Annual Report 2018–19...Additionally, our community sponsorship program supports a range of...

Annual Report 2018–19

Chairman and CEO’s Report 4

Our Community 8

Greater Charitable Foundation 14

Financial Statements 30 June 2019 20

Top to bottom: Row 1: BackTrack – Armidale; Libby – Cooks Hill; Healthy Youngsters, Healthy Dads – Newcastle

Row 2: Sally – Bump; Skye & Emily – Dapto; Michael & Cheryn – Molong

Row 3: Macey – Tamworth; Katie & Belinda – Armidale; Adam & Jon – Fern Bay

Front cover: Libby – Cooks Hill

While the year’s financial results highlight our commitment and dedication to serving the needs of our customers and the business today, it is critical that we also have an eye to the future to ensure we stay ahead of our competitors in terms of product and service delivery and become the preferred bank in our chosen markets.

For this reason, significant work and investment continues to be undertaken on our business transformation. This will allow us to respond to the increasingly competitive marketplace and increasingly complex regulatory environment, as well as the evolving needs of current and prospective customers.

Our 2019 Annual Report provides an overview of our achievements over the past reporting year and how we have performed against our strategy of being a customer-owned and focused financial services provider and the strategic objectives that underpin it.

Strengthen business capabilitiesAt Greater Bank we work together to deliver to our customers and the communities we serve banking solutions that genuinely meet their needs, now and into the future. This is the guiding philosophy that drives all staff in their everyday activities and sets a focus when looking at the future of the business.

In the 2019 Financial Year, we have continued to invest in quality and efficient business systems, as well as knowledgeable and committed people to deliver outstanding customer service and superior, competitively-priced products.

Central to this has been the ongoing transformation of our organisation. This has been a key focus of the business for the past two years, and will remain so in the immediate future, as we meet the challenges presented by shifts in customer expectations, the evolving regulatory environment and digitisation, while also ensuring our business continues to thrive well into the future.

These changes aim to drive greater efficiency within the business by improving our current capabilities and processes across our key distribution channels. It will allow us to better deliver our core business function of providing quality and affordable products and services that keep pace with expectations of our current and emerging markets, and that our customers have access to their channel of choice where they need it with the view of getting a solution in a timely manner.

This evolution through innovation is important to meeting the needs of our younger and prospective customers. However, we understand that this position must be balanced against serving and protecting our existing, diverse customer base. Accordingly, as we continue to introduce new capabilities to secure our future, we are also committed to remaining true to who we are through any transformation process.

Significant to the change process we are undertaking, and its ongoing success, has been the management of our people. Our Greater Performing Culture program continues to provide a platform to support our people as we transform key elements of our business operation. It is enabling us to build a workplace that inspires and empowers everyone to deliver a banking experience that is continually improving to ensure we are here for our customers and employees for generations to come.

Sustainably grow our customer baseGreater Bank today services more than 270,000 customers across a broad geographic base within NSW and South-East Queensland.

While we remain committed to building our presence and customer base in our existing regional markets, the continued move towards digital and mobile banking, which has been driven by customer demand as well as our growth aspirations, has allowed us to broaden our reach. Our mobile lending channels allow us to service customers further north into Queensland’s Sunshine Coast and south to the ACT, while our digital

Chairman and CEO’s Report

Maintaining our position of financial strength, solid growth results and continued investment in the business were the highlights of what has been a successful 2019 Financial Year for Greater Bank.

Annual Report | 2018–19

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banking platforms allow customers to access their accounts and interact with us anywhere, anytime.

Our product portfolio continues to be recognised by consumers and industry experts, with Greater Bank again being awarded a number of industry awards during the year.

The 2019 Mozo Experts Choice Awards saw Greater Bank secure the top spot in the industry’s home loan market after taking out nine categories, including the prestigious Home Lender Bank of the Year Award. The Great Rate Home Loan won four categories, including three for owner occupiers and one for investors, while the Ultimate Home Loan Package won an additional four categories with the same owner-occupier and investor split.

For the second consecutive year, Greater Bank took out the 2019 Home Lender of the Year as part of Money magazine’s 15th annual Consumer Finance Awards, which involves a Canstar review of more than 15,000 financial products and services from over 200 financial institutions throughout Australia. In determining the award, Greater Bank’s portfolio of fixed and variable home loan products, along with line of credit facility, scored well all round by Money magazine.

This industry recognition is testament to our mission of delivering quality products that can be tailored to suit individual customer needs to help them achieve their financial goals.

Greater Bank was also recognised as the Most Recommended Customer-Owned Bank at the 2019 DBM Australian Financial Awards announced in February 2019.

The award is generated from DBM Consultants’ Consumer Atlas survey. It gathers financial behaviour, attitudes and intentions from 62,400 Australians and is based on Greater Bank claiming the top Net Promoter Score within the category.

We know that our customers are, and will continue to be, our greatest advocates. Providing outstanding products and services is not only critical to attracting new customers, but also to ensure we are meeting, and exceeding the expectations of current customers with the aim of driving the highest levels of satisfaction, and in turn, customer retention.

Our customer growth strategy resulted in a net growth of more than 7,000 for the year ending 30 June 2019.

Improve organisational efficiencyGreater Bank has posted strong financial results for the 2019 Financial Year, which is again reflective of the strength, management and operational-efficiency of the business.

Our group profit result of $31.45 million, is the result of sustained customer growth, as well as our ongoing investment in the business that is enabling us to deliver capabilities to meet current and future customer needs.

Interest rates are now at an all-time low following movement by the Reserve Bank of Australia towards the end of the financial year to reduce the official cash rate. While this is a key driver for interest rate changes there are other factors that we need to consider, such as costs associated with funding and servicing loans, and also ensuring we continue to meet regulatory responsibilities. It’s also important that we consider the conflicting interests of both borrowing and depositing customers before making any decision on rate changes.

It was these factors that saw us make multiple changes to our lending and deposit interest rates throughout the year. In addition to changes in our variable interest rates, we announced in May the reduction in the interest rate on our Ultimate Home Loan and Great Rate Home Loan to 2.99% p.a. making it the lowest one-year fixed rate home loan in the market at the time.

Opposite page: Wayne Russell, Chairman; Scott Morgan, CEO. Above: Greater Bank Board Members L to R: Roger Cracknell, Malcolm McDonald, Jayne Drinkwater, Russell Ware, Wayne Russell and Louise Eyres

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Despite the challenges outlined above that we are faced with when considering interest rate changes, one distinct competitive advantage we have as a customer-owned bank is that we don’t have shareholders. This allows us to redirect funds to directly benefit our customers, and is what positions us to offer the most affordable one-year fixed rate home loan in the market.

Our other key reporting metrics for the year ending 30 June 2019, include:

Total assets of $7.2 billion, up from $6.7 billion the previous year.

Net loan approvals topped $1.19 billion, which was off the back of our quality product offering and improved market conditions, particularly across the Hunter and Illawarra.

Total deposit growth of 4.9%.

Capital Adequacy of 17.8% remains well above our prudential requirements and that of many other authorised deposit-taking institutions in Australia. This, along with our strong asset position, is a clear indicator of our financial strength and security.

Proactively manage regulatory change and riskOur Board and Executive Committee are focused on achieving and demonstrating the highest standards of corporate governance, as well as effective management of risk and regulation.

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services, which concluded in February 2019, shone a light on the governance standards and operational conduct within our industry. While much work is now being undertaken by the industry and our regulators as a result of the commission’s findings, for the majority of customer-owned banks, building societies and credit unions in Australia it is business as usual.

We stated from the outset that Greater Bank was in full support of the commission, as well as its findings and recommendations, believing that it will only strengthen our focus on ensuring that our customers are at the forefront of every decision we make, every day.

This focus and risk appetite has long been set by the Board and driven from the top down. Today though, the management of our risk framework is undertaken at all levels of the business and is reinforced through a culture of placing the customers’ needs at the heart of every decision.

We have and will continue to invest in governance and compliance to ensure the best interest of customers and

the long-term, sound financial principal performance of the business is maintained. This is achieved through the ongoing rollout and communication of our values training to all employees, which aims to positively reinforce risk-based decision-making and oversights across all areas of our operations.

Our three lines of defence model and Risk Management Framework is incorporated explicitly into all policies. The framework allows us to identify, analyse and manage the current and emerging risks within the business.

Through the Board committees, Chief Risk Officer and external support, we ensure oversight of the risk profile and risk management, as well as independent reporting lines to appropriately escalate issues.

Commit to Corporate Social Responsibility (CSR)Greater Bank is committed to contributing to the sustainable development of all our stakeholders by delivering economic, social and environmental benefits. As a customer-owned bank that does not have shareholders, our profits are reinvested into our business to provide better value products and services, and to foster and support the communities in which we operate.

Our greatest contribution to the community has been establishment of the Greater Charitable Foundation. Since 2011, the Greater Bank Board has invested more than $1 million annually to allow the Foundation to provide grants to many charities that are making a real difference to the lives of families and the communities in which they operate.

Additionally, our community sponsorship program supports a range of partnerships. This includes our commercial partnership with the Hunter’s A-League franchise, the Newcastle Jets, of which we are the club’s major community partner, through to the support of grassroots community groups across our area of operation, from the Gold Coast through to the Illawarra.

We are exceptionally proud of the work we are doing to support the communities that support us. Please take the time to read about this in the ‘Our Community’ section of this report.

Greater Bank Board changesIn June 2019, we announced a change to the Greater Bank Board, with marketing leader, Louise Eyres, replacing Scott Robinson, who stood down after more than a decade of service as Non-Executive Director on the Greater Bank Board. The changes were ratified at the June Board meeting and were effective from 1 July 2019.


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Greater Bank Executive Committee L to R: Craig Newham, Emma Brokate, Scott Morgan, Jeff McArthur, Bruce White and Bob Moffat

Based in Melbourne, Louise, is currently the Chief Marketing Officer at Sport Australia, leading the enterprise team accountable for marketing, media relations and communications, digital strategy and consumer insights that deliver to a complex national agenda for sport and physical activity in Australia. She was appointed to the role in 2017, prior to which she spent 13 years at ANZ; the final eight years as Group General Manager Marketing.

Louise is an outstanding appointment whose experience will be particularly valuable as we guide the organisation through transformation that is digitally-focused and largely driven by shifting customer need. We look forward to her contribution, particularly at a leadership and strategic planning level, as the Board continues to guide the organisation to deliver against our value proposition to help our customers achieve their financial objectives.

We would like to pay tribute to Scott Robinson for the role he has played in shaping the Board and organisation during his 12-year tenure. Over this time we have seen tremendous change to our organisation, most noticeably our transition from a building society to a customer-owned bank. We thank Scott for the time and dedication he has given to the role and his contribution to the success of the bank.

Looking aheadOur strategic plan, coupled with our underlying philosophy to provide our customers and the communities we serve with banking solutions that genuinely meet their needs, has driven much change in the business over the last three years and will continue to guide us as we move into 2020 and beyond.

We will continue to balance the needs of our current, diverse customer base, as well as those of future customers through innovation and digital transformation, while at the same time remaining true to our foundations.

Greater Bank continues to achieve positive year-on-year results which would not be possible without the dedication, hard work and commitment of all our people – the Board, Executive team and all employees. We thank you for continuing to make Greater Bank greater in 2019 and look forward to working together to achieve much more over the next 12 months.

Wayne Russell Chairman

Scott Morgan CEO

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Greater Bank ASPIRE program

This commitment is delivered through our commercial and community sponsorship portfolio and the Greater Charitable Foundation.

During the 2019 Financial Year, our sponsorship portfolio focused on seven major partnerships and a further 41 local area partnerships across NSW and South-East Queensland. By investing in these grassroots, community initiatives, together we are generating greater community engagement, social inclusion and wellbeing through the support of sport and recreation, education, and other community-based events and programs.

Additionally, the Greater Charitable Foundation celebrated a total funding allocation of more than $8M to 28 charitable organisations since its inception in 2011. This Financial Year, 14 charity partners were supported, covering a range of projects from cancer support and mental health services to youth education programs.

Our community partnerships Here is a snapshot of the major programs and community partnerships we supported in the 2019 Financial Year.

UNIVERSITY OF NEWCASTLE – GREATER BANK FINANCE ACADEMY

In November 2018, Greater Bank and the University of Newcastle announced a new five-year partnership dedicated to building financial literacy across the region. Together, we will combine our strengths in education, banking, community engagement and regional focus, to deliver community education programs and practical facilities that support informed financial decision-making.

This partnership has seen the establishment of the Greater Bank Finance Lab, located in the university’s city campus, NeW Space Building. It is a dedicated teaching space equipped with 20 computers that will facilitate a hands-on, interactive environment to promote learning in effective decision-making, economic systems, monetary markets and financial literacy. The lab will enable Newcastle Business School students to build not only theoretical but also practical, real-life skills in financial decision- making, risk management and economic systems, before they graduate.

Greater Bank Finance Academy is another initiative being delivered under the new partnership that will extend the partnership’s reach into the community. The University of Newcastle and Greater Bank, in conjunction with 25 high schools, have collaborated on the development of the financial literacy outreach program that will be delivered to high school students across the Hunter, Central Coast, Central West and northern regions of NSW. The course will provide participants with meaningful content and access to information that will help provide clarity and understanding around the intricacies of finance in a dynamic landscape. The pilot program will run for the remainder of 2019 calendar year with the official program to kick off in 2020.

The third phase of the partnership will see the roll-out of the Greater Bank Finance Clinic where the university will host drop-in financial literacy sessions. Members of the community can come in to the Greater Bank Finance Lab for dedicated sessions aimed at improving financial wellbeing. This program is aimed at helping those in need to learn more about managing their day-to-day finances and will be open to the public in 2020.

This idea of collaboration and community support is the underlying premise of what makes the partnership with the university so important for our business.

RUNNSW

We believe in promoting an active and healthy lifestyle at Greater Bank, so were thrilled to be on board with RunNSW for the fifth consecutive year to deliver the 2019 Greater Bank Fun Run Series.

Launched annually in February, the series sees more than 10,000 participants of all ages and abilities take to the streets and tracks for a range of events right across the state.

This year’s calendar included road running events, such as the Greater Bank Sydney 10 and Western Sydney 10, team-based Street Relays on the NSW Central Coast, and the iconic Fernleigh15 in Newcastle. Other regional centres, including the Illawarra, North Coast and New England regions, also played host to events this running season.

Our CommunityAs a customer-owned bank, our commitment to the communities we serve runs far deeper than simply providing banking solutions that genuinely help our customers. We have a long history of supporting the communities that support us, which remains an important pillar of our business strategy.


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NETBALL SUPPORT Greater Bank has been a proud sponsor of grassroots netball for more than 25 years. In 2019, our support extended to over 10 associations across the Hunter and beyond, including Penrith, Kurri Kurri and Nelson Bay.

In 2019, our support of regional netball pathways was expanded by announcing a new three-year partnership with the Hunter, Central Coast and the newly added Western Region Academies of Sport netball programs.

As a long-time supporter of the Hunter and Central Coast Academies of Sport, the new partnership will allow the three Academy programs to strengthen their position in the athlete development pathway and provide greater opportunities for regional- based netballers.

We reinforced our support for sport through our continued sponsorship of the Greater Bank ASPIRE program; a 10-week intensive training program for players aged from 14 to 16 years. Developed by netball star Sam Poolman, the program provides an opportunity for players to improve their netball skills and learn first-hand what it takes to become a professional athlete.

Last year we also had the pleasure of hosting Australian netball legend Liz Ellis at the Newcastle Business Club. She provided guests with wonderful insights to what the sport is achieving nationally, and also the pathways required for Newcastle Netball to have a presence against the State Premier League and, potentially, an expanded national competition.

NEWCASTLE JETS As the A-League Club’s Major Community Partner, Greater Bank has continued to work closely with the Newcastle Jets to engage with communities across the Hunter, as well as regional areas throughout Northern NSW.

Our association with the Jets:CONNECT program entered its fourth year and continued to provide a platform for Jets’ players and coaching staff, as well as Greater Bank employees, to participate in a series of community events and activities.

The pre-season Jets:TOUR of regional NSW saw trial matches, as well as community and school visits, conducted in Port Macquarie and Forster. In addition, the Jets:PLAY free coaching clinics hosted by the full A-League squad were held in Forster, Port Macquarie, Raymond Terrace, Mayfield and Belmont.

