Laboratories Credit Union Limited


Read the latest report from Scott Martin, LCU's current Chairman

About our Chairman: Scott Martin 

  • Scott has been Chairman of the Board since 2017
  • A Director since 2012
  • And holds BSc Hons PhD GAICD FAIP 


On behalf of the Board, I am pleased to present to Members the 2018 Annual Report for Laboratories Credit Union Limited in our 64th year.

Financial and Operating Performance

2018 has been another year of very healthy growth and pleasing financial performance in all areas: 

  • Reflecting another year of careful cost control, LCU achieved a net interest margin (the average difference between lending and borrowing rates) of 1.95%, which compares to 1.97% in 2017, and an industry average of 2.5%
  • Despite keeping LCU fees and charges at sector-leading low levels, our 64th consecutive pre-tax surplus was both pleasing and on-target at $1,040,704, compared with $1,123,632 in 2017.  This surplus grows LCU member total capital to $13.1 million, and generating a healthy Return on Assets of 0.42% (similar to 2017’s 0.47%);
  • Our critical financial resilience metrics remain within our target comfort zones and well in excess of prudential requirements: Capital Adequacy was 16.2% (cf 16.54% 2017) and Minimum Liquid Holdings 16.16% (cf 18.85% 2017).
  • After the unusually strong loan growth experienced in 2017, this year we have achieved more normal level of loan growth of 6.1%, which combined with 5.7% deposit growth.

These excellent financial results rest on long-established foundations.  Prudent and frugal operations lie at the core of LCU’s ability to offer industry-leading value and still return earnings to boost capital. LCU’s cost base is improved by having a single branch, by having efficient and engaged staff cross-trained over multiple functions and through the effective use of technology. However, the inexorable cost of technology is a factor that LCU will always be exposed to as one of the smallest players in the prudential sector.

In summary, LCU has delivered another excellent result from strong financial fundamentals, which place us well entering the 2019 year.

Member Services and Marketing

2018 has been another year of strong member service performance, reflecting our focus on friendly personalized service, innovation in our service offer, and planning for the future needs of our evolving membership.

Consistent with our CSIRO roots, LCU has aimed to be at the forefront of technological developments for members and has been amongst the first to offer ApplePay, AndroidPay and, more recently, Osko, Australia’s new almost instantaneous payments platform.  In 2017 we undertook a project to migrate the hosting of LCU’s core banking system to an alternate supplier – one that offers more longevity (more credit unions are using it) as well as lower costs. The migration placed significant demands on staff for many months (testing and validating) and I commend them for delivering the upgrade without any inconvenience to members.

LCU has also revamped our car loan product offer, which has led to a pleasing uptick in loans.

In line with LCU’s member-centred approach, Your Financial Wellness has been released to members as a powerful aid to help members understand their current and future financial positions.

The team at LCU is committed to spreading the footprint of the credit union and had led and participated in a diverse set of professional, community and member events and initiatives in the 2018 year. A key example was hosting the Riverside Business Chamber networking event in February in addition to several organisation-specific events in the Riverside Corporate Park.

Our connection with CSIRO and NMI was vibrantly supported via sponsorship of events, scholarships and amenities across sites, and as a CSIRO employee, myself, I can attest to how LCU’s local support is appreciated by staff. For example, LCU contributed to the purchase of some new gym equipment at the Lindfield site, which is giving a substantial boost to site vibrancy.

LCU’s campaign to 18-35-year-old members was reinvigorated under a program with Natural Mind Concepts working with staff. We’ve already seen an uptick in membership in this demographic linked to additional deposits more than $800k.

Economic Landscape

Smaller, non-diversified financial institutions historically experience an operational squeeze during times of low interest rates – it’s simply harder to maintain the net interest margin. When interest rates were reducing some years ago, our strategy was to tighten the belt on spending and weather the coming lean time. None of us expected it to last this long! The previous and current senior management of LCU are to be congratulated in not only weathering this transition but having established an operating configuration in which LCU not only survives, but thrives during low interest periods. Our 2018 figures are strong despite not a single official RBA interest rate change in the year.

System-Wide Machinations

I don’t intend to say much about the Royal Commission, suffice to say that thus far it has shone a positive light on the customer-owned banking sector as a real alternative to the large banks. Notwithstanding the disgust of customers of big banks to the public revelations there has yet to be a substantial exodus and is, perhaps, indicative of the populace indifference to banking, which is I believe partially responsible for enabling the poor business practices in the first place.  

Compliance and Regulation

Compliance and regulation are aspects of LCU’s operation that should not be apparent to the member, but from a board perspective, they are arguably our highest demands on time and effort.  In this context, I would like to acknowledge Joanne O’Donnell for her work establishing the TriLine Risk Management System at LCU, ably supported by management and staff. This marks a significant evolution for LCU from a landscape of manual spreadsheets to an integrated system across the organization, making welcomed efficiencies!

