Bendigo and Adelaide Bank : 2021 Annual financial report

Annual Financial Report 2021

Contact Us

Bendigo and Adelaide Bank Limited ABN 11 068 049 178

Registered head office The Bendigo Centre, Bendigo VIC Australia 3550 Telephone: [phone]

[phone] (if calling from overseas)

Shareholder Enquiries

Share Registry 1300 032 762 (within Australia)

Email: [e-mail]

This report has been printed on FSC™ certified paper. This paper has been made with wood sourced from forests that are responsibly managed in the most environmentally sustainable way. This includes water and energy use, as well as the end product's overall environmental rating.

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Table of contents

Section 1

1. Message from our Chair
2. Message from our Managing Director
3. Year in review highlights

6 Directors' Report

16 Operating and Financial Review

28 Remuneration Report

Section 2

52 Financial Statements

1. Directors' Declaration
2. Independent Auditor's Report

Section 3

140 Additional Information

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Message from our Chair

We are proud to have supported our customers and their communities throughout the last financial year. As Australia's better big bank, we will continue to walk side by side with them. Over this time, we have witnessed the resilience of our stakeholders and our business, which have combined with a renewed sense of optimism as we look towards a pathway out of the challenges of the last eighteen months.

Our multi-year strategy to reduce complexity, increase capability and tell our story is well progressed. We have been busy reshaping our business for the future - making lasting changes - to deliver on our vision in these times of economic challenge and lay the right foundations for further growth. We have and will continue to adapt to the evolving needs of our customers and the changing economic environment. Ultimately, these changes will see us become a bigger, better, faster and stronger business.

It's important to state that regardless of any change we make to our business, our purpose, values, strategy and customer commitment will remain at the centre of every decision we make. We are firmly committed to supporting the success of all stakeholders by strengthening what we offer them, improving the productivity and efficiency of our business and carefully managing our costs.

The economic outlook presents both ongoing challenges and opportunities for our Bank. Whilst a historic low interest rate environment continues to place pressure on our margins, fewer customers than expected are experiencing financial hardship from COVID-19 and we continue to see strong demand for lending across our consumer, business, and agribusiness customers. At the same time, we are encouraged by the various stimulus measures that will aid Australia's economic recovery.

The ongoing support and loyalty of our shareholders is not something we take for granted. After a year of strong performance, I am pleased to join the board in announcing a full year, fully franked dividend of 26.5 cents per share. We are pleased that you, our shareholders, can share in the success of our company's strategy.

Since our founding years, we have operated with a belief that the long-term sustainability of our business is tied to much more than the health of our balance sheet or financial performance. I don't make this statement lightly as it is evidenced in our more than 160-year-old purpose to feed into customer and community prosperity, not off it. As more investors have come to value the holistic performance of businesses across important environmental, social and governance (ESG) measures, we too have made some changes to reflect our proven leadership in this space. That's why this year, we are proud to introduce our first sustainability report. Released annually, this report will document our ESG progress, providing a greater level of transparency, measurement and accountability to our various stakeholders.

The way in which we deliver on our purpose takes many forms and one very practical example of the Bank feeding into prosperity is through our highly regarded scholarship program. This year, we proudly achieved an impressive milestone. Since the program commence in 2007, over $10 million in scholarship assistance has been provided to more than 1,140 regional and rural students. Our program is one of the largest privately funded and best targeted scholarship programs in Australia - an initiative that will continue to nurture significant intellectual capital across the community.

We know investing in capability has important multiplier effects for our business, our customers and our communities. Fostering a culture of excellence, trust and transparency empowers us to support customers, manage risk and develop talent. We are proud to have made important progress on our diversity and inclusion strategy, our staff development programs and continue to focus on our gender targets. This reflects our commitment to reflecting the diversity of the communities in which we operate.

Our advantages and market opportunities lie in our point of difference, the strength of our purpose, and commitment to our customers. These are core to our very being - as we remain steadfast in our vision to be Australia's bank of choice.

Jacqueline Hey

Chair, Bendigo and Adelaide Bank

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Message from our Managing Director

Earlier this year I attended the inaugural Business Council of Australia Biggies Awards which recognised the positive contributions Australian businesses made to the community in 2020 through bushfire, drought, COVID-19 and economic uncertainty.

Scott Hart and his team at Community Bank Braidwood

• Districts were named finalists in the Awards, for their unwavering and selfless support of their community during the Black Summer Bushfire response and recovery. As each of the finalists' stories were shared, I reflected on the resilience of businesses and communities nationwide, amidst what were unforeseen conditions. I felt an enormous sense of pride at how the values of our people shone through in their actions. In times of adversity, strong values become the compass that guides our actions and ensure we remain true to our purpose.

I am always proud to say that this is where our Bank excels. COVID-19 has now been a part of our lives for some 18 months and despite this, our business has delivered strong financial results whilst delivering lasting social and economic impact. We have made tangible progress against our growth and transformation strategy, all while centring the experience of our customers and their communities and staying true to our history, values and identity. This progress has positioned the Bank well to continue to deliver value for all the stakeholders in our business as we further strengthen our capability and productivity.

Our results clearly demonstrate our strategy is making us a bigger, better and stronger business. Our cash earnings after tax increased 51.5 percent from last year to $457.2 million. We have delivered total income on a cash basis of $1,702.5 million, up 4.5 percent

on the prior corresponding period, while sustaining above system lending and strong residential growth - which was 2.8 times above system. Given our strong performance, the board was pleased to announce a total, fully franked dividend payment of 50 cents per share in acknowledgment of the loyalty and support our shareholders have shown for our vision and multi- year strategy.. On behalf of my team, I thank you, our shareholders, for your ongoing support.

Over the last year we have strengthened our operations and improved how we engage customers. Brand, technology and process simplification continue to drive efficiency and importantly, strengthen the experience

our customers receive when they bank with us. We have also enhanced our people and culture functions to help identify and manage talent, nurture our values-led culture, and equip our people with the skills, wellbeing support and knowledge they need to continue delivering great outcomes for our customers.

We continue to be ahead of our major competitors in leading corporate reputation indices. Our investment in innovation, which when combined with our deeply human-approach, high trust and positive net promoter scores - 29.8 points higher than the average of the major banks - will allow us to become even more agile in responding to our customers' ever-changing needs, and further grow market share.

Unique to us, and our greatest opportunity to create value for our stakeholders, is where our community focus and customer connection and experience overlaps with our strong digital capabilities. Our proven leadership in innovation puts us in good stead. Our recent partnership with Tyro is providing our merchant customers with simpler, flexible payment solutions, while our investment in Tic:Toc continues to see fast growing, direct-to-customer digital offerings provided to customers when and how they want it. Our recent acquisition of Melbourne-based fintech company, Ferocia will allow our Bank to further accelerate our digital strategy and shape the future of banking for a new generation of customers.

Strongly aligned to our purpose to feed into prosperity, not off it, is our commitment to strengthening communities. To date, through our unique Community Bank model, more than $270 million has been returned to communities, providing infrastructure, invigorating local activity, and strengthening for the long term the social and economic fabric of the places we call home.

Steering through periods of significant, unforeseen change and upheaval would challenge any organisation that doesn't have a strong understanding of who they are and what they stand for. I want to personally thank my team for their tireless efforts. As we look ahead,

I would like to restate our continued commitment of support to you, our shareholders, as well as our customers, communities and many partners as we all play our own important part in Australia's economic recovery.

Marnie Baker

Chief Executive Officer and Managing Director, Bendigo and Adelaide Bank

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