Auckland's growth potential is the focus for
Invercargill-based SBS Bank, which has launched into the
northern market with an expanding internet banking service.
An increase in lending customers and a 5.4% operating surplus
had capped a busy year for the Invercargill-based lender, SBS
Bank chief executive Ross Smith said yesterday.
''While it remains a tough and competitive market, we have
achieved growth in our foray into the Auckland market during
the past nine months,'' Mr Smith said in an interview with
the ODT yesterday.
For the year ending March, total lending by SBS rose by $53
million, from $2.225 billion to $2.278 billion, mainly due to
increased Auckland residential lending.
While total operating income dipped from $91.5 million to
$90.8 million, SBS' operating surplus rose 5.4%, from $20.9
million to $22 million.
After-tax profit rose 9%, from $14.33 million to $15.63
Mr Smith said other highlights during the year included the
creation of the Invercargill-based centralised lending unit,
and the launch of SBS2, an upgraded personal internet banking
''The unit is a virtual SBS branch and now provides support
to all mortgage brokers throughout New Zealand,'' Mr Smith
He said aside from Auckland having a third of the population,
it accounted for 50%-60% of residential mortgages across the
''We're seeing a considerable amount of growth and activity
SBS has 16 branches in the South Island, three around Hawkes
Bay and one each in Tauranga and Hamilton. It also expected
within two years to open branches in Auckland, Mr Smith said
Of its 100,000 customers, 70% are residential mortgages and
rural and commercial lending make up about 15% each.
Mr Smith said rural lending, and in particular dairy lending
in the South, was a tough and competitive market because of
the lack of new farms and SBS rural lending limits were in
the less than $20 million bracket.
Asked about the Reserve Bank's loan to value ratio
restrictions on all banks, Mr Smith said the restrictions had
not had a big effect on SBS.
Its historical amount of lending to the higher-risk category
was less than other banks, so in having to restrict it to
less than 10% of its overall lending portfolio had not been
It was about 2%-3% of SBS' portfolio.
He said despite the Christchurch rebuild, there was less
opportunity than would be imagined in Canterbury.
People preferred to stay with their existing banks while
dealing with ongoing insurance and rebuild issues.
SBS staffing during the past year grew 10% to 450, including
six working in the new centralised lending unit, which
provides internet banking services and which is expected to
grow to up to 10 by the end of the year.
Mr Smith steps down as chief executive at the end of July
after 22 years with SBS, which included the shift from being
the Southland Building Society (established 1869) to become a
registered bank in late 2008.
SBS is scheduled to hold its annual shareholders' meeting in
Invercargill on July 23.
SBS lending by region
• 35% South of Christchurch
• 20% Christchurch
• 14% Agriculture
• 13% Rest of North Island
• 8% Upper South Island
• 4% Consumer finance
• 3% Auckland
• 3% Other lending (brokers)
SOURCE: SBS BANK