In contrast to the past couple of years, APRA has alleviated some of the investor lending constraints for mutuals. This is a welcome development and one that we interpret as an acknowledgement of the lower actual risks in the system from the mutual sector. However, LCU business-as-usual was not constrained by APRA’s previous limits so, equally, their removal confers no immediate benefit.


It was my great pleasure to present LCU Tertiary Scholarships for 2018 to recipients Dibyendu Roy, Alice Warrington, Annika Rees, Ethan Kalms, Amy Bendixsen, Sabrina Colatosti, Maya Robertson, Alex Wieringa, Brett Whittard, Tafyd Love, Lachlan Sinclair and Jaqueline Albert. LCU's tertiary scholarship scheme was instigated by former director Don Pendergast, who attended the luncheon ceremony, which remains an event central to LCU's bond.

Since the inception of the CSIRO Alumni Scholarship in Physics in 2015, LCU has been the major sponsor, in the memory of Drs Gerry Haddad, Tony Farmer, John Dunlop and Don Price. As an ex-colleague of these fine gentlemen at CSIRO Lindfield I am particularly proud of the support LCU provides to this prestigious award. LCU directors Dr Tony Murphy and Dr Anita Andrew and former director Dr Warren King are members of the selection panel for the scholarship.

This year, the scholarship was awarded to Naomi Paxton from QUT. In a truly invigorating ceremony, Professor Michelle Simmons, Australian of the Year, congratulated Naomi via recorded video[1] and CSIRO’s Dr Martin Cole made the presentation in person. Naomi presented an overview of the research she will undertake in the bio-fabrication for repair and replacement of human tissues. 

Board and Staff

I would like to thank my fellow Directors, Anita Andrew (Deputy Chair and Chair of the Board Risk Committee), Frank Benito de Valle, Tony Murphy, Allison Smart, Peter Steele, John Stephens (Chair of the Board Audit Committee)  and Paul Swan for their valuable contribution to the governance of LCU over the past year. I would also like to thank our Associate Director Amber O’Connell, who attends Board meetings by invitation and provides invaluable service and views to the Board – Amber has made unprecedented contributions to the strategic planning activities of the Board and governance.

This year we farewelled Kieran Greene from LCU’s Board of Directors.  Kieran served as director since 2000 and as Chairman between 2006 and 2009. We marked the occasion with a wonderful dinner during which appreciation for Kieran’s attributes as a gentleman and a director resounded around a packed room. On behalf of LCU, I gratefully acknowledge and thank Kieran for his years of service; particular, his dignity, integrity and generous votes of gratitude towards others over the years. His positive influences on board culture and respectful discourse have set a precedent for decades to come.

The Board gratefully acknowledges the friendly service and commitment of our staff Leanne Harris, Eileen Thoms, Lyn Slatter, Kerrie Griffiths, Rhonda Hatton, Susanne Tran-Lowder, Nalini Mannie, Deepthi Satheesan, Matthew Thoms, Joanne O’Donnell and Betty Ho. Personal service and member value are the cornerstones of LCU’s success. We wish a successful and happy future for Dee, who left LCU this year to pursue a career closer to her new home on the central coast. From a personal perspective, it has been a pleasure collaborating in joint events in my role at CSIRO.

Looking Forward 

Last year, in this section I listed the Risk Management System, the Osko payment system, involvement in SocietyOne, APRA CET1 capital approval and LCU’s participation in the loan sharing scheme and coming developments. It is wonderful to be able to say that all of those exciting initiatives have come to pass and I commend management and staff for their dedication to LCU. It is testament to the able and committed leadership of Leanne Harris that LCU has been able to complete so many challenging projects in addition to business as usual and maintaining LCU’s exemplary hallmark customer service. 

Except for the launch of a new mobile banking app, there are no other significant IT projects in 2019. So much has been undertaken and accomplished in this area in the past two to three years that we now find LCU in a position well prepared for years to come.

In its entire 64-year history, LCU has returned a surplus and today LCU has a solid model for sustained business even under low official interest rates. Our banking and operating systems are recently upgraded. I have strong confidence for LCU in coming years. One persisting concern (for the entire sector) is attracting younger members by offering a relevant and appealing proposition – not only in financial services, but being able to capitalise on the resurgence in authenticity and social responsibility. In many ways, that’s where mutuals originated – we are akin to craft-banking or artisan-banking – we (collectively) face the challenge of how to get the message out there! LCU’s sustained strength can be attributed to members’ enthusiasm to promote and recommend LCU to friends and family – it is a powerful channel. On behalf of LCU, I thank all members for advancing our mutual cause and implore you to keep up the great work!

Scott Martin
Chairman 19 September 2018


[1] Michelle Simmons video link: More about Naomi Paxton: