Effective, efficient and sustainable

Key Highlights

Goal five: deliver profitability and productivity

Profitability and productivity - Overview

Effectiveness

  2012/13 ($’000) 2011/12 ($’000) 2010/11 ($’000)
What we earned      
Interest received on customer loans 130,172 145,059 140,519
Investment income 23,357 26,033 23,993
Other income 16,734 16,797 19,454
Total earnings 170,263 187,889 183,966
What we spent      
Interest paid on customer deposits 84,580 98,586 91,029
Interest paid on borrowings 87 1,760 2,912
Employee benefits 26,884 25,724 26,994
Other administrative costs 23,919 24,772 25,132
Income tax expense 9,396 10,031 10,388
Total expenses 144,866 160,873 156,455
Total profit 25,397 27,016 27,511

The Bank’s credit quality ratio (the percentage of loans 30 days or more in arrears) decreased from an already low base in 2011/12 to 0.24% of the total loan portfolio. This resulted from debts being paid in full, refinances or accounts brought up to date as well as the Bank’s strong commitment to lending responsibly in the first instance. Delinquency remains low compared to industry benchmarks.

In 2012/13 we saw an increase in provisions for impaired loans from 0.02% to 0.03%, which was due to the inclusion of the Fitzroy & Carlton Community Credit Cooperative Limited (FCCC) provision, and the addition of a collective provision, which seeks to recognise inherent losses within the loan portfolio.

Efficiency

bankmecu maintained a strong focus on business management practices that deliver efficiency and protect operating margins in a challenging and competitive market.

The Bank aims to increase business productivity to more than $10m of assets per full-time employee, and achieved $10m in 2012/13, up from $9.6m the previous year.

Our return on average assets decreased in 2012/13 to 0.86% from 0.99%, due to interest margin pressure from several interest rate cuts during the year. In addition, average assets increased by $206m. The return on average assets is 0.01% below target for the year, yet above the Australian Mutual Authorised Deposit-Taking Institution (ADI) average of 0.5%.

Net interest margin

  2012/13 2011/12 2010/11
Interest income on loans $130.2m $145.1m $140.5m
Interest income on investments $23.4m $26.0m $24.0m
Interest expense on deposits and borrowings/NCDs $84.7m $100.3m $93.9m
Net interest margin $68.9m $70.7m $70.6m
Net interest margin as a % of average assets 2.34% 2.59% 2.79%

Cost to income ratio

Key performance indicator

Mutual ADI 

average Jun-13

Target

2012/13

2012/13 2011/12 2010/11

Difference between

2011/12 & 2012/13

Cost to income ratio 74.57% 58.95% 58.71% 57.73 56.69 1.99%

Despite an increase due to lower operating income, the cost/income ratio remains a very clear benchmark indicator of our efficient operation.

The cost to income ratio increase is attributed to a decrease in operating income (e.g. a static net interest margin, dividends, VISA Commission and customer fee income decreasing due to lower growth and transaction volumes), while operating expenses increased only slightly.

Sustainability

Responsibility for our approach to sustainable development exists at all levels of the organisation and is considered core business.

bankmecu has in place an Environmental Management System (EMS) to monitor aspects of operations with an environmental impact and to ensure continual environmental performance improvement.

We currently report on emissions relating to car travel, gas consumption, electricity, air travel, paper and waste to landfill.

Total greenhouse gas emissions reduced by 9% and emissions per FTE decreased by 11%, due to ongoing efficiency measures.

Total consumption increase/decrease in 2012/13

The electricity decrease can largely be attributed to the closure of Kerang and Kensington service centres in November 2012 and savings at Kew, Morwell, Castlemaine, Echuca, Townsville and Brisbane service centres. Electricity costs increased by 1%.

Gas usage increased most significantly at Bendigo service centre due to ongoing timer malfunction issues.

Car travel reduced due to less employee business travel in personal cars being claimed.

Air travel reduced due to less domestic air travel being undertaken during the year. More travel was taken in the previous year due to the bank designation in 2011/12. We have also introduced video conferencing in an attempt to further reduce air travel.

Water consumption decreased significantly due to leak identification, separate meterage and ongoing efficiency measures, including the installation of a rainwater tank at head office. Water costs have decreased by 19%.

Total waste generation, including recycled material and waste to landfill, decreased by 2.63% compared to last year.

The ratio of waste to landfill versus recycled material shifted from 68% landfill and 32% recycled to 64% landfill and 36% recycled.

Paper use decreased from the previous year which was unusually high due to the rebrand to bankmecu. Of purchased office paper, 7.08% had 100% recycled content, 92.10% had 80% recycled content and 0.82% had 10% recycled content.

The decrease in paper sent to customers is attributed to an increasing number of customers subscribing to electronic statements (increase of 15%) and receiving their statements via internet banking

The Bank’s supply chain management system saw two large tenders assessed against a formal sustainability questionnaire.

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Profitability and productivity - In depth

Effectiveness

bankmecu strives to ensure its products, services, systems, suppliers, policies and procedures deliver effective reliable outcomes at fair and competitive prices to customers, while ensuring products and services reflect quality.

