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SUNCORP GROUP LIMITED — Interim / Quarterly Report 2021
Nov 9, 2021
65879_rns_2021-11-09_b1ff1aef-8df6-432f-a03c-c5b46d6a3dd6.pdf
Interim / Quarterly Report
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ASX announcement
10 November 2021
Suncorp Bank APS330 30 September 2021
Suncorp Group (ASX: SUN | ADR: SNMCY) today released its Bank quarterly update as at 30 September 2021 as required under the Australian Prudential Standard 330. The report is attached.
ENDS
Authorised for lodgement with the ASX by Suncorp Audit Committee.
For more information contact:
Media Pip Freebairn +61 402 417 368 [email protected] Analysts / Investors Howard Marks +61 402 438 019 [email protected]
Suncorp Group Ltd - ABN 66 145 290 124 – Level 23, 80 Ann Street, Brisbane Qld 4000 1 suncorpgroup.com.au
SUNCORP GROUP LIMITED SUNCORP BANK APS 330
FOR THE QUARTER ENDED 30 SEPTEMBER 2021 RELEASE DATE: 10 NOVEMBER 2021
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Suncorp Group Limited
ABN 66 145 290 124
SUNCORP
APS 330
BASIS OF PREPARATION
This document has been prepared by Suncorp Bank to meet the disclosure obligations under the Australian Prudential Regulation Authority ( APRA ) Australian Prudential Standard ( APS ) 330 Public Disclosure .
Suncorp Bank is represented by Suncorp-Metway Limited ( SML ) and its subsidiaries. SML is an authorised deposit-taking institution ( ADI ) and a wholly owned subsidiary of Suncorp Group Limited. Suncorp Group is represented by Suncorp Group Limited and its subsidiaries.
Other than statutory information required by a regulator (including APRA), all financial information is measured in accordance with Australian Accounting Standards. All figures have been quoted in Australian dollars and have been rounded to the nearest million.
This document has not been audited nor reviewed in accordance with Australian Auditing Standards. It should be read in conjunction with Suncorp Group’s consolidated annual and interim financial reports which have been either audited or reviewed in accordance with Australian Auditing Standards.
Figures relate to the quarter ended 30 September 2021 (unless otherwise stated) and should be read in conjunction with other information concerning Suncorp Group filed with the Australian Securities Exchange ( ASX ).
DISCLAIMER
This report contains general information which is current as at 10 November 2021. It is information given in summary form and does not purport to be complete.
It is not a recommendation or advice in relation to the Suncorp Group and Suncorp Bank or any product or service offered by its entities. It is not intended to be relied upon as advice to investors or potential investors, and does not consider the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate.
The information in this report is for general information only. To the extent that the information may constitute forward-looking statements, the information reflects Suncorp Group’s intent, belief or current expectations with respect to our business and operations, market conditions, results of operations and financial condition, capital adequacy, specific provisions and risk management practices at the date of this report. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which are beyond Suncorp Group’s control, which may cause actual results to differ materially from those expressed or implied.
Suncorp Group and Suncorp Bank undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date of this report (subject to ASX disclosure requirements).
Registered office Investor Relations Level 23, Howard Marks 80 Ann Street Acting Head of Investor Relations Brisbane, QLD 4000 0457 275 021 suncorpgroup.com.au [email protected]
PAGE 2
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
TABLE OF CONTENTS
Basis of preparation .................................................................................................................................... 2 Overview .................................................................................................................................................. 4 Loans and advances................................................................................................................................... 6 Impairment losses on loans and advances ..................................................................................................... 7 Impaired assets and non-performing loans ..................................................................................................... 7 Provision for impairment .............................................................................................................................. 8 Gross non-performing loans coverage by portfolio ........................................................................................... 9 Appendix 1 – APS 330 Tables .................................................................................................................... 10 Appendix 2 - Definitions ............................................................................................................................ 29
PAGE 3
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
OVERVIEW
Suncorp Bank’s home lending portfolio continued to build through the September quarter, increasing $446 million or 1.0% (3.9% annualised). The momentum in home lending lodgements continued, with total lodgements 40% higher than 1Q21 and up 18% on the June quarter. The increase in home lending lodgements was driven by the Bank’s consistent competitive offerings, improved turnaround times, and enhanced credit assessment efficiency. Home lending growth was supported by a positive net refinance rate, the continued delivery of its targeted program of work to improve customer and broker experiences and simplification of its origination process. The Bank maintains a high-quality and conservatively positioned home lending portfolio, remaining weighted towards owner occupiers, principal and interest repayments and loans with a loan-to-valuation ratio (LVR) below 80%.
Business lending contracted $60 million or 0.5% (2.1% annualised) due to a reduction in the commercial loan portfolio partially offset by growth in agribusiness lending. The contraction in commercial lending was driven by investment project completions and large customer-initiated property sales taking advantage of appreciating property values. Modest agribusiness growth was driven by restocking, property purchases and summer crop planting, partially offset by repayments from commodity sales including initial harvest proceeds from winter crops.
Household deposit growth was broadly in line with the strong system growth experienced during the quarter, assisted by a reduction in household spending due to lockdowns in NSW and Victoria. The Bank’s at-call deposit growth was predominantly driven by growth in transaction account and mortgage offset balances supported by customer-focused initiatives including zero account-keeping fees, competitive rates, campaigns and ongoing development of digital banking functionality.
The Bank has continued to focus on increasing its digital enablement and capabilities. The number of digitally active Bank customers increased 4% (annualised) through the quarter. The average number of monthly Suncorp App logins per user has continued to grow, increasing to 22.9 by September 2021 (September 2020: 18.6). This increasing digital engagement remains a key focus, including the migration of mobile banking app customers to the flagship Suncorp app. At 30 September 2021, 32% of personal customers were using the Suncorp app, up from 23% at 30 June 2021.
Total impairment charges for the quarter was a net release of $1 million. This reflects an unchanged collective provision and a small specific provision release for a commercial lending group due to improved performance. The collective provision will be reviewed again as part of finalising the 31 December half year financial position.
Gross impaired assets decreased $11 million over the quarter to $169 million or 29 basis points of gross loans and advances (GLA). This was mainly driven by a $7 million reduction in gross impaired home loans, underpinned by the strong housing market supporting asset sales by borrowers, coupled with strong clearance rates for properties brought to auction.
Total past due loans not impaired decreased by $99 million over the quarter to $451 million or 78 basis points of GLA, predominantly driven by a $91 million decrease in home lending arrears. The improved arrears position is attributable to the cohort of customers exiting hardship arrangements and returning to performing status, following earlier COVID-19 temporary loan deferral assistance. The strong housing market has also resulted in increased voluntary borrower sales.
As at 30 September 2021, 92.2% of Home Lending and SME customer accounts (~16,800) which had previously received a temporary loan deferral between March 2020 and March 2021 were performing or had exited the portfolio, compared with 91.4% as at 30 June 2021. The remainder were continuing to receive support through hardship arrangements (5.3%) or were 90 days past due or impaired (2.5%).
On 19 July 2021, APRA announced the second iteration of temporary deferral arrangements, to provide support to customers impacted by COVID-19 lockdowns. As at 30 September 2021, 378 home lending accounts (~$139 million) and 32 SME lending accounts (~$19 million) were under a COVID-19 temporary deferral arrangement, representing 0.2% and 0.1% of total home lending and SME accounts respectively. This is significantly less than the ~16,800 total accounts which required assistance in the first iteration in 2020.