Over the past four years the program provided more than 7,000 aspiring young footballers with the opportunity to learn skills from their sporting heroes.

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Left page, top to bottom: RunNSW, Hunter Academy of Sports netballers, BackTrack, Newcastle Jets W-League. Right page: Greater Bank staff support Drought Angels

As an extension of our Major Community Partner sponsorship with the Newcastle Jets, we were again the major sponsor of the Jets’ W-League team for the 2018–19 season. These talented athletes have shown that they are not only great footballers, but also outstanding role models and ambassadors away from the playing field.

Our partnership is also supporting the next generation of athletes through the Jets Academy, the primary pathway for young footballers from the Newcastle, Hunter Valley and Northern NSW regions to enter the world of professional football.

With more than 170 young players across 11 teams in the Jets Academy, the Club is committed to not only developing the skills of young footballers but also developing good people both on and off the field.

BACKTRACKSince 2014, Greater Bank has partnered with BackTrack, a not-for-profit community organisation that aids and assists young people in the New England region who are struggling to reconnect with education and training.

In addition to more than $300,000 in funding that we have provided, a number of our New England-based staff have volunteered with BackTrack to assist some of the young people involved in the AgLads program to complete tax returns and other aspects that underpin financial independence.

As a customer-owned bank, we are focused on supporting the regions that supports us. We are proud to work with BackTrack on a multi-faceted program that prepares disadvantaged youths for employment, helps them find job prospects and ultimately lead happier and more productive lives.

DROUGHT ANGELSGreater Bank, along with its employees and customers, raised more than $100,000 in September 2018 to help farming families across the drought-affected areas in which we operate, particularly North-West NSW and South-East Queensland.

Funds were raised through the Flanno for a Farmer initiative, where employees were encouraged to wear their ‘flanno’ to work for a day and make a minimum $5 donation.

All funds raised in addition to Greater Bank’s $100,000 corporate contribution were donated to rural charity Drought Angels, to assist farming families with both financial and wellbeing support.

Major eventsThis year we supported 13 major events and festivals across the Hunter and Central Coast region that focused on community and cultural diversity. Overall these events provided fun, entertainment and a community connection of close to 100,000 people across all events.

LAKES FESTIVALAs part of Greater Bank’s celebration of 50 years on the Central Coast in 2018, we teamed up with Central Coast Council to be the Major Partner of the Lakes Festival for the next three years.

The 10-day event held in November featured more than 20 sporting, family, cultural, education and live music events and attracted over 40,000 visitors. It is also well supported by staff from our Central Coast branches.

MINGARA CHRISTMAS UNDER THE STARSGreater Bank has been the major sponsor of the Mingara Christmas Under the Stars event for the past seven years as part of our connection to the Central Coast and mission to support the communities that support us.

Staff from our Central Coast branches lent their time and support at the 2018 event to sell candles to help raise over $22,000 in much-needed funds for two local charity partners, The Salvation Army Oasis Youth Centre and Books in Homes.

Giving back to the communities we call home is a big part of who we are. It is something we have stayed true to for 50 years now on the Central Coast.

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MAITLAND RIVERLIGHTS FESTIVALMaitland Riverlights Festival is a diverse and colourful celebration of culture through interactive stalls, dance, food, music and arts. Greater Bank was proud to help bring the event to life as the Naming Rights Sponsor in 2018, a partnership that will continue until 2020.

Riverlights really shines at night, with the popular festival parade and magical lantern flotilla featured on the Hunter River; an unforgettable family experience.

This year we encouraged primary school children to attend the Lantern Making Workshops held at public libraries across the Hunter. Participants were provided with an information pack and materials to build a lantern and Greater Bank staff attended the workshops to hand out prizes for the most impressive creations on display!

BEAUMONT STREET CARNIVALEGreater Bank is intrinsically linked to Newcastle’s inner-city suburb of Hamilton. Our foundations were established in the main street – Beaumont Street – more than 90 years ago and we have remained part of the community’s fabric ever since.

It is why we were again a major partner of the iconic event Beaumont Street Carnivale; an event that brought together more than 30,000 people this year to enjoy a cosmopolitan and diverse range of entertainment, retail and hospitality organisations during a full day of fun, food and family activities.

It was a wonderful celebration of the cultural diversity that is central to the rich tapestry of the Hamilton community.

WALLSEND WINTER FAIRGreater Bank supported Wallsend local businesses and the community with our continued position as major sponsor of the Wallsend Winter Fair, the largest street event held in Newcastle.

With more than 30,000 people attending and 120 vibrant specialty stalls and local businesses on show, we can’t think of a better way to celebrate all that the Wallsend community has to offer.

The day also featured an appearance by the Newcastle Jets A-League team, which was made possible through our Major Community Partnership with the club.


Images top to bottom: Maitland Riverlights, Dignitaries at Beaumont Street Carnivale, Greater Bank branch manager, Helen O’Connor at Beaumont St Carnivale, Lakes Festival. Right page: Greater Bank staff at Wallsend Winter Fair

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ITALIAN FILM FESTIVALThe annual Newcastle Italian Film Festival has become a prominent fixture on the region’s arts and culture calendar, which was again supported by Greater Bank.

Presented by Hand in Hand Art House, the festival was held over three consecutive nights at Newcastle’s Tower Cinemas and featured contemporary Italian films of varied genres.

Our support, which has been ongoing since 2012, allows the organisers to raise money for their charity partner, Motor Neurone Disease Association NSW. To date, the festival has raised $90,000 for the charity.

COMMUNITY FUNDING PROGRAMAt Greater Bank we understand that the best way to make communities stronger is by supporting the organisations that bring people together for the common good.

Since September 2016, we have supported charitable and community groups across New England through the #GreaterNewEngland Community Funding Program. In March this year, the program reached an important milestone of $150,000 in funding that has been distributed to 90 community groups since its inception.

To celebrate, more than 40 representatives from the beneficiary groups came together in Gunnedah to share how the funding has helped them contribute to a greater New England.

This year also saw the funding program expand into the NSW South Coast with the establishment of the #GreaterIllawarra Program, whereby community groups across the Illawarra have the opportunity to share in the $3,000 grant up for grabs each month.

Such has been the success of these two programs, we are now looking to expand the concept into other areas of NSW over the next two Financial Years.

Other community supportOther community organisations that received our support in the 2019 Financial Year included:

Ballina Netball Association Bathurst Golf Club Bathurst Netball Association Casino Rugby Club Cessnock Goannas Charlestown Netball Association Coffs Harbour Carols D’Bah Groms Grafton Carols Grafton Netball Association Grafton Pro Am Gunnedah Athletics Club Illuminate Festival Kurri Kurri Netball Lake Illawarra Cricket Club Maitland High Markets Merewether Carlton Rugby Union Merewether Golf Club Nelson Bay Netball Association Newcastle Netball Association North West AFL – Major Sponsor Orange Netball Association Pacific Pines Football Club Penrith Netball Association Robina Raptors Junior Rugby League Club Singleton Touch Football South Dubbo Wanderers FC Souths Juniors Rugby League Tamworth AFL Toukley Athletics Club Wangi Netball Association Waratah Mayfield Cricket Club Waratah Rugby Club Wests Hockey


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Over the past eight years, we have committed more than $8 million in funding to support 28 charitable organisations. This has provided a direct benefit to more than 32,000 people.

Here is an overview of 14 charitable partners and the projects we supported over the last Financial Year.

CANCER COUNCIL NSWFinancial Counselling Program

A cancer diagnosis can cost up to $149,400 and financial stress is reported by around one-quarter of people diagnosed with cancer and more than one-third of carers.

The Financial Counselling Program was aimed at alleviating the financial stress of cancer on patients and their families based in the Hunter and Central Coast by connecting them with a qualified Financial Counsellor who provided free information, support and advocacy to reduce their financial burden.

Greater Charitable Foundation funding enabled more than 100 patients and carers to access this free financial counselling service, which resulted in more than $80,000 of debt being waived. The beneficiaries reported positive outcomes, including a reduction in financial burden, better access to hardship programs and improved mental and emotional health.

CANCER PATIENTS FOUNDATIONLook Good Feel Better

This free national community service program run by the Cancer Patients Foundation is dedicated to teaching cancer patients how to manage the appearance-related side-effects caused by cancer treatment.

Women, men and teens participate in practical workshop demonstrations covering skin care, make-up and head wear, leaving them empowered and ready to face their cancer diagnosis with confidence.

Greater Charitable Foundation funding is supporting 25 Look Good Feel Better programs throughout Newcastle, Dubbo, Grafton and Bomaderry.

Greater Charitable FoundationFormed in 2011, the Greater Charitable Foundation aims to improve the life outcomes of families and communities throughout NSW and South-East Queensland. We achieve this by supporting Australian-based charities undertaking practical, life-changing initiatives within Greater Bank’s areas of operation.

finalist State volunteering award

$8 million⁺in funding over

32,000beneficiaries

In excess of

directly supported by our funding over 8 years

8 yearsof operations

More than

200volunteers =Greater Bank

1,000hours

gave over

14Supported over 8 years

28 differentcharitableorganisations

different charitable organisations supported in the 2018–19 FY


HMRI – Stroke survivor Fiona

CANTEENFamily Support Project

CanTeen was supported by the Greater Charitable Foundation with the delivery of a new Family Support Project, aimed at improving the wellbeing of families when a parent has cancer.

The project had three elements:

an in-hospital Parent Support Worker;

a Family Resilience Study; and

the development of a family resources package.

A full-time social worker was appointed to support parents when they are treated with cancer in hospital. A key focus of their role was to work with parents to improve open and honest communication about cancer within the family, which is a key need of adolescent and young adult children.

In addition, CanTeen undertook a study to further explore the impact of cancer on family dynamics and identified additional support options. The findings, combined with insights from the social worker, provided the basis for an information guide specifically designed for parents with cancer who have children aged from 12 to 25 years. It is aimed at helping parents talk to their family about cancer and act as a companion through this challenging time.

CHILDREN’S HOSPITAL FOUNDATION QLDChild Life Therapy Program

The Child Life Therapy (CLT) program at Gold Coast University Hospital is designed to help counteract the fears, misconceptions and anxiety that hospital experiences can provoke for children. This is achieved through distraction therapy, as well as medical play activities that support the child’s developmental, social and emotional wellbeing.

Reducing this anxiety in both child and family is considered critical for improved health and social outcomes following a period of hospitalisation. Without such support, children can become overwhelmed with anxiety about both hospital, procedure and/or operation, which can have a negative impact on their post-treatment recovery.

CLONTARF FOUNDATIONIn-school re-engagement program

The Clontarf Foundation program targets many at-risk, Aboriginal and Torres Strait Islander male students who are not attending or have very low school attendance.

It addresses issues relating to long-term disadvantage at the grassroots level, and in doing so, is bringing about sustainable change across a number of regional

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NSW centres. Our funding is supporting close to 700 Aboriginal and Torres Strait Islander students across Orange, Dubbo, Port Macquarie, Singleton, Tamworth and Taree.

FOUNDATION FOR RURAL AND REGIONAL RENEWAL (FRRR)Hunter Corporate Collaborative Drought Support

Greater Charitable Foundation joined seven other Hunter-based organisations to provide more than $100,000 in funding via the Foundation for Rural and Regional Renewal (FRRR) to assist the region’s farming community as they battle with the ongoing reality caused by stifling drought conditions.

Known as the Hunter Corporate Collaborative (HCC), the organisations worked together to provide support and services to assist those most affected by drought conditions in the Upper Hunter local government areas of Singleton and Muswellbrook through two key initiatives.

The Upper Hunter Community Services (UHCS) Counselling and Laundry Facilities received funding to implement a free counselling support service for individuals and families of the Upper Hunter where mental health and wellbeing are being impacted by drought. In addition, they are providing a place for impacted families and individuals to attend to their laundry needs in a setting that provides an opportunity to interact with other community members and UHCS staff.

Singleton Neighbourhood Centre (SNC) is providing support to farming families, endeavouring to develop diversified off-farm income to supplement their farming activities. A series of workshops focused on training in basic business and marketing operations are being delivered so that participants gain the knowledge and practical skills to successfully diversify their income.

HARRY MEYN FOUNDATIONHarry’s House Respite Program

Located in the Newcastle beachside village of Stockton, Harry’s House provides a ‘home away from home’ for families that have a child undergoing cancer treatment in the Hunter, as well as those grieving the loss of their child to cancer within the past two years.

Harry’s House was established to address the shortage in the Hunter of zero-to-low-cost accommodation for families who had to travel away from home for their child to receive treatment. Our funding ensured that more than 250 people could utilise the retreat and receive the much-needed respite at such a challenging time in their lives.

HUNTER MEDICAL RESEARCH INSTITUTE (HMRI)Phase 3 clinical trial of ‘Modafinil therapy’ in stroke survivors

One in five Australians will experience a stroke in their lifetime, and of those, half will experience severe and debilitating fatigue.

Greater Charitable Foundation funding is supporting the work of the HMRI Stroke Research Team as they undertake a Phase 3 clinical trial of ‘Modafinil therapy’ in stroke survivors to assist in alleviating post-stroke fatigue and improving post-stroke quality of life. This year, Greater Bank and HMRI also celebrated a major milestone of 21 years in partnership. This is a long-term success story that demonstrates the true value of sustained funding support in the often-uncertain arena of medical research.

MCGRATH FOUNDATIONMcGrath Breast Care Nurse – Hunter Region

This year alone, more than 700 people in the Hunter New England and Central Coast region will be diagnosed with breast cancer. For this reason, Greater Charitable Foundation funding has enabled the McGrath Foundation to fund a second Breast Care Nurse based in Newcastle – Helen Moore.

McGrath Breast Care Nurses help to improve the outcomes for people diagnosed with breast cancer by acting as patient advocates, coordinating care, and ensuring their physical, psychological and emotional needs are met. So far this year Helen has seen 184 new patients and made more than 1,000 direct patient support contacts across the region, coordinating medical care and accompanying patients to appointments to ensure they can answer questions and reiterate treatment options at what can be an overwhelming time.

NATIONAL CENTRE FOR CHILDHOOD GRIEF (NCCG)Grief Resource Packs and Children’s Grief Workshop

It is estimated that one in 20 children will experience the death of a parent, or other close relative who cares for them, during their childhood. Whilst there is growing research and support for various physical and mental health issues which cause death, there is little support for the children impacted by the death.

The NCCG is the only organisation of its kind in Australia providing face-to-face counselling, group support and programs along with training and education for the professionals who work with bereaved children. Greater Charitable Foundation funding supported an intensive workshop on ‘Children’s Grief’ for 24 school counsellors in the Hunter Region and the distribution of ‘Grief Resource Packs’ to more than 200 rural and regional schools throughout NSW.

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Images top to bottom: McGrath Breast Care nurse Helen Moore with her patient Tracey Dunn and GCF CEO Anne Long, CanTeen Bandana Day, Child Life Therapy program, Greater Bank staff at a Clontarf Dubbo Academy training session

OZHARVESTNutrition Education Sustenance Training (NEST) Program

Greater Charitable Foundation funding is supporting the OzHarvest Nutrition Education Sustenance Training (NEST) program in Newcastle and on the Gold Coast.

The program provides vulnerable and disadvantaged community members with essential information and learnings regarding nutrition and life skills. Participants are taught about healthy eating choices, low-cost meal planning, food shopping, healthy cooking and ways to minimise food waste.

Since the Foundation began supporting this program in 2016, our funding has helped more than 800 participants to take part in the NEST program. In addition, last Financial Year 55 Greater Bank staff volunteered their time to support OzHarvest.

STARLIGHT CHILDREN’S FOUNDATION AUSTRALIAStarlight Express Room, Starlight Connection and Livewire Programs

Our funding of Starlight Children’s Foundation Australia enabled the expansion of their much-needed support to seriously ill children and their families in regional NSW and South-East Queensland.

We helped Starlight to deliver in-hospital programs at the Starlight Express Room at John Hunter Children’s Hospital (Newcastle) and to take the Starlight Connection Program to regional hospitals in Maitland, Gosford, Armidale, Tamworth, Lismore, Gold Coast and Taree, where hospitalised children often have little or no access to specialised distraction programs.

The Livewire in-hospital workshops and the nationwide Livewire Zine are designed exclusively for teenagers experiencing a serious illness. Between 2011 and 2018, the Greater Charitable Foundation provided over $1M in funding to Starlight to support seriously ill children and their families in hospital.

TANTRUM YOUTH ARTSOpening Doors

Opening Doors is an immersive theatrical performance developed by Tantrum Youth Arts that aims to educate and empower young people with increased knowledge around the causes and impacts of domestic family violence and the avenues of support available to them if they are experiencing these issues.

The performance and forum presented by professional actors is supported by input from police officers, solicitors, counsellors and support service providers through a partnership with Cooperative Legal Service Delivery (CLSD).

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The performance directly engages students in a conversation about the situations portrayed in the play and provides them with the opportunity to actively problem-solve and explore avenues of support through the flexible structure of the play.

The Greater Charitable Foundation provided funding support for the redevelopment and roll-out of the interactive performance and workshop program to 3,000 high school students across New South Wales.

UNIVERSITY OF NEWCASTLEHealthy Youngsters, Healthy Dads

Studies undertaken by the University of Newcastle suggest that fathers’ weight profiles and parenting practices may be more influential than mothers’ for a child’s obesity risk.

Greater Charitable Foundation funding is supporting the world’s first father-focused obesity prevention program for preschool-aged children, providing fathers with the knowledge, parenting skills and motivation to improve their health and become healthy role models for their children.

More than 100 dads and their preschool-aged children have participated in the program over the past 12 months, with the majority of dads reporting that they are now a lot more active with their youngsters and that their youngsters have increased their intake and variety of vegetables, improved their sport skills and reduced their screen time.

2019 Funding RoundApplications for the Foundation’s 2019 Funding Round opened in February with successful grant recipients announced in August.

Greater Charitable Foundation BoardThe Greater Charitable Foundation was pleased to welcome two new Board Directors during the 2019 Financial Year.

Mrs Jayne Drinkwater, a current Non-Executive Director of Greater Bank and member of its Board since October 2010, was appointed to the Greater Charitable Foundation Board in July 2018.

She has extensive experience at a senior level in the areas of operations, customer service, IT and marketing.

Ms Ingrid Kaczor also joined the Foundation Board in May 2019 as the CEO-appointed Director. As Community Engagement Manager at Greater Bank, Ingrid has extensive skills in the community, sponsorship and local-area marketing space, which enables her to provide informed insights into the Foundation’s partnerships.

VolunteeringVolunteering remains a key platform for Greater Bank and the Greater Charitable Foundation. It is well supported by our employees, who display a strong commitment and passion for giving their time to the community.

Over the last Financial Year, more than 200 Greater Bank employees volunteered over 1,000 hours to assist Greater Charitable Foundation’s partners, as well as Greater Bank-sponsored partners and events.

In 2015, we established the Greater Bank Employee Volunteer of the Year Awards to recognise and acknowledge staff members who go above and beyond to ‘give back’ to their local community.

Recognised this year was Greater Bank Card Services Reconciliation/Assistant DR Officer, Vim Hawtin and Raymond Terrace Branch Manager, Amy Dodd.

Both Vim and Amy demonstrated outstanding passion for community giving, having collectively supported more than 13 different charity and community initiatives.

Both employees received $500, which they donated back to their charity of choice, OzHarvest Newcastle.

Greater Bank Dubbo Branch was also recognised for the outstanding dedication all its employees have shown towards supporting their Dubbo community.

“Our charity partners rely heavily on the dedication of volunteers and we are lucky to have a network of Greater Bank employees who are ready and willing to give up their time to help fulfil this role and give back to those who need it most.” Ms Anne Long, Greater Charitable Foundation CEO

Images top to bottom: Left page: Greater Bank employee Charles Frank helping deliver NEST program, Starlight captains and Greater Bank staff, Dr Andrew Bivard – HMRI, Professor Phil Morgan University of Newcastle at Healthy Youngsters, Healthy Dads. Right page: Greater Bank employee Volunteers of the year Amy Dodd and Vim Hawtin with GCF CEO Anne Long

Directors’ Report 22

Auditor’s Independence Declaration 26

Statements of Comprehensive Income 27

Balance Sheets 28

Statements of Changes In Equity 29

Statements of Cash Flows 30

Notes to and Forming Part of the 31Financial Statements

Directors’ Declaration 67

Independent Auditor’s Report to the Members 68

Top to bottom: Row 1: Katie & Belinda – Armidale; Libby – Cooks Hill; Skye & Emily – Dapto;

Row 2: Michael & Cheryn – Molong; Sally – Bump; Sam & Kate – Vaucluse

Row 3: Macey – Tamworth; Healthy Youngsters, Healthy Dads – Newcastle; Adam & Jon – Fern Bay

Financial Report | 2018–19

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The Directors of Greater Bank Limited ABN 88 087 651 956 (Company) have much pleasure in presenting their report on the Company and the consolidated entity, Greater Bank Group (Greater Bank), consisting of the Company and the entities it controlled at the end of, and during the year ended 30 June 2019.

DirectorsThe following persons held office as Directors for the whole of the Financial Year and up until the date of this report.

W M Russell B.Comm, CA, GAICD, MIIA (Aust)

Mr Russell joined the Board in April 2011. He has extensive experience in providing auditing and assurance services, having worked as an audit and assurance partner at PricewaterhouseCoopers for 20 years. He is currently a partner at accountancy firm Pitcher Partners. Mr Russell is involved in a number of industry associations and is a member of the Executive and past President of the Australian Financial Institutions Auditors Association. Mr Russell has been the Chair of the Board since his appointment on 29 November 2011.

Special Responsibilities: Chair of the Board, Member of the Board Audit Committee, Member of the Board Risk Committee, Member of the Remuneration Committee, Member of the M&A Strategy Committee, Chair of the Succession Planning Committee and Director of the Greater Charitable Foundation Pty Ltd.

W R Ware LL.M. (Hons), FAICD

Mr Ware joined the Board in February 2009. He practised law for 14 years until 1987 when he became a professional Company Director and Business Consultant. He has served on the boards of a number of public companies in diverse industries for over 30 years. He is a member of the Hunter Region Committee of the Australian Institute of Company Directors and a former president of the Newcastle Business Club and the Beauford Club of Newcastle.

Special Responsibilities: Chair of the Remuneration Committee, Member of the Succession Planning Committee and Chair of Greater Investment Services Pty Ltd.

M L McDonald B Ec., FCA, GAICD Mr McDonald joined the Board in May 2009. He has practised as a Chartered Accountant for over 30 years and was a Partner in the Newcastle Offices of Touché Ross & Co and KPMG Peat Marwick until his resignation in 1994. He subsequently practised on his own account for several years. He served as a Trustee of the Anglican Diocese of Newcastle until February 2016. He is currently Chair of the Board of Anglican Care, the aged care mission of the Diocese, and has considerable involvement in the not-for-profit sector at Board and Committee level.

Special Responsibilities: Chair of the Board Audit Committee and Board Risk Committee, Member of the Succession Planning Committee, Member of the Remuneration Committee (to 31 August 2019) and Director of Greater Investment Services Pty Ltd.

V J Drinkwater B Ec., MBA (With merit), GAICD, CAHRI

Mrs Drinkwater joined the Board in October 2010. She has extensive experience as a Senior Executive in banking and financial services having worked across operations, customer service, IT and marketing. Mrs Drinkwater was previously employed by nib holdings limited as Interim CEO New Zealand, and as Chief Marketing Officer and Chief Operating Officer at nib health funds limited.

Special Responsibilities: Deputy Chair of the Board (from 1 July 2019), Member of the Remuneration Committee, Member of the Succession Planning Committee, Member of the Board Audit Committee, Member of the Board Risk Committee, Director of Greater Investment Services Pty Ltd and Director of the Greater Charitable Foundation Pty Ltd.

R J Cracknell, CPA, FAICD

Mr Cracknell joined the Board in May 2011. He was Chief Executive of ABS Building Society from 1973 until April 2011 and has over 40 years’ experience in the Building Society Industry. He has held various executive positions with the Australian Permanent Building Societies (NSW Division) and was a Councillor of AAPBS (National). Mr Cracknell was a partner in the accountancy firm of Jones, Cracknell & Starr for over 40 years.

Special Responsibilities: Member of the Board Audit Committee, Member of the Board Risk Committee, Member of the Succession Planning Committee and Chair of the M&A Strategy Committee.

Directors’ Report


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The following Director held office for the whole of the financial year to 30 June 2019.

D S Robinson B.Surveying (Hons), MAICD

Mr Robinson joined the Board in October 2007 and has over 31 years’ experience in surveying, town planning and land development. He is the Managing Director of ADW Johnson, a leading Hunter-based consultancy in surveying, town planning, engineering and land development. Mr Robinson was a Junior Officer in the Royal Australian Navy. He retired from the Board in June 2019.

Special Responsibilities (prior to his retirement): Deputy Chair of the Board, Member of the M&A Strategy Committee and Member of the Succession Planning Committee.

The following Director was appointed in July 2019 and continues in office at the date of this report.

L M Eyres, B.Bus, MBA (Exec), GAICD

Mrs Eyres has over 25 years’ executive experience in mining, financial services and federal government in Australia and Asia across marketing, customer and digital strategy. Mrs Eyres was previously employed as Group General Manager Marketing, ANZ and as Global Head of Brand, BHP Billiton. Currently Mrs Eyres is Chief Marketing Officer, Sport Australia and is a Director of the Williamstown VFL Club and a Director of Plan International.

Special Responsibilities: Member of the Succession Planning Committee (from 1 July 2019) and Member of the Remuneration Committee (from 1 September 2019).

Company SecretaryThe Company has two company secretaries. Mr G Nyman was appointed company secretary on 18 January 2016 and is the Head of Legal at Greater Bank. Mr Nyman has over 20 years of experience in corporate legal practice, the majority of which he spent as Special Counsel at Sparke Helmore Lawyers. Mr Nyman holds Bachelor of Laws and Bachelor of Commerce degrees from the University of Newcastle and is a member of the Australian Institute of Company Directors, the Governance Institute of Australia, the Association of Corporate Counsel Australia, and the Law Society of NSW. Mr Nyman is admitted as a Legal Practitioner by the Supreme Court of NSW and the High Court of Australia.

Mr R J Moffat was appointed company secretary on 5 October 2016 and is the Chief Financial Officer with responsibilities for all financial reporting and governance, treasury and business intelligence operations for Greater Bank. Mr Moffat has over 20 years of management experience within the finance industry and has held various roles across finance, strategy, treasury and capital management both in Australia and internationally. Mr Moffat holds a Bachelor of Commerce degree and a Masters of Business Administration from the University of Newcastle as well as a Diploma of Applied Finance from the Securities and Investment Institute. Mr Moffat is a member of the Chartered Accountants Australia and New Zealand.

Corporate ObjectivesGreater Bank will ensure its long-term financial viability by achieving the following short- and long-term objectives:

Sustainably grow our customer base in target markets;

Improve organisational efficiency;

Proactively manage regulatory change and risk;

Strengthen business capabilities (people, process and systems); and

Commit to corporate social responsibility.

The current strategies in place to achieve these objectives are to maintain a distribution network that supports the increasing needs of customers, to provide a range of products and services to meet the demands of customers, to continue to provide a superior service level, and to enhance the customer experience at all points of contact. Furthermore, internal strategies are in place to ensure that Greater Bank provides a challenging and enjoyable workplace, continues to build capacity and knowledge with good corporate governance and is an employer of choice.

Greater Bank measures its performance using a range of financial and non-financial indicators. The main financial indicators are interest margins, cost to income ratio, return on assets, loan portfolio growth and deposit portfolio growth, while non-financial indicators include customer metrics such as net growth, depth of relationship and sentiment, customer complaints and resolution, as well as staff and system metrics.

Principal ActivitiesThe principal activity of Greater Bank during the year consisted of the provision of financial services to customers in the form of taking deposits and providing financial accommodation. Those activities enhanced the financial position of Greater Bank and provided the platform to enable Greater Bank to improve the quality of its distribution channels and expand the range of products and services available to customers.


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Directors’ ReportRESULTS OF THE CONSOLIDATED ENTITY

2019 $’000

2018 $’000

PROFIT AFTER INCOME TAX EXPENSE 31,452 34,214

Review of OperationsA review of operations for Greater Bank is contained in the Chairman and Chief Executive Officer’s Report.

Directors’ MeetingThe persons holding office as Directors of the Company during the year were: W M Russell, D S Robinson, W R Ware, M L McDonald, V J Drinkwater and R J Cracknell. The number of meetings of the Directors (including meetings of Committees) held during the year and the number of meetings attended by each Director were as follows:

Board of Directors

Audit Committee

Risk Committee

Remuneration Committee

M&A Strategy

Committee

Succession Planning

Committee

Number of Meetings 11 5 4 2 1 4

W M Russell 11 (11) 5 (5) 4 (4) 2 (2) 1 (1) 4 (4)

D S Robinson 11 (11) 1 (1) 4 (4)

M L McDonald 11 (11) 5 (5) 4 (4) 2 (2) 4 (4)

W R Ware 11 (11) 2 (2) 4 (4)

V J Drinkwater 11 (11) 5 (5) 4 (4) 2 (2) 4 (4)

R J Cracknell 11 (11) 5 (5) 4 (4) 1 (1) 4 (4)

Insurance of OfficersDuring the Financial Year, Greater Bank paid premiums to insure the Directors and Senior Executive officers of the Company and its controlled entities.

In accordance with normal commercial practice, disclosure of the total amount of premium payable under, and the nature of the liabilities covered by the insurance contract, is prohibited by a confidentiality clause in the contract.

The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the consolidated entity.

State of AffairsThere was no significant change in the state of affairs of Greater Bank during the Financial Year.

Member LiabilityGreater Bank Limited is a company limited by shares (NIL on issue) and guarantee. The guarantee is provided by members of the Company and is limited to $1 per member. The total amount that members of the Company are liable to contribute if the Company were wound up is $269,024.

After Balance Date EventsThe Directors are not aware of any matters or circumstances that have arisen since 30 June 2019 that have significantly affected or may significantly affect:

A The operations of Greater Bank,

B The results of those operations, or

C The state of affairs of Greater Bank in the Financial Years subsequent to 30 June 2019.


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Likely Developments and Expected Results of OperationsThere are no material likely developments in the operations of Greater Bank, other than continued profitable operations, at the date of this report.

Proceedings on Behalf of the CompanyNo person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001.

Environmental RegulationGreater Bank is not subject to any significant environmental regulation.

Auditor’s Independence DeclarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 26.

Rounding of AmountsThe amounts in the financial statements have been rounded to the nearest thousand dollars under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The Company is an entity to which the Legislative Instrument applies.

AuditorPricewaterhouseCoopers Australia continues in office in accordance with section 327 of the Corporations Act 2001. Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers Australia) for audit and non-audit services provided during the year are disclosed in Note 26.

W M Russell

Chairman

Signed at Hamilton this 24th day of September 2019 in accordance with a resolution of the Directors.


26


27

CONSOLIDATED COMPANY

Notes 2019$’000

2018$’000

2019$’000

2018$’000

Interest revenue 2 277,228 260,940 300,175 282,580

Interest expense 3 (126,765) (117,139) (150,362) (139,370)

Net interest income 150,463 143,801 149,813 143,210

Non-interest income 4 22,219 25,841 22,219 27,485

172,682 169,642 172,032 170,695

Non-interest expense 5 (127,496) (120,719) (127,392) (120,393)

Loan impairment (expense)/recovery 11a (446) 2 (446) 2

PROFIT BEFORE INCOME TAX 44,740 48,925 44,194 50,304

Income tax expense 6 (13,288) (14,711) (13,281) (14,622)

PROFIT FOR THE YEAR 31,452 34,214 30,913 35,682

OTHER COMPREHENSIVE INCOME

Items that may be reclassified to the statement of comprehensive income

Cash flow hedges 23 7,992 (1,832) 7,992 (1,832)

Income tax relating to these items 23 (2,398) 549 (2,398) 549

Items that will not be reclassified to the statement of comprehensive income

Revaluation of land and buildings 23 (472) 1,371 (472) 1,371

Income tax relating to these items 23 142 (411) 142 (411)

Total other comprehensive income 5,264 (323) 5,264 (323)

TOTAL COMPREHENSIVE INCOME 36,716 33,891 36,177 35,359

The above Statements of Comprehensive Income should be read in conjunction with the accompanying notes.

Statements of Comprehensive Incomefor the year ended 30 June 2019


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Notes 2019$’000

2018$’000

2019$’000

2018$’000

ASSETS

Cash and cash equivalents 7 191,655 148,326 156,465 104,864

Investment securities 8 1,208,861 1,123,844 1,948,861 1,858,844

Other receivables 9 2,650 2,486 8,098 7,797

Derivative financial instruments 10 5,669 - 5,669 -

Loans and advances 11 5,713,245 5,389,220 5,713,245 5,389,220

Other financial assets 12 615 320 695 400

Deferred tax assets 13 2,362 3,601 2,362 3,690

Property, plant and equipment 14 31,527 31,471 31,527 31,471

Investment properties 15 879 5,857 879 5,857

Intangible assets 16 4,168 6,032 4,168 6,032

TOTAL ASSETS 7,161,631 6,711,157 7,871,969 7,408,175

LIABILITIES

Payables and other liabilities 17 13,955 15,311 14,850 15,439

Deferred revenue 18 1,732 306 1,732 306

Deposits and other borrowings 19 6,141,175 5,757,508 6,144,241 5,760,139

Current tax liabilities 20 601 2,609 601 2,609

Derivative financial instruments 10 111 2,700 111 2,700

Other financial liabilities 21 449,878 411,807 1,159,174 1,108,445

Provisions 22 5,915 5,792 5,915 5,792

TOTAL LIABILITIES 6,613,367 6,196,033 7,326,624 6,895,430

NET ASSETS 548,264 515,124 545,346 512,745

EQUITY

Reserves 23 22,399 20,906 20,017 18,524

Retained profits 24 525,865 494,218 525,329 494,221

TOTAL EQUITY 548,264 515,124 545,346 512,745

The above Balance Sheets should be read in conjunction with the accompanying notes.

Balance Sheetsfor the year ended 30 June 2019


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Statements of Changes in Equityfor the year ended 30 June 2019


Notes 2019$’000

2018$’000

2019$’000

2018$’000

TOTAL EQUITY AT THE START OF THE FINANCIAL YEAR

Reserves 23 20,906 32,090 18,524 29,708


515,124 481,233 512,745 477,386

TOTAL PROFIT AND LOSS FOR THE YEAR


31,452 34,214 30,913 35,682

TOTAL OTHER COMPREHENSIVE INCOME FOR THE YEAR

Reserves 23 5,264 (323) 5,264 (323)

5,264 (323) 5,264 (323)

OTHER TRANSACTIONS WITHIN EQUITY FOR THE YEAR

Transfer from retained profits to reserves 23 (3,771) (10,861) (3,771) (10,861)

Transfer from reserves to retained profits 24 3,771 10,861 3,771 10,861

Retained profits – adoption of AASB 9 and AASB 15 24 (3,576) - (3,576) -

(3,576) - (3,576) -

TOTAL EQUITY AT THE END OF THE FINANCIAL YEAR

Reserves 23 22,399 20,906 20,017 18,524


548,264 515,124 545,346 512,745

The above Statements of Changes in Equity should be read in conjunction with the accompanying notes.


30

Statements of Cash Flowsfor the year ended 30 June 2019


Notes2019

$’000Inflows/

(Outflows)

2018$’000

Inflows/(Outflows)

2019$’000

Inflows/(Outflows)

2018$’000

Inflows/(Outflows)

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 277,553 261,336 300,500 282,975

Fees and commissions received 20,742 21,373 20,742 21,373

Other income received 454 4,888 454 6,532

Interest paid (124,417) (114,155) (148,015) (136,222)

Operating expenses paid (121,241) (116,274) (121,169) (116,310)

Income taxes paid (16,313) (12,022) (16,313) (12,022)

Net (advances) and repayments in loans and advances (328,548) (494,827) (327,789) (495,785)

Net (placements) and redemptions in investment securities (96,049) (28,141) (101,049) (26,162)

Net acceptances and (payments) in deposits 381,390 378,514 381,825 376,576

NET CASH PROVIDED BY OPERATING ACTIVITIES 28a (6,429) (99,308) (10,814) (99,045)

CASH FLOWS FROM INVESTING ACTIVITIES

Net purchases and sales in other financial assets and liabilities (413) 133 (413) 133

Payments for intangibles, property, plant and equipment (6,232) (4,344) (6,232) (4,344)

Proceeds from sale of property, plant and equipment 6,403 290 6,403 290

CASH FLOWS FROM INVESTING ACTIVITIES (242) (3,921) (242) (3,921)

CASH FLOWS FROM FINANCING ACTIVITIES

Net issue/(repayment) of commercial notes 50,000 24,838 62,657 28,057

NET CASH PROVIDED BY FINANCING ACTIVITIES 28b 50,000 24,838 62,657 28,057

Net increase/(decrease) in cash held 43,329 (78,391) 51,601 (74,909)

CASH AT THE BEGINNING OF THE FINANCIAL YEAR 148,326 226,717 104,864 179,773

CASH AT THE END OF THE FINANCIAL YEAR 7 191,655 148,326 156,465 104,864

The above Statements of Cash Flows should be read in conjunction with the accompanying notes.


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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A Basis of PreparationThe financial report includes separate financial statements for Greater Bank Limited (Company) as an individual entity and the Greater Bank Group (Greater Bank), consisting of the Company and the entities it controlled at the end of, and during the year ended 30 June 2019.The financial statements of Greater Bank are general purpose financial reports prepared in accordance with provisions of Australian Accounting Standards and the Corporations Act 2001 in Australia. Greater Bank’s financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Greater Bank is a for-profit entity for the purposes of preparing financial statements.The financial statements of Greater Bank are prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of property and investment property at fair value.All amounts are expressed in Australian dollar currency.Notes containing prior year comparatives may have been restated to provide the user with additional details. Such changes do not alter the total balance as previously disclosed.The significant accounting policies adopted in the preparation of these financial statements and that of the previous Financial Year are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated.

i) Critical accounting estimates and significant judgements The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires

management to exercise judgement in the process of applying the accounting policies. The notes to the financial statements set out the areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to Greater Bank’s financial statements. The most significant of these are:

impairment losses on loans and advances (refer note 11B),

fair value of land and buildings (refer note 14A),

fair value of investment properties (refer note 15A),

fair value of financial instruments (refer note 1P), and

effective life of financial instruments (refer note 1D i). Estimates and judgements are continually evaluated and are based on historical experience and other factors,

including reasonable expectations of future events. Management believes the estimates and judgements used in preparing the financial statements are reasonable. Actual results in the future may differ from those reported.

ii) New accounting standards and interpretations adopted A number of new standards became applicable for the current reporting period and Greater Bank had to change

its accounting policies and make retrospective adjustments as a result of adopting the following standards:

AASB 9 Financial Instruments; and

AASB 15 Revenue from Contracts with Customers. Financial Instruments Classification, Measurement and Derecognition Greater Bank early adopted AASB 9 Financial Instruments and AASB2009-11 Amendments to Australian Accounting

Standards arising from AASB 9 from 1 July 2010. This version of AASB 9 replaced the provisions of AASB139 that related to the classification and measurement of financial instruments and the derecognition relating to financial instruments. Greater Bank reviewed the requirements of AASB 9 Financial Instruments applicable for adoption during the current period and there are no changes to the existing classification or measurement of financial instruments.

Hedge Accounting Greater Bank’s risk management strategies and hedge documentation are aligned with the requirements of AASB 9

and therefore these relationships, and future relationships using this methodology, are treated as hedges (refer note 1P).

Impairment of Financial Assets Debt financial assets carried at amortised cost are subject to AASB 9’s new expected credit loss model. For Greater

Bank, this resulted in a revised impairment methodology for loans and advances. In accordance with provisions in AASB 9, comparative figures have not been restated. The impacts on Greater Bank’s financial statements as at 30 June 2018 are shown in the relevant notes; loans and advances (note 11), deferred tax assets (note 13), reserves (note 23) and retained earnings (note 24).

Notes to and Forming Part of the Financial Statementsfor the year ended 30 June 2019


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AASB 15 Revenue from Contracts with Customers AASB 15 Revenue from Contracts with Customers replaces all previous guidance on revenue recognition from

contracts with customers. It requires the identification of discrete performance obligations within a customer contract and an associated transaction price that is allocated to these obligations. Revenue is recognised upon satisfaction of these performance obligations, which occur when services are rendered to the customer.

Greater Bank adopted AASB 15 on 1 July 2018. Greater Bank has applied AASB 15 retrospectively, recognising the cumulative effect of initially applying the Standard as an adjustment to the opening balance of retained earnings. Under this transition method, Greater Bank has elected to apply this retrospectively only to contracts that are not completed contracts at the date of initial application.

Contracts with Customers Revenue earned by Greater Bank from its contracts with customers primarily consists of fee and commission

income as presented as Non-Interest Income in the statement of comprehensive income and disclosed in Note 4 Non-Interest Income.

Greater Bank earns fee and commission revenue on a range of banking products, lending activities and through referrals to partner products and services where Greater Bank is acting as an agent. Payment is typically due from the customer when the service has been provided.

Where consideration is provided for services and Greater Bank has not yet satisfied its performance obligations, either in part or in full, a deferred revenue liability (Refer Note 18) is recognised by Greater Bank on the balance sheet. The liability is calculated as the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period. Revenue is subsequently recognised by Greater Bank as performance obligations are satisfied.

Key Judgements The key judgements in applying AASB 15 include the timing and amount of variable consideration to be recognised

in relation to home loan package fees, determining whether multiple services provided in a single contract are distinct and establishing whether performance obligations are satisfied at a point in time or over time.

Greater Bank’s implementation of AASB 15 has had minimal impact on the recognition of revenue, as the receipt of consideration from customers is generally aligned with satisfaction of the performance obligations of Greater Bank.

iii) New accounting standards and interpretations not yet adopted

Recognition and accounting for leases (effective for financial reporting periods beginning on or after 1 January 2019) The IASB has issued a new standard, AASB 16 Leases, for the recognition and accounting for lease transactions.

This will replace AASB 117 Leases. The new standard removes the classification and distinction between finance and operating leases. Lessees will now bring to account a ‘right-of-use’ asset and lease liability onto the balance sheet for all leases. Greater Bank expects the change will result in the recognition of additional assets and liabilities and will affect primarily the accounting for the Company’s operating leases. As at reporting date the Company has non-cancellable operating lease commitments of $28,766,212 (refer note 27). The impact on the statement of comprehensive income is immaterial.

B Consolidation

i) Controlled entities The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the

entity and has the ability to affect those returns through its power to direct the activities of the entity. The effects of all transactions between entities in the Greater Bank Group have been eliminated in full.

Where control of an entity was obtained during the financial period, its results have been included in the consolidated statement of comprehensive income from the date on which control commenced. Where control of an entity ceased during the financial period, its results are included for that part of the financial period during which control existed.

Investments in subsidiaries are accounted for by the Company at cost.

ii) Business combinations The acquisition method of accounting is used to account for all business combinations. The consideration transferred

for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.


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Acquisition-related transaction costs are expensed as incurred. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the

acquisition date fair value of any previous equity interest in the acquired entity, over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised directly in the statement of comprehensive income as a bargain purchase.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in the statement of comprehensive income.

iii) Securitisation Securitised positions are held through a number of Special Purpose Entities (‘SPEs’). These securitised positions

allow the Company to access funding. The Company does not consolidate an SPE it does not control. Where it can sometimes be difficult to determine whether the Company does control the SPE, it makes judgements about its exposure to the variable returns of the entity and its ability to affect those returns. The Company has consolidated its SPEs. Accordingly, their underlying assets, liabilities, revenues and expenses are reported in the Company’s consolidated balance sheet and statement of comprehensive income.

C Segment ReportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer. All operating segments are less than the quantitative threshold required for separate disclosure.

D Revenue Recognition

i) Interest revenue Interest income arising from loans and held to maturity investment securities is brought to account using the effective

interest rate method. Incremental fees and transaction costs associated with the origination of loans and held to maturity investment securities, which are an integral part of the effective interest rate, are deferred and recognised in the statement of comprehensive income on a yield basis over the expected life of the financial instrument.

The effective interest rate is that rate that exactly discounts estimated future cash flows throughout the life of the financial instrument.

The balance outstanding of the deferred origination income and expense is recognised in the balance sheet as an adjustment to the carrying amount of the loans and held to maturity investment securities outstanding.

ii) Other revenue Other income, commission and fee income is recognised in the statement of comprehensive income as revenue

when performance obligations in relation to the contract have been satisfied, which occur when the services promised in the contract with a customer have been provided to the customer.

E Income TaxGreater Bank has adopted the balance sheet liability method of tax-effect accounting, which focuses on the tax effect of transactions and other events that affect amounts recognised in either the balance sheet or a tax-based balance sheet.Deferred tax assets and liabilities are recognised for temporary differences, except where the deferred tax asset/liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that the future taxable amounts will be available to utilise those temporary differences and losses.Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.The Company and certain wholly owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2002. The Australian Taxation Office has been notified of the decision. As a consequence, those entities are taxed as a single entity and the deferred tax assets and liabilities of those entities are set off in the consolidated financial statements.Tax funding and sharing agreements between the Company and certain wholly owned Australian controlled entities, known as ‘group member entities’, apply from 1 July 2013. Broadly, group member entities are required to calculate their notional tax liability as if they were standalone taxpayers before transferring their tax liability to the head entity. Such transfers will be effected on intercompany account. The Company has responsibility for settling the consolidated entity’s income tax liability with the ATO.



34

F Financial AssetsAll financial assets are initially recognised at fair value plus, in the case of financial assets and liabilities not classified as at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.Financial assets are then classified as either a debt or equity financial asset, which in turn determines their subsequent accounting measurement. The categories and measurement treatments are:

i) Debt financial asset A debt financial asset is classified as at amortised cost only if both of the following criteria are met:

the asset is held within a business model with the objective to collect the contractual cash flows, and

the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding.

The nature of any derivatives embedded in the debt financial asset are considered in determining whether the cash flows of the asset are solely payment of principal and interest on the principal outstanding and are not accounted for separately.

A gain or loss on a debt financial asset that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in the statement of comprehensive income when the financial asset is derecognised or impaired and through the amortisation process using the effective interest rate method.

If either of the two criteria above are not met, the debt financial asset is classified as at fair value through profit or loss. A gain or loss on a debt financial asset that is subsequently measured at fair value and is not part of a hedging

relationship is recognised in the statement of comprehensive income and presented net in the income statement within other income or other expenses in the period in which it arises.

A debt financial asset relating to a loan or advance to a customer will only be recognised when the cash has been advanced to the customer.

ii) Equity financial asset All equity financial assets are measured at fair value. Equity financial assets that are held for trading are measured at fair value through profit or loss. Changes in the fair

value of financial assets at fair value through profit or loss are recognised in other income or other expenses in the income statement as applicable. Interest income from these financial assets is included in the net gains/(losses). Dividend income is presented as other revenue.

For all other equity financial assets (i.e. equity financial assets other than held for trading), Greater Bank can make an irrevocable election at initial recognition of each equity financial asset to recognise changes in fair value through other comprehensive income (OCI) rather than through profit or loss. Generally management will utilise this election where the value of the equity financial asset cannot be reliably revalued.

Where management has elected to present fair value gains and losses on equity financial assets in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to the statement of comprehensive income. Gains and losses arising from subsequent changes in fair value for equity financial assets nominated as fair value through other comprehensive income are recognised directly in the financial asset at fair value through other comprehensive income reserve in equity, until the asset is derecognised, at which time the cumulative gain or loss will be transferred to retained profits. Dividends from equity financial assets continue to be recognised in the statement of comprehensive income as other revenue when the right to receive payments is established and as long as they represent a return on investment.

Equity financial assets are measured at fair value. Fair values of quoted equity financial assets in active markets are based on current bid prices. If the relevant market is not considered active (or the securities are unlisted), Greater Bank establishes fair value by using valuation techniques, including recent arm’s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants. Where equity financial assets cannot be reliably valued they are recorded at cost.

G Cash and Cash EquivalentsCash and cash equivalents includes cash on hand and deposits at call and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to cash and are subject to an insignificant risk of changes in value. Greater Bank has considered expected credit losses for cash and determined that losses are immaterial.



35

H Investment Securities

i) Asset recognition Investment securities are classified as debt financial assets and are measured at amortised cost using the effective

interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity. Any gains or losses from investments are recognised in the statement of comprehensive income when the investments are derecognised, on impairment, as well as through the amortisation process.

ii) Revenue recognition Interest income arising from investment securities is recognised in the statement of comprehensive income using

the effective interest rate method (refer Note 1D). Greater Bank has considered expected credit losses for investment securities and determined that losses

are immaterial.

