10,297
(7)
282
95
2,044
2,985
-
(762)
(854)
57
13,876
29,838
2,243
(55)
32,026
7,995,029
25,821
58,997
8,079,847
7,637,791
1,721
10,422
7,649,934
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Year ended 30 June 2021
Interest income
Interest expense
Other income
Transaction fees
Loan fee income
Banking commissions
Other banking operations income
Funds management income
Other Wealth Management fees and commissions
Banking
$’000
Wealth
Management
$’000
Corporate and
Consolidation
$’000
Total
$’000
164,358
(52,370)
(12)
(2)
(10)
(13)
164,336
(52,385)
3,918
4,674
2,984
1,695
-
-
-
-
-
-
9,412
4,206
-
-
-
(320)
-
-
3,918
4,674
2,984
1,375
9,412
4,206
Total operating income
125,259
13,604
(343)
138,520
Expenses
Personnel costs
Administration costs
Technology costs
Occupancy costs
Marketing costs
Governance costs
Impairment expense / (recovery)
Restructure costs
Income tax expense
27,241
20,999
14,893
4,532
6,042
549
(1,180)
2,277
15,002
6,338
2,964
1,017
144
344
181
185
282
646
6,036
(8,617)
39,615
15,346
290
16,200
87
8
1,850
-
-
69
4,763
6,394
2,580
995
2,559
15,717
Segment profit for the year
34,904
1,503
(66)
34,351
Segment balance sheet information
Segment assets
Segment liabilities
6,467,120
24,307
51,049
6,542,476
6,123,366
1,426
2,470
6,127,262
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3.1 Capital management strategy
The Group’s capital management strategy is to adhere to regulatory requirements and maximise shareholder
value through optimising the level and use of capital resources, whilst also providing the flexibility to take
advantage of opportunities as they may arise.
activities;
The Group’s capital management objectives are to:
› Comply with internal and regulatory capital requirements;
› Ensure sufficient capital resource is available to support the Group’s business, operational and investment
› Maintain balance sheet resilience to safeguard the Group’s ability to continue as a going concern; and
› Support MyState Limited’s and MyState Bank Limited’s credit rating.
The Group’s capital management policy considers each of internal, regulatory and rating agency capital
requirements. Under APS 110 Capital Adequacy, the ultimate responsibility for the prudent management of
capital resides with the Board of Directors. The Board must ensure that an appropriate level and quality of
capital is maintained, commensurate with the type, amount and concentration of risk exposures.
The Group’s regulatory capital requirements are measured on a Level 1 and Level 2 basis.
Level 1 is comprised of MyState Bank Limited (the ADI) and ConQuest 2010-1R.
Level 2 is comprised of the wider MyState Limited prudential group. This group includes MyState Limited (the
non-operating holding company), MyState Bank Limited, Connect Asset Management Limited (the Securitisation
programme Manager) and ConQuest 2010-1R.
All entities that are consolidated for accounting purposes are included within the Level 2 regulatory capital
calculation except for TPT Wealth Limited and securitisation special purposes vehicles (Conquest 2014-2 Trust,
Conquest 2016-1 Trust, Conquest 2016-2 Trust, Conquest 2017-1 Trust, Conquest 2018-1 Trust, Conquest 2019-1 PP
Trust, and Conquest 2019-2 Trust).
The Group has developed a detailed Internal Capital Adequacy Assessment Plan (ICAAP). This plan covers the
capital requirements of the Group on a Level 1 and Level 2 basis (as previously described) as well as TPT Wealth
Limited. The Group’s capital position is monitored on a frequent basis and is reported to the Board monthly. The
ICAAP also includes a three year forecast of capital adequacy which is prepared and submitted to the Board at
least annually.
The ICAAP aims to ensure that adequate planning activities take place so that the Group is effectively capitalised.
The ICAAP encompasses known financial events, dividend policy, capital raisings, securitisation and stress testing.
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The Board has currently set a minimum total capital adequacy ratio of 12.5% for the Group. Capital adequacy of the
Group on a level 2 basis is detailed in the following table:
Qualifying capital
Common equity tier 1 capital
Paid-up ordinary share capital (i)
Retained earnings
Reserves excluding general reserve for credit losses
Total common equity tier 1 capital
Less: Regulatory adjustments
Deferred expenditure including deferred tax assets
Goodwill and intangibles
Other deductions
Total regulatory adjustments
Net common equity tier 1 capital
Tier 2 capital
Subordinated notes (ii)
General reserve for credit losses
Total capital
Risk weighted assets
Capital adequacy ratio (iii)
30 June 2022
$’000
30 June 2021
$’000
211,167
221,796
6,980
208,196
219,128
44
439,943
427,368
35,540
64,556
47,086
147,181
292,761
24,818
68,913
41,733
135,464
291,904
50,000
2,257
32,706
6,380
345,018
330,990
2,780,972
2,231,100
12.41%
14.84%
(i) On 24 June 2021, the Group raised $24.2 million (5,628,573 shares at $4.30 each) under a retail entitlement offer. This followed
an institutional entitlement offer and fully underwritten institutional placement (Placement) which raised $11.3 million and $20 million
respectively (7,274,502 ordinary shares at $4.30 each) from existing and new institutional investors, on 2 June 2021.
(ii) On 10 July 2020, the Group issued $25 million of floating rate subordinated notes (“notes”). The issuer was MyState Limited. The
notes have a term of 10 years, maturing 10 July 2030, and pay interest quarterly at a floating rate equal to the three-month BBSW plus a
margin of 4.35% per annum. The issuer has the option to redeem these notes on 10 July 2025 and each quarterly interest payment date
thereafter, and for certain regulatory events (in each case subject to APRA’s prior written approval). On the same date, and with the same
terms, MyState Bank Limited issued $25 million of floating rate subordinated notes to MyState Limited with terms identical to those issued
by MyState Limited.
On 3 November 2021, the Group issued $25 million of floating rate subordinated notes (“notes”). The issuer was MyState Limited. The
notes have a term of 10 years, maturing 3 November 2031, and pay interest quarterly at a floating rate equal to the three-month BBSW
plus a margin of 2.75% per annum. The issuer has the option to redeem these notes on 3 November 2026 and each quarterly interest
payment date thereafter, and for certain regulatory events (in each case subject to APRA’s prior written approval). On the same date, and
with the same terms, MyState Bank Limited issued $25 million of floating rate subordinated notes to MyState Limited with terms identical
to those issued by MyState Limited.
If APRA notifies the issuer that a non-viability trigger event has occurred, the notes will be converted into ordinary shares of MyState
Limited, or written-off. For the notes issued on 3 November 2021, the amount included in the Group’s Level 2 Tier 2 regulatory capital is
a percentage equal to that of the external interest in the Group’s regulatory capital. The amount included in the Group’s Level 1 Tier 2
regulatory capital is 100%. For the notes issued on 10 July 2020, the amount included in the Group’s Level 1 and Level 2 Tier 2 regulatory
capital is 100%.
(iii) At 30 June 2022, the Group’s total capital ratio of 12.41% was marginally below the Board’s risk appetite limit (12.50%) with Additional
Tier 1 capital issuance and planned securitisation to remediate this position.
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3.2 Financial risk management
Risk management is an integral part of the Group’s business processes. The Board sets policy to mitigate risks
and ensure the risk management framework is appropriate, to direct the way in which the Group conducts
business. Promulgated Board approved policies ensure compliance throughout the business, which are
monitored by way of a dedicated compliance system. Risk management plans exist for all documented risks
within the Group and these plans are reviewed regularly by the Executive Management Team, the Group Risk
Committee and the Board. Business units are accountable for risks in their area and are responsible for ensuring
the appropriate assessment and management of these risks.
Risk exposure profile
The Group actively monitors a range of risks, which are not limited to, but include the following:
› Credit risk,
› Market risk; and
› Liquidity risk.
3.2.1 Credit risk
Approach to credit risk management
Credit risk arises within the Group’s lending and treasury investment activities and is the risk that a counterparty
may fail to complete its contractual obligations when they fall due.
The Group’s approach to managing this risk is to separate prudential control from operational management by
assigning responsibility for approval of credit exposures to specific individuals and management committees.
The Group Risk Committee has oversight of credit risk exposures and the Enterprise Risk Committee monitors
credit related activities through regular reporting processes, including monitoring large exposure to single groups
and counterparties. The roles of funding and oversight of credit are separate.
Board approved lending policies guide the processes for all loan approvals by subsidiary operations. All loans
over a designated amount, whether within delegated limits or not, are reported to the Group Risk Committee on a
regular basis. Any loan outside of delegated limits must be approved by the Board prior to funding.
Maximum exposure to credit risk
The amounts disclosed in the following table are the maximum exposure to credit risk, before taking account of
any collateral held or other credit enhancements. For financial assets recognised in the Statement of Financial
Position, the exposure to credit risk equals their carrying amount. For customer commitments, the maximum
exposure to credit risk is the full amount of the committed facility as at the reporting date.
Cash and liquid assets
Due from other financial institutions
Other assets
Financial instruments
Loans and advances
Customer commitments (i)
Maximum exposure to credit risk
30 June 2022
$’000
30 June 2021
$’000
119,215
40,924
9,831
80,266
31,859
7,032
842,926
707,166
1,012,896
826,323
6,971,375
5,607,300
268,364
200,392
8,252,635
6,634,015
(i) For further information regarding these commitments, refer to note 8.1.
