bankmecu stakeholders can be assured that we continue to take a very measured and conservative approach to managing our business.
Crucial to our success is achievement of a balanced set of outcomes which are in line with customers’ expectations across our key areas of performance. These include financial, governance, customer value, workplace culture, social, and environmental impact. When taken together these outcomes demonstrate how a more responsible approach to banking creates shareholder value.
In this report I want to explain how we have performed in each of these areas.
Financial performance
Amongst the many highlights of this year, mecu Limited achieved a record level of profit at just over $27m. Profits are our source of capital and are retained and added to reserves. Our reserves now stand at $287m making us one of the strongest customer owned financial institutions in Australia. Our customers own these reserves. They provide a foundation for the financial strength of the company and the delivery of ongoing customer benefit.
Governance
bankmecu has an experienced capable Board of directors and a strong management team who are dedicated to serving the interests of the company. Your Board places great importance on ensuring all Directors have the qualifications, training and expertise required to make the key strategic and policy decisions necessary for the successful running of your bank. In accordance with the APRA prudential standard 520 all Board members, CEO, senior managers and auditors are assessed for fitness and propriety annually.
Customer value
Our customers told us this year that they rate their satisfaction with bankmecu at 94%. They also told us they have an entrenched desire that we pursue a responsible approach to banking. Our research indicates the top three issues of importance to our customers are that:
- Our fees are fair.
- We operate ethically.
- We meet best practice levels of financial performance.
This year bankmecu customers were collectively $31m better off than if the business they conduct with us was instead conducted with the major 4 banks. That works out to be an average benefit of $231.60 for each customer.
Workplace culture
A workplace culture which is committed to offering a more responsible approach to banking and being accountable to our customers is essential to our success.
Our independent assessment of the bankmecu workplace culture and benchmarking our culture with other organisations again confirmed best practice levels of performance in a number of areas. Some 87% of bankmecu employees describe bankmecu as being an employer of choice.
Social impact
All financial institutions are now facing what looks to be a challenging market place in 2011-12. Demand for credit has slowed. People are repaying their loans. The sector is also seeing deposit growth. House prices have levelled off and are falling in some areas. Fortunately job security is strong in the markets where bankmecu operates.
In this environment bankmecu’s culture of cost management and its conservative approach to managing risk will hold us in good stead.
Our growth over the next year is expected to reflect system growth and we plan to deliver another strong year’s performance in profit and customer value.
The environment
Australia’s major banks have clearly become more dominant since the global financial crisis. Major banks now account for over 90% of the entire Australian home loan market. As a consequence of this increased dominance, competition in banking is reduced.
bankmecu has responded to this challenge by moving to become Australia’s first ‘customer owned bank’. Our customers have told us they believe creating bankmecu as a customer-owned bank – a bank that is accountable to its customers, will help a mutual organisation like bankmecu better appeal to the next generation of people who would otherwise not consider banking with a Credit Union.
It is very important to us that our approach to banking reflects the attitudes and values of our customers. Similarly our approach to reporting reflects the importance we place on communicating with all stakeholders in a clear, transparent and meaningful way on all issues identified as being of material importance.
We take real pride in bankmecu being recognised nationally and internationally as one of Australia's most successful customer owned financial institutions combining leading economic performance with a strong commitment to sustainable development, high levels of customer satisfaction and a highly engaged corporate culture.
It is clearly our ambition to see that as Australia’s first customer owned bank that the bankmecu brand represents leadership in responsible banking performance.
Peter Crocker
Chairman