Profit and loss account

  2012/13 ($’000) 2011/12 ($’000) 2010/11 ($’000)
What we earned      
Interest received on customer loans 130,172 145,059 140,519
Investment income      23,357 26,033 23,993
Other income      16,734 16,797 19,454
Total earnings    170,263 187,889 183,966
What we spent      
Interest paid on customer deposits      84,580 98,586 91,029
Interest paid on borrowings              87 1,760 2,912
Employee benefits      26,884 25,724 26,994
Other administrative costs      23,919 24,772 25,132
Income tax expense        9,396 10,031 10,388
Total expenses   144,866 160,873 156,455
Total profit 25,397 27,016 27,511

Net profit

Key performance indicator Mutual ADI average @ Jun ’13  Target 2012/13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference between 11/12 & 12/13
Net profit before tax ($m) - 36.0 34.8 37.0 37.9 25.7 25.5 24.9 23.6 23.9 -6.08%
Net profit after tax ($m) - 25.4 25.4 27.0 27.5 18.2 18.3 17.5 16.6 17.1 -5.93%
Return on equity 6.62% 7.90% 7.81% 9.08% 10.13% 7.83% 9.43% 10.28% 10.70% 14.40% -13.96%

Source: Mutual ADI average provided in APRA quarterly report.

Credit quality

Credit quality measures the percentage of delinquent loans 30 days or more in arrears to the total loan portfolio. The bulk of delinquent loan balances are made up of mortgages over 30 days and in arrears.

Key performance indicator Domestic bank industry average @ Jun ’13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference between 11/12 & 12/13
Credit quality 1.30% 0.29% 0.27% 0.51% 0.46% 0.18% 0.23% 0.12% 0.14% 8.07%

Source: Domestic bank average provided in APRA quarterly report.

At 30 June 2013, bankmecu held 12,278 mortgages; of these only 29 were in arrears by more than 30 days representing 0.24 per cent of the portfolio.

Industry-wide lending continued to slow, reflecting the interest rate environment and increased consumer debt. Customers continue to increase their conservatism towards repayment off debt.

Our lending guidelines are very conservative and we continue to adopt a responsible banking approach to credit.

Credit integrity

To meet its prudential obligations and reflect the true value of its assets, bankmecu makes provisions against identified impairments in its loan asset portfolio. Provisions were set aside in 2012/13 for identified and incurred but not reported impairments.

Our responsible lending practices support our long-term economic performance and have resulted in a low provision for impaired loans against a growing loan portfolio.

Provision for impaired loans

Year Bad and doubtful debt expense ($) Provision for impaired loans ($) Total loan portfolio ($) Provision for impaired loans to loan portfolio ($)
2012/13 336,255 765,715 2,308,363,400 0.03
2011/12 –67,467 515,739 2,210,654,941 0.02
2010/11 1,064,795 1,220,572 2,116,056,214 0.06
2009/10 179,760 554,833 1,958,974,225 0.03
2008/09 292,812 410,793 1,397,920,362 0.03
2007/08 151,778 335,061 1,101,879,505 0.03
2006/07 176,334 445,611 941,697,201 0.05
2005/06 264,011 666,815 844,449,970 0.08
2004/05 66,276 1,033,459 813,722,501 0.13

2012/13 saw an increase in provisions for impaired loans which was due to the inclusion of a provision for Fitzroy & Carlton Community Credit Cooperative (FCCC) and the inclusion of a collective provision. The collective provision was developed to improve the calculation of provisioning required by accounting standard AASB 139 to account for losses that have incurred but are not yet reported.

The Bank adheres to all relevant legislation and codes regarding the handling of bad debt recovery. The Bank assists customers where possible to manage credit responsibly. We continue to support and assist customers who may experience financial hardship wherever possible.

Our delinquency rate remains low compared to industry benchmarks.

Total operating expenditure

Total operating expenditure in 2012/13 was $50,803,490.

Primary suppliers

As a practice, bankmecu sources all of its supplies in the Australian market. Suppliers are required to demonstrate ongoing compliance with all relevant Australian laws and regulations.

Suppliers’ details

Suppliers Service provided Total operating expense in 2012/13 (%) Difference in actual expenditure between 11/12 & 12/13 (%)
Cuscal Payment channel services 9.38% -13.61%
Data Action IT and data processing 7.80% 4.48%
QBE Mortgage Insurance Services Mortgage loan insurance 2.35% 49.63%
 Salmat Mail house 1.56% -19.98%
Valuation Exchange Mortgage loan valuation service 1.49% 4.24%

Cuscal is our provider of wholesale and transactional banking. In 2012/13, Cuscal costs decreased by 13.61% mainly due to cost savings associated with the introduction of the Cuscal Card Switch, as well as savings due to the Sale of the ATM Network in November 2011. bankmecu is a shareholder in Cuscal.

Data Action is our core banking and information technology bureau service provider. In 2012/13, Data Action’s cost increases were mainly due to the costs associated with Requests for Work (RFW) with the introduction of the Personal Internet Lending Module and miscellaneous software upgrades on the core banking system. bankmecu is a shareholder in Data Action.

QBE Mortgage Insurance Services provides us with mortgage insurance services. QBE costs increased in 2012/13 due to the introduction of the bankmecu self securitised loan portfolio – Buloke in July 2012.

Salmat provides statement mailing and other mail services to bankmecu. In 2012/13 payment decreases resulted from the Bank’s continued increase in customer uptake of e-statements. Customer uptake of e-statements increased 15.92% to 24,323 customers in 2012/13 from 21,000 in 2011/12. This increase has also resulted in a 12.87% paper saving (2012/13: 282,181 sheets; 2011/12: 250,000 sheets).