I Loans and Advances

i) Asset recognition Loans and advances are classified as debt financial assets and are recognised when cash is advanced to customers.

They are carried at amortised cost using the effective interest rate method (refer Note 1F).

ii) Revenue recognition Interest income arising from loans is brought to account using the effective interest rate method (refer Note 1D). Loan

products that have both mortgage and deposit facilities are presented gross on the balance sheet, segregating the asset and liability component, because they do not meet the criteria to be offset. Interest earned on these products is presented on a net basis in the statement of comprehensive income as this reflects how the customer is charged.

Loan fees received and transaction costs directly attributable to the acquisition of the loan are deferred and included as an adjustment to the interest revenue of the loan on a yield basis over the expected life of the loan using the effective interest rate method. The deferred revenues and costs are included in the balance sheet as part of the value of the loans and advances outstanding.

Other loan fees, commissions and other service fees provided in relation to services are recognised in the statement of comprehensive income as other income when the service has been provided to the customer.

iii) Impairment (Loan Portfolio) Loans are subject to regular review and assessment for possible impairment. AASB 9 has introduced new requirements

for impairment of financial assets, aimed at more timely recognition of credit losses. Consequently, allowances for impairment losses on loans are based on an expected credit loss model, as opposed to the incurred credit loss model applicable to the previous standard.

An expected credit loss (ECL) is applied to loans. Under the ECL methodology, Greater Bank calculates the allowance for credit losses by considering, on a discounted basis, the cash shortfalls it would incur in various default scenarios and multiplying the shortfalls by the probability of each scenario occurring. These scenarios are based on assumptions about the risk of default and expected loss rates. Assumptions are based on past history, existing market conditions, as well as forward-looking estimates at the end of each reporting period.

Loans are classified into three stages within the ECL. The stages are based on changes in credit quality and are defined as follows:

Stage 1: 12 month ECL. Loans that have not had a significant increase in credit risk since initial recognition. This applies to loans that are less than 30 days past due, except for those that have been up to 30 days past due within the last 12 months;

Stage 2: Lifetime ECL. Loans showing a significant increase in credit risk since initial recognition. This applies to loans that have been up to 30 days past due within the last 12 months and those that are equal to 30 but less than 90 days past due and not considered credit impaired; and

Stage 3: Lifetime ECL. Loans showing a significant increase in credit risk since initial recognition and deemed credit impaired loans. This applies to loans that are equal to or greater than 90 days past due plus those loans individually identified as credit impaired that may not yet be past due. As a result, these loans are considered to be in default. The default definition has been generally aligned with the default definition for prudential purposes of 90 days past due. However, unlike the APRA definition, the carrying value of loans within stage 3 is not adjusted for those considered well secured.



36


Loans can move between stages during their lifetime. A credit loss reserve is maintained in equity to cover additional credit risks inherent in the loan portfolio. Whilst not

required under any accounting standard, the credit loss reserve is an appropriation of retained profits (refer note 1R) and calculated in accordance with the Prudential Standard APS 220 Credit Quality.

iv) Restructured loans A restructured loan is a non-commercial facility where the original contractual terms have been modified to provide

concessional changes for reasons relating to financial difficulties of the borrower. Where the loan after restructuring remains doubtful and it is not well secured the loan shall be subject to impairment. Loans will only be recognised as restructured once the customer has formally agreed to the new terms.

v) Assets acquired through enforcement of security Assets acquired through enforcement of security are assets acquired in full or partial settlement of a loan or similar

facility through enforcement of security arrangements.

vi) Bad debts written off Bad debts are written off as identified by management and the Board of Directors when it is reasonable to expect

that the recovery of the debt is unlikely. Bad debts will be written off directly to the statement of comprehensive income in the period in which they are

identified. Bad debts can be written off directly against the allowance for impaired losses only to the extent that the allowance balance includes a specific allowance in respect of the debt being written off.

J Plant, Property and Equipment

i) Asset recognition Land and buildings are initially recognised at cost and then subsequently carried at fair value less accumulated

depreciation. Plant and equipment are initially recognised at cost and then subsequently carried at cost less accumulated

depreciation and less any impairment adjustment. Assets are reviewed for impairment annually. Cost includes expenditure directly attributable to the acquisition of the asset. Items of equipment, furniture and fittings and other small assets, which cost less than $1,000, are expensed at the

time of purchase.

ii) Revaluations Land and buildings are carried at fair value at the date of the revaluation less any subsequent accumulated

depreciation of buildings and accumulated impairment losses. Increases in the carrying amounts arising on revaluation of land and buildings are recognised, net of tax, in other

comprehensive income and accumulated in the property revaluation surplus reserve in equity. To the extent that the increase reverses a decrease previously recognised in the statement of comprehensive income, the increase is first recognised in the statement of comprehensive income. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus attributable to the asset; all other decreases are charged to the statement of comprehensive income. Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. Upon disposal, any revaluation surplus reserve relating to the particular asset being disposed is transferred to retained profits.

The balances in the asset revaluation surplus reserve for each particular asset are net of any potential capital gains tax liability.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the year the item is derecognised.

Fair value is determined by reference to market-based evidence, which is the amount that the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheet date.


37

iii) Depreciation Depreciation is calculated so as to write off the net cost or revalued amount of each item of property, plant and

equipment (excluding land) over its expected useful life. Additions are depreciated from the date of acquisition, which represents when the asset is ready for use.

Greater Bank uses the following useful lives and methods of depreciation:

USEFUL LIFE METHOD

Buildings 40 years straight lineOffice Equipment and Furniture 5–8 years reducing balanceMotor Vehicles 7 years reducing balanceComputer Hardware 3–5 years reducing balanceLeasehold Improvements 5–10 years straight line

Useful lives and residual values are reviewed annually and reassessed in light of commercial and technological developments. If an asset’s carrying value is greater than its recoverable amount due to a useful life, residual value or impairment adjustment, the carrying amount is written down immediately to its recoverable amount. Adjustments arising from such restatements and on disposal of fixed assets are recognised in the statement of comprehensive income.

For taxation purposes, Greater Bank adopts an effective life for the asset as determined by Taxation Rulings made public by the Commissioner of Taxation. Greater Bank generally uses the reducing balance method of depreciation for tax purposes.

K Investment PropertiesInvestment properties are initially recognised at cost and then subsequently carried at fair value. Cost includes expenditure directly attributable to the acquisition of the asset.Fair value is determined by reference to market-based evidence, which is the amount that the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm’s length transaction as at the valuation date. Annual assessments of the fair value are made by the Directors, supplemented by independent valuations performed every three years (or more often if circumstances require) ensuring that the carrying amount does not differ materially from the asset’s fair value at the balance sheet date.Changes in fair values for investment properties are recognised directly in the statement of comprehensive income.Where the property is used by Greater Bank for its own occupation, the property is classified as property, plant and equipment.

L Intangible Assets (Computer Software)Costs directly incurred in acquiring computer software, plus costs incurred in developing major products or systems that will contribute to future period financial benefits through revenue generation and/or cost reductions are capitalised to computer software and amortised over the estimated useful life. Costs incurred on research and software maintenance are expensed as incurred.Computer software assets are amortised over the shorter of the licence period or 5 years on a reducing balance basis, unless determined more appropriate to amortise on a straight line basis. Major system and product development assets are amortised over 3 to 7 years on a straight line basis.

M Deposits and Other BorrowingsDeposits are measured at amortised cost using the effective interest rate method (refer Note 1F).Interest on deposits is brought to account using the effective interest rate method.Securities sold under repurchase agreements are retained in the Financial Statements where substantially all the risks and rewards of ownership remain with the Group. A liability for the agreed repurchase amount from the counterparty is recognised within deposits and other borrowings.

N Financial LiabilitiesFinancial liabilities are measured at amortised cost using the effective interest rate method except for derivative instruments, financial liabilities designated as at fair value through profit and loss, and in other limited circumstances as allowed under AASB 9 Financial Instruments, which are subsequently measured at fair value through profit and loss. All Greater Bank’s financial liabilities except for derivative instruments are classified at amortised cost.



38

O ProvisionsGreater Bank makes provision where it has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation.

P Derivative InstrumentsGreater Bank uses derivative financial instruments to hedge its exposure to interest rate risks arising from operational, financing and investment activities. In accordance with its treasury management policy, Greater Bank does not hold or issue derivative financial instruments for trading purposes.All derivatives, including those used for balance sheet hedging purposes, are recognised on the balance sheet at fair value and are disclosed as an asset where they have a positive fair value at balance date or as a liability where the fair value at balance date is negative.Derivatives are initially recognised at fair value on the date a derivative contract is entered into and subsequently remeasured to their fair value at balance date. Fair values for interest rate swaps is the estimated amount that the Company would receive or pay to terminate the swap at the balance date, taking into account current interest rates and the credit worthiness of the swap counterparties. Movements in the carrying amounts of derivatives are recognised in the statement of comprehensive income, unless the derivative is designated as a hedge and meets the requirements for hedge accounting.

i) Cash flow hedges For a derivative designated as hedging a cash flow exposure arising from a recognised asset or liability (or a highly

probable forecast transaction), the gain or loss on the derivative associated with the effective portion of the hedge is initially recognised in equity in the cash flow hedge reserve and reclassified into the statement of other comprehensive income when the hedged item is brought to account. The gain or loss relating to the ineffective portion of the hedge is recognised immediately in the statement of comprehensive income.

ii) Fair value hedges For a derivative designated as hedging a fair value exposure arising from a recognised asset or liability (or a firm

commitment), the gain or loss on the derivative is recognised in the statement of comprehensive income together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Q Employee Entitlements

i) Wages and salaries and annual leave Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured at the amounts

expected to be paid when the liabilities are settled.

ii) Long service leave A liability for long service leave is recognised and is measured as the present value of expected future payments

to be made in respect of services provided by employees up to the balance date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields on national government guaranteed securities with terms to maturity that match, as closely as possible, the estimated future cash outflows.

iii) Superannuation Contributions are made by the Company to an employee’s superannuation fund and are charged as expenses

when incurred. The Company has no legal obligation to cover any shortfall in the funds’ liability to provide benefits to employees on retirement.

iv) On-costs On-costs associated with employees, including payroll tax, are recognised as liabilities and expenses when the

employment to which they relate has occurred.



39

R ReservesWith effect from 1 July 2005 the Company has established a reserve for credit losses to cover credit risks inherent but not yet incurred in the loan portfolio (refer Note 1I (i)). Movement in the credit loss reserve is recognised as an appropriation of retained profits.

S Goods and Services TaxWhere capital or expense acquisitions relate to input taxed activities, goods and services tax is generally non-recoverable from taxation authorities. Accordingly, where the amount of goods and services tax incurred is not recoverable, the tax is recognised as part of the cost of acquisition of an asset or as part of an item of expense.For the purposes of the statement of cash flows, receipts and payments from operations are inclusive of goods and services tax.

T ImpairmentThe carrying amounts of Greater Bank’s assets (excluding financial assets – refer note 1Aii) are reviewed at least at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. Any impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in the statement of comprehensive income unless the asset has previously been revalued, in which case the impairment loss is recognised as a reversal but only to the extent of the previous revaluation amount.

U Payables and Other Liabilities

i) Creditors and other accruals Creditors and other accruals represent amounts payable to creditors and have been recorded at cost. All amounts

are expected to settle within 12 months.

ii) Employee entitlements Liabilities for annual leave are recognised and are measured at the amounts expected to be paid when the liabilities

are settled.

V Rounding of AmountsThe Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, issued by Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with this Legislative Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.



40



2019$’000

2018$’000

2019$’000

2018$’000

2. INTEREST REVENUE

Cash and cash equivalents 3,644 3,627 3,172 3,032

Investment securities 37,084 35,790 60,503 58,025

Loans and advances 236,500 221,523 236,500 221,523

277,228 260,940 300,175 282,580

3. INTEREST EXPENSE

Deposits 113,759 105,533 113,780 105,553

Other financial liabilities 13,006 11,606 36,582 33,817

126,765 117,139 150,362 139,370

4. NON-INTEREST INCOME

Commission 4,398 4,656 4,398 4,656

Dividend income from controlled entity - - - 1,650

Fee income 15,837 16,055 15,837 16,055

Bad debts recovered 71 70 71 70

Net gain on disposal of investment securities 1,589 1,355 1,589 1,355

Rental revenue 243 454 243 454

Fee gratuity - 2,751 - 2,751

Other revenue 81 500 81 494

22,219 25,841 22,219 27,485

A Revenue from Contracts with Customers

Commission 4,398 4,656 4,398 4,656

Fee income 15,837 16,055 15,837 16,055

20,235 20,711 20,235 20,711

Services transferred to customers as at a point in time 17,080 17,700 17,080 17,700

Services transferred to customers over time 3,155 3,011 3,155 3,011

20,235 20,711 20,235 20,711


41



Notes 2019$’000

2018$’000

2019$’000

2018$’000

5. NON-INTEREST EXPENSE

Amortisation of computer software 1,675 1,312 1,675 1,312

Consultants’ fees 2,735 1,882 2,731 1,878

Depreciation – buildings 435 413 435 413

Depreciation – leasehold improvements 607 893 607 893

Depreciation – plant and equipment 2,651 2,468 2,651 2,468

Donations and sponsorships 1,788 1,796 2,003 1,754

Employee-related expense 66,382 63,511 66,382 63,511

Marketing and promotions 8,783 8,739 8,783 8,739

Net loss on revaluation of investment properties - 182 - 182

Net loss on revaluation of land and buildings - 72 - 72

Net loss on disposal of property, plant and equipment 775 716 775 716

Operating rental expense 10,545 10,131 10,545 10,131

Payment system processing costs 11,053 10,713 11,053 10,713

Repairs and maintenance costs 1,249 1,412 1,249 1,412

Technology and communication costs 5,229 3,986 5,229 3,986

Other general and administration expenses 13,589 12,493 13,274 12,213

127,496 120,719 127,392 120,393

6. INCOME TAX EXPENSE

A Income Tax Expense

Current tax 12,049 14,594 11,953 14,506

Deferred tax 1,239 117 1,328 116

13,288 14,711 13,281 14,622

Income tax expense attributable to profit from operations 13,288 14,711 13,281 14,622

Aggregate income tax expense 13,288 14,711 13,281 14,622

Deferred income tax expense/(revenue) included in income tax expense comprises

Decrease/(increase) in deferred tax assets 13 (142) (201) (53) (202)

Increase/(decrease) in deferred tax liabilities 13 1,381 318 1,381 318

1,239 117 1,328 116


42



Notes 2019$’000

2018$’000

2019$’000

2018$’000

B Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable

Profit from operations before income tax expense 44,740 48,925 44,193 50,304

Prima facie tax payable at 30% (2018 – 30%) 13,422 14,678 13,258 15,091

Tax effect of amounts which are not deductible (taxable) in calculating taxable income

Non-assessable income/non-deductible expense (exempt Charitable Foundation)

(67) 8 - -

Non-assessable income from consolidated entity - - - (495)

Entertainment expenses 16 25 16 26

Sundry items (83) - 7 -

(134) 33 23 (469)

INCOME TAX EXPENSE 13,288 14,711 13,281 14,622

C Amounts Recognised Directly in Equity/Other Comprehensive Income

Aggregate current and deferred tax arising in the reporting period and not recognised in the statement of comprehensive income but directly debited or credited to equity

Current tax – credited directly to equity 18 85 18 85

Net deferred tax – debited/(credited) directly to equity

13 (2,274) 53 (2,274) 53

23 (2,256) 138 (2,256) 138

7. CASH AND CASH EQUIVALENTS

All Cash and Cash Equivalents are current assets

Cash on hand 7,904 9,134 7,972 9,206

Financial institution balance – at call 58,948 62,384 23,690 18,850

Financial institution balance – short-term 124,803 76,808 124,803 76,808

191,655 148,326 156,465 104,864

Short-term cash and cash equivalents are those where original maturity is less than 90 days.

8. INVESTMENT SECURITIES

Financial institutions balance 911,879 920,284 911,879 920,284

Investments in other securities 296,982 203,560 1,036,982 938,560

1,208,861 1,123,844 1,948,861 1,858,844

Investment securities with financial institutions are those where original maturity is greater than 90 days.

Investment securities expected to mature within 12 months 230,879 109,080 230,879 109,080

Investment securities expected to mature after 12 months 977,982 1,014,764 1,717,982 1,749,764

1,208,861 1,123,844 1,948,861 1,858,844


43



2019$’000

2018$’000

2019$’000

2018$’000

9. OTHER RECEIVABLES

All Other Receivables are current assets

Accrued income 344 739 344 739

Prepayments 2,122 1,504 2,118 1,500

Other receivables 184 243 5,636 5,558

2,650 2,486 8,098 7,797

10. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instrument asset

Interest rate swap contracts – cash flow hedges 5,669 - 5,669 -

5,669 - 5,669 -

Derivatives expected to mature within 12 months 2,094 - 2,094 -

Derivatives expected to mature after 12 months 3,575 - 3,575 -

5,669 - 5,669 -

Derivative financial instrument liability

Interest rate swap contracts – cash flow hedges 111 2,700 111 2,700

111 2,700 111 2,700

Derivatives expected to mature within 12 months 111 1,855 111 1,855

Derivatives expected to mature after 12 months - 845 - 845

111 2,700 111 2,700

Cash flow hedge ineffectiveness – gain/(loss) - - - -

11. LOANS AND ADVANCES

Overdrafts 78,330 88,632 78,330 88,632

Term loans 5,639,534 5,301,609 5,639,534 5,301,609

Gross loans and advances 5,717,864 5,390,241 5,717,864 5,390,241

Allowance for expected credit losses (4,619) (1,021) (4,619) (1,021)

Net loans and advances 5,713,245 5,389,220 5,713,245 5,389,220

Loans and advances expected to be paid within 12 months 1,130,890 1,087,731 1,130,890 1,087,731

Loans and advances expected to be paid after 12 months 4,582,355 4,301,489 4,582,355 4,301,489

5,713,245 5,389,220 5,713,245 5,389,220


44



2019$’000

2018$’000

2019$’000

2018$’000

A Allowance for Expected Credit Losses (ECL)

Movement in the allowance for expected credit losses are as follows:

Opening balance 1,021 1,023 1,021 1,023

Bad debt write-off - (808) - (806)

Write-off of known credit impaired loans (776) - (776) -

New/(Released) provision 1,222 806 1,222 804

Adjustment on implementation of AASB 9 3,151 - 3,151 -

4,618 1,021 4,618 1,021

Stages of the allowance for expected credit losses are as follows:

Stage 1 – 12 month ECL 773 - 773 -

Stage 2 – lifetime ECL (not credit impaired) 2,124 - 2,124 -

Stage 3 – lifetime ECL (credit impaired) 1,721 1,021 1,721 1,021

4,618 1,021 4,618 1,021

2018 has not been restated. Prior to the implementation of AASB 9, all provisions were for individually credit impaired loans.

There were no changes in the ECL estimation techniques or significant assumptions made during the reporting period.

B Credit Impaired Loans

Credit Impaired Loans with stage 3 ECL 7,915 2,887 7,915 2,887

Stage 3 ECL (1,721) (1,021) (1,721) (1,021)

6,194 1,866 6,194 1,866

2018 has not been restated. Prior to the implementation of AASB 9, all provisions were for individually credit impaired loans.Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit. The majority of the credit impaired loans remain well secured.

Use of estimates and judgementsThe loss allowances for loans are based on assumptions about risk of default and expected loss rates. Greater Bank uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on past history, existing market conditions as well as forward-looking estimates at the end of each reporting period. When assessing loans on an individual basis for inclusion in stage 3 of the ECL, consideration is given to the counterparties’ willingness to meet their contractual obligations, the counterparties’ economic circumstances, their future prospects and the security provided.


45



2019$’000

2018$’000

2019$’000

2018$’000

C Assets Acquired Through the Enforcement of Security

Net fair value of assets acquired through the enforcement of security still held at the end of the Financial Year

Real estate 1,340 1,203 1,340 1,203

Other assets - - - -

1,340 1,203 1,340 1,203

Assets acquired during the year are disposed of as soon as practically possible with the proceeds used to reduce the outstanding indebtedness. Any residual proceeds after the debt is repaid are returned to the borrower.

There were no assets through the enforcement of security during the year that were used by Greater Bank in its operations.

12. OTHER FINANCIAL ASSETS

All other financial assets are non-current assets

Equity financial assets 615 320 615 320

Investments in controlled entities - - 80 80

615 320 695 400

Controlled Entities

NAME OF ENTITY CLASS OF SHARE

INVESTMENT HOLDING

NATURE OF BUSINESS2019 %

2018 %

2019 $’000

2018 $’000

Greater Investment Services Pty Ltd Ordinary 100% 100% 80 603 Management Services

Greater Property Holdings Number 1 Pty Ltd Ordinary N/A 100% N/A - Dormant entity wound up in August 2018

Greater Charitable Foundation Trust N/A 100% 100% - - Charitable Foundation

Greater Charitable Foundation Pty Ltd Ordinary 100% 100% - - Trustee

GBS Receivables Repo Trust N/A N/A N/A N/A N/A Mortgage securitisation special purpose entity

GBS Secured Funding Trust No 1 N/A N/A N/A N/A N/A Mortgage securitisation special purpose entity

Notes:

a) All the above entities are incorporated/established in Australia.

b) The Company has control of GBS Receivables Repo Trust and GBS Secured Funding Trust No 1 as the Company is exposed to, and has the ability to affect, the variable returns associated with these special purpose entities.

c) The GBS Receivables Repo Trust is an internal securitisation and the Company holds all of the notes on issue. At balance date the units had a value of $700M (2018 $700M).

d) The GBS Secured Funding Trust No 1 is an internal securitisation and the Company holds part of the notes on issue. At balance date the units had a value of $40M (2018 $35M).


46



2019$’000

2018$’000

2019$’000

2018$’000

13. DEFERRED TAX ASSETS

Net deferred tax assets 2,362 3,601 2,362 3,690

A Composition of Net Deferred Tax Assets

Deferred tax assets

The balance comprises temporary differences attributable to

Doubtful debts 1,385 306 1,385 306

Impaired assets - - - 89

Employee benefits 3,089 2,976 3,089 2,976

Property, plant and equipment 1,431 1,498 1,431 1,498

Deferred revenue 58 92 58 92

Accrued expenditure 1,286 1,441 1,286 1,441

7,249 6,313 7,249 6,402

Amounts recognised directly in equity/other comprehensive income

Cash flow hedges - 794 - 794

7,249 7,107 7,249 7,196

Deferred tax liabilities

Less set-off of deferred tax liabilities

The balance comprises temporary differences attributable to

Property, plant and equipment (1,059) (1,154) (1,059) (1,154)

Prepaid expenditure (16) (22) (16) (22)

Securitisation trust establishment costs (12) (10) (12) (10)

(1,087) (1,186) (1,087) (1,186)

Amounts recognised directly in equity/other comprehensive income

Property revaluation surplus reserve (2,178) (2,320) (2,178) (2,320)

Cash flow hedges (1,622) - (1,622) -

Total set-off amount of deferred tax liabilities (4,887) (3,506) (4,887) (3,506)


47



2019$’000

2018$’000

2019$’000

2018$’000

B Movements in Net Deferred Tax Assets

Attributable to deferred tax assets

Opening balance 7,107 6,906 7,196 6,994

Credited/(charged) to the statement of comprehensive income 2,469 (282) 2,469 (281)

Credited/(charged) to equity/other comprehensive income (2,416) 465 (2,416) 465

Under/(over) provision in prior year 89 18 - 18

7,249 7,107 7,249 7,196

Less set-off of deferred tax liabilities

Attributable to deferred tax liabilities

Opening balance 3,506 3,188 3,506 3,188

Charged/(credited) to the statement of comprehensive income 1,248 797 1,248 797

Charged/(credited) to equity/other comprehensive income 142 (412) 142 (412)

Under/(over) provision in prior year (9) (67) (9) (67)

Total set-off amount of deferred tax liabilities 4,887 3,506 4,887 3,506

NET DEFERRED TAX ASSETS 2,362 3,601 2,362 3,690

C Recovery of Deferred Tax Assets

Attributable to deferred tax assets

Deferred tax assets to be recovered after more than 12 months 2,692 2,715 2,692 2,804

Deferred tax assets to be recovered within 12 months 4,557 4,392 4,557 4,392

7,249 7,107 7,249 7,196

Attributable to deferred tax liabilities

Deferred tax liabilities to be settled after more than 12 months 3,205 3,466 3,205 3,466

Deferred tax liabilities to be settled within 12 months 1,682 40 1,682 40

4,887 3,506 4,887 3,506

NET DEFERRED TAX ASSETS 2,362 3,601 2,362 3,690


48



2019$’000

2018$’000

2019$’000

2018$’000

14. PROPERTY, PLANT AND EQUIPMENT

All property, plant and equipment are non-current assets

Land and buildings 23,203 23,437 23,203 23,437

23,203 23,437 23,203 23,437

Leasehold improvements 13,915 13,316 13,915 13,316

Less accumulated depreciation (12,359) (11,755) (12,359) (11,755)

1,556 1,561 1,556 1,561

Plant and equipment 20,076 18,778 20,076 18,778

Less accumulated depreciation (13,308) (12,305) (13,308) (12,305)

6,768 6,473 6,768 6,473

PROPERTY, PLANT AND EQUIPMENT 31,527 31,471 31,527 31,471

A Valuation of Land and Buildings

Use of estimates and judgements The valuation of land and buildings is on the basis of fair market values based on existing use and are classified as level 3 assets. In determining fair value, Greater Bank uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Specifically, inputs include observations of the net rental market and current commercial capitalisation rates. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from the fair value. The Directors’ assessments are supported by independent valuations. Details of the independent valuations are shown below.

June 2019 – Director’s assessment of fair value at 30 June 2019 having considered the independent valuations undertaken at 30 June 2019 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265) and H Pawlik, FAPI CPV, of WBP Group (Reg Valuer No. 67837).

June 2018 – no independent valuations performed. Director’s assessment of fair value at 30 June 2018 having considered the previous independent valuations undertaken at 30 June 2016.

B Carrying Amounts that Would Have Been Recognised if Land and Buildings Were Stated at Cost

Freehold land and buildings stated on the historical cost basis, would be as follows:

Land and buildings

Cost 19,678 18,740 19,678 18,740

Accumulated depreciation (5,859) (5,246) (5,859) (5,246)

Net book amount 13,819 13,494 13,819 13,494


49


2019$’000

2018$’000

2019$’000

2018$’000

C Movement in Land and Buildings

Balance as at start of year 23,437 22,486 23,437 22,486

Additions 1,045 66 1,045 66

Disposals (400) - (400) -

Revaluation increment/(decrement) recognised in the statement of comprehensive income

- (73) - (73)

Revaluation increment/(decrement) recognised in other comprehensive income

(444) 1,371 (444) 1,371

Depreciation expense (435) (413) (435) (413)

Balance as at end of year 23,203 23,437 23,203 23,437

D Movement in Leasehold Improvements


Additions 602 134 602 134

Depreciation expense (607) (893) (607) (893)


E Movement in Plant and Equipment


Additions 3,443 2,841 3,443 2,841

Disposals (469) (253) (469) (253)

Revaluation increment/(decrement) recognised in other comprehensive income

(28) - (28) -

Depreciation expense (2,651) (2,468) (2,651) (2,468)


15. INVESTMENT PROPERTIES

All investment properties are non-current assets

Investment properties 879 5,857 879 5,857

A Valuation of Investment Properties

Use of estimates and judgements The valuation of investment properties is on the basis of fair market values based on existing use and are classified as level 3 assets. In determining fair value, Greater Bank uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Specifically, inputs include observations of the net rental market and current commercial capitalisation rates. An annual assessment is made by the Directors to ensure that the carrying values do not differ materially from fair value. The Directors’ assessments are supported by independent valuations. Details of the independent valuations are shown below.

June 2019 – Director’s assessment of fair value at 30 June 2019 having considered the independent valuations undertaken at 30 June 2019 by D Rich, AAPI CPV, of Preston Rowe Paterson (Reg Valuer No. 69265) and H Pawlik, FAPI CPV, of WBP Group (Reg Valuer No. 67837).

June 2018 – no independent valuations performed. Director’s assessment of fair value at 30 June 2018 having considered the previous independent valuations undertaken at 30 June 2016.



50



2019$’000

2018$’000

2019$’000

2018$’000

B Movement in Investment Properties


Revaluation increment/(decrement) recognised in the statement of comprehensive income

- (182) - (182)

Disposals (4,978) - (4,978) -

Balance as at end of year 879 5,857 879 5,857

C Amount Recognised in the Statement of Comprehensive Income for Investment Properties

Rental income 243 454 243 454

Direct operating expenses (118) (118) (118) (118)

125 336 125 336

16. INTANGIBLE ASSETS

All intangible assets are non-current assets

Computer software 13,086 12,667 13,086 12,667

Less accumulated amortisation (8,918) (6,635) (8,918) (6,635)

4,168 6,032 4,168 6,032

A Movement in Software Balances


Additions 1,044 1,302 1,044 1,302

Disposal (127) (10) (127) (10)

Amortisation expense (1,675) (1,312) (1,675) (1,312)

Impairment expense (1,106) (745) (1,106) (745)


17. PAYABLES AND OTHER LIABILITIES

All payables and other liabilities are expected to be settled within 12 months

Creditors and other accruals 9,573 11,182 10,468 11,310


13,955 15,311 14,850 15,439

18. DEFERRED REVENUE

Expected to be brought to account within 12 months 1,732 306 1,732 306

Expected to be brought to account after 12 months - - - -

1,732 306 1,732 306


51



2019$’000

2018$’000

2019$’000

2018$’000

A Movement in Deferred Revenue Balances

Opening deferred revenue 306 1,307 306 1,307

Adjustment for adoption of AASB 15 1,370 - 1,370 -

Consideration received from customers 3,031 - 3,031 -

Revenue recognised in reporting period (2,975) (1,001) (2,975) (1,001)

Closing deferred revenue 1,732 306 1,732 306

19. DEPOSITS AND OTHER BORROWINGS

Call deposits 3,132,529 2,981,054 3,135,595 2,983,685

Term deposits 2,898,582 2,776,454 2,898,582 2,776,454

Securities sold under repurchase agreements* 110,064 - 110,064 -

6,141,175 5,757,508 6,144,241 5,760,139

Refer Note 30 E for the split of current and non-current deposits.

*Represents securities sold under repurchase agreements with the Reserve Bank of Australia.

Collateral Arrangements – Assets Pledged

Securities** 127,488 - 127,488 -

127,488 - 127,488 -

** Represents assets pledged as collateral to secure liabilities. The corresponding liability has been disclosed above in Securities sold under repurchase agreements. Greater Bank has pledged collateral as part of entering repurchase agreements. Repurchase Agreements are transacted under market standard terms and conditions as per the Global Master Repurchase Agreements with our counterparties.

20. CURRENT TAX LIABILITY

All current tax liabilities are expected to be settled within 12 months

Income tax payable 601 2,609 601 2,609

601 2,609 601 2,609

21. OTHER FINANCIAL LIABILITIES

Commercial notes 449,878 399,807 - -

Loans – securitisation special purpose entities - - 1,159,174 1,096,445

Investment securities purchased, not settled - 12,000 - 12,000

449,878 411,807 1,159,174 1,108,445

Other financial liabilities expected to be settled within 12 months 117,940 119,521 275,330 308,506

Other financial liabilities expected to be settled after 12 months 331,938 292,286 883,844 799,939

449,878 411,807 1,159,174 1,108,445


52



2019$’000

2018$’000

2019$’000

2018$’000

22. PROVISIONS


5,915 5,792 5,915 5,792

Provisions expected to be settled within 12 months 630 609 630 609

Provisions expected to be settled after 12 months 5,285 5,183 5,285 5,183

5,915 5,792 5,915 5,792

Movement in provisions – Consolidated and Company 1 Jul 18 Increase Released 30 Jun 19$’000 $’000 $’000 $’000

Long service leave 5,792 963 (840) 5,915

5,792 963 (840) 5,915

23. RESERVES

Community support reserve 631 861 631 861

Cash flow hedge reserve 3,792 (1,802) 3,792 (1,802)

Credit loss reserve 10,512 14,053 10,512 14,053

Property revaluation surplus reserve 7,464 7,794 5,082 5,412

22,399 20,906 20,017 18,524

MOVEMENT IN RESERVES

A Community Support Reserve

Balance as at start of year 861 997 861 997

Transfer (to)/from retained profits (230) (136) (230) (136)

Balance as at end of year 631 861 631 861

The community support reserve has been set aside to provide services and facilities in the communities in which Greater Bank operates.