The credit quality of financial assets has been determined based on Standard and Poor’s credit ratings for financial
assets other than loans and advances at amortised cost. For loans and advances at amortised cost, the assets
identified as being “closely monitored” are those assets that are greater than 30 days past due. New facilities are
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Credit quality of financial assets
Financial assets other than loans and advances at amortised cost
Equivalent S&P rating A+ and above
Equivalent S&P rating A and below
Loans and advances at amortised cost
New Facilities - not closely monitored
New Facilities - closely monitored
Continuing facilities - not closely monitored
Continuing facilities - closely monitored
Total on balance sheet exposure to credit risk
Loans and advances at amortised cost past due analysis
Not past due
Past due days:
31 to 60 days
61 to 90 days
More than 90 days
Total loans and advances at amortised cost
Estimate of collateral held against past due assets
Estimate of collateral held
30 June 2022
$’000
30 June 2021
$’000
622,183
390,713
476,364
349,959
2,860,403
1,544,649
1,372
364
4,085,757
4,036,862
23,843
25,425
7,984,271
6,433,623
6,942,215
5,576,675
8,285
7,166
13,709
11,492
5,760
13,373
6,971,375
5,607,300
39,730
45,588
To mitigate credit risk, MyState Bank (ADI) holds collateral against select loans and advances in the form of
a mortgage charge over property. The bank can take possession of the security held against the loans and
advances as a result of customer default. The collateral shown above is an estimate of the value of collateral
held, it is not practicable to determine the fair value.
Credit quality is impacted by concentration risk created by the ensuing vulnerability of assets to similar
conditions such as economic or political factors. The Group monitors the geographical diversification of its loans
and advances. An analysis of this concentration of credit risk at the reporting date is shown in the following table:
Tasmania
Victoria
New South Wales
Queensland
Western Australia
Australian Capital Territory
South Australia
Northern Territory
30 June 2022
$’000
30 June 2021
$’000
2,510,364
2,223,256
1,356,804
981,390
1,414,717
1,122,964
1,415,876
1,106,049
125,683
68,109
71,510
12,769
77,467
50,601
43,897
7,094
Gross loans and advances at amortised cost
6,975,832
5,612,718
There are no loans that individually represent 10% or more of shareholders’ equity.
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3.2.2 Market risk
Managing market risk
Market risk is the exposure to adverse changes in the value of the Group’s portfolio as a result of changes in
market prices or volatility. The Group is exposed primarily to interest rate risk.
Interest rate risk exposure
The operations of MyState Bank are subject to the risk of interest rate fluctuations as a result of mismatches in
the timing of the repricing of interest rates on its assets and liabilities.
The figures in the table below indicates the earnings at risk for an ensuing 12 month period of a 1% parallel shock
increase to the yield curve. A 1% decrease has the equal opposite result.
Value at Risk (VaR)
The following table indicates the VaR based on historical data. The Group estimates VaR as the potential loss
in earnings from adverse market movements over a 20 day holding period to a 99% confidence level. VaR takes
account of all material market variables that may cause a change in the value of the loan portfolio. Although an
important tool for the measurement of market risk, the assumptions underlying the model are limited to reliance
on historical data.
Value at risk (post-tax) based on historic data
Average
Minimum
Maximum
Derivatives
30 June 2022
$’000
30 June 2021
$’000
4,084
3,286
4,878
1,531
980
2,999
The Group is exposed to changes in interest rates. The only derivative instruments currently entered into by
the Group are interest rate swaps. The Group protects its portfolio of fixed rate loans, corporate and retail
term deposits, NCDs and exposure to variable rate debt obligations, by paying fixed or variable rates to swap
providers and receiving fixed or variable rates in return, dependent on the hedged item. The hedge instruments
are benchmarked to either BBSW (Bank Bill Swap rate) or AONIA (RBA Interbank Overnight Cash Rate).
The hedging strategy is to mitigate earnings volatility for the Group by managing interest rate margins in an
increasing rate environment.
Derivatives accounting policy
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently
remeasured to their fair value. Fair values are obtained from quoted market prices in active markets.
Movements in the carrying amounts of derivatives are recognised in the Consolidated Income Statement, unless
the derivative meets the requirements for hedge accounting.
The Group documents the relationship between the hedging instruments and hedged items at inception of the
transaction, as well as its risk management objective and strategy for undertaking various hedge transactions.
The Group also documents its assessment of whether the derivatives used in hedging transactions have been or
will continue to be, highly effective in offsetting changes in the fair values or cash flows of hedged items.
This assessment is carried out both at inception and on a monthly basis.
Cash flow hedges
The Group has cash flow hedges that are used to hedge the variability of interest rates in relation to certain
assets and liabilities. These derivative instruments are established with terms that exactly match the terms of the
asset or liability designated as the hedged item and therefore form highly effective relationships. The portion
of the asset or liability designated in the hedging relationship is determined by reference to specific fixed rate
assets or liabilities within the deposit or loan portfolio. The Group conducts tests for ineffectiveness and sources
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of ineffectiveness are limited to credit risk of parties to the relationship. The variability in fair values attributable
to an item designated as a cash flow hedge is recognised in Other Comprehensive Income to the extent of
the hedge’s effectiveness. Any ineffective portion of the change in the fair value of a derivative is recognised
immediately in the Consolidated Income Statement.
Derivatives that do not qualify for hedge accounting
If a derivative expires or is sold, terminated, or exercised, or no longer meets the criteria for hedge accounting,
or the designation is revoked, then hedge accounting is discontinued and the amount recognised in Other
Comprehensive Income remains in Other Comprehensive Income until the forecast transaction affects the
Consolidated Income Statement. If the forecast transaction is no longer expected to occur, it is reclassified to
the Consolidated Income Statement as a reclassification adjustment.
When a derivative is not designated in a qualifying relationship, all changes in its fair value are recognised
immediately in the Consolidated Income Statement, as a component of net income from other financial
instruments carried at fair value.
The following table indicates the Group’s hedge exposures at 30 June 2022.
Description
Notional amount of hedging instrument (i)
Carrying amount of hedging instrument (i)
Cash flow hedges
$’000
Fair value hedges
$’000
577,129
9,534
-
-
(i) Note that Derivatives are reported as financial instruments in the statement of financial position.
3.2.3 Liquidity risk
Managing liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial and statutory obligations as they fall due,
which could arise due to mismatches in cash flows.
The Group maintains a portfolio of highly marketable assets that can be liquidated in the event of an unforeseen
interruption of cash flows. The Group also has committed lines of credit that it can access to meet its liquidity
needs. Liquidity scenarios are calculated under stressed and normal operating conditions, to assist in
anticipating cash requirements providing adequate reserves.
The Group’s objective is to manage its funds in a way that will facilitate growth in core business under a wide
range of market conditions. The Group maintains, and adheres to, a Liquidity Risk Management framework
(LRMF). This process includes acknowledgement of liquidity risks within the Group and justification of the
amount of liquidity that is being held based on the liquidity risk profile of the organisation.
Group Treasury is responsible for implementing liquidity risk management strategies in accordance with the
LRMF. The Group’s Assets and Liabilities Committee (ALCO) assists the Board with oversight of asset and liability
management including liquidity risk management. The Group’s liquidity policies are approved by the Board after
endorsement by the Group Risk Committee and the Banking Group’s ALCO.
On 19 March 2020 the RBA established a Term Funding Facility (TFF) that offered ADI’s three-year funding at a
rate of 0.25% per annum to support the Australian economy through COVID-19. MyState Bank, the Group’s ADI,
was granted an allowance of $109.0m which was fully drawn ahead of the 30 September 2020 deadline.
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On 1 September 2020, the RBA announced changes to the TFF, including a Supplementary Allowance that
provided ADI’s additional three year funding at a rate of 0.10%. MyState Bank was granted an allowance of
$75.7m which was fully drawn ahead of the 30 June 2021 deadline.
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The combined drawn amount as at the reporting date of $184.7m is reported within “term deposits”. Funding
obtained under the TFF has been secured by $219.4m of eligible asset backed self-securitisation. The funding
was drawn down progressively and will therefore be able to be repaid progressively at the end of each respective
three year term, commencing in May 2023 and ending in June 2024.
MyState Limited - Annual Report 2022
Liquidity risk exposure
The Group is exposed to liquidity risk primarily through its banking activities. The Group’s contractual cash
flows associated with its financial liabilities and hedging derivatives, within relevant maturity groupings is as
follows. These are presented on an undiscounted basis and, therefore, will not agree to amounts presented on
the Consolidated Statement of Financial Position as they incorporate principal and associated future interest
payments.
On demand
$’000
< 3 months
$’000
3 months to
1 year
$’000
1 year to
5 years
$’000
> 5 years
$’000
Total
$’000
2022
At call deposits
3,456,811
-
Due to other financial
institutions
Term deposits
Negotiable certificates of
deposit
Subordinated notes
Floating rate notes
Securitisation liabilities
-
-
-
-
-
-
22,982
-
-
-
-
-
3,456,811
-
22,982
789,825
1,219,829
368,469
-
2,378,123
342,107
174,356
-
-
516,463
664
1,991
10,619
63,273
76,547
2,771
11,084
105,422
-
119,277
92,557
277,672
794,187
-
1,164,416
Contractual amounts payable 3,456,811
1,250,906
1,684,932
1,278,697
63,273
7,734,619
Derivative liability
-
186
5,096
18,009
-
23,291
2021
At call deposits
2,965,447
-
Due to other financial
institutions
Term deposits
Negotiable certificates of
deposit
Subordinated notes
Floating rate notes
Securitisation liabilities
-
-
-
-
-
-
18,821
380
253
632,137
807,082
242,796
281,279
-
-
1,013
55,065
82,541
247,622
808,855
-
-
-
-
-
2,965,447
-
-
-
18,821
1,682,015
281,279
-
-
56,331
1,139,018
1,141
6,087
50,335
57,943
Contractual amounts payable 2,965,447
1,015,411
1,056,858
1,112,803
50,335 6,200,854
Derivative liability
-
163
1,922
13,775
-
15,860
Contractual maturity of assets and liabilities
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The contractual maturities of the Group’s financial assets and liabilities as at the reporting date are contained in
the following table. The Group expects that certain assets and liabilities will be recovered or settled at maturities
which are different to their contractual maturities.
Financial assets
Cash and liquid assets
Due from other financial
institutions
Other assets
Financial instruments
Loans and advances (i)
30 June 2022
30 June 2021
< 12 months
$’000
> 12 months
$’000
Total
$’000
< 12 months
$’000
> 12 months
$’000
Total
$’000
119,215
40,924
9,831
-
-
-
119,215
80,266
40,924
31,859
9,831
7,032
-
-
-
80,266
31,859
7,032
381,929
460,997
842,926
351,018
356,148
707,166
73,160
6,898,215
6,971,375
66,042
5,541,258
5,607,300
Total financial assets
625,059
7,359,212
7,984,271
536,217
5,897,406
6,433,623
Financial liabilities
Due to other financial institutions
(22,982)
Other liabilities
(17,213)
-
-
(22,982)
(18,821)
(17,213)
(20,605)
-
-
(18,821)
(20,605)
Deposits
Subordinated notes
Floating rate notes
(5,982,929)
(325,618)
(6,308,547)
(4,685,945)
(242,796)
(4,928,741)
-
-
(49,758)
(49,758)
(149,685)
(149,685)
-
-
(34,662)
(34,662)
(49,976)
(49,976)
Securitisation liabilities
(273,421)
(816,773) (1,090,194)
(267,457)
(798,958)
(1,066,415)
Total financial liabilities
(6,296,545) (1,341,834) (7,638,379) (4,992,828) (1,126,392) (6,119,220)
Net contractual amounts
receivable / (payable)
(5,671,486)
6,017,378
345,892 (4,456,611)
4,771,014
314,403
(i) Contractual recovery is subject to evolving regulatory and industry support for counterparties requesting such support, as at the
reporting date, the primary support provided to borrowers is repayment deferral periods.
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3.3 Average balance sheet and sources of net interest income
The following table shows the major categories of interest-earning assets and interest-bearing liabilities,
together with their respective interest earned or paid by the Group and the average interest rates. Averages are
calculated based on the balance at each month end.
30 June 2022
30 June 2021
Average
balance
$’000
Interest
$’000
Average rate
%
Average
balance
$’000
Interest
$’000
Average rate
%
Average assets and interest
income
Interest-earning assets
Cash and liquid assets
109,206
26
0.02%
102,751
21
Financial instruments
739,889
4,487
0.61%
608,672
3,403
Loans and advances (i)
5,933,925
155,236
2.62%
5,173,127
160,912
0.02%
0.56%
3.11%
Total average interest-earning
assets
6,783,020
159,749
2.36% 5,884,550
164,336
2.79%
Non-interest earning assets
142,541
-
-
141,968
-
-
Total average assets
6,925,561
159,749
2.31% 6,026,518
164,336
2.73%
Average liabilities and
interest expense
Interest-bearing liabilities
Deposits and derivatives
5,588,647
31,184
0.56% 4,563,415
30,861
Notes and bonds on issue
1,146,984
16,822
1.47% 1,300,339
20,206
1.36%
2.25%
Total average interest-bearing
liabilities
6,735,631
48,006
0.71% 5,863,754
51,067
0.87%
Non-interest bearing liabilities
36,982
-
-
42,846
-
-
Total average liabilities
6,772,613
48,006
0.71% 5,906,600
51,067
0.86%
Reserves
397,433
-
-
332,453
-
-
Total average liabilities and
reserves
7,170,046
48,006
0.67% 6,239,053
51,067
0.82%
(i) The offset account average balance included in Loans and advances is $262.919 million (2021: $232.382 million).
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4.1 Cash and liquid assets
Notes, coins and cash at bank
Other short term liquid assets
Total cash and liquid assets
Reconciliation of profit for the year to net cash provided by operating
activities
Profit for the year
Add / (less) items classified as investing / financing activities or non-cash items:
Depreciation of property, plant and equipment
Depreciation of right of use assets
Amortisation of intangible assets
Loss / (gain) on sale of non-current assets
Bad and doubtful debts expense net of recoveries
Share based payment
Tax movement within reserves
Changes in assets and liabilities:
30 June 2022
$’000
30 June 2021
$’000
114,570
4,645
119,215
75,469
4,797
80,266
32,026
36,341
563
2,728
5,625
(854)
(762)
227
(2,990)
638
3,626
5,275
248
(995)
501
(130)
Decrease / (increase) in due from other financial institutions
(9,065)
2,756
Decrease / (increase) in loans and advances
Decrease / (increase) in financial instruments
Decrease / (increase) in other assets
Decrease / (increase) in deferred tax assets
Increase / (decrease) in due to other financial institutions
Increase / (decrease) in deposits and other borrowings
Increase / (decrease) in employee benefits provisions
Increase / (decrease) in tax liabilities
Net cash flows used in operating activities
Cash and liquid assets accounting policies
Cash and liquid assets
(1,363,313)
(125,795)
(548)
3,617
2,059
1,403,585
345
3,168
(49,384)
(320,192)
(164,167)
(270)
(614)
(4,619)
325,186
(434)
(5,444)
(122,294)
Cash and liquid assets in the Consolidated Statement of Financial Position and for the purposes of the
Consolidated Statement of Cash Flows comprise cash at bank and in hand and short-term deposits with
an original maturity of less than three months, net of outstanding bank overdrafts. Cash flows arising from
deposits, share capital, investments, loans to subsidiaries and investments in associates are presented on a net
basis in the Statement of Cash Flows.
Cash Flow statement
Cash flows arising from the following activities are presented on a net basis in the Statement of Cash Flows:
› Customer deposits and withdrawals from savings and fixed-term deposit accounts;
› Movements in investments;
› Amounts due to and from other financial institutions;
› Customer loans and advances; and
› Dividends paid.
Where operational income and expense accruals and prepayments are included in the above line items, the
movements will differ between the Statement of Financial Position and the disclosure in this note.
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4.2 Financial instruments
Financial instruments at amortised cost
Negotiable certificates of deposits
Term deposits
Floating rate notes
Other deposits
Total financial instruments at amortised cost
Financial instruments at fair value
Derivatives
Total financial instruments
30 June 2022
$’000
30 June 2021
$’000
341,098
35,700
317,703
35,700
455,878
353,258
721
1,068
833,397
707,729
9,529
(563)
842,926
707,166
Financial instruments accounting policies
Financial instruments at amortised cost
Financial instruments at amortised cost are those non-derivative financial assets that the Group has acquired
with the objective of holding in order to collect contractual cash flows. 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 instruments at fair value
Financial instruments other than those carried at amortised cost, are carried at their fair value at the reporting
date. Note 4.7 contains information on how the Group determines fair values. Fair value gains and losses are
recognised in comprehensive income until the derecognition date, at which point the net gains and losses are
transferred to profit or loss for that instrument.
Derecognition of financial assets and liabilities
Financial assets are derecognised when the contractual rights to receive cash flows from the assets have
expired, or where the Group has transferred its contractual rights to receive the cash flows of the financial assets
and substantially all the risks and rewards of ownership. Financial liabilities are derecognised when they are
extinguished, i.e. when the obligation is discharged, cancelled or expired.
4.3 Loans and advances
Classification of loans and advances at amortised cost
Residential loans secured by mortgage
Personal loans and unsecured overdrafts
Overdrafts secured by mortgage
Commercial loans
Total loans and advances at amortised cost
Less:
Specific provision for impairment
Collective provision for impairment
30 June 2022
$’000
30 June 2021
$’000
6,872,096
5,468,427
20,238
31,846
51,652
46,989
29,200
68,102
6,975,832
5,612,718
-
50
4,457
5,368
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Total loans and advances at amortised cost net of provision for impairment
6,971,375
5,607,300
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Loans and advances at amortised cost accounting policy
Loans and other receivables that have fixed or determinable payments that are not quoted in an active market
are classified as “loans and advances”. Loans and advances are recognised on trade date and are measured
at amortised cost using the effective interest method, less any impairment. Interest income is recognised
by applying the effective interest rate, except for short-term receivables when the effect of discounting is
immaterial.