Valuation Exchange provides valuation which supports our residential mortgage lending. Valuation Exchange costs increased in 2012/13 due to growth in lending. Valuation Exchange replaced Telstra as the fifth largest supplier in terms of dollar value spent.

Cost of materials and services purchased

The cost of materials and services includes capital expenditure and excludes depreciation and payments to employees.

Cost of materials and services purchased 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 Difference between 11/12 & 12/13
Total ($m) 26.5 26.5 26.1 25.2 21.2 20.6 17.9 19.4 20.9 -0.20%
% of operating expense 52.34% 52.53% 50.52% 50.44% 55.14% 64.02% 60.26% 64.37% 59.69% -0.36%

Payments to employees

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 Difference between 11/12 & 12/13
Payroll and benefits paid $26.9m $25.7m $26.9m $25.0m $17.2m $13.2m $11.8m $11.5m $13.2m 4.51%
% of operating expense 52.92% 50.94% 52.14% 49.24% 44.76% 41.16% 39.32% 38.19% 37.70% 3.89%

Employee payroll and benefits paid increased by 4.51% compared to last year due to increases in base salaries and to a provision required for Defined Benefit Superannuation.

Salaries are determined using a range of external benchmarks, including the Australasian Mutuals Institute Salary Survey. Salaries are reviewed annually to ensure they remain competitive with industry standards.

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Efficiency and productivity

The major efficiency drivers are:

  • increasing productivity to $9.7m+ assets per full-time employee
  • managing business units according to Board-approved budgets
  • protecting the operating margin by managing the interest margin, improving non-interest income and keeping the operating expenses to income ratio within the top quartile of the Australian customer owned banking sector
  • promoting a constant process of efficiency improvement
  • a commitment to an engaged workforce

Asset to staff ratio

Key performance indicator Target 2012/13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06

Difference between

11/12 & 12/13

Asset to staff ratio >$9.7m/FTE $10.0m $9.6m $8.5m $7.8m $7.8m $8.0m $7.3m $6.4m 4.54%

Asset to staff ratio represents bankmecu’s total assets per full-time equivalent (FTE) staff. bankmecu’s ratio increase is due to asset growth and fewer staff vacancies resulting in improved productivity. bankmecu’s FTE figure increased from 296.46 in 2011/12 to 304.18 in 2012/13, and assets increased $206m during the same period.

Return on equity

Key performance indicator Mutual ADI average at Jun ’13  Target 2012/13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06

Difference between

11/12 & 12/13

Return on equity 6.62% 7.90% 7.81% 9.08% 10.13% 7.83% 9.43% 10.28% 10.70% 14.40% -13.96%

Source: Mutual ADI average provided in APRA quarterly report.

Although return on equity decreased by 14 per cent in 2012/13, it remains close to target and higher than the industry average.

Return on average assets

Key performance indicator Mutual ADI average @ Jun ’13 Target 2012/13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06

Difference between

11/12 & 12/13

Return on average assets 0.54% 0.87% 0.86% 0.99% 1.09% 0.85% 1.09% 1.22% 1.25% 1.44% -12.67%

Source: Mutual ADI average provided in APRA quarterly report.

Return on average assets represents the per cent of net profit after tax to average assets.

The decreased return can be largely attributed to interest margin pressure from several interest rate cuts during the year. In addition, average assets increased by $206m.

Subsidiaries and joint ventures

bankmecu does not have any joint ventures. The Ed Credit Services Unit Trust’s return on issued units was 6.92%, which exceeded the average 2012/13 90-day BBSW at 3.18%.

Net interest margin

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05
Interest income on loans $130.2m $145.1m $140.5m $108.0m $89.9 m $80.4m $66.8m $59.8m $56.7m
Interest income on investments $23.4m $26.0m $24.0m $21.9m $24.9m $28.1m $25.0m $18.9m $16.6m
Interest expense on deposits and borrowings/NCD’s $84.7m $100.3m $93.9m $67.5m $64.2m $62.4m $48.9m $39.9m $35.6m
Net interest margin $68.9m $70.7m $70.6m $62.5m $50.6m $46.0m $42.9m $38.8m $37.7m
Net interest margin as a % of average assets 2.34% 2.59% 2.79% 2.92% 3.01% 3.20% 3.20% 3.30% 3.40%

Net interest margin is a measurement of the difference between the interest income generated and the amount of interest paid out.

The reduction in the ratio is the result of continuing price competition in the marketplace as the banking sector replaces wholesale borrowings with retail deposits as a primary funding source, and operating in a falling rate environment.

Refer to the Statutory Financial Report for a geographic breakdown of deposits and loans.

Cost to income ratio

Key performance indicator Mutual ADI average @ Jun ’13 Target 2012/13 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06

Difference between

11/12 & 12/13

Cost to income ratio 74.57% 58.95% 58.71% 57.73% 56.69% 66.13% 59.59% 56.02% 55.50% 55.80% 1.99%

Source: Mutal ADI average provided in APRA quarterly report.

Despite an increase due to lower net operating income, the cost/income ratio remains a very clear benchmark indicator of efficient operation.

The cost to income ratio increase is attributed to a decrease in net operating income (e.g. a static net interest margin, dividends, VISA Commission and customer fee income decreasing due to lower sales and transaction volumes), while operating expenses increased only slightly.

