Competition stiffens for PSIS after record year

Competition stiffens for PSIS after record year

by Paul McBeth

June 16 (BusinessWire) – PSIS Ltd., the mutual that evolved out of the Public Service Investment Society, is unlikely to repeat its success of 2009, with increased competition for retail deposits dampening interest rate margins.

The banking cooperative posted a record net profit of $13.1 million in the 12 months ended March 31, from a $7.9 million profit a year earlier.

The financier put its gains down to favourable interest rate margins and low loan losses of $3.2 million, or 0.3% of total assets.

Still, it doesn’t expect to repeat this success as the major lenders increase competition for longer term deposits to boost their balance sheets and comply with new central bank prudential regulations.

“We’re unlikely to match the level of profit (this year), but we will achieve a reasonable level”, chairman David Gascoigne told a media briefing in Wellington.

Net interest income rose to $49.6 million in the 2009/10 year from $35.9 million a year earlier, and boosted its loan book to $1.12 billion from $1.06 billion. Its deposits increased to $1.12 billion from $1.07 billion.

Chief executive Girol Karacaoglu said PSIS will focus on its existing members to boost its growth, and is forecasting increased earnings from these customers of about 2% to 3% a year.

The increase in its loan book and deposit base last year was a 50/50 split of new and existing clients, he said. Gascoigne said the firm is exploring how it might make returns for its 130,000 members, such as a dividend payment or more attractive lending and deposit rates in good years.

Karacaoglu said the PSIS hadn’t decided whether to apply for the government’s extension to the retail deposit guarantee scheme, having not needed to call on the initial programme, though it has qualified with a credit rating of BB+.

(BusinessWire) 18:32:23

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