Provision for impairment
Provision for impairment
Specific provision for impairment
Opening balance
Net specific provision funding
Write-off of previously provisioned facilities
Closing balance of specific provision for impairment
Collective provision for impairment
Opening balance
Net collective provision funding
Write-off of previously provisioned facilities
Closing balance of collective provision for impairment
Charge to profit for impairment on loans and advances
Increase / (decrease) in specific provision for impairment
Increase / (decrease) in collective provision for impairment
Bad debts recovered
Bad debts written off directly
Less charge related to discontinued operation
Total impairment (recovery) / expense on loans and advances
30 June 2022
$’000
30 June 2021
$’000
50
(50)
-
-
5,368
(918)
7
4,457
(50)
(918)
(539)
745
-
(762)
305
(255)
-
50
6,632
(1,037)
(227)
5,368
(255)
(1,037)
(675)
972
-
(995)
The Group has undertaken a review of the expected credit loss (ECL) of its lending portfolios against relevant
specific economic conditions under varying scenarios. The review considered the macroeconomic outlook,
customer credit quality, the quality of collateral held and exposure at default as at the reporting date. These
model inputs including forward-looking information have been revised in recognition that rising cash rates is a
key driver of the estimates therein. The modelled ECL is sensitive to the speed and resilience of post-COVID-19
economic normalisation, and the longevity of any monetary and fiscal intervention, as these influence both the
probability of default, and the value of collateral that may be utilised. Whilst the inputs have been revised,
the underlying methodology for calculating the ECL is consistently applied in the current and comparative period
as described in the Impairment of financial assets accounting policy’ presented below.
At 30 June 2022, this review includes forward looking economic assumptions using a scenario weighting of
60% base case, 30% moderate recession and 10% strong recovery. The key assumptions used to determine the
forward looking economic overlay were revised to incorporate the latest observed economic data, including a
higher Official Cash Rate (OCR), stronger levels of employment and lower near term house price growth, with
price falls under the moderate recession scenario of -20% across FY23 and FY24.
Given the ever-changing COVID-19 environment in Australia and geopolitical uncertainties affecting the world,
future economic conditions that result in outcomes that differ from the current estimate are possible and will be
accounted for in future periods.
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Impairment of financial assets accounting policy
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets
are considered to be impaired when there is objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment
have been affected. The primary source of credit risk for the Group arises on its loan portfolio. In relation to this
portfolio, the Group maintains a specific provision and a collective provision.
Specific provisions for impairment are made against individual risk rated credit facilities where a loss is expected.
The provisions are measured as the difference between a financial asset’s carrying amount and the expected
future cash flows.
All other loans and advances that do not have an individually assessed provision are assessed collectively
for impairment. The collective provisions are calculated using an Expected Credit Loss (ECL) model. This
model is forward looking and does not require evidence of an actual loss event for impairment provisions to be
recognised.
The Group applies a three-stage approach to measuring the ECL based on credit risk since origination. The
Group estimates ECL through modelling the probability of default, loss given default and exposure at default, as
follows:
Stage 1 - Performing - This category includes financial assets that have not experienced a significant increase
in credit risk since their origination. For these financial assets an allowance equivalent to 12 month’s ECL is
recognised, which represents the credit losses expected to arise from defaults occurring over the next 12 months.
Stage 2 - Under-performing - This category includes financial assets that have experienced a significant
increase in credit risk since their origination and are not credit impaired. For these financial assets an allowance
equivalent to lifetime ECL is recognised. Lifetime ECL is the credit losses expected to arise from defaults
occurring over the remaining life of the financial assets.
Stage 3 - Non-performing (impaired) - This category includes financial assets that are credit impaired. The
provision is also equivalent to the lifetime ECL. The difference to the provision calculated on stage 2 loans is
that the stage 3 loan calculation is not discounted over a future period, but rather the provision is calculated at
nominal value.
Financial assets in stage 1 and stage 2 are assessed for impairment collectively, whilst those assets in stage 3 are
subject to either collective or specific impairment assessment.
Significant changes in credit risk
Significant increases in credit risk for financial assets are assessed by comparing the risk of a default occurring
over the expected life of a financial asset at the reporting date compared to the corresponding risk of default at
origination. In determining what constitutes a significant increase in credit risk, the Group considers qualitative and
quantitative information. The judgement to determine this is primarily based on changes in internal customer risk
grades since origination of the facility. For all of the Group’s loan portfolios, in addition to the primary indicator, a
mathematical model has been developed to identify where a facility’s recent behaviour has deteriorated significantly
from its original behaviour.
Key judgements and estimates made by the Group include the following:
Forward looking information
The measurement of expected credit losses needs to reflect an unbiased probability-weighted range of possible
future outcomes. AASB 9 provides limited guidance on how to meet this requirement and consequently, the
Group has developed an approach considered appropriate for its credit portfolio, informed by emerging market
practices.
In applying forward looking information in its AASB 9 credit models, the Group considered three alternate
economic scenarios (base case, strong recovery and moderate recession), to ensure a sufficient unbiased
representative sample is included in estimating ECL. At 30 June 2022, the forward looking component of the
collective provision for doubtful debts is $0.9m (2021: $1.5m). The balance of the overlay at 30 June 2021
reflected the level of uncertainty of the potential ongoing impact of COVID-19 at that time. At 30 June 2022,
while there are no customers on COVID related assistance, the overlay now primarily reflects the uncertainty
surrounding the impact of inflation and higher interest rates on the economic recovery.
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4.4 Transfer of financial assets (securitisation program)
Some loans and advances to customers are sold by the Group to securitisation vehicles. The transfer takes the
form of the Group assuming an obligation to pass cash flows from the underlying assets to investors in the notes.
The Group utilises its securitisation program to provide regulatory capital relief and funding diversification.
The following table sets out the carrying values at the transaction date of financial assets transferred during the
financial year in this manner to vehicles that provide regulatory capital relief and the value of the associated
liabilities issued from the vehicles. This table does not include transfer of assets to the securitisation vehicle in
which the Group is the bond holder.
Transferred financial assets:
Loans and advances
Associated financial liabilities
Securitisation liabilities to external investors
Transfer of financial assets accounting policy
30 June 2022
$’000
30 June 2021
$’000
350,389
350,389
-
-
Once assets are transferred to a securitisation vehicle, the Group does not have the ability to use the transferred
assets during the term of the arrangement. The Group does not have any loans transferred to unconsolidated
securitisation vehicles.
The consolidated securitisation vehicles generally transfer all the risks and rewards of ownership of the assets to the
investors in the notes. However, derecognition of the transferred assets from the Group is prohibited because the cash
flows that the securitisation vehicles collect from the transferred assets on behalf of the investors are not passed to
them without material delay. In these cases, the consideration received from the investors in the notes in the form of
cash is recognised as a financial asset and a corresponding financial liability is recognised. The investors in the notes
have recourse only to the cash flows from the transferred financial assets.
4.5 Deposits and other borrowings including subordinated notes
Deposits
At call deposits
Term deposits
Negotiable certificates of deposit
Total deposits
Other borrowings
Subordinated notes(i)
Floating rate notes(ii)
Securitisation liabilities
30 June 2022
$’000
30 June 2021
$’000
3,456,811
2,965,447
2,335,273
1,682,015
516,463
281,279
6,308,547
4,928,741
49,758
149,685
34,662
49,976
1,090,194
1,066,415
Total deposits and other borrowings including subordinated notes
7,598,184
6,079,794
Concentration of deposits:
Customer deposits
Wholesale deposits
Subordinated notes(i)
Floating rate notes(ii)
Securitisation liabilities
Total deposits
5,553,779
4,462,773
754,768
465,968
49,758
149,685
34,662
49,976
1,090,194
1,066,415
7,598,184
6,079,794
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(i) Refer to note 3.1 (ii) for details regarding the subordinated notes issue.
(ii) On 20 November 2021, floating rate notes with a face value of $100m and term of 3 years were issued by MyState Limited.
There are no customers who individually have deposits which represent 10% or more of total liabilities.
MyState Limited - Annual Report 2022
Deposits and other borrowings accounting policy
Deposits and other borrowings are initially measured at fair value, net of transaction costs and are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective
yield basis.
The Group does not currently hold any financial liabilities at fair value.
4.6 Other liabilities
Trade payables and related accruals
Lease liabilities
Total other liabilities
Lease liabilities
30 June 2022
$’000
30 June 2021
$’000
6,975
10,238
17,213
8,699
11,906
20,605
Lease liabilities are initially measured at the present value of the future lease payments at the commencement
date, discounted using the interest rate implicit in the lease (or if that rate cannot be readily determined, the lessee’s
incremental borrowing rate).
Lease payments are allocated between principal and interest expense. Interest expense is recognised as a
financing cost within interest expense (refer note 2.1) in the income statement over the lease period. Any variable
lease payments not included in the measurement of the lease liability are also recognised in the income statement
in the period in which the event or condition that triggers those payments occurs. Lease liabilities are remeasured
when there is a change in future lease payments arising from a change in lease term, an assessment of an option
to purchase the underlying asset, an index or rate, or a change in the estimated amount payable under a residual
value guarantee. When the lease liability is remeasured, a corresponding adjustment is made to the carrying value of
the Right-of-use (ROU) asset, or, in the income statement, where the carrying value of the ROU asset has been fully
written down. The ROU asset is recorded in property, plant and equipment and right-of-use assets (refer to note 5.1).
4.7 Fair value of financial instruments
Classification of financial instruments
Cash and liquid assets and amounts due from financial institutions are carried at cost. As these assets are short
term assets, their cost is considered to approximate their fair value.