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Sustainability

bankmecu will practice systematic and balanced business strategies that satisfy the economic, social and environmental performance expectations of its stakeholders now, while protecting, sustaining and enhancing the financial, human and natural resources that will be needed to develop the Bank into the future.

Land

We operate a number of premises in metropolitan and regional areas throughout Australia. For business purposes, bankmecu used 10,449 square metres of land, including 2,029 square metres of car park space. The Bank owns approximately 64 per cent of premises and the remainder are leased. Our land footprint is small because the Bank encourages customers to bank using remote channel access including internet banking systems and automated telephone banking.

In addition to land occupied for banking operations, bankmecu owns 928 hectares in Victoria’s West Wimmera. The land is being utilised as a Conservation Landbank with a view to protecting and enhancing its biodiversity value while sequestering carbon from the atmosphere. These properties have been purchased through recommendation by Trust for Nature for their significant biodiversity conservation value.

In 2012/13 bankmecu spent $167,000 on land purchase for biodiversity conservation and habitat restoration and a further $193,558 on re-vegetation and land management costs for the entire Conservation Landbank project.

Environmental Management System

The natural environment provides the resources required for all businesses to carry out their day-to-day operations. Minimising our own impact on the environment will help to ensure the Bank’s sustainability by reducing operating costs and placing less strain on finite natural resources.

In 2010/11, bankmecu established an Environmental Management System (EMS). The purpose of this system is to monitor aspects of our operations that have an obvious environmental impact. The EMS also includes an action plan for continual improvement in environmental performance.

bankmecu’s Environment Policy outlines bankmecu’s major impacts on the environment and articulates the Bank’s approach to managing operational impacts in relation to waste, energy, travel, water, land, procurement and partnerships.

The Bank’s environmental objectives include:

  • to use energy more efficiently
  • to use water more efficiently
  • to reduce the amount of waste produced and increase the quantity of waste re-used and recycled
  • to reduce the environmental impacts of travel
  • to consider environmental issues through procurement activities
  • to consider environmental issues associated with products and services offered to customers
  • to consider environmental issues when new partnerships are formed
  • to increase environmental awareness amongst customers and employees; and
  • to maintain carbon neutrality

Targets have been established and action items identified with a clear strategy to continually monitor and improve performance against objectives. Targets are highlighted throughout this report where applicable.

Greenhouse gas emissions

bankmecu greenhouse gas emissions are broken down into Scope 1, Scope 2 and Scope 3 emissions as per the most widely used international accounting tool – the Greenhouse Gas Protocol published by the World Business Council for Sustainable Development and the World Resources Institute.

EMS target:

  • Reduce carbon emissions per FTE by 10 per cent by 2014/15 relative to 2009/10 levels – in progress.
  • Offset all Scope 1 and 2 emissions by 30 June 2011 – target met.
  • Endeavour to add at least one new Scope 3 emission source per year for the following 3 years – target met.

Scope 1, Scope 2 and Scope 3 emission sources

Source: Greenhouse Gas Protocol

Scope 1: Direct Greenhouse Gas (GHG) emissions occur from sources that are owned or controlled by the Company. For example, emissions from combustion in owned or controlled boilers or vehicles.

Scope 2: Indirect GHG emissions occur from the generation of purchased electricity consumed by the Company.

Scope 3: Other indirect emissions are a consequence of the activities of the Company, but occur from sources not owned or controlled by the Company. For example, extraction and production of purchased materials, use of products and services and waste disposal.

bankmecu currently reports on emissions relating to car travel and gas consumption (Scope 1), electricity (Scope 2), air travel, paper and waste to landfill (Scope 3). We continue to investigate means for including emissions from additional sources not currently included in the Company’s emissions profile.

bankmecu greenhouse gas emissions (CO2-e tonnes)

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 Difference

b/w 11/12

& 12/13

Difference

b/w 09/10

& 12/13

Scope 1 – Direct emissions
Car travel – company owned* 21.14 22.30 23.07 72.07 46.44 39.55 47.55 -5.2% -70.7%
Gas – Scope 1 85.37 69.16 79.87 67.89 49.08 39.77 26.53 23.4% 25.7%
Scope 2 – Indirect emissions
Electricity – Scope 2 1,340.4 1,429.65 1,643.81 1,996.63 1,319.36 1,149.50 1,069.63 -6.2% -32.9%
Scope 3 – Other indirect emissions
Gas – Scope 3 6.88 5.66 6.49 - - - - 21.6% -
Electricity – Scope 3 177.60 184.56 197.16 - - - - -3.8% -
Car travel – company owned* 1.67 1.70 1.76 - - - - -1.8% -
Car travel – employee owned claims* 5.37 8.12 13.73 - - - - -33.9% -
Car travel – packaged cars* 41.52 41.22 78.8         -0.7% -
Air travel** 118.10 173.79 147.65 47.91 62.02 39.46 53.95 -32.0% 146.5%
Paper – Office paper*** 14.35 14.66 14.33 - - - - -2.1% -
VEGA – printing jobs, including paper**** 23.49 66.49 37.2 - - - - -64.7% -
Waste – general waste to landfill 46.25 50.46 28.92 - - - - -8.3% -
TOTAL emissions (CO2-e tonnes) 1,882.14 2,067.77 2,272.79 2,039.02 1,256.24 1,041.16 990.91 -9.0% -7.7%
TOTAL per FTE 6.19 6.97 7.39 6.5 5.59 5.51 5.44 -11.3% -4.8%
 
