SBS Bank showed yesterday it has not been immune from potential losses associated with the Christchurch earthquakes.
SBS chief executive Ross Smith said the Invercargill-based bank reported solid profit for the year ended March, despite allowing $3.55 million for potential losses in relation to the Christchurch earthquakes.
The bank's operating profit fell 10.7% to $17.3 million in the period - which included the extra provisioning - from $19.4 million in the previous corresponding period.
The profit after tax fell 5.2% to $14.3 million from $15.04 million in the pcp. The after-tax profit was helped by a $5.1 million gain from financial instruments designated at fair value.
SBS was now allowing more than $17 million for credit impairment, up from $15.8 million last year and just $3.7 million in 2007.
Mr Smith said SBS might have over-provisioned for Christchurch but the bank had taken a conservative approach.
During the reporting period, the bank had successfully completed a merger, and had grown the business, something which was a testament to the strength of the SBS model.
"Results like these during an extended global financial crisis are why we remain resolute about retaining our status as a New Zealand bank that is owned by its customers."
A key highlight for Mr Smith was the success of the merger with the Hastings Building Society, with 98% of society members voting in favour of joining forces with SBS.
"While it is still early days, we are very pleased with the progress made to date. We have been able to launch an expanded range of everyday banking products services under the local brand of HBS Bank."
The bank's accounts showed that operating expenses rose $4 million in the period to $47.6 million.
Mr Smith said about $1 million of that was the cost of the merger and the rest was the six months of operating costs of HBS.
Other highlights included growth in retail funding for the year of $210 million (9.3%) that had enabled SBS to retain healthy liquidity ratios, well above Reserve Bank minimum, he said.
SBS increased loan advances under management by $125 million to $2.6 billion and produced an increase in total assets of $186 million (7%) to $2.8 billion. Operating cash flow stayed strong at $25.3 million in the period.
At a glance
2011 ($000) / 2010 ($000) / change (%)
Income: 81,919 / 78,174 / 4.8
PBT: 17,308 / 19,379 / (10.7)
PAT: 14,250 / 15,037 / (5.2)
Equity: 202,040 / 177,664 / 13.7
