Chairman's Report 2002-2003

Financial Performance

Our Credit Union continues to be seen as an industry leader with a reputation for professionalism and innovation. According to figures released by APRA (Australian Prudential Regulation Authority) on a quarterly basis, BCU outperforms the majority of Credit Unions in NSW /ACT and nationally in many areas.

Whilst Membership levels remained constant this year at just over 50,000 Members, due to a review of inactive Memberships, total assets exceeded the $500 million level for the first time in the Credit Union’s history (an increase of around 18% over the last financial year). This is a proud achievement and a testament to the hard work by many in the past.

This year saw deposits grow by $72.8 million or 18.20% made up of $32.4 million in savings and $40.4 million in term deposits. This growth can be attributed to an increase in confidence in the Credit Union when compared to alternative investments. BCU remains a leader in our industry for commercial lending, which this year accounted for approximately 30% of our loans compared with 4-5% for most other Credit Unions.

Overall loans grew in the past financial year by $40.9 million (11.31%increase), primarily due to the buoyant housing market and the highest level of consumer confidence since mid 1994 leading to increased business activity. At year-end home loans constituted 65% of our loan book, followed by commercial loans at 30% and personal loans at 5%. All our markets have been characterised by strong competition over the last few years, which we expect will continue for the foreseeable future.

Annual net profit for the financial year 2002/2003 was reported at $5.1 million, significantly up on the previous year. All branches performed well with our two newest branches, Port Macquarie and Ballina, contributing well above our forecast and promising a bright future.

Benefits to Members

The payment of bonus share dividends to the value of $1.5 million in 2002 was seen in the industry as another example of our Credit Union’s leadership, innovation, and focus on Members. Since then payment of a second bonus share dividend totalling $1.25 million was paid in December 2002 and the Board has proposed a further bonus share dividend payment of 45 bonus shares to be paid to Full Members and nine to Junior Members on 16th December this year.

Members have not only benefited through this dividend scheme but also through ongoing investments within the Credit Union to improve services to Members. An example of this was $493,900 invested in December last year to upgrade our core banking software and to purchase additional software modules to better customise lending products and improve response times for loan approvals in the future.

Members continue to embrace our flexible delivery options with 21% of Members now registered for iBank compared with 16% last year. On average 1,400 iBank transactions are conducted daily and Phone Banking is continuing to prove popular with around 67,000 Member enquiries a month.

Community Focus

Our Credit Union remains focused on servicing the needs of its Members and supporting the community. Over the past few years Board Committees have been established for Education, Community Housing and Regional Development to boost the social and economic wellbeing of the communities in which BCU operates. Earlier this year the Board agreed to establish a Foundation to provide a vehicle through which these committees could make a meaningful contribution to our community at large.

A major contribution this year was the $30,000 grant to Southern Cross University for a research programme into death and dying in non-cancer patients. It is the project’s aim to define optimal treatment pathways, management protocols and educational tools to enable carers at all levels to cope comfortably with the many issues facing patients with non-cancer illnesses such as dementia, muscle wasting diseases and heart, kidney or liver failure.

In addition, BCU continues to provide significant support to local communities across the region through sponsorship including business awards, local community initiatives and larger projects.

The Future

Whilst still maintaining our focus on Member services, it is the Board’s aim over the next 5 years to grow our assets thereby achieving increased economies of scale, sustainable operations and geographic spread across a number of markets. Our Credit Union will seek to maintain its reputation for personal service and draw on its expertise of the small business market.

This growth will be achieved through geographic expansion to similar communities along the coastal strip and thus capitalising on our strong market position. This expansion north commenced in December 2001 with the opening of the Ballina branch and will be followed towards the end of this calendar year with the establishment of a branch office in Tweed Heads South. In addition to this we will continue to introduce new products as well as improve existing products and rates to better meet the needs of our Members. Only through encouraging our Members to support the Credit Union through utilising a greater range of BCU’s products and services (such as insurance, financial planning, business loans, superannuation, retirement savings accounts and credit cards) will our Credit Union be able to continue to prosper and offer the personal service and branch network that regional communities demand.

In compiling the long-term strategic plan for BCU, the key drivers will continue to be competition, legislation and technology. Ongoing legislative requirements will make increasing demands on our human and financial resources as the Credit Union industry is brought under the same legislative umbrella as the national and multi-national financial institutions.

Considerable resources have been committed this year to comply with new Financial Services Regulations to ensure Members are informed about deposit products in accordance with the legislative requirements. Other industry specific regulations include the Financial Transaction Reports Act 1988; Consumer Credit Code; Code of Banking Practice; Electronic Funds Transfer Code of Conduct and many more.

IT expenditure last year amounted to almost $2 million. This is almost 25% more than the previous year and ongoing investment in IT will be essential to keep pace with technological advances and match competitor offerings. In an effort to obtain the best return on investment and contain IT costs, BCU is increasingly utilising the services of its strategic partners who have the resources to provide the IT processes for many of the products offered by our Credit Union eg ComCorp - Financial Planning; CreditLink - Cuecards and Visa Cards, Cheques and BPAY Biller.

The ability to attract and retain skilled and committed staff will continue to be important to enable BCU to retain our reputation for personal service, to enable us to be flexible to continue to meet changing Member needs yet compete against the national financial institutions.

A co-ordinated marketing approach will be essential as the branch network grows to ensure consistency in branding, to successfully enter new markets and increase the take-up rate of BCU services to existing Members.

Close

Much of this report has focused on the present and the future. We should not, however, forget to reflect on the past, the platform upon which our Credit Union has grown to what it is today.

It is 34 years since the concept of the Credit Union was discussed at “The Pub with No Beer” by Members of the Nambucca District Council of the Banana Growers Federation, disgruntled they could not obtain loans from the Bank for their banana plantations. The foundation of the Nambucca BGF Members Credit Union Ltd in September 1970 (later to become the Bananacoast Community Credit Union Ltd) was celebrated this year with former and current Directors captured on film for posterity. We have certainly come a long way since the Credit Union operated out of BGF’s office in Macksville on Friday afternoons.

This is an opportune time to send special thanks to Ron Stone on his retirement from the Board, which he joined in 1972. Ron has made an exceptional contribution for the past thirty-one years, always putting the interests of Members first.

In closing I would like to thank my fellow Directors, our CEO (Ray Battle), our General Manager - Finance & Administration (David Bevan), the Management Team and staff for their ongoing commitment to making our Credit Union something all Members should be proud of. 

Bill Singleton
OAM Chairman
22nd September 2003