Offsets
Air travel offsets 0 0 0 0 80.55 42.67 79.55 - -
GreenPower 0 0 0 145.48 140.11 184.45 127.2 - -
VEGA -printing jobs 23.49 66.49 37.2 - - - - - -
Purchased offsets 1,860 2,002 2,236 - - - - -7.1% 0.0%
TOTAL offsets (CO2-e tonnes) 1,883.49 2,068.49 2,273.20 145.48 220.66 227.12 206.75 -8.9% 1194.7%

* Prior to 2010/11 all car travel was recorded together. Emission data relating to car travel is now broken down as per the GHG Protocol. Records prior to 2010/11 have been placed in Scope 1 ‘Car Travel – Company owned’.

** Prior to 2010/11, Radiative Forcing was not considered in the methodology for determining air travel CO2-e emissions. Including Radiative Forcing is considered best practice and has been included this year.

*** Double counting occurred in 2010/11. This equated to 22.16 tonnes of extra offsets purchased. bankmecu included and offset emissions for printed statements and letterhead which were also being offset by Print Media Group, the Bank’s print provider.

**** Print Media Group – includes the printing process for marketing materials and the emissions from paper used through Print Media Group.

***** A calculation error was identified in total GHG emissions recorded in 2010/11 resulting in a shortfall in offsets purchased of 84.59 tonnes. This amount was purchased with 2011/12 offsets to rectify the error.

Even though we included additional emissions in our emission profile from 2010/11 our total greenhouse gas emissions have decreased by 7.7% since 2009/10. Total greenhouse gas emissions per FTE decreased by 4.8% during the same period. Significant gains were experienced from 20011/12, with total greenhouse gas emissions reducing by 9% and emissions per FTE decreasing by 11.3%, due to ongoing efficiency measures.

Note: bankmecu’s CO2-e emissions are calculated through an emissions accounting tool, EASE, provided by OMG Equilibrium. Calculations are based on the GHG Protocol. Paper emissions are calculated based on EPA Victoria Guidelines.

Energy consumption

EMS target: Increase energy efficiency per m² by 5 per cent by 2014/15 relative to 2009/10 levels – on target.

bankmecu monitors energy consumption (electricity and gas) at our owned and leased service centres wherever possible.

Electricity consumption

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference b/w 11/12 & 12/13 Difference b/w 09/10 & 12/13
Electricity Consumption (KWH) 1,177,996 1,233,254  1,394,905 1,517,882 1,008,732 884,096 861,633 899,596 -4% -22%
KWH/FTE 3,873  4,160 4,538 4,842 4,492 4,678 4,727 4,691 -7% -20%
KWH/m2 160 181 158 172 - - - - -11% -7%
CO2-e 1,340 1,614 1,841 1,997 1,319 1,150 1,070 1,224 -17% -33%
CO2-e /m2 0.21 0.24 0.21 0.23 - - - - -13% -9%
$ (NET) 303,417 301,191 295,878 268,354 - - - - 1% 13%

Note: figures based on square metres are indicative as some service centres have unknown areas and some are not separately metered. In 2011/12 only one service centre in Colac, which closed down, is missing an area and one site is not separately metered (unknown kWh).

Our overall electricity consumption decrease can largely be attributed to the closure of Kerang and Kensington service centres in November 2012 and savings at Kew, Morwell, Castlemaine, Echuca, Townsville and Brisbane.

bankmecu’s Head Office has solar panels installed on its roof, and energy saving tips were provided to staff through Footprints.

IT efficiency measures

bankmecu did not make any significant hardware changes during 2012/13.

The main hardware changes where some efficiency gains are expected include:

  • The implementation of 13 x Canon multi-functional copiers across the organisation – providing email/scan capabilities in service centres that did not have this capacity previously and to rationalise printers where possible.  For example –  in Kew Head Office IT removed the use of two copiers from two Departments with one higher-end copier that services both departments.
  • A new video conferencing unit has been implemented in the Kew board room. It is intended to use the facility for various meetings which will save the company in travel emissions and cost.

Solar panels

Solar panels were installed at Kew Head Office in 2008. The system is rated to provide 10,000 kW per year. An education display in the Head Office foyer area displays details on electricity generated and CO2 savings made through this initiative.

Gas consumption

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference b/w 11/12 & 12/13 Difference b/w 09/10 & 12/13
Gas Consumption (MJ)* 1,663,403 1,347,355  1,556,537 1,216,974 857,382 694,115 462,968 500,000 23% 37%
MJ/FTE 5,468 4,545 5,064 3,882 3,818 3,673 2,540 2,607 20% 41%
MJ/m2 539.12 436.68 504.47 394.42 - - - - 23% 37%
CO2-e 92.25 74.82 86.36 67.89 49.08 39.77 26.53 31.7 23% 36%
CO2-e /m2 0.03 0.02 0.03 0.02 - - - - 50% 50%
$ (NET) 24,318 17,017 18,586 16576 - - - - 43% 47%

*Figures from 2009/10 include Kew, Canberra, Bendigo, Mildura and Kyneton. In the years prior, figures only included Kew Head Office.

