SBS focus growth in Auckland

Ross Smith
Ross Smith
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 million.

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 service.

''The unit is a virtual SBS branch and now provides support to all mortgage brokers throughout New Zealand,'' Mr Smith said.

He said aside from Auckland having a third of the population, it accounted for 50%-60% of residential mortgages across the country.

''We're seeing a considerable amount of growth and activity up there.''

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 yesterday.

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 difficult.

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


- simon.hartley@odt.co.nz

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