SBS yesterday reported an improved operating profit of $22.1 million for the year ended March, up slightly from the $21.3 million reported in the previous corresponding period.
Total operating income increased to $77.5 million from $71.5 million. Expenses were held steady, but the provision for credit impairment increasing more than $3 million to $12 million, keeping the operating profit lower that it could have been.
The profit after tax was $12 million, down on the $14 million in the previous reporting period, mainly due to revaluation of financial instruments to fair value following the rapid fall in interest rates.
Chief executive Ross Smith said in an interview SBS had produced a solid annual result in what had probably been the most significant year in its 140-year history.
"It is a particularly pleasing result that reflected the trust of SBS Bank members and the conservatism taken by the society in the midst of an economic crisis that continued to challenge financial institutions and redefine banking globally."
The highlight of the year was gaining bank registration, he said.
The bank registration was gained without changing SBS' mutual, member-owned structure.
The response to bank registration was instant, Mr Smith said. From October to the end of the financial year, depositors' funds grew by more than $200 million, up 400% on the same period in the previous year.
Support had always been strong in the South Island, but the bank registration meant it was easier to convince North Island clients to shift their business.
SBS had marketed itself as New Zealand-owned and that had helped business in recent years, he said.
The corresponding impact on key measures of commercial strength - capital ratio and liquidity - was significant.
SBS Bank's total assets increased to $2.54 billion and total lending climbed $68 million to $2.4 billion.
While SBS Bank had to prosper, the interest of its members and their communities would always be paramount in commercial decisions, he said.
"It is clear that this recession will be the toughest that anyone has experienced in their working lives, and SBS Bank will not be immune.
However, SBS Bank has stood the test of time and faced adversity many times in its 140 years and is well positioned to manage through the recession."
SBS' investments were all in New Zealand, with more than 96% of lending secured by mortgages over property and no exposure to bonds of the type that had crippled many banks overseas, Mr Smith said.
Despite the severe economic recession and expected challenging times ahead, SBS Bank remained in good heart.
"We are going to keep our heads down in the current circumstances. We are not out to grow the business at extreme levels. We will be doing more lending, but the lending decisions need to be the right ones.
"We will be active in the residential mortgage market - that's our bread and butter. But for new, large commercial developments, unless they are existing customers, we will be not doing that lending at this time," he said.