Gas consumption increased by 23 per cent compared to 2011/12. Gas usage increased at Bendigo mainly during the winter months of May – Aug 2012, where usage doubled compared to the previous year, due to ongoing timer issues experienced. The issues have been rectified. Losses at Bendigo were partly offset by some savings experienced at the Kew, Canberra and Mildura service centres.

Travel

Motor vehicle and air travel are the primary modes of transportation used by bankmecu employees for the purpose of business-related travel.

In 2012/13 we implemented or continued the following travel reduction activities:

  • eco Drive training which is included in the induction process for all new employees
  • eco Drive tips are provided on the intranet for staff perusal
  • public transport tickets are available to staff working at Head Office for business-related trips
  • staff and customers at Head Office have access to a bike rack to encourage the use of bicycles
  • bankmecu advances up to $1000 a year for the purchase of a public transport ticket or bicycle to be used as transport to work, to be paid off by staff over 26 pay periods; and
  • a Car Pooling Register is available on the intranet for employees

Car travel

EMS target: Reduce carbon emissions from road vehicles used for bankmecu administrative operations per FTE by 5 per cent by 2014/15, relative to 2009/2010 levels – in progress.

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference b/w 11/12 & 12/13 Difference b/w 09/10 & 12/13
Kilometres (Km) 369,143 385,801 431,139 352,432 223,722 176,539 208,829 206,011 -4% 5%
Km / FTE 1,214 1,301 1,403 1,124 996 936 1,146 1,074 -7% 8%
CO2-e 69.70 73.34 117.36 72.07 46.44 39.55 47.55 46.9 -5% -3%
Total cost ($) 55,057 71,142 - - - - - - -23% -

Note: Petrol costs include costs associated with business mileage provided for company owned job needs and pool car vehicles only, not salary packaged cars or mileage in personal cars claimed through Human Resources and payroll.

The increase since 2009/10 can largely be attributed to the fact that business use mileage from packaged cars was not included prior to 2010/11. In previous years only job needs vehicles were measured, i.e. pool cars and personal cars used for business purposes. This is in addition to expanded operations, while experiencing a drop in FTE numbers post merger consolidation. bankmecu will revise its EMS target in light of these factors.

Car travel reduced in 2012/13 due to less employee business travel in personal cars being claimed. Business kilometres travelled for work purposes in jobs needs, packaged vehicles and in pool cars remained steady.

The Vehicles Policy addresses the purchasing and use of company-owned vehicles. New pool vehicles purchased must be manufactured in Australia and meet a minimal greenhouse rating of seven and a half, for metropolitan car travel, or five for regional trips or carrying larger loads, as specified by the Federal Government’s Green Vehicle Guide. They must also have a minimum safety rating of three stars, as specified by the Australian New Car Assessment Program.

Air travel

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference b/w 11/12 & 12/13 Difference b/w 09/10 & 12/13
Kilometres (Km) 441,765 517,141 497,630 369,639 453,807 314,464 483,506 227,275 -15% 20%
Km / FTE 1,452 1,744 1,619 1,179 2,021 1,667 2,652 1,185 -17% 23%
CO2-e 118.10 173.79 174.12 147.65 47.91 62.02 39.46 53.95 -32% -20%
Total cost ($) 123,516 153,632 - - - - - - -20% -

Air travel reduced due to less domestic air travel being undertaken during the year. More travel was taken in the previous year due to the bank designation in 2011/12.

Water consumption

EMS target: Reduce water consumption per FTE by 5 per cent at bankmecu by 2014/15, relative to 2009/10 levels – on target.

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 Difference b/w 11/12 & 2012/13 Difference b/w 09/10 & 12/13
Water Consumed (m3)* 1,437 2,811 1,232 1,745 891 786 1,225 1,055 -49% -18%
m3/ FTE 4.73 9.48 4.01 5.57 3.97 4.16 6.72 5.50 -50% -15%
m3/m2 0.31 0.60 -  - - - - - -49% -
$ (NET) 5,019 6,197 2,690 2,663         -19% 88%

*2012/13 data includes water consumption from Kew, Moe, Morwell, Kensington (closed 2 November 2012) , Traralgon, Bendigo, Ballarat, Maryborough, Echuca, Kyneton, Sunbury, Castlemaine.

2011/12 data includes water consumption from Kew, Moe, Morwell, Kensington, Traralgon, Bendigo, Ballarat, Colac (closed August 2011), Maryborough, Echuca, Kyneton, Sunbury, Castlemaine.

2010/11 data includes water consumption from Kew, Moe, Morwell, Kensington, Toowong (sold October 2010), Traralgon, Lilydale (closed August 2010), Croydon (sub-let December 2010), Clayton (closed August 2010), Bendigo, Ballarat, Colac, Maryborough, Echuca, Kyneton, Sunbury, Castlemaine.

2009/10 data includes water consumption from Kew, Moe, Morwell, Kensington, Toowong, Traralgon, Lilydale, Croydon, Clayton, Bendigo, Ballarat, Colac, Maryborough, Echuca, Kyneton, Sunbury, Castlemaine.

In 2008/09 data included water consumption from Kew, Moe, Morwell, Kensington and Toowong.

From 2005/06 to 2007/08, data only included water consumption from Kew and Moe.

Water consumption per full-time equivalent (FTE) is based on the total FTE figure for bankmecu.

Supplier invoices are used to determine water consumption at bankmecu owned and operated service centres. The Echuca service centre consumption is apportioned based on 40 per cent usage as per the lease agreement. Maryborough’s water consumption is not separately metered; it is split between tenants.