PAGE 4
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
As at 30 September 2021, the Net Stable Funding Ratio (NSFR) and the Liquidity Coverage Ratio (LCR) were both at 135%, demonstrating the continued strength of Suncorp’s funding and liquidity position. Following APRA’s announcement on 10 September that Committed Liquidity Facility (CLF) limits will no longer be available beyond December 2022, the Bank is determining the best course of action to optimise the CLF reduction.
The Bank’s capital levels remain sound, with a Common Equity Tier 1 ratio of 9.63% (June 2021: 10.06%), above the target operating range of 9-9.50%. The decline in the quarter reflected the dividend payment made to Suncorp Group in August 2021.
PAGE 5
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
LOANS AND ADVANCES
| LOANS AND ADVANCES | |||||
|---|---|---|---|---|---|
| Sep-21 | Sep-21 | ||||
| Sep-21 | Jun-21 | Sep-20 | vs Jun-21 | vs Sep-20 | |
| $M | $M | $M | % | % | |
| Housing loans(1) | 42,336 | 41,697 | 40,537 | 1.5 | 4.4 |
| Securitised housingloans and covered bonds | 4,181 | 4,374 | 5,496 | (4.4) | (23.9) |
| Total housing loans | 46,517 | 46,071 | 46,033 | 1.0 | 1.1 |
| Consumer loans | 104 | 122 | 158 | (14.8) | (34.2) |
| Retail loans | 46,621 | 46,193 | 46,191 | 0.9 | 0.9 |
| Commercial and SME | 7,067 | 7,142 | 7,403 | (1.1) | (4.5) |
| Agribusiness | 4,243 | 4,228 | 4,089 | 0.4 | 3.8 |
| Total Business loans | 11,310 | 11,370 | 11,492 | (0.5) | (1.6) |
| Total lending | 57,931 | 57,563 | 57,683 | 0.6 | 0.4 |
| Gross loans and advances | 57,931 | 57,563 |
57,683 | 0.6 | 0.4 |
| Provision for impairment | (237) | (239) | (300) | (0.8) | (21.0) |
| Total loans and advances | 57,694 | 57,324 | 57,383 | 0.6 | 0.5 |
| Credit-risk weighted assets | 27,799 | 27,535 | 27,615 | 1.0 | 0.7 |
| Geographical breakdown - Total lending(2) | |||||
| Queensland | 28,046 | 28,020 | 28,447 | 0.1 | (1.4) |
| New South Wales | 15,912 | 15,771 | 15,678 | 0.9 | 1.5 |
| Victoria | 7,517 | 7,393 | 7,152 | 1.7 | 5.1 |
| Western Australia | 3,729 | 3,686 | 3,729 | 1.2 | - |
| South Australia and other | 2,727 | 2,693 | 2,677 | 1.3 | 1.9 |
| Outside of Queensland loans | 29,885 | 29,543 | 29,236 | 1.2 | 2.2 |
| Total lending | 57,931 | 57,563 | 57,683 | 0.6 | 0.4 |
(1) Comparative periods have been restated to reflect the reclassification of 'Other Lending' from 'Commercial and SME' to 'Housing loans'.
(2) The 30 September 2020 comparatives have been restated to reflect changes to business loan reporting to reclassify asset location based on the industry code and the primary collateral state rather than the loan origination business centre.
PAGE 6
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
IMPAIRMENT LOSSES ON LOANS AND ADVANCES
| Quarter Ended | Sep-21 | Sep-21 | |||
|---|---|---|---|---|---|
| Sep-21 | Jun-21 | Sep-20 | vs Jun-21 | vs Sep-20 | |
| $M | $M | $M | % | % | |
| Collective provision for impairment | - | 60 | - | (100.0) | - |
| Specific provision for impairment | 1 | (3) | (2) | (133.3) | (150.0) |
| Actual net w rite-offs | - | 1 | (1) | (100.0) | (100.0) |
| Impairment releases/(losses) | 1 | 58 | (3) | (98.3) | 133.3 |
| Impairment releases/(losses) to gross | |||||
| loans and advances | 0.00% | 0.10% | (0.01%) |
IMPAIRED ASSETS AND NON-PERFORMING LOANS
| IMPAIRED ASSETS AND NON-PERFORMING LOANS | IMPAIRED ASSETS AND NON-PERFORMING LOANS |
|---|---|
| Sep-21 Sep-21 Sep-21 Jun-21 Sep-20 vs Jun-21 vs Sep-20 $M $M $M % % Quarter Ended |
|
| Retail lending 40 47 54 Agribusiness lending 24 25 36 Commercial/SME lending 105 108 80 |
(14.9) (25.9) (4.0) (33.3) (2.8) 31.3 |
| Gross impaired assets 169 180 170 Impairmentprovision (55) (57) (49) |
(6.1) (0.6) (3.5) 12.2 |
| Net impaired assets 114 123 121 |
(7.3) (5.8) |
| Impairment provisions as a percentage of gross impaired assets 33% 32% 29% |
|
| Size of gross individually impaired assets Less than one million 35 36 42 (2.8) (16.7) Greater than one million but less than ten million 95 101 104 (5.9) (8.7) Greater than ten million 39 43 24 (9.3) 62.5 |
|
| Gross impaired assets 169 180 170 (6.1) (0.6) |
|
| Past due loans not shown as impaired assets 451 550 542 (18.0) (16.8) |
|
| Gross non-performing loans 620 730 712 (15.1) (12.9) |
|
| Analysis of movements in gross individually impaired assets Balance at the beginning of the period 180 205 170 (12.2) 5.9 Recognition of new impaired assets 7 15 16 (53.3) (56.3) Other movements in impaired assets(1) 1 (4) (1) (125.0) (200.0) Impaired assets w hich have been reclassed as performing assets or repaid (19) (36) (15) (47.2) 26.7 |
|
| Balance at the end of theperiod 169 180 170 (6.1) (0.6) |
|
(1) Net of increases in previously recognised impaired assets and impaired assets w ritten off.
PAGE 7
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
PROVISION FOR IMPAIRMENT
| Sep-21 | Sep-21 | ||||
|---|---|---|---|---|---|
| Sep-21 | Jun-21 | Sep-20 | vs Jun-21 | vs Sep-20 | |
| $M | $M | $M | % | % | |
| Collective provision | |||||
| Balance at the beginning of the period | 195 | 255 | 255 | (23.5) | (23.5) |
| (Release)/charge against impairment losses | - | (60) | - | (100.0) | - |
| Balance at the end of theperiod | 195 | 195 | 255 | - | (23.5) |
| Specific provision | |||||
| Balance at the beginning of the period | 44 | 48 | 46 | (8.3) | (4.3) |
| (Release)/charge against impairment losses | (1) | 3 | 2 | (133.3) | (150.0) |
| Impairmentprovision w ritten off(1) | (1) | (7) | (3) | (85.7) | (66.7) |
| Balance at the end of theperiod | 42 | 44 | 45 | (4.5) | (6.7) |
| Totalprovision for impairment - Banking activities | 237 | 239 | 300 | (0.8) | (21.0) |
| Equity reserve for credit loss (ERCL) | |||||
| Balance at the beginning of the period | 85 | 76 | 81 | 11.8 | 4.9 |
| Transfer(to)/from retained earnings | (3) | 9 | 6 | (133.3) | (150.0) |
| Balance at the end of theperiod | 82 | 85 | 87 | (3.5) | (5.7) |
| Pre-tax equivalent coverage | 117 | 121 | 124 | (3.3) | (5.5) |
| Total provision for impairment and equity reserve for | |||||
| credit loss - Banking activities | 354 | 360 | 424 | (1.7) | (16.5) |
| Provision for impairment expressed as a percentage of | |||||
| gross loans and advances are as follows: | % | % | % | ||
| Collective provision | 0.34 | 0.34 | 0.44 | ||
| Specific provision | 0.07 | 0.08 | 0.08 | ||
| Total provision | 0.41 | 0.42 | 0.52 | ||
| ERCL coverage | 0.20 | 0.21 | 0.22 | ||
| Totalprovision and ERCL coverage | 0.61 | 0.63 | 0.74 |
(1) Includes other items such as unw ind of discount.