B Cash Flow Hedge Reserve

Balance as at start of year (1,802) (520) (1,802) (520)

Recognised in equity during the year 8,051 (1,548) 8,051 (1,548)

Transferred to the statement of comprehensive income during the year

(59) (284) (59) (284)

Deferred tax (2,398) 550 (2,398) 550

Balance as at end of year 3,792 (1,802) 3,792 (1,802)

The cash flow hedge reserve represents the future value of hedged instruments that have been designated as effective hedges in accordance with hedge accounting as described in Note 1P (i).


53



2019$’000

2018$’000

2019$’000

2018$’000

C Credit Loss Reserve


Transfer (to)/from retained profits (3,541) (26) (3,541) (26)


The credit loss reserve is a requirement of Australian Prudential Regulation Authority Prudential Standards and represents the potential inherent losses in the loans and advances portfolio under a stressed economic environment.

D Property Revaluation Surplus Reserve


Revaluation gross (906) 958 (906) 958

Deferred tax 272 (288) 272 (288)

Depreciation transfer gross 434 413 434 413

Deferred tax (130) (124) (130) (124)


The property revaluation surplus reserve is used to record the unrealised increments and decrements on the revaluation of property as described in Note 1J.

E Business Combination Reserve

Balance as at start of year - 10,699 - 10,699

Transfer (to)/from retained profits - (10,699) - (10,699)

Balance as at end of year - - - -

The assets and liabilities represented within the Business Combination Reserve are no longer separately identifiable within Greater Bank’s Balance Sheet. All investment securities have matured and customer loans and deposits have been merged and are managed as part of Greater Bank’s overall portfolios. Therefore, the business combination reserve is now represented as part of retained profits.

24. RETAINED PROFITS

Retained profits 525,865 494,218 525,329 494,221

Movement in retained profits

Balance at beginning of year 494,218 449,143 494,221 447,678

Adjustment for adoption of AASB 9 (3,151) - (3,151) -

Tax effect of adoption of AASB 9 945 - 945 -

Adjustment for adoption of AASB 15 (1,370) - (1,370) -

490,642 449,143 490,645 447,678

Net profit in the year 31,452 34,214 30,913 35,682

Transfer (to)/from credit loss reserve 3,541 26 3,541 26

Transfer (to)/from community contribution reserve 230 136 230 136

Transfer (to)/from business combination reserve - 10,699 - 10,699

525,865 494,218 525,329 494,221


54



2019$

2018$

2019$

2018$

25. RELATED PARTIES

A Controlled Entities

Information in respect of controlled entities is disclosed in Note 12. Transactions with these entities are disclosed in Note 25C below.

B Key Management Personnel

Key management personnel are the Directors and those Senior Executives who are responsible for the planning, directing and controlling of the activities of Greater Bank. Details of changes to the Directors are shown in the Directors’ Report.

i) Compensation paid to key management personnel

Short-term employee benefits 3,502,483 3,404,002 3,502,483 3,404,002

Post-employment benefits 230,534 226,662 230,534 226,662

Other long-term benefits 231,102 224,641 231,102 224,641

Termination benefits - - - -

3,964,119 3,855,306 3,964,119 3,855,306

ii) Loans to key management personnel

Loans outstanding at beginning of year 6,162,223 6,300,984 6,162,223 6,300,984

Net balances from changes in personnel (1,478,123) - (1,478,123) -

Advances made during the year 626,978 871,829 626,978 871,829

Interest and fees charged 225,731 232,172 225,731 232,172

Repayments made during the year (464,865) (1,242,762) (464,865) (1,242,762)

Loans outstanding at end of year 5,071,944 6,162,223 5,071,944 6,162,223

Loans granted at commercial terms are provided at the same interest rate and terms available to customers. Security is taken in the majority of cases in accordance with the Company’s normal credit risk policy.

iii) Deposits made by key management personnel

Deposits outstanding at the beginning of year 2,113,827 1,670,136 2,113,827 1,670,136

Net balances from changes in personnel (215,247) - (215,247) -

Interest paid 30,071 23,726 30,071 23,726

Net movement in deposits during the year 917,954 419,965 917,954 419,965

Deposits outstanding at the end of the year 2,846,605 2,113,827 2,846,605 2,113,827

The Company provides each staff member a deposit account upon which no transaction fees are payable. These accounts are included in the above disclosure.


55


C Transactions with Other Related Parties

The Company has related party transactions with the following entities:

i) Greater Investment Services Pty Ltd invests funds with the Company. At balance date these deposits totalled $720,000 (2018 $499,000). In support of the entities’ AFS licence, the Company has provided a support agreement including a financial support commitment to the entity. The entity acts as the manager for GBS Receivables Repo Trust and GBS Secured Funding Trust No 1. The Company provides administration services to the entity for $NIL (2018 $NIL) consideration. During the year Greater Investment Services Pty Ltd paid a dividend of $NIL (2018 $1,650,000), issued NIL shares (2018 523,073) and returned capital of $NIL (2018 $523,073) to the Company.

ii) The Company provides custodian, basis swap, interest rate swap and redraw commitment facilities to GBS Receivables Repo Trust and GBS Secured Funding Trust No 1 as well as acting as servicer of the securitised mortgages. These trusts are special purpose entities that allow the Company to access funding by securitising mortgage loans. The Company holds all the units in GBS Receivables Repo Trust. At balance date the units had a value of $700,000,000 (2018 $700,000,000). In addition, the Company holds units in GBS Secured Funding Trust No 1. At balance date the units had a value of $40,000,000 (2018 $35,000,000).

iii) Greater Charitable Foundation invests funds with the Company. At balance date these deposits totalled $2,345,000 (2018 $2,131,000). The Trust’s principal activities are the provision of distributions to other entities or persons to advance or promote a charitable purpose. During the year the Company donated $990,000 (2018 $1,000,000) to the foundation. During the year, the Company provided administrative services to the foundation of $329,000 (2018 $337,000) for nil consideration.


2019$

2018$

2019$

2018$

26. REMUNERATION OF AUDITORSPricewaterhouseCoopers Australia During the year the following fees were paid or payable for services provided by the auditor of the parent entity:

Auditing services for the financial statements and prudential regulation reporting of any entity within the consolidated entity 376,006 364,966 329,656 320,736

Other audit-related work 31,409 32,796 27,409 28,846

Other advisory services 110 828 110 828

407,525 398,590 357,175 350,410


56



2019$’000

2018$’000

2019$’000

2018$’000

27. COMMITMENTS

Greater Bank leases various ATM locations and Branch offices under non-cancellable operating leases expiring within one to thirteen years. The leases have varying terms, escalation clauses and renewal rights.

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

i) Lease commitments

Within one year 8,788 7,468 8,788 7,468

Later than one year but not later than five years 17,039 15,698 17,039 15,698

Later than five years 2,939 - 2,939 -

28,766 23,166 28,766 23,166

ii) Capital commitments

As at 30 June 2019, Greater Bank has a commitment of $5,500 (2018 $304,140) for IT-related projects.

iii) Project commitments

As at 30 June 2019, Greater Bank has a commitment of $3,599,707 (2018 NIL) for the Digital Transformation project being a contract for software subscriptions.

28. RECONCILIATION OF NET CASH

A Provided by Operating Activities to Operating Profit after Income Tax

Operating profit after income tax 31,451 34,214 30,913 35,682

Depreciation and amortisation 5,368 5,086 5,368 5,086

Impaired losses/(gains) on loans 4,507 1,271 4,507 1,271

Profit on sale of investments (1,589) (1,355) (1,589) (1,355)

Loss/(profit) on sale of property, plant and equipment 775 716 775 716

Fair value movement of land and buildings - 72 - 72

Fair value movement of investment properties - 182 - 182

Increase/(decrease) in accrued interest payable 572 2,917 571 2,674

Decrease/(increase) in accrued interest receivable 325 396 325 396

Decrease/(increase) in other receivables 395 (338) 395 (338)

Decrease/(increase) in net deferred tax assets (1,113) 188 (1,025) 186

Decrease/(increase) in sundry debtors and prepaid expenditure (559) 903 (697) 840

Increase/(decrease) in deferred revenue (112) (1,001) (112) (1,001)

Increase/(decrease) in income taxes payable (2,008) 2,413 (2,008) 2,413

Increase/(decrease) in creditors and accrued expenses (1,611) (513) (1,601) (493)

Increase/(decrease) in other provisions 377 (5) 377 (5)

Decrease/(increase) in loans and advances (328,548) (494,827) (327,789) (495,785)

Decrease/(increase) in investment securities (96,049) (28,141) (101,049) (26,162)

Increase/(decrease) in deposits 381,390 378,514 381,825 376,576

NET CASH PROVIDED BY OPERATING ACTIVITIES (6,429) (99,308) (10,814) (99,045)


57



2019$’000

2018$’000

2019$’000

2018$’000

B Provided by Financing Activities to Other Financial Liabilities

Balance as at start of year 399,807 374,898 1,096,445 1,068,318

Cash flows 50,000 24,838 62,657 28,057

Non-cash movement 70 71 72 70

Balance as at end of year 449,877 399,807 1,159,174 1,096,445

29. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

A Financial Assets and Liabilities

The carrying amount of the following categories of financial assets and liabilities are:

Financial assets

Financial assets measured at amortised cost 7,121,029 6,664,896 7,831,287 7,361,745

Fair value through other comprehensive income 615 320 695 400

Financial assets that are designated hedging instruments 5,669 - 5,669 -

7,127,313 6,665,216 7,837,651 7,362,145

Financial liabilities

Financial liabilities measured at amortised cost 6,602,358 6,180,803 7,315,614 6,880,200

Financial liabilities that are designated hedging instruments 111 2,700 111 2,700

6,602,469 6,183,503 7,315,725 6,882,900

Greater Bank early adopted AASB 9 Financial Instruments and AASB2009-11 Amendments to Australian Accounting Standards arising from AASB 9 from 1 July 2010 and on review of the current AASB 9 Financial Instruments adopted from 1 July 2018, there have been no changes to financial asset or liability classifications.

B Risk Management Framework

Greater Bank’s activities are principally related to the use of financial instruments. Greater Bank predominantly accepts deposits from customers at both fixed and floating rates for various periods and lends to retail borrowers at both fixed and floating rates with a range of credit standings for a variety of purposes such as residential, personal and commercial. Surplus funding is invested in high quality liquid or investment securities. Accordingly, Greater Bank’s activities are exposed to the following key financial risks: market risk, credit risk and liquidity risk.

Risks are monitored and managed using an enterprise wide risk management system. This system records all the identified risks, the risk controls and risk mitigants used to manage the risks and an assessment of each risk. These risks are formally reviewed by management and presented to the Board Risk Committee on a quarterly basis.

Risk management is carried out by the Executive Committee, comprising of Senior Management Executives, under policies approved by the Board of Directors (the Board). The Board provides written principles for the overall risk management, as well as written policies covering specific areas as required, to meet minimum Prudential Standards requirements issued by the Australian Prudential Regulation Authority (APRA).

These Risk Management Policies and supporting documents identify Greater Bank’s policies and procedures, processes and controls that comprise its risk management and control systems. These systems address key material risks, financial and non-financial, likely to be faced by Greater Bank. The policies and procedures are reviewed annually by senior management and the Board to take account of changing circumstances. In addition, the Chief Executive Officer annually certifies to APRA that Senior Management and the Board have identified key risks facing Greater Bank. The Board has established systems to monitor those risks, including setting and requiring adherence to a series of prudential limits, adequate timely reporting processes, and compliance reporting demonstrating that these risk management systems are operating effectively and are adequate having regard to the risks they are designed to control.


58


C Market Risk

The predominant market risk that Greater Bank is exposed to is interest rate risk. Greater Bank is not exposed to foreign exchange or other price risk.

Greater Bank’s interest rate risk arises from the net difference in cash flows from long-term fixed rate assets or liabilities which are funded by or invested in floating rate assets or liabilities. Long-term fixed rate assets include loans advanced to customers and other investment securities, while long-term fixed rate liabilities includes deposits raised from customers and other wholesale funding arrangements. This exposure creates an interest rate risk because the net balances and cash flows generated from these assets and liabilities are dependent upon movements in interest rates.

Greater Bank has established policy limits for the level of interest rate risk. Current policy measures interest rate risk in terms of the net present value of a basis point (PVBP) movement in interest rates. PVBP measures the net effect on the fair value of financial instruments for every one basis point (0.01%) change in the interest rate yield curve. The policy has limits for the amount of movement in the fair value of net assets or liabilities exposed to a hypothetical basis point variance before the risk requires active management. The limits are placed for specific time periods together with an overall portfolio limit. The risk is managed by, or a combination of, changes to product pricing or product terms to change consumer product purchasing preferences, by the use of interest rate swaps or other derivative instruments, or by the maturity placement of investment securities. When interest rate swaps are used for the above purpose, Greater Bank uses hedge accounting.

For the PVBP model the cash flows from financial assets and liabilities are spread over time buckets based on contractual repricing except for ‘at call’ transactional accounts. At call transactional accounts are liabilities raised from customers and historically have limited sensitivity to movements in interest rates. The model allocates the portion of the transactional account balances that is sensitive to movements in interest rates into the less than three months’ time bucket while the remaining portion of transaction account balances that are not sensitive to interest rate movements are evenly allocated into each time bucket over a five-year time horizon. The yield curve used in the PVBP model is based off the relevant published market interest rates.

The following tables set out the Company’s and Greater Bank’s exposure to interest rate risk, measured by the present value of a basis point change in the yield curve.

Financial Instruments PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2019 – CONSOLIDATED

Less than 3 months

3 to 12 months 1 to 3 years 3 to 5 years Over 5 years Total

Net Exposure ($’s) 12,099 (8,157) (7,903) 6,163 (1,419) 783

Financial Instruments PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2019 – COMPANY

Less than 3 months


Net Exposure ($’s) 12,107 (8,121) (7,742) 6,363 (1,419) 1,188

Financial Instruments PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2018 – CONSOLIDATED

Less than 3 months


Net Exposure ($’s) 14,779 (6,998) (22,674) 13,399 (1,397) (2,891)

Financial Instruments PRESENT VALUE OF BASIS POINT (PVBP) PROFILE 2018 – COMPANY

Less than 3 months


Net Exposure ($’s) 14,787 (6,969) (22,547) 13,553 (1,399) (2,575)


59


D Credit Risk

Greater Bank’s credit risk predominantly arises from the risk that counterparties will not meet their contractual obligations with the consolidated entity. The main exposure to credit risk for Greater Bank is either loans provided to customers or investments made for prudential liquidity needs.

Credit risk exposure for loans is minimised by prudent assessment of each individual loan applicant, obtaining security for the majority of loans made and where credit risk warrants undertaking credit insurance.

The credit risk policy assesses the credit worthiness of the applicant considering not only the ability to service the loan but also other factors such as length and stability of employment, asset accumulation and stability of residency. To facilitate this, a credit risk grading system is used that scores or grades loan applicants based on the above criteria. Security still remains an important consideration in assessing the granting of credit. The pricing offered to loan applicants is dependent upon a combination of the loan applicant’s credit risk grade, the security provided and the reason or purpose for the credit request.

Greater Bank minimises concentration of credit risk in relation to loans by dealing with a relatively large number of individual customers. Exposure to credit risk is limited to the market area that Greater Bank participates in. Greater Bank is active in the retail finance markets of Newcastle, Hunter Valley, Central Coast, Sydney, South Coast, Central West and North Coast of New South Wales and South-East Queensland. The Company imposes portfolio limits for each loan product and for each credit risk grade. These portfolio limits seek to limit Greater Bank’s exposure to certain products that represent a specific credit exposure and also to ensure the portfolio is not concentrated in a specific category of credit risk grade loan applicants.

Security for housing loans is in the form of registered mortgage over residential property real estate. Security for commercial loans is in the form of registered mortgage over residential and/or commercial real estate. Security for personal loans is in the form of either registered mortgage over real estate, mortgage over other property or charges against funds held on deposit. Where appropriate, guarantees are also sought from related parties to a loan. No security is taken for loans via credit cards and some personal loans. Credit risk also arises in relation to financial guarantees given to certain parties. Such guarantees are secured by a registered mortgage over real estate property or by a charge over funds held on deposit.