Water consumption decreased significantly in 2012/13 and has decreased by 15 per cent per FTE since 2009/10. The decrease can be attributed to several issues:

  • Leaks were identified and fixed in May 2012 at Moe and Maryborough service centres, which went undetected for some months
  • bankmecu is now being separately metered for its water usage at Maryborough. The premises are tenanted by three other tenants (formerly only one other in 2010/11) increasing data accuracy/bankmecu share of the water usage for the building

We have been able to sustain low water usage at Head Office as a result of the installation and use of a rainwater tank since 2007/08.

Rainwater tank

Captured rainwater in the 33,880 litre tank at Kew Head Office is used for toilet flushing and garden watering. Since installation in March 2008, the rainwater tank has supplied 1,501,510 litres of water.

Water use from rainwater tank

Period Litres Reading date
March 2008 – 30 June 2009 175,692 29 June 2009
1 July 2009 – 30 June 2010 297,976 28 June 2010
1 July 2010 – 30 June 2011 402,729 27 June 2011
1 July 2011 – 30 June 2012 327,757 25 June 2012
1 July 2012 – 30 June 2013 297,356 24 June 2013
TOTAL 1,501,510  

Initiatives to reduce water consumption in 2012/13 included Footprints-initiated awareness emails to staff about water saving measures and government rebates for water efficiency improvements in the home, for all states and territories where bankmecu staff reside.

Waste

EMS target:

Reduce waste by 5 per cent by 2014/15, relative to 2009/2010 levels – in progress.

Increase recycling figures by 5 per cent of waste by 2014/15, relative to 2009/2010 – in progress.

Waste to landfill and recycled waste

  2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 Difference b/w 11/12 &12/13 Difference b/w 09/10 &12/13
Landfill waste (Head Office) 11.7 11.7 8.19 3.51 0.86 2.83 3.83 0% 233%
Landfill waste (Head Office)/FTE 0.06 0.14 0.09 0.04 0.01 0.03 0.04 -57% 50%
Landfill waste (Other sample) 18.65 20.45 20.73 20.53 4.18 4.2 4.22 -9% -9%
Landfill waste (Other sample)/FTE 0.13 0.15 0.09 0.07 0.03 0.04 0.04 -13% 86%
Landfill total 38.54 42.05 28.92 24.04 5.04 7.03 8.06 -8% 60%
Landfill/FTE 0.13 0.14 0.09 0.08 0.02 0.03 0.04 -7% 63%
Recycled waste (Head Office) 5.79 4.38 6.87 6.04 5.86 7.26 7.27 32% -4%
Recycled waste (Head Office)/FTE 0.06 0.05 0.08 0.07 0.06 0.08 0.07 20% -14%
Recycled waste (Other sample) 11.1 10.57 13.09 20.84 2.15 1.15 2.67 5% -47%
Recycled waste (Other sample)/FTE 0.07 0.08 0.06 0.07 0.02 0.01 0.02 -13% 0%
Recycled total 21.45 19.56 19.97 26.88 8.01 8.41 9.94 10% -20%
Recycled/FTE 0.07 0.07 0.06 0.09 0.04 0.04 0.05 0% -22%

Waste figures across all service centres in 2012/13 were extrapolated from sample data gathered from bankmecu service centres employing more than four employees. Sample data came from service centres in Ballarat, Bendigo, Casltemaine, Kew, Mildura, Moe, Morwell and Traralgon.

Prior to 2009/10, a total waste figure was estimated for sites with more than four employees and divided by all FTEs (including those staff in service centres with less than four employees) giving an inaccurately low figure. bankmecu now estimates waste to landfill and recycling figures for all FTEs across bankmecu based on sample data to assist in determining more accurate Scope 3 emissions. As a result, total landfill and recycling figures have increased from 2009/10.

Total waste generation, including recycled material and waste to landfill, decreased by 2.63 per cent compared to last year.

The ratio of waste to landfill versus recycled material shifted from 68 per cent landfill and 32 per cent recycled to 64 per cent landfill and 36 per cent recycled.

Initiatives to reduce waste generation and increase recycling in 2012/13 included:

  • recycling training, which is included in the induction process for all new employees
  • battery collection points at head office and at the call centre in Moe (the two largest staff-occupied buildings) and awareness initiatives by email about the importance of battery recycling
  • mobile phone recycling
  • paper, cardboard, toners, plastics, glass, aluminium, liquid paperboard, and steel container recycling systems
  • excess electronic equipment donations to the not-for-profit organisation Computerbank. bankmecu pays a small fee to have this organisation collect the equipment
  • Computerbank then either recommissions the equipment, offering it to disadvantaged groups/communities where appropriate, or disposes of it in a responsible way
  • awareness emails informing staff about what can and can’t be recycled; and the impacts of using bottled water

Supply chain management system

EMS target: For all new partnerships to be assessed against environmental and social criteria by June 2012.

bankmecu developed a supply chain management system as an outcome of implementing an Environmental Management System (EMS) in 2010/11.

bankmecu recognises the supply chain as a challenging area in terms of utilising products for business purposes with minimal environmental and social impact, while balancing budgetary and contractual constraints.

bankmecu made a commitment to develop a supply chain management system as an outcome of implementing our EMS. In 2010/11 bankmecu revised the Procurement Policy and Procedure to include specified sustainability criteria when engaging potential new suppliers. Where the Procurement Policy requires due diligence, a supplier will now be assessed for sustainability performance in any Request for Proposal (RFP) questionnaire by a minimum of two people using an internal evaluation form.