The following financial assets and liabilities are also carried at amortised cost:
› Financial instruments;
› Loans and advances;
› Deposits; and
› Other borrowings.
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The aggregate net fair value of financial assets and financial liabilities which are carried at amortised cost is:
Financial assets
Financial instruments
Loans and advances
Total financial assets
Financial liabilities
Deposits
30 June 2022
30 June 2021
Carrying
value
$’000
Net fair value
$’000
Carrying
value
$’000
Net fair value
$’000
833,397
819,283
707,729
725,199
6,971,375
6,893,600
5,607,300
5,613,341
7,804,772
7,712,883
6,315,029
6,338,540
6,308,547
6,301,702
4,928,741
4,928,719
Other borrowings including subordinated notes
1,289,637
1,288,359
1,151,053
1,150,973
Total financial liabilities
7,598,184
7,590,061
6,079,794
6,079,692
Fair value hierarchy
The level in the fair value hierarchy of the inputs used in determining the fair values is shown below. The fair value
of these assets is:
Level 1 - inputs that are prices quoted for identical instruments in active markets;
Level 2 - inputs based on observable market data other than those in level 1; and
Level 3 - inputs for which there is no observable market data.
Where the expected maturity is in excess of 12 months, the fair value is discounted to its present value. During the
year, there have been no material transfers between levels of the fair value hierarchy.
2022
Financial assets
Financial instruments
Loans and advances
Financial liabilities
Deposits
Other borrowings including subordinated notes
2021
Financial assets
Financial instruments
Loans and advances
Financial liabilities
Deposits
Other borrowings including subordinated notes
Level 1
value
$’000
Level 2
value
$’000
Level 3
value
$’000
Total
value
$’000
-
-
-
-
-
-
-
-
819,283
-
819,283
- 6,893,600 6,893,600
6,301,702
1,288,359
-
-
6,301,702
1,288,359
725,199
-
725,199
-
5,613,341
5,613,341
4,928,719
1,150,973
-
-
4,928,719
1,150,973
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The Group has performed a VaR analysis as detailed in note 3.2, Market risk. VaR takes account of all material
market variables that may cause a change in the value of the loan portfolio, being 100% of Level 3 inputs.
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5.1 Property, plant and equipment and right-of-use assets
Leasehold improvements
At revalued amount
Accumulated depreciation
Plant and equipment
At cost
Accumulated depreciation
Right-of-use assets - land and buildings
At cost
Accumulated depreciation
Total property, plant and equipment
30 June 2022
$’000
30 June 2021
$’000
7,370
(6,820)
550
5,847
(5,040)
807
15,581
(6,485)
9,096
10,453
7,351
(6,629)
722
5,433
(4,826)
607
14,938
(4,589)
10,349
11,678
Property, plant and equipment accounting policy
Leasehold improvements
Following initial recognition at cost, leasehold improvements are carried at a revalued amount, being their fair
value at the date of the revaluation less any subsequent accumulated depreciation on leasehold improvements.
Fair value, is determined by reference to market-based evidence, which is the amount for which the assets could
be exchanged between a knowledgeable willing buyer and seller in an arm’s length transaction as at valuation
date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the
Consolidated Statement of Financial Position, unless it reverses a revaluation decrease of the same asset
previously recognised in the Consolidated Income Statement. Any revaluation deficit is recognised in the
Consolidated Income Statement unless it directly offsets a previous surplus of the same asset in the asset
revaluation reserve.
A property previously classified as land and buildings was reclassified as Investment property in the prior
comparative period and held for sale and subsequently disposed of during the financial year.
Plant and equipment and right-of-use (ROU) assets
Plant and equipment and right-of-use assets are measured at cost less accumulated depreciation and any
impairment in value. The cost of ROU assets correspond to the amount recognised for the lease liability on initial
recognition together with any lease payments made at or before the commencement date, net of any lease
incentives received and initial direct costs.
Impairment of property, plant and equipment and right-of-use assets
The carrying values of property, plant and equipment and right-of-use assets are reviewed for impairment when
events or changes in circumstances indicate the carrying value may not be recoverable. For an asset that does
not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Derecognition of property, plant and equipment and right of use assets
An item of property, plant and equipment or right-of-use asset is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on
derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the item) is included in the Consolidated Income Statement in the year the item is derecognised.
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5.2 Investment property
Land and buildings
At revalued amount
Accumulated depreciation
Total investment property
Investment property accounting policy
Land and buildings
30 June 2022
$’000
30 June 2021
$’000
-
-
-
-
5,293
(1,492)
3,801
3,801
Following initial recognition at cost, land and buildings are carried at a revalued amount, being their fair value
at the date of the revaluation less any subsequent accumulated depreciation on buildings and accumulated
impairment losses. Independent valuations are performed with sufficient regularity to ensure the carrying amount
does not differ materially from the asset’s fair value at the Consolidated Statement of Financial Position date.
Fair value, is determined by reference to market-based evidence, which is the amount for which the assets could
be exchanged between a knowledgeable willing buyer and seller in an arm’s length transaction as at valuation
date.
Any revaluation surplus is credited to the asset revaluation reserve included in the equity section of the
Consolidated Statement of Financial Position, unless it reverses a revaluation decrease of the same asset
previously recognised in the Consolidated Income Statement. Any revaluation deficit is recognised in the
Consolidated Income Statement unless it directly offsets a previous surplus of the same asset in the asset
revaluation reserve.
At 31 December 2021, the investment property was reclassified from Investment property to Held for sale in line
with AASB 5 Non-Current assets held for Sale. Prior to reclassification, the property was revalued and a gain
on revaluation of $530k was recognised in line with the requirements of AASB 140 Investment Property. The
property has subsequently been sold and settled on 16 May 2022. A gain on disposal of $324k has been recorded
separately in the Consolidated Income Statement. (Refer note 1.3)
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5.3 Intangible assets and goodwill
Goodwill
$’000
Software
$’000
Total
$’000
Year ended 30 June 2022
At 1 July 2021, net of accumulated amortisation
65,152
18,326
83,478
Additions
Disposal
Transfer out from derecognition of SAAS capitalised costs
Amortisation
-
-
-
-
4,343
4,343
-
-
(3,351)
(5,625)
(3,351)
(5,625)
At 30 June 2022, net of accumulated amortisation
65,152
13,693
78,845
At 30 June 2022
Cost (gross carrying amount less impairment)
Accumulated amortisation
Net carrying amount
Year ended 30 June 2021
At 1 July 2019, net of accumulated amortisation
Additions
Disposal
Amortisation
65,152
40,293
105,445
-
(26,600)
(26,600)
65,152
13,693
78,845
65,152
-
-
-
19,319
4,282
-
84,471
4,282
-
(5,275)
(5,275)
At 30 June 2021, net of accumulated amortisation
65,152
18,326
83,478
At 30 June 2021
Cost (gross carrying amount less impairment)
Accumulated amortisation
Net carrying amount
Intangibles accounting policy
65,152
41,066
106,218
-
(22,740)
(22,740)
65,152
18,326
83,478
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised
at fair value as at the date of acquisition. Following initial recognition, the cost model is applied to the class of
intangible assets. The useful lives of these intangible assets are assessed to be either finite or infinite. Where
amortisation is charged on assets with finite lives, this expense is taken to the Consolidated Income Statement.
Certain costs directly incurred in acquiring and developing software are capitalised and amortised over the
estimated useful life.
Software as a Service arrangement
Any capitalised costs of configuring or customising a supplier’s application software in a software as a service
arrangement have been derecognised in the financials in line with the IFRS Interpretation Committee’s (IFRIC) agenda
decision in April 2021. The impact has been recognised in the Group’s retained earnings. (Refer to note 1.3)
Intangible assets are tested for impairment where an indicator of impairment exists and, in the case of indefinite
life intangibles (limited to Goodwill), annually, either individually or at the cash-generating unit level. Useful lives
are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Goodwill is treated as an indefinite life intangible, software and other intangibles are finite life intangibles. Refer
to note 2.4 Expenses for the useful life of tangible and intangible assets.
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Impairment testing of Goodwill
For the purpose of impairment testing, goodwill has been allocated to the Group’s two cash-generating units
(CGU’s) the Banking Business and the Wealth Management Business. These CGU’s represent the lowest level
within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying
amounts of goodwill allocated to each CGU for the purpose of impairment testing is as follows:
Banking Business
Wealth Management Business
Total goodwill
30 June 2022
$’000
30 June 2021
$’000
40,189
24,963
65,152
40,189
24,963
65,152
The Group’s assessment of goodwill value-in-use exceeds the carrying value allocated to the CGUs and
included in the financial statements.
The recoverable amounts for each CGU’s value-in-use was determined using cash flow projections from Board
approved financial budgets for the year ending 30 June 2023. Growth rates have been applied from year two
through to year ten. Cash flows are projected by undertaking detailed calculations for each income and expense
category over a three year period and are then extrapolated off the 3rd year, which is the lowest point of growth.