PAGE 8
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
GROSS NON-PERFORMING LOANS COVERAGE BY PORTFOLIO
| PORTFOLIO | |||||
|---|---|---|---|---|---|
| Sep-21 | Sep-21 | ||||
| Sep-21 | Jun-21 | Sep-20 | vs Jun-21 | vs Sep-20 | |
| $M | $M | $M | % | % | |
| Retail Lending | |||||
| Past due loans | 383 | 474 | 464 | (19.2) | (17.5) |
| Impaired assets | 40 | 47 | 54 | (14.9) | (25.9) |
| Specific provision | 7 | 8 | 7 | (12.5) | - |
| Collectiveprovision | 13 | 14 | 20 | (7.1) | (35.0) |
| Totalprovision coverage (1) | 4.7% | 4.2% | 5.2% | 0.5 | (0.5) |
| Agribusiness Lending | |||||
| Past due loans | 30 | 32 | 37 | (6.3) | (18.9) |
| Impaired assets | 24 | 25 | 36 | (4.0) | (33.3) |
| Specific provision | 5 | 5 | 8 | - | (37.5) |
| Collectiveprovision | 7 | 11 | 14 | (36.4) | (50.0) |
| Totalprovision coverage (1) | 22.2% | 28.1% | 30.1% | (5.8) | (7.9) |
| Commercial and SME Lending | |||||
| Past due loans | 38 | 44 | 41 | (13.6) | (7.3) |
| Impaired assets | 105 | 108 | 80 | (2.8) | 31.3 |
| Specific provision | 30 | 31 | 30 | (3.2) | - |
| Collectiveprovision | 29 | 27 | 14 | 7.4 | 107.1 |
| Totalprovision coverage (1) | 41.3% | 38.2% | 36.4% | 3.1 | 4.9 |
(1) Calculated as: (Specific provision + Collective provision Stage 3) / (Past due loans + Impaired assets). The basis for the coverage ratio w as revised at 30 June 2021 to better reflect the provisions held for Gross Non-performing loans. The collective provision presented in the table above is the provision held for non-performing loans ie. loans in Stage 3 only. Accordingly comparatives for Sep-20 have been restated.
PAGE 9
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
APPENDIX 1 – APS 330 TABLES
-
Table 1: Capital disclosure template – not applicable for this reporting period. This table was disclosed in the June 2021 reporting period.
-
Table 2: Main features of capital instruments
-
Table 3: Capital adequacy
-
Table 4: Credit risk
-
Table 5: Securitisation exposures
-
Table 20: Liquidity Coverage Ratio Disclosure
-
Table 22: Remuneration Disclosures
TABLE 2: MAIN FEATURES OF CAPITAL INSTRUMENTS
Attachment B of Prudential Standard APS 330 details the continuous disclosure requirements for the main features of all capital instruments included in Suncorp Bank’s regulatory capital.
The Suncorp Group’s main features of capital instruments are updated on an ongoing basis and are available at http://www.suncorpgroup.com.au/investors/reports.
The full terms and conditions of all of Suncorp Group’s regulatory capital instruments are available at http://www.suncorpgroup.com.au/investors/securities[1] .
On 23 September 2021, additional Tier 1 capital was deployed to SML amounting to $350 million ($100 par value). The Capital notes increased the amount of additional Tier 1 capital to $935 million.
1 The published full terms and conditions represent the comparable capital instruments issued by Suncorp Group Limited to external investors. The terms of these instruments may differ slightly to those instruments issued by the regulatory Level 2 group.
PAGE 10
SUNCORP
APS 330
TABLE 3: CAPITAL ADEQUACY
| Avg risk | |||||||
|---|---|---|---|---|---|---|---|
| Carrying value | w eight | Risk Weighted Assets | |||||
| Sep-21 | Jun-21 | Sep-21 | Sep-21 | Jun-21 | |||
| $M | $M | % | $M | $M | |||
| On-balance sheet credit risk-weighted assets | |||||||
| Cash items | 3,219 | 1,495 | - | 16 | 19 | ||
| Claims on Australian and foreign governments | 4,019 | 3,359 | - | - | - | ||
| Claims on central banks, international banking | |||||||
| agencies, regional development banks, ADIs and | 432 | 574 | 36 | 154 |
207 | ||
| overseas banks | |||||||
| Claims on securitisation exposures | 749 | 741 | 20 | 149 |
147 | ||
| Claims secured against eligible residential mortgages |
45,073 | 44,658 | 37 | 16,529 |
16,434 | ||
| Past due claims | 589 | 689 | 93 | 546 |
629 | ||
| Other retail assets | 1,912 | 1,411 | 99 | 1,900 |
1,403 | ||
| Corporate | 8,133 | 8,435 | 100 | 8,129 |
8,430 | ||
| Other assets and claims | 376 | 266 | 100 | 376 |
266 | ||
| Total banking assets | 64,502 | 61,628 | 27,799 | 27,535 | |||
| Notional | Credit |
Avg risk |
|||||
| amount | equivalent | w eight | Risk Weighted Assets | ||||
| Sep-21 | Sep-21 | Sep-21 | Sep-21 | Jun-21 | |||
| $M | $M | % | $M | $M | |||
| Off-balance sheet positions | |||||||
| Guarantees entered into in the normal course of | |||||||
| business | 290 | 290 | 98 | 285 | 287 | ||
| Commitments to provide loans and advances | 10,383 | 2,781 | 52 | 1,457 | 1,572 | ||
| Lending of securities or posting of securities as | |||||||
| collateral | 100 | 100 | - | - | - | ||
| Foreign exchange contracts | 3,332 | 81 | 40 | 32 | 24 | ||
| Interest rate contracts | 43,211 | 95 | 41 | 39 | 39 | ||
| Securitisation exposures | 2,060 | 87 | 20 | 17 | 18 | ||
| CVA capital charge | - | - | - | 63 | 74 | ||
| Total off-balance sheetpositions | 59,376 | 3,434 | 1,893 | 2,014 | |||
| . | |||||||
| Market risk capital charge | 148 | 100 | |||||
| Operational risk capital charge | 3,635 | 3,635 | |||||
| Total off-balance sheet credit risk-w eighted assets | 1,893 | 2,014 | |||||
| Total on-balance sheet credit risk-w eighted assets | 27,799 | 27,535 | |||||
| Total assessed risk(Total Risk Weighted Assets) | 33,475 | 33,284 | |||||
| Risk-weighted capital ratios | % | % | |||||
| Common Equity Tier 1 | 9.63 | 10.06 | |||||
| Tier 1 | 12.42 | 11.82 | |||||
| Tier 2 | 2.42 | 2.46 | |||||
| Total risk-weighted capital ratio | 14.84 | 14.28 |
PAGE 11
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
TABLE 4: CREDIT RISK
Table 4A: Credit risk by gross credit exposure – outstanding as at 30 September 2021
| Table 4A: Credit risk by gross credit exposure – outstanding as at 30 September 2021 | Table 4A: Credit risk by gross credit exposure – outstanding as at 30 September 2021 |
|---|---|
| Receivables due from other Banks(2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) Gross Impaired Assets Past due not impaired > 90 days Total not past due or impaired Specific Provisions (5) $M $M $M $M $M $M $M $M $M $M $M |
|
| Agribusiness - - - - 4,244 193 Construction & development - - - - 712 220 Financial services 3,201 - 176 364 89 353 Hospitality - - - - 844 53 Manufacturing - - - - 219 13 Professional services - - - - 333 21 Property investment - - - - 3,081 96 Real estate - Mortgage - - - - 44,544 2,063 Consumer - - - - 104 - Government/public authorities - 1,523 - 3,662 - - Other commercial & industrial(6) - - - - 1,788 159 |
4,437 24 30 4,383 5 932 1 3 928 1 4,183 - - 4,183 - 897 64 1 832 14 232 3 - 229 1 354 1 4 349 - 3,177 9 12 3,156 4 46,607 39 360 46,208 7 104 - 4 100 - 5,185 - - 5,185 - 1,947 27 18 1,902 10 |
| Total gross credit risk 3,201 1,523 176 4,026 55,958 3,171 Securitisation exposures(1) - - 52 749 1,973 35 |
68,055 168 432 67,455 42 2,809 1 19 2,789 - |
| Total including securitisation exposures 3,201 1,523 228 4,775 57,931 3,206 Impairment provision Total |
70,864 169 451 70,244 42 (237) (55) (22) (160) 70,627 114 429 70,084 |
(1) The securitisation exposures of $1,973 million included under Loans and advances qualify for regulatory capital relief under APS 120 Securitisation and therefore do not contribute to the Bank’s total gross credit risk. The remaining securitisation exposures carry credit risk commensurate with their respective asset classes in accordance with APS 120 Securitisation .
