Performance Against Targets
The WATC Board sets annual performance targets for WATC. These targets form part of the Statement of Corporate Intent, which is submitted to the Minister at the start of each financial year in accordance with Section 16I(1) of the Western Australian Treasury Corporation Act 1986.
Estimated Interest Rate Savings
In order to gauge its effectiveness in providing competitively priced loan funds to clients, WATC calculates the estimated interest rate savings to clients borrowing from WATC, excluding any guarantee fees collected by WATC on behalf of the State, compared to the estimated cost to clients of borrowing in the corporate bond market.
Target: Savings > 0.00%
Outcome: Estimated interest rate savings to clients by reference bond credit rating and term to maturity were greater than 0.00%
| Term to Maturity as at 30 June 2017 (Years) | AAA | AA+ | AA | AA- |
| 1 to 2 | 0.26% | 0.37% | 0.61% | 0.59% |
| 2 to 3 | 0.34% | 0.42% | 0.65% | 0.52% |
| 3 to 4 | 0.55% | 0.63% | 0.61% | |
| 4 to 5 | 0.35% | 0.40% | 0.70% | 0.79% |
| 5 to 6 | 0.38% | 0.46% | 0.56% | |
| 6 to 7 | 0.29% | 0.56% | 0.83% | 0.46% |
| 7 to 8 | ||||
| 8 to 9 | 0.29% | 0.47% | 0.74% | 0.63% |
| 9 to 10 | 0.26% | 0.63% | 0.62% |
A blank entry in the above table means there is no reference bond available in the corporate bond market for comparative purposes.
With Standard & Poor’s and Moody’s Investors Service rating the State AA+ and Aa2 respectively, the AA+ savings category is the most accurate estimate of the interest rate savings delivered by WATC to its Western Australian public sector clients.
Target achieved. WATC continued to deliver significant interest rate savings to clients in 2016/17.
Assessment Client Satisfaction
WATC uses a range of mechanisms to continually monitor and assess client satisfaction, including independent surveys and seeking direct client feedback. As part of WATC’s advisory services quality assurance framework, following the completion of each engagement, clients are requested to provide feedback on their experience.
Target: 90% client satisfaction
Outcome: 100% of clients rated satisfied or better (with over 86% of clients rating very satisfied or extremely satisfied) with WATC’s advisory services. Key attributes rated by clients include the quality of advice provided, adding value to the client’s project, and WATC’s overall capability and service provided
Target achieved. The positive feedback received from clients provides validation that WATC continues to deliver financial solutions for the benefit of the Western Australian public sector.
Administration Cost Ratio
WATC monitors its administrative efficiency by measuring its Administration Cost Ratio. The Administration Cost Ratio is a measure of the average administrative on-cost that must be borne by WATC’s clients.
Net Administration Expense is defined as total administration expenses less non-interest revenue. Average Lending Assets is defined as the average of the opening and closing book value of loans to clients for the period.
Target: Administration Cost Ratio < 0.060%
Outcome: Administration Cost Ratio = 0.037%
Target achieved. WATC continued to deliver scale benefits to the State by keeping net administration expenses in check while average client debt funding requirements increased by 10.2 per cent over the year.
Pre-Tax Profit
Unlike private sector financial institutions, it is not the primary objective of WATC to maximise pre-tax profit, but rather to maintain an adequate profit while providing cost-effective financial products and services to the State and Western Australian public sector agencies.
Target: Profit = $21.1 million
Outcome: Profit = $17.6 million
Acceptable target range achieved.
Return on Capital
WATC operates to achieve a return on capital consistent with the risk carried within its business. The Capital Asset Pricing Model is used as the basis for the determination of a minimum return target.
Adjusted Average Capital for the Year is opening equity adjusted to take into account the timing and amount of any dividends paid to government during the year.
Target: Return = 5.2%
Outcome: Return = 15.49%
Target achieved. WATC achieved well above its target minimum return on capital for 2016/17 through its effectiveness in constraining administrative and loan-raising expenses, as well as effective hedge management of portfolio exposures.
Staff Engagement Rating
WATC strives to create an environment where employees are motivated to do their jobs to the best of their abilities. The Staff Engagement Rating for 2016/17 is based on the Aon Hewitt Best Employer Survey report. Aon Hewitt conducts this survey across a range of organisations in Australia and New Zealand (including the financial sector) which enables WATC to benchmark against ‘best employer’ standards. WATC’s goal is to achieve ‘best employer’ accreditation from Aon Hewitt.
Target: Employee Engagement Rating > 55%
Outcome: Employee Engagement Rating = 46%
WATC did not achieve its target. Work continues on the strategic approach to improve employee engagement, encouraging and developing staff self-leadership, accountability and continuous improvement aligned to WATC’s vision, objectives and values.
Future Outlook
WATC continues to work towards improving on the above results and is well placed to meet future challenges as it delivers financial solutions for the benefit of its clients and the State of Western Australia.
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