An exit value is calculated at the end of 10 years, based on an implied terminal value earnings multiple of 8.5
and 9.2 for the Banking Business and the Wealth Management Business respectively, and a long-term growth
rate not exceeding industry. A post-tax discount rate of 11.7% (16.7% pre-tax) and 11.1% (15.9% pre tax) was used
for the Banking Business and the Wealth Management Business respectively. Certain income categories are
modelled by projecting growth in relevant portfolio balances and the resulting income derived there-from. Other
non-portfolio related income streams and expense categories are modelled by projecting real rates of growth
(above inflation) for each category. Terminal value is determined at year ten using the assumption that the CGU
achieves no real growth above inflation into perpetuity. The growth rates applied do not exceed the long-term
average growth rate for the business which the CGU operates. The discount rate used of 11.7% reflects the
Group’s post-tax nominal weighted average cost of capital, which has been reviewed by externally engaged
advisers and approved by the Board. Average inflation is projected to be 5.1%. The method for determining
value-in-use is consistent with that adopted in the comparative period.
The key assumptions adopted in assessing Banking’s value-in-use are the rate of growth in the balance of the
housing loan portfolio and the outlook for net interest margin (NIM). Taking into account management’s past
experiences and external evidence, the assumptions that have been adopted for both of these components are
considered to be reasonable. Management expects that any reasonably possible change to assumptions used in
Management’s assessment will not result in impairment.
The key assumption adopted in assessing Wealth Management’s value-in-use is the rate of growth in income
derived from management fee (MF) income. MF income is derived from its activities as the responsible entity for
various Managed Investment Schemes (MIS). MF income derived is directly related to the portfolio balances of
the MIS. Other sources of income for the Wealth Management Business are its Trustee Services divisions. Taking
into account Management’s past experiences and external evidence, the assumptions adopted are considered
reasonable. Management’s assessment of Wealth Management’s value-in-use exceeds its carrying value. Any
reasonably possible change to assumptions used in Management’s assessment will not result in impairment.
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Goodwill accounting policy
Goodwill on the acquisition of businesses is carried at cost as established at the date of the acquisition of the
business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash generating units (or
groups of CGU’s) that is expected to benefit from the synergies of the combination.
A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there
is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying
amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the
CGU and then to the other assets of the unit pro rata based on the carrying amount of each asset in the CGU.
Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for
goodwill is not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount
of goodwill is included in the determination of the profit or loss on disposal.
Impairment of subsidiaries accounting policy
Investments in subsidiaries are tested annually for impairment or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognised for the
amount by which the investment’s carrying amount exceeds its recoverable amount (which is the higher of fair
value less costs to sell and value in use). At each balance sheet date, the investments in subsidiaries that have
been impaired are reviewed for possible reversal of the impairment.
5.4 Employee benefits provisions
Balances
Provision for annual leave
Provision for long service leave
Total employee benefits provisions
Due to be settled within 12 months
Due to be settled in more than 12 months
Total employee benefits provisions
Employee benefits accounting policy
30 June 2022
$’000
30 June 2021
$’000
2,319
3,266
5,585
4,129
1,456
5,585
2,006
3,234
5,240
3,879
1,361
5,240
Liabilities for salaries, wages and annual leave are recognised in respect of employees’ service up to the
reporting date. Where settlement is expected to occur within twelve months of the reporting date, the liabilities
are measured at their nominal amounts based on the remuneration rates which are expected to be paid when
the liability is settled. Where settlement is expected to occur later than twelve months from reporting date,
the liabilities are measured at the present value of payments which are expected to be paid when the liability
is settled.
A liability for long service leave is recognised and measured at the present value of expected future payments
to be made in respect of services provided up to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service.
Contributions are made by the Group to employee superannuation funds and are charged as expenses
when incurred.
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5.5 Share capital
Issued and paid up ordinary shares
Movements in ordinary share capital
Opening balance
Shares issued pursuant to the:
- Group employee share scheme
- Executive long term incentive plan
30 June 2022
$’000
30 June 2021
$’000
211,167
208,196
30 June 2022
30 June 2021
Number of
shares
Amount
$’000
Number of
shares
Amount
$’000
105,275,092
208,196
92,008,862
152,775
12,584
-
62
-
21,853
34,063
84
167
- Dividend reinvestment plan
617,265
3,000
307,239
1,397
- Institutional placement and entitlement offer
- Retail entitlement offer
- Less: Share issue transaction costs, net of tax
-
-
-
-
-
(91)
7,274,502
31,280
5,628,573
24,203
-
(1,710)
Closing balance
105,904,941
211,167
105,275,092
208,196
Terms and conditions
Ordinary shares have the right to receive dividends as declared from time to time and, in the event of a winding
up of the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number
of shares and amounts paid up on the shares held. Ordinary shares entitle their holder to one vote per share,
either in person or by proxy at meetings of the Company.
The Company does not have authorised capital or par value in respect of its issued shares.
The Group offers share based remuneration, refer to note 5.2 in the Remuneration Report for further information
regarding these arrangements.
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6.1 Income tax expense, current and deferred tax balances
The major components of income tax expense /(benefit) are:
Income tax expense
Current income tax charge
Adjustment in respect of current income tax of previous years
Adjustments in respect of deferred income tax of previous years
Adjustments in respect of equity / goodwill
Relating to origination and reversal of temporary differences
Total income tax expense
A reconciliation between tax expense and accounting profit
before income tax multiplied by the Group’s applicable income
tax rate is as follows:
Income tax expense attributable to:
Accounting profit before income tax
30 June 2022
$’000
30 June 2021
$’000
12,426
14,794
(34)
-
(2,789)
4,273
13,876
78
(10)
611
244
15,717
45,902
52,058
The income tax expense comprises amounts set aside as:
Provision attributable to the current year at the statutory rate of 30%, being:
- Prima facie tax on accounting profit before tax
13,771
15,617
- Under / (over) provision in prior year
Expenditure not allowable for income tax purposes
Other
Income tax expense reported in the consolidated income
statement
Total income tax expense
Weighted average effective tax rates
Deferred income tax relates to the following:
Deferred tax assets
Employee entitlements
Provisions
Doubtful debts
Other
Total deferred tax assets
Current tax receivable
Total tax assets
Deferred tax liabilities
Financial assets at fair value
Property, plant and equipment
Other
Total deferred tax liabilities
Current tax payable
Total tax liabilities
(34)
139
-
63
36
1
13,876
15,717
13,876
30.2%
15,717
30.2%
1,676
243
1,337
1,639
4,895
1,383
6,278
61
1,711
4,198
5,970
-
5,970
1,572
221
1,662
2,445
5,900
3,996
9,896
68
2,387
347
2,802
-
2,802
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Movements in deferred tax balances
Opening balance
Reclassification deferred tax
(Charged)/credited to income statement
Credited/(charged) to equity
Adjustments for deferred tax of prior years
Deferred tax assets
Deferred tax liabilities
30 June 2022
$’000
30 June 2021
$’000
30 June 2022
$’000
30 June 2021
$’000
5,900
5,286
(130)
(916)
41
-
13
611
(10)
2,802
(130)
468
2,830
-
1,944
858
-
-
Closing balance
4,895
5,900
5,970
2,802
Taxation accounting policy
Income tax expense is recognised in the Consolidated Income Statement, except to the extent that it relates
to items recognised directly in other comprehensive income, in which case it is recognised in the Consolidated
Statement of Comprehensive Income. Income tax expense on the profit or loss of the period comprises current
tax and deferred tax.
Current tax payable
Current tax payable is the expected tax payable on the taxable income for the financial year using tax rates that
have been enacted, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred income tax is provided on all temporary differences at reporting date. Temporary differences are
calculated at each reporting date as the difference between the carrying amount of assets and liabilities for
financial reporting purposes and their tax base.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
› Where the deferred income tax liability arises from the initial recognition of goodwill or 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; and
› When the taxable temporary differences associated with the investments in subsidiaries and the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward of unused tax assets and unused tax losses can be
utilised except:
› When the deferred income tax asset relating to the deductible temporary difference 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, affect neither the accounting profit nor the taxable profit and loss; and
› When the deductible temporary differences are associated with investments in subsidiaries, in which case
a deferred tax asset is only recognised to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the temporary differences
can be utilised.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable
entity and the same taxable authority.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires
the exercise of judgement. The Group estimates its tax liability based on its understanding of the tax law.
Tax consolidation
The Group has elected to be taxed as a single entity under the tax consolidation regime. The head company
is MyState Limited. The members of the Group have entered into a tax sharing agreement that provides for
the allocation of income tax liabilities among the entities should the head entity default on its tax payment
obligations. No amounts have been recognised in the financial statements in respect of this agreement on the
basis that the possibility of default is remote.
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The Company and the controlled entities in the tax consolidated group continue to account for their own
current and deferred tax amounts. The Company has applied the separate tax payer within group approach
in determining the appropriate amount of current taxes and deferred taxes to allocate to members of the tax
consolidated group.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
7.1 Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial information
shown below, are the same as those applied in the consolidated financial statements. Refer to note 1 and policy
notes within the financial statements for a summary of the significant accounting policies relating to the Group.