(2) Receivables due from other banks include collateral deposits provided to derivative counterparties.
(3) Represent the credit equivalent amount of the Bank’s off-balance sheet exposures calculated in accordance with APS 112 Capital Adequacy: Standardised Approach to Credit Risk .
(4) Total credit risk excludes cash and cash equivalents, including any reverse repurchase agreements held by the ADI.
(5) In accordance with APS 220 Credit Quality , regulatory specific provisions represent $42 million specific provisions for accounting purposes plus $66 million ineligible collective provision.
(6) Includes a portion of small business loans, with limits below $1 million, that are not classified.
PAGE 12
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
TABLE 4: CREDIT RISK (CONTINUED)
Table 4A: Credit risk by gross credit exposure – outstanding as at 30 June 2021
| TABLE 4: CREDIT RISK (CONTINUED) Table 4A: Credit risk by gross credit exposure – outstanding as at 30 June 2021 |
TABLE 4: CREDIT RISK (CONTINUED) Table 4A: Credit risk by gross credit exposure – outstanding as at 30 June 2021 |
|---|---|
| Receivables due from other Banks(2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) Gross Impaired Assets Past due not impaired > 90 days Total not past due or impaired Specific Provisions (5) $M $M $M $M $M $M $M $M $M $M $M |
|
| Agribusiness - - - - 4,228 209 Construction & development - - - - 728 269 Financial services 1,495 - 143 487 105 257 Hospitality - - - - 869 52 Manufacturing - - - - 228 18 Professional services - - - - 335 26 Property investment - - - - 3,110 100 Real estate - Mortgage - - - - 43,936 2,072 Consumer - - - - 122 - Government/public authorities - 1,579 - 3,310 - - Other commercial & industrial(6) - - - - 1,776 178 |
4,437 25 32 4,380 5 997 2 3 992 1 2,487 - - 2,487 - 921 68 - 853 17 246 3 1 242 1 361 1 3 357 - 3,210 9 19 3,182 4 46,008 46 448 45,514 8 122 - 4 118 - 4,889 - - 4,889 - 1,954 25 18 1,911 8 |
| Total gross credit risk 1,495 1,579 143 3,797 55,437 3,181 Securitisation exposures(1) - - 54 741 2,126 37 |
65,632 179 528 64,925 44 2,958 1 22 2,935 - |
| Total including securitisation exposures 1,495 1,579 197 4,538 57,563 3,218 Impairment provision Total |
68,590 180 550 67,860 44 (239) (57) (24) (158) 68,351 123 526 67,702 |
(1) The securitisation exposures of $2,126 million included under Loans and advances qualify for regulatory capital relief under APS 120 Securitisation and therefore do not contribute to the Bank’s total gross credit risk. The remaining securitisation exposures carry credit risk commensurate with their respective asset classes in accordance with APS 120 Securitisation .
(2) Receivables due from other banks include collateral deposits provided to derivative counterparties.
(3) Represent the credit equivalent amount of the Bank’s off-balance sheet exposures calculated in accordance with APS 112 Capital Adequacy: Standardised Approach to Credit Risk .
(4) Total credit risk excludes cash and cash equivalents, including any reverse repurchase agreements held by the ADI.
(5) In accordance with APS 220 Credit Quality , regulatory specific provisions represent $44 million specific provisions for accounting purposes plus $81 million ineligible collective provision.
(6) Includes a portion of small business loans, with limits below $1 million, that are not classified.
PAGE 13
AS AT 30 SEPTEMBER 2021
SUNCORP
APS 330
TABLE 4: CREDIT RISK (CONTINUED)
Table 4A: Credit risk by gross credit exposure – average gross exposure over period 1 July to 30 September 2021
| Receivables due from other Banks (2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) $M $M $M $M $M $M $M |
Receivables due from other Banks (2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) $M $M $M $M $M $M $M |
|---|---|
| $M | |
| Agribusiness - - - - 4,236 201 Construction & development - - - - 720 244 Financial services 2,348 - 160 426 97 305 Hospitality - - - - 857 53 Manufacturing - - - - 224 15 Professional services - - - - 334 23 Property investment - - - - 3,096 98 Real estate - Mortgage - - - - 44,240 2,068 Consumer - - - - 113 - Government/public authorities - 1,551 - 3,486 - - Other commercial & industrial(5) - - - - 1,782 169 |
4,437 964 3,336 910 239 357 3,194 46,308 113 5,037 1,951 |
| Total gross credit risk 2,348 1,551 160 3,912 55,699 3,176 Securitisation exposures(1) - - 53 745 2,050 36 |
66,846 2,884 |
| Total including securitisation exposures 2,348 1,551 213 4,657 57,749 3,212 Impairment provision Total |
69,730 |
| (238) | |
| 69,492 |
(1) The securitisation exposures of $2,050 million included under Loans and advances qualify for regulatory capital relief under APS 120 Securitisation and therefore do not contribute to the Bank’s total gross credit risk. The remaining securitisation exposures carry credit risk commensurate with their respective asset classes in accordance with APS 120 Securitisation .
(2) Receivables due from other banks include collateral deposits provided to derivative counterparties.
(3) Represent the credit equivalent amount of the Bank’s off-balance sheet exposures calculated in accordance with APS 112 Capital Adequacy: Standardised Approach to Credit Risk .
