SBS finance general manager Tim Loan said in an interview Christchurch made up between 20% and 22% of the bank's loan book.
The bank had provisioned $3.55 million for loan impairment in its financial accounts, which were released yesterday, but Mr Loan said he felt the provisioning had been too large.
SBS had calculated it had between 150 and 170 houses in the "red zone", the extent of which was announced last week by the Government.
"Those ones will probably get paid out by the Government. A lot of them are already in the Government-based 'Welcome Home' loan scheme."
The Welcome Home scheme was for first-home buyers.
Prices for undamaged properties in Christchurch were soaring and many SBS clients moving out of the red zone were unlikely to be able to afford to buy again in Christchurch as prices rose, Mr Loan said.
Rentals had also gone up significantly.
SBS had not provisioned for the Government offer to buy the properties nor for the prospect property values would rise so significantly in the undamaged areas.
SBS chief executive Ross Smith said the Christchurch situation was a "moving target" for the bank. With so much happening, it was a case of waiting for and reacting to Government announcements.
While the red zone, with about 5000 damaged homes, had been identified, the "orange zone" had up to 15,000 houses in it and decisions still had to be made about their future.
"We have to make constant decisions to be in a position to react appropriately and look after our clients."
These were difficult times for anyone in the banking industry, he said.
In mid-2010, just when it appeared the recessionary times were over, "Mother Nature" had her say, with several devastating disasters across the country, dampening the economy and delaying the recovery, he saidMr Loan said the SBS quake recovery team was working daily with clients, dealing mainly with mortgage holidays for those who were most affected.
Some of the work involved sorting out sale and purchase agreements signed both before and after the September quake.
"Initially, the mortgage holidays were for three months but, in the context of Christchurch, three months is nothing."
SBS was considering how best to assist those clients.
During the past weeks it had been in contact with clients in the red zone who had wanted to chat about their options, including relocation.
SBS remained committed to Christchurch, as it was an important market, he said. However, SBS realised in the short term its growth would have to come from other parts of New Zealand.
One of its four Christchurch branches had closed but, looking ahead, SBS saw growth opportunities in the city.
"We tend to be helping people into their first homes. Residential lending is the place we want to be, but a lot of rebuilding has to go on first," Mr Loan said.