Statement of Financial Position
Assets
Cash and liquid assets
Other receivables
Related party receivables
Investments in subsidiaries
Current and deferred tax assets
Total assets
Liabilities
Other liabilities
Other borrowings
Related party payables
Tax liabilities
Employee benefits provisions
Total liabilities
Net assets
Equity
Share capital
Retained earnings
Reserves
Total equity
Financial performance
Profit after income tax for the year
Other comprehensive income
Total comprehensive income
30 June 2022
$’000
30 June 2021
$’000
3,963
1,131
50,000
324,392
2,588
318
965
25,000
321,392
5,510
382,074
353,185
820
50,000
5,392
121
439
2,536
25,000
2,921
32
457
56,772
30,946
325,302
322,239
317,095
314,124
7,182
1,025
7,071
1,044
325,302
322,239
26,813
12,841
-
-
26,813
12,841
The parent entity has not entered into any guarantees and does not have any contingent liabilities as at 30 June
2022 (30 June 2021: nil).
Transactions between the Company and the consolidated entities principally arise from the provision of
management and governance services. All transactions with subsidiaries are in accordance with regulatory
requirements, the majority of which are on commercial terms. All transactions undertaken during the financial
year with the consolidated entities are eliminated in the Consolidated Financial Statements. Amounts due from
and due to entities are presented separately in the Statement of Financial Position of the Company except where
offsetting reflects the substance of the transaction or event.
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7.2 Controlled entities and principles of consolidation
Details of the Group’s material subsidiaries at the end of the reporting period are as follows.
Significant subsidiaries
Principal activities
MyState Bank Limited
TPT Wealth Limited
Banking
Wealth Management
Connect Asset Management Pty Ltd
Manager of Securitisation Vehicles
Country of
Incorporation
Ownership
Interest
Australia
Australia
Australia
100%
100%
100%
Basis of consolidation accounting policy
The consolidated financial statements incorporate the financial statements of the Company and entities
(including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the
Company:
› Has power over the investee;
› Is exposed, or has rights, to variable returns from its involvement with the investee; and
› Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of these three elements of control.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee
when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the
Company’s voting rights in an investee are sufficient to give it power, including:
› The size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
› Potential voting rights held by the Company, other vote holders or other parties;
› Rights arising from other contractual arrangements; and
› Any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed
of during the year are included in the Consolidated Income Statement and Other Comprehensive Income from
the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of Other Comprehensive Income are attributed to the owners of the Company
and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
7.3 Related party disclosures
The ultimate parent entity and controlling entity is MyState Limited. Balances and transactions between the
Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation
and are not disclosed in this note. Details of transactions between the Group and other related parties are
disclosed in the following paragraphs.
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Managed Investment Schemes
Within the Group, TPT Wealth Limited (TPT) is a Responsible Entity for Managed Investment Schemes (Funds)
and, accordingly, has significant influence over their activities. TPT receives management fees from these Funds.
TPT also pays expenses of the Funds for which it is reimbursed. TPT and the Company have also invested in
these Funds and receive distributions on these investments. These investments are made on the same terms and
conditions that apply to all investors in these Funds. Details of these transactions and balances are as follows:
Management fees received
Balance of investment held at year end
Distributions received from managed funds
Consolidated
TPT
30 June
2022
$’000
30 June
2021
$’000
30 June
2022
$’000
30 June
2021
$’000
9,078
2,532
23
9,412
2,553
(35)
9,078
2,532
9,412
2,509
22
(23)
The Funds have:
› Accepted money on deposit from Directors and Executives or entities associated with Directors and
Executives at prevailing Fund rates and conditions;
› Loaned money to MyState Bank, in the form of term deposits and negotiable certificates of deposit, totalling
$2.58M (2021: $2.55M); and
› Invested in the ConQuest Trusts Residential Mortgage Backed Securities Program in the form of Class A and
B notes totalling $31.29M (2021: $28.94M).
These deposits are made on the same terms and conditions that apply to all similar transactions.
Key Management Personnel
(i) Loans to directors
During 2022, secured loans advanced to the Managing Director and Chief Executive Officer were $0.97m. At 30
June 2022, the balance outstanding was $0.97m and is included in loans and advances. (Note 4.3)
(ii) Individual Directors and Executive compensation disclosures
Information regarding individual Directors, Executive compensation, and equity instruments disclosures,
as required by the Corporations Regulation 2M.2.03, is provided in the Remuneration Report section of the
Directors’ report. Disclosure of the compensation and other transactions with key management personnel (KMP)
is required pursuant to the requirements of Australian Accounting Standard AASB 124 Related Party Disclosures.
The KMP of the Group is comprised of the Non Executive Directors, Managing Director and Chief Executive
Officer and certain Executives.
Key management personnel compensation
The key management personnel compensation comprised:
Short-term employee benefits
Post employment benefits
Share-Based payment (i)
Termination benefits
30 June 2022
$’000
30 June 2021
$’000
3,885
4,611
323
208
-
295
473
-
(i) These amounts are estimates of compensation and include a portion that will only vest to the Managing Director or Executive when
certain performance criteria are met or a ‘Capital Event’ occurs. The fair value of shares is calculated at the date of grant and is allocated
to each reporting period over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the shares
allocated to this reporting period.
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8.1 Contingent liabilities and expenditure commitments
MyState Bank has provided guarantees to third-parties in order to secure the obligations of customers. The
range of situations in which guarantees are given include:
› Local Government Authorities, to secure the obligations of property and sub-divisional developers to
complete infrastructure developments;
› Local Government Authorities, Schools and other building owners, to secure the obligations of building
contractors to complete building works;
› Landlords, to secure the obligations of tenants to pay rent; and
› CUSCAL, to secure payroll and direct debit payments processed by CUSCAL on behalf of customers.
Customer commitments
Loans approved but not advanced to borrowers
Undrawn continuing lines of credit
Performance guarantees
Total customer commitments
30 June 2022
$’000
30 June 2021
$’000
207,176
58,269
2,919
134,076
62,458
3,858
268,364
200,392
Guarantees are issued in accordance with approved Board policy. Those guarantees over $10,000 are required
to be secured. In the event that a payment is made under a guarantee, the customer’s obligation to MyState
Bank is crystallised in the form of an overdraft or loan.
Estate Administration
TPT Wealth Limited acts as executor and trustee for a significant number of trusts and estates. In this capacity,
this company has incurred liabilities for which it has a right of indemnity out of the assets of those trusts and
estates. Accordingly, these liabilities are not reflected in the financial statements.
Other contracted commitments for expenditure on plant and equipment as at the reporting date are for only
minimal amounts.
8.2 Remuneration of auditors
During the financial year, the following fees which are shown exclusive of GST claimed were paid or payable for
services provided by the auditor of the Group, Wise Lord & Ferguson:
Audit services
Audit of the financial statements of the consolidated entities
Total remuneration for audit services
Audit related services
Assurance related services
Audit of loans and other services to the securitisation program
Total remuneration for audit related services
Other non-external audit related services
Other services
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Total remuneration for non-audit related services
Total remuneration for services provided
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30 June 2022
$’000
30 June 2021
$’000
418
418
51
4
55
51
51
524
401
401
50
6
56
10
10
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8.3 Events subsequent to balance date
On 8 August 2022, the MyState Limited Group announced that it had mandated Westpac and Ord Minnett
to engage with investors with the aim to investigate the prospect of issuing a capital note that will qualify as
Additional Tier 1 regulatory capital.
There were no other matters or circumstances, other than as noted above, that have arisen since the end of the
year 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 future financial periods.
8.4 Other significant accounting policies, new accounting standards
and disclosures
The principal accounting policies, which are consistent with those applied in the comparative period unless
otherwise stated, that have been adopted in the preparation of the financial report are set out in this section and
the preceding sections.
(i) Other assets
Other assets comprise accounts receivable, accrued income and prepayments. Accounts receivable are initially
recorded at the fair value of the amounts to be received and are subsequently measured at amortised cost using
the effective interest rate method, less any provision for impairment loss.
(ii) Other liabilities
Other liabilities comprise accounts payable and accrued expenses and represent liabilities for goods and
services received by the Group that remain unpaid at the end of the reporting period. The balance is recognised
as a current liability with the amounts normally paid within 30 days of the recognition of the liability.
(iii) New and revised accounting standards
The Group has adopted the following new standards and amendments to standards:
› AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements 2018-2020 and Other
Amendments.
› AASB 2019-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current – Deferral of Effective Date.
The following accounting standards will become effective in future financial years:
› AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current
› AASB 2021-2 Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates.
› AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and
Liabilities arising from a Single Transaction.
Adoption of these amendments is not expected to result in any significant changes to how the Group applies
accounting standards in future financial years.
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Directors’ Declaration
for the year ended 30 June 2022
In accordance with a resolution of the Directors of MyState Limited, we state that:
1. In the opinion of the Directors:
(a) The financial statements and notes of the Group set out on pages 58 to 99 are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its
performance for the year ended on that date; and
(ii) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
(b) There are reasonable grounds to believe that MyState Limited will be able to pay its debts as and when
they become due and payable.
2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 by
the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2022.
3. 3. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 1.2.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the Board
Vaughn Richtor
Chairman
Brett Morgan
Managing Director and Chief Executive Officer
Hobart, dated 15 August 2022.
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Independent
Auditor’s Report
IInnddeeppeennddeenntt AAuuddiittoorr’’ss RReeppoorrtt
To the Shareholders of MyState Limited
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
OOppiinniioonn
We have audited the financial report of MyState Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated
income statement, the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising
a summary of significant accounting policies and other explanatory information and the Directors’
declaration of the Company.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
I.
giving a true and fair view of the Group’s financial position as at 30 June 2022 and of its financial
performance for the year then ended; and
II.
complying with Australian Accounting Standards and the Corporations Regulations 2001.