(4) Total credit risk excludes cash and cash equivalents, including any reverse repurchase agreements held by the ADI.
(5) Includes a portion of small business loans, with limits below $1 million, that are not classified.
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APS 330
TABLE 4: CREDIT RISK (CONTINUED)
Table 4A: Credit risk by gross credit exposure – average gross exposure over period 1 April to 30 June 2021
| Receivables due from other Banks (2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) $M $M $M $M $M $M $M |
Receivables due from other Banks (2) Trading Securities Derivatives (3) Investment Securities Loans and Advances Off-balance sheet exposures (credit equivalent amount)(3) Total Credit Risk (4) $M $M $M $M $M $M $M |
|---|---|
| $M | |
| Agribusiness - - - - 4,185 215 Construction & development - - - - 741 213 Financial services 1,269 - 146 518 105 263 Hospitality - - - - 875 56 Manufacturing - - - - 226 18 Professional services - - - - 333 25 Property investment - - - - 3,140 108 Real estate - Mortgage - - - - 43,743 1,818 Consumer - - - - 131 - Government/public authorities - 1,500 - 3,521 - - Other commercial & industrial(5) - - - - 1,807 180 |
4,400 954 2,301 931 244 358 3,248 45,561 131 5,021 1,987 |
| Total gross credit risk 1,269 1,500 146 4,039 55,286 2,896 Securitisation exposures(1) - - 69 774 2,198 40 |
65,136 3,081 |
| Total including securitisation exposures 1,269 1,500 215 4,813 57,484 2,936 Impairment provision Total |
68,217 (271) |
| 67,946 |
(1) The securitisation exposures of $2,198 million included under Loans and advances qualify for regulatory capital relief under APS 120 Securitisation and therefore do not contribute to the Bank’s total gross credit risk. The remaining securitisation exposures carry credit risk commensurate with their respective asset classes in accordance with APS 120 Securitisation .
(2) Receivables due from other banks include collateral deposits provided to derivative counterparties.
(3) Represent the credit equivalent amount of the Bank’s off-balance sheet exposures calculated in accordance with APS 112 Capital Adequacy: Standardised Approach to Credit Risk .
(4) Total credit risk excludes cash and cash equivalents, including any reverse repurchase agreements held by the ADI.
(5) Includes a portion of small business loans, with limits below $1 million, that are not classified.
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APS 330
TABLE 4: CREDIT RISK (CONTINUED)
Table 4B: Credit risk by portfolio as at 30 September 2021
| Charges for | |||||||
|---|---|---|---|---|---|---|---|
| Average | Past Due Not | Specific | |||||
| Gross Credit | Gross | Impaired | Impaired > 90 | Specific | Provisions & |
||
| Risk Exposure | Exposure | Assets | days | Provisions(2) |
Write Offs | ||
| $M | $M | $M | $M | $M |
$M |
||
| Claims secured against eligible residential mortgages(1) |
49,416 | 49,192 | 40 | 379 | 7 | 1 | |
| Other retail | 104 | 113 |
- | 4 | - | - | |
| Financial services | 4,183 | 3,336 |
- | - | - | - | |
| Government and public authorities | 5,185 | 5,037 |
- | - | - | - | |
| Corporate and other claims | 11,976 | 12,052 | 129 | 68 | 35 | (2) | |
| Total | 70,864 | 69,730 | 169 | 451 | 42 | (1) |
(1) $2,809 million, $2,884 million, $1 million and $19 million has been included in gross credit risk exposure, average gross exposure, impaired assets and past due not impaired greater than 90 days respectively to include securitisation exposures.
(2) The specific provisions of $42 million represents the specific provisions for accounting purposes. It excludes the ineligible collective provisions of $66 million which in accordance with APS 220 Credit Quality are regulatory specific provisions. The regulatory specific provisions under APS 220 Credit Quality are $108 million.
Table 4B: Credit risk by portfolio as at 30 June 2021
| Gross Credit Risk Exposure Average Gross Exposure Impaired Assets Past Due Not Impaired > 90 days Specific Provisions(2) Charges for Specific Provisions & Write Offs |
|
|---|---|
| $M $M $M $M $M $M |
|
| Claims secured against eligible residential mortgages(1) Other retail Financial services Government and public authorities Corporate and other claims |
48,966 48,642 47 470 8 2 122 131 - 4 - 1 2,487 2,301 - - - - 4,889 5,021 - - - - 12,126 12,122 133 76 36 - |
| Total | 68,590 68,217 180 550 44 3 |
(1) $2,958 million, $3,081 million, $1 million and $22 million has been included in gross credit risk exposure, average gross exposure, impaired assets and past due not impaired greater than 90 days respectively to include securitisation exposures.
(2) The specific provisions of $44 million represents the specific provisions for accounting purposes. It excludes the ineligible collective provisions of $81 million which in accordance with APS 220 Credit Quality are regulatory specific provisions. The regulatory specific provisions under APS 220 Credit Quality are $125 million.
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TABLE 4: CREDIT RISK (CONTINUED)
Table 4C: General reserves for credit losses
| TABLE 4: CREDIT RISK (CONTINUED) Table 4C: General reserves for credit losses |
||
|---|---|---|
| Sep-21 | Jun-21 | |
| $M | $M | |
| Collective provision for impairment | 195 | 195 |
| Ineligible collectiveprovisions | (66) | (81) |
| Eligible collective provisions | 129 | 114 |
| Equityreserve for credit losses | 82 | 85 |
| General reserve for credit losses | 211 | 199 |
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APS 330
TABLE 5: SECURITISATION EXPOSURES
Table 5A: Summary of securitisation activity for the period
During the quarter ending 30 September 2021, there was no new securitisation activity undertaken (quarter ending 30 June 2021: Nil).
