SBS Bank successes highlighted at AGM

MEDIA RELEASE

30 July 2009

SBS Bank successes highlighted at AGM

SBS Bank marked a year of success and stability at its annual general meeting last night.

Chief executive Ross Smith and chairman Acton Smith reiterated that, while SBS Bank’s result for the 2009 financial year may not be a record, it was one of which they could be justly proud in the current economic downturn.

Ross Smith said SBS Bank’s group operating surplus, at $22 million, was ahead of last year’s result of $21 million and, although the net surplus after tax and after adjusting for the fair valuing of financial instruments was down $2 million to $12 million, it was still a very healthy result.

“But I don’t mean to underplay the impact of the recession on our performance. We certainly have not been immune and, in fact, incurred bad debt write-offs and provisioning in excess of levels I am comfortable with. When compared to many of our contemporaries, our conservative approach to growth and prudent management of our businesses has stood us in good stead,” Mr Smith said.

In addition to SBS Bank’s traditional core banking business, its three trading subsidiaries Funds Administration NZ Limited (FANZ), Southsure Assurance and Finance Now Limited (FNL) all recorded notable performances, contributing a combined $6.7 million to the pre-tax operating surplus.

“The highlight of the year was gaining bank registration – like the Mainland cheese advertisement ‘good things take time.’

“It was particularly pleasing to achieve bank registration without changing our mutual, member-owned structure as this allowed SBS Bank to ensure the continued protection of members’ assets.

“It is fair to say SBS Bank is in great heart, in a great place and has a great future.”

The main objective of SBS Bank in the coming year would be to consolidate its position as a small mutual, strengthen its balance sheet, protect the business, look after its members and ride out the recession, Mr Smith said.

“With over $2.5 billion in assets, over $200 million in capital and a fantastic group of people working at SBS Bank I can see no reason why we won’t be around for another 140 years.

“If consolidation opportunities arise, we will continue to look at them, but they will need to be in our best interests.”

SBS Bank chairman Acton Smith said it had been an extraordinary year for the member-owned building society.

“Not only did we achieve bank registration, SBS Bank traded through an official recession now causing unemployment to rise rapidly, whilst New Zealand interest rates declined at faster rates than we have ever witnessed before.

“The outcome of all the chaos is quite simply that there is now no such thing as ‘business as usual.’ Our business environment has irrevocably changed. Risky lending is out - greater or enhanced security is in. New regulations for banking are being written right now and the new conservative age we are entering is a perfect match for the underlying risk-averse business philosophy of SBS Bank.”

Mr Smith said SBS Bank had a strong capital base, excellent liquidity and was in a position to help rationalise the building society sector.

“Yes we will continue to be challenged by bad debts and profits will be constrained but, in my opinion, SBS Bank has never been stronger, more respected, more meaningful to our members and at 140-years-old, the old girl is ready to fly!”

ENDS

© Scoop Media