The RFP questionnaire requires the supplier to respond to various questions related to three key areas:

  • Profile and Governance
  • Capacity and Continuity
  • Environmental and Social Impact

Scores are based on how well the respondents answer the questions. Points to note include:

  • our major environmental supply chain impacts are linked to the use of office equipment and supplies, printed materials and service centre refurbishments
  • the supply chain management system saw two large tenders assessed against a formal sustainability questionnaire when engaging new suppliers in 2012/13
  • we recognise there is more work to be done in terms of engaging and influencing smaller suppliers

Paper

Printers and photocopiers

The Bank continues to upgrade printers and photocopiers with duplexing capabilities.

Equally, we continue to expand the use of scanning and other electronic processes instead of paper. We are also encouraging Cuscal to move away from faxes to email or online portals for a number of direct entry and chequing/follow-up processing.

General office paper

In 2012/13 bankmecu purchased 3,885 (2011/12: 3,965) reams of paper for office use, equating to 1,942,500 (2011/12: 1,982,500) sheets in total or 6,386 (2011/12: 6,687) sheets per employee or 13 reams per employee (2012/12: 13). Paper usage decreased 2.02% compared to 2011/12.

Of purchased paper, 7.08% had 100% recycled content, 92.10% had 80% recycled content and 0.82% had 10% recycled content.

Total paper sheets used by bankmecu for office purposes

Printed material

All printed material supplied through our print contractor is printed on either ENVI 50/50 or Revive paper.

Disclosure documents, letterhead and anything else that is non-glossy is printed on ENVI 50/50. For brochures and most other marketing material Vega press uses Revive. Revive is a paper made from 100 per cent recycled fibre, is FSC recycled certified and carbon neutral certified.

During the year print supply changed to Print Media Group.

Minimising paper sent to customers

Customer statements are printed double-sided. In 2012/13 we continued to encourage customers to use electronic banking and the option for electronic statements rather than paper copies. The customer newsletter is only distributed electronically.

We also encourage customers to read the Product Disclosure Statements and other product and service information in electronic form rather than hard copy.

Key statistics:

  • Hard copy letters and inserts sent to customers – 955,119, down 1 per cent from 2011/12
  • Hard copy statements sent to customers – 1,798,983, down 9 per cent from 2011/12
  • Sheets of paper per customer – 21.96, down 3 per cent from 2011/12
  • Total paper sent to customers decreased 6 per cent from 2011/12
  • The decrease in paper sent to customers is attributed to an increasing number of customers subscribing to electronic statements (increase of 15%) and receiving their statements via internet banking
  • The number of customers overall has also decreased by 3 per cent through our close dormancy program (a program to close accounts no longer in use)

Payment of contracts

bankmecu actively monitors methods of payment. We are continuing to reduce paper waste by using Electronic Funds Transfer (EFT) where possible to make payments to creditors, rather than by cheque. We will continue to monitor and increase the use of EFT over cheque method where possible.

Payments by EFT

% of Total payments made via EFT to: 2012/13 2011/12 2010/11 2009/10 2008/09 2007/08 2006/07 Difference b/w 2011/12 & 2012/13
Creditors 77.50% 74.41% 73.52% 73.45% 69.26% 65.00% 40.00% 4.14%
Invoices 82.41% 78.03% 77.10% 73.32% 68.77% 63.00% 33.00% 5.60%

Creditors are suppliers the Bank pays via EFT, as opposed to cheque, as a per cent of all active creditors.

Invoices include the per cent paid via EFT, as opposed to cheque. The Bank can have several invoices a month for one particular creditor/supplier.

Stationery

In 2012/13 65.02 per cent (2011/12, 52.93 per cent) of stationery purchases had a recycled content, an increase of 22.84 per cent from 2011/12. The increase is due to a rise in service centres using more recycled content products following conversion to a preferred product list across all service centres.

We will continue to work with supplier Office Max to increase the percentage of Australian-made products with low environmental impact supplied, where it is financially feasible to do so.

Refurbishments

bankmecu recognises the potential efficiency savings and responsible resource use opportunities for any building works undertaken across service centres, by incorporating environmental and social considerations.

During 2012/13, we refitted and refurbished the Kew Head Office and service centre using sustainable design practices and materials wherever possible.

Examples of environmental considerations

Item Environmental consideration
Carpets All carpet laid throughout the premises was made of post consumer recycled content (material from products / packaging used and recycled by consumers).
Floors All floors were made from renewable materials with no volatile organic compounds (VOCs) and with natural antibacterial qualities.
Walls Eco Panel divider walls were made of recycled plastic.
Timber All timber used was eco-ply from sustainable forests.
Joinery All joinery was made of ‘eco-ply’ plywood, which is made from off-cuts from sustainable plantation grown timber.
Glue All glue used was low in volatile organic compounds (VOCs), which means reduced impact on the environment and human health.
Paints All paints were water-based and low in VOCs.
Furniture All loose furniture was either recycled or recyclable with a green star rating.
Lighting Energy efficient lighting.
Seating Re-upholstered and re-used existing chairs.
Contractors Locally sourced.
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