| ending 30 June 2021: Nil). | ||||
|---|---|---|---|---|
| Exposures Securitised Recognised Gain or(Loss)on Sale |
||||
| Sep-21 | Jun-21 | Sep-21 | Jun-21 | |
| $M $M $M $M |
||||
| Residential mortgages | - - - - |
|||
| Total exposures securitised during theperiod | - - - - |
Table 5B(i): Aggregate of on-balance sheet securitisation exposures by exposure type
| Table 5B(i): Aggregate of on-balance sheet securitisation exposures by exposure type | sure type | |
|---|---|---|
| Sep-21 Jun-21 Exposure type $M $M |
Sep-21 | Jun-21 |
| Debt securities 749 741 |
||
| Total on-balance sheet securitisation exposures 749 741 |
Table 5B(ii): Aggregate of off-balance sheet securitisation exposures by exposure type
| Table 5B(ii): Aggregate of off-balance sheet securitisation exposures by exposure type | sure type | |
|---|---|---|
| Sep-21 Jun-21 Exposure type $M $M |
Sep-21 | Jun-21 |
| Liquidity facilities 35 37 Derivative exposures 52 54 |
||
| Total off-balance sheet securitisation exposures 87 91 |
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APS 330
TABLE 20: LIQUIDITY COVERAGE RATIO DISCLOSURE
| Total Unw eighted Value (Average) |
Total Weighted Value (Average) |
Total Unw eighted Value (Average) |
Total Weighted Value (Average) Total Unw eighted Value (Average) Total Weighted Value (Average) |
Total Weighted Value (Average) Total Unw eighted Value (Average) Total Weighted Value (Average) |
Total Weighted Value (Average) Total Unw eighted Value (Average) Total Weighted Value (Average) |
|---|---|---|---|---|---|
Total Unw eighted Value (Average) |
Total Weighted Value (Average) |
||||
| Sep-21 Sep-21 Jun-21 Jun-21 Mar-21 Mar-21 |
|||||
| $M $M $M $M $M $M |
|||||
| Liquid assets, of which: High-quality liquid assets (HQLA) 6,923 5,961 5,574 Alternative liquid assets (ALA) 3,608 4,424 6,350 |
|||||
| Cash outflows Retail deposits and deposits from small business customers, of w hich: 32,936 3,204 31,947 3,107 31,108 3,015 stable deposits 20,357 1,018 19,684 984 19,291 965 less stable deposits 12,579 2,186 12,263 2,123 11,817 2,050 Unsecured w holesale funding, of w hich: 4,238 2,835 3,490 2,113 4,467 3,050 operational deposits (all counterparties) and deposits in networks for cooperative banks - - - - - - non-operational deposits (all counterparties) 2,999 1,596 2,844 1,467 2,986 1,569 unsecured debt 1,239 1,239 646 646 1,481 1,481 Secured w holesale funding 55 224 - 91 Additional requirements, of w hich: 8,841 1,332 8,235 1,080 8,624 1,537 outflows related to derivatives exposures and other collateral requirements 930 930 700 700 1,154 1,154 outflows related to loss of funding on debt products - - - - - - credit and liquidity facilities 7,911 402 7,535 380 7,470 383 Other contractual funding obligations 1,178 877 1,029 667 833 513 Other contingent funding obligations 5,204 627 5,614 447 5,363 505 |
|||||
| Total cash outflows 8,930 7,638 8,711 |
|||||
| Cash inflows Secured lending (e.g. reverse repos) 94 - 16 - 33 - Inflow s from fully performing exposures 611 310 745 384 679 359 Other cash inflow s 792 792 274 274 837 837 |
|||||
| Total cash inflows 1,497 1,102 1,035 658 1,549 1,196 |
|||||
| Total Adjusted Value |
Total Adjusted Value |
Total Adjusted Value |
|||
| Total liquid assets 10,531 10,385 11,924 |
|||||
| Total net cash outflows 7,828 6,980 7,515 |
|||||
| Liquidity Coverage Ratio(%) 135 149 159 |
|||||
| Number of datapoints used 62 62 62 |
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APS 330
The Liquidity Coverage Ratio (LCR) promotes shorter-term resilience by requiring ADIs to maintain sufficient qualifying High Quality Liquid Assets (HQLA) to meet expected net cash outflows under an APRA prescribed 30 calendar day stress scenario. SML manages its LCR on a daily basis and maintains a buffer over the regulatory minimum of 100%.
The amount of liquid assets held considers the amount needed to meet prudential and internal requirements (including a variety of internal stress scenarios as part of the risk management framework) and a suitable buffer reflecting management’s preference.
Liquid assets included in the LCR comprise HQLA (cash, Australian Semi-Government and Commonwealth Government securities) and alternative liquid assets covered by the Committed Liquidity Facility (CLF) with the Reserve Bank of Australia (RBA). SML received approval from APRA to reduce the CLF from $4.6 billion to $3.91 billion which became effective on 1 April 2021. Assets eligible for the CLF include senior unsecured bank paper, covered bonds and residential mortgage backed securities that are repo-eligible with the RBA. SML increased its self-securitisation in March 2020 which covered the CLF increase from May 2020, and the TFF.
The daily average LCR was 135% over the September 2021 quarter, compared to an average of 149% over the June 2021 quarter. The decrease in the average LCR was primarily due to the utilisation of the TFF before 30 June 2021. The impact was also caused by an increase in Net Cash Outflows which is primarily due to an increase in wholesale maturities over the quarter.
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TABLE 22: REMUNERATION DISCLOSURES AS AT 30 JUNE 2021
Introduction
This Remuneration Disclosure has been prepared in accordance with the Australian Prudential Regulation Authority ( APRA ) Prudential Standard ( APS ) 330: Public Disclosure.
This disclosure explains the Suncorp Group Limited ( Suncorp ) Remuneration Policy and structure, which have been endorsed by the Suncorp Board People and Remuneration Committee (People and Remuneration Committee) and approved by the Suncorp Group Limited Board (Board) . Suncorp’s remuneration framework and associated remuneration governance applies to all employees of Suncorp Bank. Suncorp Bank is a core unit of Suncorp and is represented by the legal entity Suncorp-Metway Limited ( SML ) and its subsidiaries. SML is an authorised deposit-taking institution and a wholly owned subsidiary of Suncorp. Accordingly, this Remuneration Disclosure is completed on a Level 2 basis[1] .
For the purposes of this disclosure:
-
Senior Managers are defined as Responsible Persons included in the Group’s Fit and Proper Policy. This includes:
-
Key Management Personnel (KMP) for the Group that are also KMP for SML and its subsidiaries (where KMP refers to the Group CEO and Senior Leadership Team); and
-
Other Senior Managers. These include select Executive General Managers ( EGMs ) and employees below EGM level who are Responsible Persons for SML.
-
Material Risk Takers ( MRT ) are select employees below EGM level that are not Responsible Persons who may be able to individually or collectively affect the financial soundness of the business where the incumbents have a performance-based incentive target of a significant portion of total remuneration (being more than 40% of fixed pay).
The aggregated remuneration data is for Senior Managers (KMP), Other Senior Managers, and MRTs relating to Suncorp Bank during the financial year ended 30 June 2021 (FY21).
Section 1
Remuneration governance framework
The People and Remuneration Committee recommends Suncorp’s people and remuneration framework and practices to the Board for approval. It assists the Board in fulfilling its responsibilities by ensuring that frameworks are in place that enable Suncorp to attract, retain and motivate talented employees to achieve our strategic objectives.
The People and Remuneration Committee receives input from the Risk Committee, Audit Committee, external advisors and management as illustrated below.
1 Under Application Paragraph 3, ‘where a locally incorporated ADI is a subsidiary of an authorised non-operating holding company (authorised NOHC), the authorised NOHC must ensure that the requirements under this Prudential Standard are met on a Level 2 basis’ (APS 330, July 2018).
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- The Remuneration Oversight Committee is a management committee.
The FY21 fee for the People and Remuneration Committee Chairman was $66,000 and Member fees were $33,000 (including superannuation). There were no fee increases in FY22.
All new appointments and changes to remuneration arrangements for Senior Managers and MRT roles require approval by the Board. Within pre-defined parameters, delegated authority has been granted by the Board to the Group CEO to approve remuneration for Other Senior Managers and MRT roles that are EGM level or below. The Board has oversight and reviews the remuneration arrangements of all KMP, Other Senior Managers and MRT roles on an annual basis.
FY21 Remuneration Policy and Framework
The Suncorp Remuneration Policy provides a governance framework for the structure and operation of remuneration plans within the context of Suncorp’s strategy, long-term financial soundness and risk management framework.
The remuneration strategy, which is aligned to the business strategy and risk tolerance, ensures that the principles that determine remuneration are focused on delivering performance while demonstrating appropriate behaviours. The below table summarises Suncorp’s FY21 remuneration framework.