The Company has entered into a number of residential mortgage backed securitisation arrangements. Loans are equitability assigned to special purpose vehicles. These special purpose vehicles issue commercial notes to note holders secured by the cash flows arising from the loans. A substantial component of the credit risk has been transferred to the unit holders. The Company still retains the market risk, operational risk and some credit risk from these loans. Due to the retention of substantially all the risks and rewards of these loans, Greater Bank continues to recognise these assets as ‘loans and advances’.

The following sets out the carrying value of securitised loans and the associated liabilities. The fair value of the transferred assets and associated liabilities approximates their carrying value.


2019$’000

2018$’000

2019$’000

2018$’000

Carrying amount of transferred assets

Loans and advances 441,916 393,776 441,916 393,776

Carrying amount of associated liabilities to the transferred assets

Commercial notes 450,000 400,000 450,000 400,000

Credit risk exposure for treasury transactions (i.e. investment securities, cash and derivative transactions) to counterparties is minimised by limiting transactions to pre-approved financial institutions. Greater Bank also has policies that limit the amount of credit exposure to individual counterparties and limit portfolio exposures based on external credit rating agency bands. As a result, there is currently no impairment against the treasury transactions.

The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount of these indicated in the balance sheet except for loans and advances. For loans and advances the maximum credit risk exposure for Greater Bank is $5,280M (2018 $5,002M) and for the Company $5,280M (2018 $5,002M). For loans that are securitised, credit risk is transferred to a special purpose vehicle (refer Note 1B). This maximum exposure does not take into account the value of any security.


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The credit quality of financial assets that have not had a significant increase in credit risk can be assessed by reference to the external credit rating (if available) or the security provided. The following table provides an analysis of credit risk for financial assets that have not had a significant increase in credit risk by either external credit rating or type of security.


2019$’000

2018$’000

2019$’000

2018$’000

Financial assets that have not had a significant increase in credit risk

Cash on hand 7,904 9,134 7,972 9,206

Cash & cash equivalents – by external credit rating (S&P)

- A1+/AAA 58,948 62,384 23,690 18,850

- A1/AA+/AA/AA- 94,837 44,871 94,837 44,871

- A2/A+/A/A- 29,966 21,953 29,966 21,953

- A3 - 9,984 - 9,984

- Unrated - - - -

Investment securities – by external credit rating (S&P)

- A1+/AAA 296,982 203,561 1,036,982 938,561

- A1/AA+/AA/AA- 514,039 477,979 514,039 477,979

- A2/A+/A/A- 262,121 241,804 262,121 241,804

- A3 - 4,987 - 4,987

- BBB+ 18,077 66,833 18,077 66,833

- BBB 81,377 89,857 81,377 89,857

- Unrated 36,265 38,824 36,265 38,824

Other receivables (unsecured) 2,650 2,486 8,098 7,797

Derivative financial instruments

- A1+/AAA 5,669 - 5,669 -

Loans and advances

- mortgage over residential property security 5,078,403 4,760,317 5,078,403 4,760,317

- mortgage over other property 2,881 3,754 2,881 3,754

- other security 73,966 68,295 73,966 68,295

- no security 49,905 78,764 49,905 78,764

Other financial assets (unsecured) 615 320 695 400

6,614,605 6,186,107 7,324,943 6,883,036

2018 numbers have not been restated for AASB 9 implementation within the table above; however, all comparisons would remain the same with the exception of loans and advances. If restated, the 2018 total of loans and advances that have not had a significant increase in credit risk would be $4,944M ($4,911M neither past due nor impaired in the table above). The variance of $33M relates to loans that were up to 30 days past due at 30 June 2018 but had not been up to 30 days past due during the 2017/18 Financial Year.


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Effect of collateral – all loans where the consolidated entity bears the credit risk

For loans where Greater Bank bears the credit risk, the carrying value of the loans and the degree of credit risk involved is shown in the table below. Loans classed as ‘Fully Secured’ are residentially secured loans with either full mortgage insurance or with a loan to valuation ratio of 80% or less. Loans classed as secured are residentially secured loans with either partial or no mortgage insurance or a loan to valuation ratio of more than 80% plus commercial loans secured by non-residential property, plus secured consumer loans and secured guarantees. Loans with no security are unsecured consumer loans or credit cards.

Loans ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2019 – CONSOLIDATED AND COMPANYFully Secured

$’000Secured

$’000No Security

$’000Total

$’000

Mortgage Over Residential Property 4,971,588 169,880 - 5,141,468

Mortgage Over Other Property - 2,881 - 2,881

Other Security - 75,433 - 75,433

No Security - - 61,021 61,021

TOTAL 4,971,588 248,194 61,021 5,280,803

Loans ALL LOANS WHERE ENTITY BEARS THE CREDIT RISK 2018 – CONSOLIDATED AND COMPANYFully Secured

$’000Secured

$’000No Security

$’000Total

$’000

Mortgage Over Residential Property 4,623,701 214,155 - 4,837,856

Mortgage Over Other Property - 3,754 - 3,754

Other Security - 69,826 - 69,826

No Security - - 90,968 90,968

TOTAL 4,623,701 287,735 90,968 5,002,404

Loans where credit risk has increased significantly but are not credit impaired

An analysis of loans where credit risk has increased significantly but are not credit impaired is set out in the table below. A loan is considered to be past due when any payment under contractual terms has been missed. The amount included is the carrying value, rather than the overdue amount.

Loans where credit risk has increased significantly but are not credit impaired

2019 CONSOLIDATED AND COMPANY

Mortgage Over Residential Property 47,386

Mortgage Over Other Property 191

Other Security 800

No Security 3,675

TOTAL 52,052


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Loans LOANS – PAST DUE BUT NOT IMPAIRED 2018 – CONSOLIDATED AND COMPANY

Less than 3 months

$’000

3 to 6 months

$’000

6 months or more

$’000Total

$’000

Mortgage Over Residential Property 68,909 3,541 3,309 75,759

Mortgage Over Other Property - - - -

Other Security 798 369 327 1,494

No Security 11,134 - - 11,134

TOTAL 80,841 3,910 3,636 88,387

2018 numbers have not been restated for AASB 9 implementation within the table above. If restated, the 2018 total would be $48M. The variance of $40M relates to $33M in loans that were up to 30 days past due at 30 June 18 but had not been up to 30 days past due during the 2017/18 Financial Year, which would be shown in the table above as having had no significant increase in credit risk and $7M in loans that were 90 days or more past due and would be considered credit impaired and shown in the table below.

Loans that are credit impaired

The following table shows the gross amount of loans considered credit impaired, along with the ECL (provision for impairment) and assessment of the coverage provided by collateral held in support of impaired loans.

The coverage provided by collateral held in support of loans that are credit impaired is shown in the table below. The estimated realisable value of collateral held is based on a combination of formal valuations currently held in respect of such collateral and management’s assessment of the estimated realisable value of collateral held given its experience with similar types of loans in similar situations and the circumstances peculiar to the subject collateral.

A loan is deemed ‘Fully Secured’ when it is residentially secured with either full mortgage insurance or with a loan to valuation ratio of 80% or less. ‘Partially Secured’ includes other residentially secured loans not considered ‘Fully Secured’ and other loans that have a non-residential property security. A loan is classed as ‘Unsecured’ if there is no security or if the security value is less than the loan carrying amount.

Loans EFFECT OF COLLATERAL – IMPAIRED LOANS 2019 – CONSOLIDATED AND COMPANY

Fully Secured$’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property 2,703 4,595 - 7,298


Other Security - - - -

No Security - - 617 617

TOTAL 2,703 4,595 617 7,915

Expected Credit Loss (Impairment Provision) (576) (528) (617) (1,721)

Carrying Amount 2,127 4,067 - 6,194


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Loans EFFECT OF COLLATERAL – IMPAIRED LOANS 2018 – CONSOLIDATED AND COMPANY

Fully Secured$’000

Partially Secured

$’000Unsecured

$’000Total

$’000

Mortgage Over Residential Property - 1,780 - 1,780


Other Security - 37 - 37

No Security - - 1,070 1,070

TOTAL - 1,817 1,070 2,887

Impairment Provision - (224) (797) (1,021)

Carrying Amount - 1,593 273 1,866

2018 numbers have not been restated for AASB 9 implementation within the table above. If restated, the 2018 total loans value would be $10M, less an ECL of $1M, resulting in $9M carrying value. The variance of $7M relates to the loans that were 90 days or more past due but not considered credit impaired so previously shown in the table loans that are past due but not impaired above.

E Liquidity RiskGreater Bank’s liquidity risk arises from the risk that Greater Bank will encounter difficulties in financing its obligations associated with financial liabilities.

Greater Bank manages liquidity risk by maintaining sufficient cash and highly marketable securities to not only respond to expected cash flow events but also to provide for a range of unexpected cash flow events. Greater Bank has established policy limits around the minimum level of liquidity and the quality of liquid assets that it holds for liquidity management purposes.

The following tables show the contractual maturity of financial liabilities.

Financial Liabilities FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2019 – CONSOLIDATED

Less than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000

Over 5 years $’000

Total $’000

Payables and other accruals 9,573 - - - - 9,573

Deposits 4,439,097 1,239,996 310,583 41,435 - 6,031,111

Derivatives 64 47 - - - 111

Other financial liabilities 32,600 85,340 331,938 - - 449,878

Securities sold under repurchase agreement

110,064 - - - - 110,064

TOTAL 4,591,398 1,325,383 642,521 41,435 - 6,600,737

Unrecognised loan commitments

71,712 - - - - 71,712


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Financial Liabilities FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2018 – CONSOLIDATED

Less than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000


Total $’000


Deposits 4,165,642 1,289,498 273,527 28,841 - 5,757,508

Derivatives 813 1,281 458 148 - 2,700

Other financial liabilities 41,811 77,710 292,286 - - 411,807

TOTAL 4,219,448 1,368,489 566,271 28,989 - 6,183,197


80,318 - - - - 80,318

Financial Liabilities FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2019 – COMPANY

Less than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000


Total $’000


Deposits 4,442,163 1,239,996 310,583 41,435 - 6,034,177

Derivatives 64 47 - - - 111

Other financial liabilities 75,987 199,344 580,850 125,778 177,215 1,159,174

Securities sold under repurchase agreement

110,064 - - - - 110,064

TOTAL 4,638,746 1,439,387 891,433 167,213 177,215 7,313,994


71,712 - - - - 71,712

Financial Liabilities FINANCIAL LIABILITIES CONTRACTUAL MATURITY PROFILE 2018 – COMPANY

Less than 3 months

$’000

3 to 12 months

$’000

1 to 3 years $’000

3 to 5 years $’000


Total $’000


Deposits 4,168,273 1,289,498 273,527 28,841 - 5,760,139

Derivatives 813 1,281 458 148 - 2,700

Other financial liabilities 95,170 213,335 556,099 119,279 124,562 1,108,445

TOTAL 4,275,566 1,504,114 830,084 148,268 124,562 6,882,594


80,318 - - - - 80,318

F Fair Value Measurements

The fair value of financial assets and liabilities traded in active markets (such as publicly traded equity financial assets) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the consolidated entity is the current bid price. These instruments are included in level 1.


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The fair value of financial assets and liabilities that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The consolidated entity uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. The fair value of interest rate swaps is calculated as the present value of estimated future cash flows. These instruments are included in level 2.

During the financial reporting period no assets or liabilities were transferred between categories.

Level 3 financial assets and liabilities are investments in non-listed entities, including controlled entities as set out in Note 12. These investments are illiquid and include non-traded shares and units in unit trusts where there are no reliable inputs that can be used to estimate a fair value. The Company therefore measures these investments at cost, which is supported by the net tangible assets of the entities invested in exceeding the cost value of the shares. The carrying value of level 3 existing financial assets and liabilities has changed during the financial year. The increase in value represents a debt investment that was converted to equity during the reporting period.

The following tables present Greater Bank’s financial assets and liabilities measured and recognised at fair value as at the reporting date.

Fair Value Measurements FINANCIAL ASSETS AND LIABILITIES

Consolidated 2019

$’000

Consolidated 2018

$’000

Company 2019

$’000

Company 2018

$’000

ASSETS

LEVEL 1

Interest rate swap contracts – cash flow hedges - - - -

Interest rate swap contracts – at fair value - - - -

Equity financial assets - - - -

LEVEL 2

Interest rate swap contracts – cash flow hedges 5,669 - 5,669 -


Equity financial assets - - - -

LEVEL 3



Equity financial assets 615 320 615 320

TOTAL ASSETS 6,284 320 6,284 320

LIABILITIES

LEVEL 1



LEVEL 2

Interest rate swap contracts – cash flow hedges 111 2,700 111 2,700


LEVEL 3



TOTAL LIABILITIES 111 2,700 111 2,700


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30. CAPITAL MANAGEMENT

Greater Bank has established an Internal Capital Adequacy Assessment Process (ICAAP) Policy. Its objectives are to ensure that Greater Bank maintains a level of capital that is:

consistent and appropriate to the risks Greater Bank is exposed to from its activities;

sufficient to provide a buffer to absorb any unanticipated losses from its activities and, in the event of any major problem, enable it to continue operating while the problem is being addressed; and

sufficient to provide depositors and creditors confidence that Greater Bank will continue to honour its obligations to them.

The above policy is consistent with the requirements of the Prudential Standards issued by the Australian Prudential Regulation Authority (APRA).

Greater Bank is required by APRA to measure and report capital on a risk-weighted basis in accordance with the requirements of the Prudential Standards (known as ‘capital adequacy’). APRA requires Greater Bank to maintain minimum levels of capital to risk-weighted assets. Greater Bank has met the capital requirements imposed by the Prudential Standards throughout the current and previous Financial Year. The Board has a policy of imposing an additional level of capital above the minimum required by APRA.

Capital adequacy is measured as a ratio of capital to risk-weighted assets. Capital is split into two tiers. Common Equity Tier 1 is generally retained earnings, property reserves, reserve balances available for general use and other regulatory adjustments relating to items that are included in equity but are treated differently for capital adequacy purposes. It excludes the fair value assets through other comprehensive income reserve. Tier 2 capital includes qualifying subordinated liabilities and the credit loss reserve.

Greater Bank has adopted the standardised approach for measuring credit and operational risk. Credit risk is measured based on allocating weightings to assets that seek to reflect the varying levels of risk associated to on balance sheet assets and off balance sheet exposures. Operational risk is measured based on risk weighting the investment and lending portfolios, plus each significant non-interest income source.

Greater Bank’s capital results can be viewed at:www.greater.com.au/legal/regulatory-disclosuresThese results are unaudited, but are consistent with Greater Bank’s prudential reporting requirements.

31. COMPANY DETAILS

Greater Bank Limited (ABN 88 087 651 956) is a company limited by shares and guarantee, incorporated and domiciled in Australia. Greater Bank’s Legal Entity Identifier (LEI) is 2549006OX3X023N1WR46. The registered office and principal place of business is:

Greater Bank Limited103 Tudor StreetHamilton NSW 2303

The financial report was authorised for issue by the Directors on the 24th day of September 2019. The Directors have the power to amend and reissue the financial report.


67

In the Directors’ opinion:

A The financial statements and notes set out on pages 27 to 66 are in accordance with the Corporations Act 2001, including:

i) Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

ii) Giving a true and fair view of Greater Bank Limited’s and the consolidated entity’s financial position as at 30 June 2019 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the Financial Year ended on that date; and

B There are reasonable grounds to believe that Greater Bank Limited will be able to pay its debts as and when they become due and payable; and

C Note 1(A) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the Directors.

W M Russell

Chairman

Signed at Hamilton this 24th day of September 2019.

Directors’ Declaration


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Top to bottom: Row 1: Ash & Allen – Metford; Sam Poolman & ASPIRE netballers; Fiona – Hunter Hunter

Row 2: Diane – New Lambton; Sam – Lennox Head; Stef & Jarred – Blue Bay

Row 3: Kate & Justin – Ballina; BackTrack – Armidale; Christine – Peel


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Head Off ice: 103 Tudor Street Hamilton NSW 2303 PO Box 173 Hamilton NSW 2303 P 1300 651 400 F 02 4921 9112Greater Bank Limited ABN 88 087 651 956. AFSL/Australian Credit Licence No. 237476.

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