BBaassiiss ffoorr OOppiinniioonn
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 (the Code) that are
relevant to our audit of the financial report in Australia; and we have 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.
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report and in forming our opinion thereon, and 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
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performance of procedures designed to respond to our assessment of the risks of material misstatement
of the financial statements. 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.
11.. OOppeerraattiioonn ooff IITT SSyysstteemmss aanndd CCoonnttrroollss
Key audit matter
How our audit addressed the matter
We focus our audit on those IT systems and controls
that are significant to the Group’s
financial
reporting process.
We assessed and tested the design and operating
effectiveness of the Group’s IT controls, including
those over user access and change management as
well as data reliability and integrity.
This involved assessing:
• Technology control environment and
governance;
• Change management processes
for
software applications;
• Access controls designed
to enforce
segregation of duties;
• System development,
the
appropriateness of management’s testing
and implementation controls;
reviewing
• We carried out direct tests of the operation
of key programs to establish the accuracy of
calculations, the correct generation of
reports, and to assess the correct operation
of automated controls and technology-
dependent manual controls; and
• Third party reports on IT systems and
controls.
For outsourced providers, we obtain assurance
from third party auditors on the design and
operating effectiveness of controls.
This is a key audit matter because a significant part
of the Group’s financial reporting process is heavily
reliant on IT systems with automated processes and
controls for the capture, processing, storage, and
extraction of information.
There has been continued change to the Group’s IT
landscape in the 2022 financial year and it has been
essential to ensure appropriate user access and
change management protocols exist and are being
observed. These protocols are important because
they ensure that access and changes to IT systems
and related data are made and authorised in an
appropriate manner.
These key controls mitigate potential fraud or error
because of change to an application or underlying
data.
MyState has outsourced arrangements in place for
a number of key IT processes.
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22.. RReeccooggnniittiioonn aanndd MMeeaassuurreemmeenntt –– SSooffttwwaarree AAsssseettss aanndd GGooooddwwiillll
Refer to Note 5.3 ‘Software assets and goodwill’
Key audit matter
How our audit addressed the matter
The recognition and measurement of software
assets is a key audit matter because of the Group’s
ongoing investment in new systems and the
judgement required to:
To address the risk of material misstatement and
obtain sufficient audit evidence, we performed the
following procedures over software assets and
goodwill:
• Recognise when costs incurred transition
from research to development; and
• Assess the useful life of IT assets.
• We evaluated and tested the Group’s
policies and processes for recognising
software assets;
The Group continues to enhance its IT systems and
online servicing capability.
There is also a high level of judgement required in
the Group’s annual testing of impairment of
goodwill with
forward-looking
significant
assumptions used in the valuation models.
• We reviewed amounts capitalised
projects
for
significant
being
completed by the group. This included a
retrospective assessment of amounts
capitalised in early stages of significant
projects;
currently
• We reviewed the Group’s processes for
considering the completion of projects and
commencement of amortisation;
• We ensured
software assets made
redundant through new projects were
written off;
• We reviewed the useful lives applied to IT
systems to ensure they are reasonable; and
• We reviewed the goodwill valuation model
and forward-looking assumptions applied
to each CGU of the Group.
33.. PPrroovviissiioonn ffoorr IImmppaaiirrmmeenntt oonn LLooaannss aanndd AAddvvaanncceess
Refer to Note 4.3 ‘Loans and advances’
Key audit matters
How our audit addressed the matter
The provision for impairment on loans and
advances is a key audit matter because of the
Group’s significant balance of loans and advances,
the significant growth in loan balances during the
2022 financial year, and the significant judgement
inherent
the provisioning model. The
provisioning model is determined in accordance
with the requirements of AASB 9 Financial
Instruments.
in
Provision for impairment of loans and advances
that exceed specific thresholds are individually
To address the risk of material misstatement and
obtain sufficient audit evidence, we performed the
following procedures over the provisions for
impairment on loans and advances:
• Assessed the governance oversight;
• Reviewed and tested the calculation of the
expected credit loss model, including the
specific provision, collective provision for
impairment and management overlays;
• Considered the assumptions within the
management overlays;
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Key audit matters
How our audit addressed the matter
assessed by management with reference to future
cash repayments and proceeds from the realisation
of security.
• Ensured the methodology for write off of
debt was consistent with prior periods;
• Tested the accuracy of the data used to
Other loans that do not have an individually
assessed provision are assessed on a portfolio
basis with loans with similar risk characteristics.
Key areas of judgement included:
• The design of the expected credit loss
model used;
• The selection of assumptions adopted such
as the probability of default, loss given
default, exposure at default and forward-
looking information, and the impact of
COVID-19 on these assumptions;
• The design of the management overlays
applied in response to significant economic
events; and
• The stress test modelling undertaken to
verify provisioning levels.
OOtthheerr IInnffoorrmmaattiioonn
calculate the provision;
and
• Reviewed a sample of current arrears
follow up
including whether specific
in arrears had been
balances
procedures,
financial assets
appropriately provided for; and
reviewed
• Reviewed management assessments of
provision for loans that exceed specific
thresholds.
We also assessed the impact of regulatory changes
on the provision for impairment on loans and
advances, specifically the impact of Prudential
Standard APS 220 Credit Risk Management.
We considered the impact of the growth in loan
balances on credit risk and tested the internal
control environment that supports lending.
The Directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2022 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.
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.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss ffoorr tthhee FFiinnaanncciiaall RReeppoorrtt
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 ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
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AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall RReeppoorrtt
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
judgement 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 Group’s internal control.
• 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 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 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, related safeguards.
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From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period 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.
RReeppoorrtt oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
OOppiinniioonn oonn tthhee RReemmuunneerraattiioonn RReeppoorrtt
We have audited the Remuneration Report included in pages 40 to 57 of the Directors’ report for the year
ended 30 June 2022.
In our opinion, the Remuneration Report of MyState Limited, for the year ended 30 June 2022 complies
with section 300A of the Corporations Act 2001.
RReessppoonnssiibbiilliittiieess
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.
WWIISSEE LLOORRDD && FFEERRGGUUSSOONN
DDAANNNNYY MMCCCCAARRTTHHYY
Partner
Date: 15 August 2022
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Shareholder information
Voting Rights
In accordance with the MyState Limited Constitution, a shareholder is entitled to exercise one vote in respect of
each fully paid ordinary share held.
Range of Units at 17 August 2022
The Company’s quoted securities on the ASX (ASX Code: MYS) are ordinary fully paid shares.
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 Over
Rounding
Total
Total holders
Units
% Units
51,970
3,312
1,238
1,170
53
21,638,726
8,396,053
8,891,791
25,601,432
41,376,939
57,743
105,904,941
20.43
7.93
8.40
24.17
39.07
0.00
100.00
Unmarketable Parcels
Minimum $ 500.00 parcel at $ 4.8000 per unit
Minimum
Parcel Size
105
Holders
480
Units
15,744
Top Holders (Grouped) as at 17 August 2022
Rank Range
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SELECT MANAGED FUNDS LTD
MR BRIAN DAVID FAULKNER
BEECHWORTH HOLDINGS PTY LTD
BNP PARIBAS NOMS PTY LTD
MR KENNETH JOSEPH HALL
NATIONAL NOMINEES LIMITED
PRESTIGE FURNITURE PTY LTD
MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED
STANBOX NO 2 PTY LTD
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
MRS WENDY JEAN FAULKNER
HORRIE PTY LTD
ECAPITAL NOMINEES PTY LIMITED
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
DONETTA PTY LIMITED
MRS JOAN ELIZABETH EVERSHED
Total holders
10,976,640
7,773,082
7,346,302
1,225,960
1,002,000
900,000
873,791
684,588
613,902
556,000
531,849
525,000
498,742
411,864
394,652
384,618
377,718
332,652
312,547
Units
10.36
7.34
6.94
1.16
0.95
0.85
0.83
0.65
0.58
0.52
0.50
0.50
0.47
0.39
0.37
0.36
0.36
0.31
0.30
NETWEALTH INVESTMENTS LIMITED
Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total)
Total Remaining Holders Balance
310,287
36,032,194
69,872,747
0.29
34.03
65.97
Unquoted Securities
A total of 532,884 unquoted performance rights issued pursuant to the company's employee incentive scheme
(ASX Code MYSAC) are held by 11 people.
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Registered Office
MyState Limited ABN 26 133 623 962
Level 2, 137 Harrington Street
Hobart TAS 7000
Phone: 138 001
Website: mystatelimited.com.au
Email: info@mystatelimited.com.au
Company Secretary
Scott Lukianenko
Share Registry
Computershare Investor Services
GPO Box 2975EE
Melbourne VIC 3000
Phone: 1300 538 803
Overseas callers: +61 3 9415 4660
Website: computershare.com.au
Auditors
Wise Lord & Ferguson
Level 1, 160 Collins Street
Hobart TAS 7000
Australian Securities
Exchange Listing
MyState Limited is listed on the Australian
Securities Exchange under the code MYS.
MyState Bank
ABN 89 067 729 195
Phone: 138 001
Website: mystate.com.au
Email: info@mystate.com.au
TPT Wealth
ABN: 97 009 475 629
Phone: 1300 138 044
Website: tptwealth.com.au
Email: info@tptweatlh.com.au
mystatelimited.com.au