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APS 330
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Bank Function Scorecard
The FY21 Bank Function Scorecard measures are below:
| Category | Performance measure | Weighting |
|---|---|---|
| Adjusted NPAT (Bank) | 40% | |
| Financial | Budgeted costs | |
| Home lending market share | ||
| growth | ||
| Brand NPS Main Financial | 20% | |
| Institution (Bank) | ||
| Customer | Product NPS (Home lending) | |
| Broker NPS | ||
| Digital Users (Group) | ||
| Risk management and | 20% | |
| Risk | compliance measures Risk maturity model |
|
| Net stable funding ratio | ||
| Ways of Working | 20% | |
| People & Culture | Employee Engagement | |
| Key diversity measures |
The Bank Function Scorecard is cascaded as appropriate to the Bank Leadership Team. The same process occurs in other Functions.
Changes to the FY22 remuneration framework
The FY22 STI structure remains the same, however the performance measures have been adjusted where needed to align to the FY22 business plan. The structure of the FY22 Group Scorecard will be disclosed in the FY22 APS 330 disclosure.
The FY22 LTI structure has been enhanced. There are now three LTI performance measures, each weighted one-third of the total grant. The performance measures are:
-
Relative TSR against S&P / ASX 100 companies excluding real estate investment trusts and resources companies
-
Relative TSR against a customised peer group of 12 ASX 100 organisations with banking and / or insurance operations
-
Cash return on tangible equity.
Remuneration alignment with risk management
Suncorp is committed to effective risk management throughout the Group, with risk management considering both financial and non-financial risks.
The Non-Financial Risk Committee, made up of the KMP, supports the identification, assessment, monitoring, and mitigation of non-financial risks. This governance structure ensures that relevant nonfinancial risks, including conduct risks, are considered.
The Enterprise Risk Management Framework ( ERMF ) lays the foundation for all Suncorp’s risk management processes. The ERMF seeks to ensure the integration of effective risk management across the Group and incorporates Suncorp’s policies (which include risk management policies and the Remuneration Policy). Employees are educated on the importance of managing risk and the link between risk management and the outcomes for our shareholders, customers and employees.
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The Board sets the risk appetite for the Group and has ultimate responsibility for the effectiveness of the Group’s risk management practices. Suncorp develops its strategy and business plan both in consideration of the Group’s risk appetite and with regard to the broader external environment.
In addition to ensuring the remuneration framework is aligned to prudent risk management, the Board also places significant importance on ensuring the framework incentivises desired conduct and behaviours.
Risk and conduct are incorporated into the remuneration framework as outlined below:
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APS 330
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Risk and financial control personnel
Separate performance and remuneration review processes govern remuneration decisions concerning identified employees working in the areas of risk and financial control ( R&FC ).
In these roles, performance measures are set and assessed by risk management and financial control function leaders, independent of their business units. For all R&FC roles, the function leader is not the direct leader of the role. The Chief Risk Officer (CRO) and Group Chief Financial Officer (Group CFO) are the function leaders for risk management roles and financial control roles that do not directly report to them. The Group CEO is the function leader for R&FC roles that report to the CRO or Group CFO, and the Board acts as the function leader of the EGM Internal Audit, CRO and Group CFO. In addition, employees working in risk roles across the Group typically have a comparatively higher percentage of risk-based measures in their scorecard.
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APS 330
Section 2: Quantitative disclosure requirements
| FY21 | FY21 | FY21 | |
|---|---|---|---|
| Senior Managers (KMP) | Other Senior Managers | MRT | |
| Number of Individuals1 | 11 21 3 12 21 3 |
||
| Number of Roles |
- The number of individuals is based on headcount. Where the individual held the disclosed role for a portion of the financial year their remuneration is pro-rated to reflect this.
The table below contains aggregated remuneration details for Senior Managers and MRTs as calculated in accordance with Australian Accounting Standards:
| FY21 | FY21 | FY21 | FY21 | FY21 | FY21 | FY20 | FY20 | FY20 | FY20 | FY20 | FY20 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Senior Managers (KMP) |
Other Senior Managers |
MRT | Senior Managers (KMP) |
Other Senior Managers |
MRT | |||||||
| $000 | Unrestricted | Deferred | Unrestricted | Deferred | Unrestricted | Deferred | Unrestricted | Deferred | Unrestricted | Deferred | Unrestricted | Deferred |
| Fixed pay | ||||||||||||
| Cash-based1 | 8,041 | - 6,277 - 830 - 7,925 - 5,235 - 707 - - 609 - 93 - 660 - 445 - 87 - |
||||||||||
| Other2 | 514 | |||||||||||
| Variable pay | ||||||||||||
| Cash-based3 | 4,506 | - 2,863 71 447 124 68 - 1,030 13 238 12 5,983 - 1,240 - 30 - 4,960 2 232 1 20 |
||||||||||
| Share linked instruments4 |
- |
-
Represents actual fixed pay received, including salary sacrificed benefits.
-
Represents employer superannuation, non-monetary benefits including airfares and premium rebates paid on behalf of the employee and the net annual leave and long service leave accrual for the financial year.
-
Represents cash incentives earned during the financial year. For Other Senior Managers and MRT below EGM level, the deferred cash portion awarded includes interest accrued on prior year deferred STIs and is subject to malus and clawback criteria during the deferral period. For Other Senior Managers at the EGM level, the deferred portion of the FY21 and FY20 STI is deferred into share rights, outlined in ‘Share linked instruments’ under the ‘Deferred’ column.
-
STI deferred into share rights is expensed to the profit & loss from the start of the performance period to the end of the deferral period and the fair value is amortised from the start of the performance period to the end of the deferral period. Grants made under the LTI plan, Restricted Share Plan and Share Rights Plan are expensed to the profit & loss based on the fair value at grant date over the period from grant date to vesting date.
During FY21, 10 Senior Managers (KMP), 18 Other Senior Managers and 3 MRTs received a variable remuneration award. In FY20, 8 Senior Managers (KMP), 16 Other Senior Managers and 3 MRTs received a variable remuneration award. No guaranteed bonuses were made to any Senior Managers and MRTs during FY21 and FY20.
PAGE 27
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APS 330
The table below summarises the sign-on and termination payments made or granted to Senior Managers and MRTs in FY21 and FY20.
| FY21 | FY21 | FY21 | FY21 | FY21 | FY21 | FY21 | FY20 | FY20 | FY20 | FY20 | FY20 | FY20 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Senior Managers (KMP) |
Other Senior Managers |
MRT | Senior Managers (KMP) |
Other Senior Managers |
MRT | ||||||||
| No. of individuals |
Total Amount $000 |
No. of individuals |
Total Amount $000 |
No. of individuals |
Total Amount $000 |
No. of individuals |
Total Amount $000 |
No. of individuals |
Total Amount $000 |
No. of individuals |
Total Amount $000 |
||
| Special incentive awards1 |
- | - | - | - | - | - | - | - | - | - | - | - | |
| Termination payments1,2 |
2 | 1,888 | 1 | 438 | - | - | 2 | 1,693 | 1 | 420 | - | 2 |
-
One KMP ceased employment in FY20. A special incentive award that was offered due to foregone benefits at their prior employer (sign-on award) was forfeited on cessation of employment and is not included in the above table. No termination payment was made.
-
Termination payments are paid in accordance with contractual commitments.
