Chairman's Report 2003-2004Winning PerformanceOur Credit Union started 2004 on a high after winning two awards in the prestigious Money Magazine’s “The Best of the Best Annual Awards”. BCU was the only Financial Provider to win two awards from a field which included almost every bank, building society and credit union in Australia. We won Best Transaction Account – Electronic User. This award was ranked by the fees charged and the range of access facilities offered such as ATMs, phone and internet banking. It acknowledged many people do their banking electronically with less reliance on a branch network for day to day transactions. BCU came equal first in the Best Transaction Account – Combination User. This award identified the best “everyday” account for people who use electronic banking plus a branch network. Financial PerformanceIn the financial year 2003 – 2004 BCU recorded an annual net profit of $5.6 million, up from $5.1 the previous year. Loans grew by $80.4 million for the year, with the largest growth in housing loans ($66.6 million) due to the buoyant housing market and consumer confidence over the past financial year. Our Credit Union continues to attract small business with commercial loans showing a growth of $13.2 million over the year and representing around 28% of all loans. Personal loans grew by $570,000 for the same period and made up only 7.64% of all loans. This is in line with the industry trend, which has witnessed a substantial share of the personal loan market being taken over by national retailers and finance companies. As loans are our primary source of revenue, the more loans the Credit Union attracts, the greater the benefit to Members and the community through distribution of profits. It is therefore disappointing to witness this move away from credit unions for personal and car loans. Total deposits grew by $48.3 million in the financial year. Term deposits grew by $25.3 million with savings and at call deposits increasing by $20.2 million for the twelve months, mainly in the Personal Savings and Incentive Savings Accounts, and Retirement Savings Accounts increased by $2.8 million. Official Government deeming rates increased in March for the first time in two years, which saw an additional $108,000 being paid in interest to eligible Members for the four months from March to June, 2004. Membership has increased to 50,477 and all branches continue to perform well, with strong growth reported in our traditional markets of Coffs Harbour, Dorrigo, Grafton, Macksville, Nambucca and Woolgoolga, as well as in newer markets such as Ballina and Port Macquarie. Our branch in South Tweed Heads, which opened in December last year, is being well received in the local community and growth in loans and deposits have exceeded expectations. Agri banking in the southern region also continues to account for above average deposits. Benefits to Members & the CommunityAs a Community Credit Union, all Members are equal shareholders and after tax profits are retained within the Credit Union for the benefit of Members. One significant benefit continues to be the distribution of bonus shares on an annual basis. Last year $1.874 million in total was distributed to eligible Members. From an analysis of fees and charges, the Credit Union continues to provide Members with value for money …. as evidenced by the “Best of the Best” Awards. From an independent survey of 1,114 Members conducted in November last year, the availability of “full service” branches, personalised service and local Managers continue to be valued highly by Members. For this reason a significant investment continues to be made in our branch network and in our staff. (More information on the survey results will be provided in our December newsletter). In addition to the new branch in South Tweed Heads, a number of our existing branches received a long-overdue facelift. When the lease expired in Toormina the Board committed to moving to our own bigger and brighter premises, which were purchased in 1998 in anticipation of the growth of demand for our services in the southern area of Coffs Harbour. A significant investment has also been made in training staff to better meet the needs of Members. Two highlights in the past financial year were when our HR Manager accepted the prestigious ‘2004 Employer of the Year - Trainees’ Award for the Mid North Coast region and the introduction of the new Wealth Creation Advisory Service. Whilst Members can continue to access Financial Planners, a number of our staff have undergone intensive training and are now licensed through ComCorp to assist Members to build their wealth creation and management capabilities, regardless of their financial circumstances and goals. Our Credit Union has gone one step further to improve our service to small business with the appointment of specialist commercial teams to support local branch managers and ensure that business Members receive the best possible service and advice in a timely manner. Rather than establishing autonomous business banking centres, as has been the trend in other organisations, BCU understands that Members value the close relationship between branch managers and local businesses. BCU continues to invest in providing local employment and adequately manning its branches, phone centre and administration support. Total staff numbers grew in the twelve months from 164 to 173. Around $500,000 was invested last year in updating IT hardware and software to improve the reliability and efficiency of the network, both for over-the-counter transactions and remote delivery by internet banking. The number of Members registered to use iBank continues to increase with the growing acceptance of the internet. iBank users increased by 2,650 in the financial year from 20.2% of the membership base to 25.4%. The number of monthly transactions also increased from an average of 23,000 to 32,000. In addition to the ongoing contribution to a variety of community projects across the region, a number of major community initiatives came to fruition this year including the opening of a Senior Citizens Centre in Woolgoolga and the Native Hardwood Design Centre for furniture designers in Northern NSW. The FutureWhilst the Credit Union continued to record a growth in profits in the financial year 2003 - 2004, it is anticipated that the forthcoming 12 months and years ahead will see a slow down in this growth due to a squeeze on margins. This will be a result of significantly increased competition from new entrants into our markets and from the major banks turning their attention to BCU’s traditional membership base in regional Australia. Despite this, it is important that we continue to grow and seek economies of scale to face the challenges of increased legislation, rapidly changing technology and a fiercely competitive marketplace. Our 5-Year Strategic Plan, which has been ratified by the Board, will take us to the year 2009 and is focussed on continued growth, the need to improve efficiencies and to adapt to meet the changing needs of our Members. There is no doubt that the market in which we operate, and the needs of Members, are very different today than they were over 30 years ago when the Credit Union was first established. The environment in which we operate will continue to change at an ever increasing pace, there will be ongoing population growth along the North Coast of NSW and the key economic drivers mentioned above will all necessitate change. Despite all this, one thing will remain constant... our focus on Members as outlined in our Credit Union’s Vision; “To comprehensively meet the financial needs of our Members within the communities in which we operate in a caring and professional manner”. In ConclusionThe past financial year has seen many milestones:
The winning of prestigious national and regional awards for our banking services and quality of staff training. Unfortunately, we also saw the passing of Bill Ussher, Member Number One. Bill was a driving force behind the establishment of the Credit Union and Chaired our Board from 1970 to 1977. In that time assets grew from $6,800 to almost $1 million. He remained on the Board until 1987. Bill, like many others over the past 30 years, was instrumental in establishing the strong foundations upon which our Credit Union now finds itself. We will remain committed to his grass root ideals and philosophy of a “fair go” and equal opportunity for Members. In closing, I thank my fellow Board Directors, our CEO (Ray Battle), our General Manager – Finance & Administration (David Bevan), the Management Team and Staff for their dedication to making our Credit Union the “Best of the Best”. Bill Singleton |