The table below summarises information on deferred remuneration for Senior Managers and MRTs.
| $000 | FY21 | FY21 | FY20 | FY20 | ||
|---|---|---|---|---|---|---|
| Senior Managers (KMP) |
Other Senior Managers |
MRT | Senior Managers (KMP) |
Other Senior Managers |
MRT | |
| **Total outstanding deferred remuneration1 ** | 12,885 | 1,935 106 11,853 |
1,602 137 |
|||
Cash-based2 |
- |
- 16 - |
63 68 |
|||
| Shares and share-linked instruments3 | 12,885 | 1,935 90 11,853 |
1,539 69 |
|||
| **Total paid during the year4 ** | 1,163 | 815 67 2,368 |
678 71 |
|||
**Total reductions due to explicit adjustments5 ** |
(4,161) | - - (3,825) |
(204) - |
|||
**Total reductions due to implicit adjustments6 ** |
- |
- | - | (3,479) |
(760) |
(5) |
-
Includes the total outstanding deferred cash and equity awards as at 30 June. Outstanding deferred remuneration is subject to malus and clawback criteria. All deferred remuneration outstanding for Senior Managers and MRTs at 30 June has been included, even where that award was earned in a different capacity within the Group. The deferred balance has been excluded where the Senior Manager and MRT is no longer employed in that capacity at 30 June.
-
Deferred cash-based remuneration for FY21 represents the deferred portion of short-term incentives awarded in FY20 and/or FY19, together with the interest accrued on the outstanding deferral, for all Senior Managers and MRTs employed within that capacity as at 30 June. Deferred cash may have been accrued whilst employed in a different capacity within the Group.
-
Deferred equity represents the market value as at 30 June, calculated by the number of performance rights, share rights or restricted shares granted multiplied by the closing share price as traded on the ASX on 30 June. The balance consists of all offers up to and including 30 June that are still to vest for Senior Managers and MRTs employed in that capacity as at 30 June.
-
Consists of all deferred cash incentives from prior years (and associated interest) paid and deferred equity vested during the financial year, received whilst employed in the capacity of a Senior Manager or MRT.
-
Represents the market value at grant date of performance rights, share rights or restricted shares forfeited during the financial year.
-
Represents any reduction in the market value at grant date compared to the market value at 30 June for performance rights, share rights or restricted shares yet to vest, or reduction in the market value at grant date compared to the market value at vesting date during the period. Note that increases may have occurred during the period, however only reductions have been disclosed in accordance with the requirements of APS 330.
PAGE 28
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APS 330
APPENDIX 2 – DEFINITIONS
| AASB 9 | AASB 9_Financial Instruments_was issued in December 2014. It addresses recognition and |
|---|---|
| measurement requirements for financial assets and financial liabilities, impairment requirements that | |
| introduce a forward-looking expected credit loss impairment model, and general hedge accounting | |
| requirements which more closely align with risk management activities undertaken when hedging | |
| financial and non-financial risks. This standard became mandatory for the annual reporting period | |
| from 1 July 2018. | |
| Capital adequacy ratio | Capital base divided by total assessed risk, as defined by APRA. |
| Collective provision | A collective provision is established to determine expected credit losses (see also Expected Credit |
| Losses definition below) for loan exposures which are not specifically provisioned and can be in the | |
| performing or non-performing portfolios. For business banking exposures, a ratings-based approach | |
| is applied using estimates of probability of default and loss given default, at a customer level. For | |
| portfolio managed exposures, the portfolios are split into pools with homogenous risk profiles and | |
| pool estimates of probability of default and loss given default are used to calculate the collective | |
| provision. | |
| Common Equity Tier 1 (CET1) | Common Equity Tier 1 capital comprises accounting equity plus adjustments for intangible assets |
| and regulatory reserves. | |
| Common Equity Tier 1 ratio | Common Equity Tier 1 divided by total risk weighted assets, as defined by APRA. |
| Credit value adjustment (CVA) | A capital charge that covers the risk of mark-to-market losses on the counterparty credit risk. |
| Eligible collective provisions | Primarily represents the collective provision for impairment on loans and advances in Stage 1 |
| (performing and/or newly originated assets). Provisions for loans and advances in Stage 1 are | |
| established to provide for expected credit losses (ECL) for a period of 12 months. Forward-looking | |
| provisions for future, presently unidentified losses are also included within the Eligible collective | |
| provision balance. | |
| Expected credit losses (ECL) | Expected credit losses (ECL) are calculated as the probability of default (PD) x loss given default |
| (LGD) x exposure at default. The credit models are calibrated to reflect PD and LGD estimates | |
| based on historical observed experience, as well as reflecting unbiased forward-looking views of | |
| macroeconomic conditions, through macroeconomic variables that influence credit losses, for | |
| example unemployment rates and changes in house prices. | |
| Equity reserve for credit losses | The equity reserve for credit losses represents the difference between the collective provision for |
| impairment and the estimate of credit losses across the credit cycle based on guidance provided by | |
| APRA. | |
| General reserve for credit losses (GRCL) | The general reserve for credit losses is a reserve that covers credit losses prudently estimated but |
| not certain to arise over the full life of all the individual facilities based on guidance provided by | |
| APRA. | |
| Impaired assets | Impaired assets are those for which the Bank has determined that it is probable that it will be unable |
| to collect all principal and interest due according to the contractual terms. The Bank fully considers | |
| the counterparty’s capacity to repay and security valuation position before an asset is considered | |
| impaired. | |
| Ineligible collective provisions | Represents the collective provision for impairment on loans and advances in Stage 2 or Stage 3. |
| Stage 2 assets include assets that have experienced a significant increase in credit risk (SICR) since | |
| origination (under-performing loans). Stage 3 assets within ineligible collective provisions include | |
| ‘past due but not impaired’ and ‘impaired assets’ (non-performing loans, other than those for which a | |
| specific provision is held under AASB 9). Collective provisions for loans and advances in Stage 2 | |
| and Stage 3 are established to provide for ECL for the remaining term of the loans and advances | |
| (lifetime ECL). Ineligible collective provision is considered as specific provision for regulatory | |
| purposes under APS 220_Credit Quality_. | |
| Liquidity coverage ratio (LCR) | An APRA requirement to maintain a sufficient level of qualifying high-quality liquid assets to meet |
| liquidity needs under an APRA-defined significant stress event lasting for 30 calendar days. Absent | |
| of a situation of financial stress, the LCR must not be less than 100%. The LCR is calculated as the | |
| ratio of qualifying high-quality liquid assets relative to net cash outflows in a modelled APRA-defined | |
| 30-day stress scenario. | |
| Loan-to-value ratio (LVR) | Ratio of a loan to the value of the asset purchased. |
| Past due loans | Loans outstanding for more than 90 days. |
| Risk weighted assets | Total of the carrying value of each asset class multiplied by their assigned risk weighting, as defined |
| by APRA. | |
| Specific provision | A specific provision for impairment is recognised where there is objective evidence of impairment and full recovery of principal and interest is considered doubtful. The present value of the expected |
| future cash flows is compared to the carrying amount of the loan to determine the specific provision | |
| required. | |
| Term Funding Facility (TFF) | On 19 March 2020, the RBA announced the Term Funding Facility (TFF) to support lending to Australian businesses as part of a package of measures to support the Australian economy. Under |
| the TFF, Authorised Deposit-taking Institutions (ADIs) can access three-year funding through | |
| repurchase agreements at a fixed interest rate equivalent to the official cash rate at the time of | |
| drawdown. | |
| Total assessed risk | Credit risk-weighted assets, off-balance sheet positions, market risk capital charge and operational |
| risk charge, as defined by APRA. |
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