Public Trust improves its market position

21 March 2011
For immediate release

Public Trust improves its market position

Public Trust’s un-audited interim results for the six months to 31 December 2010 have today been released, reporting a $0.4 million profit after tax, $0.9 million ahead of budget.

The result reflects an increase in operating surplus against budget, closely managed operating expenses and lower mortgage provisions. Fee and commission revenue continued to grow as a percentage of total revenue, increasing to 63.9% compared to 61.1% for the same period in 2009.

“We are pleased to report a result ahead of forecast in a challenging economic environment,” Public Trust Chief Executive Grenville Gaskell said.

“We are seeing an increase in market share in key customer segments and have maintained high satisfaction levels. Our strategy to become a more customer centric organisation is beginning to show results.”

Previously unrealised investment losses had reversed in line with expectation, with $2.5 million recognised for the period. The reversal of investment losses is forecast to continue over a number of years with the timing dependant on market conditions and the performance of underlying assets.

“The lower level reversal of investment losses, when compared to the same period in 2009, had a significant impact on the overall profit after tax for the period. This was also impacted by the expected reduction in Common Fund revenue which decreased by 11.0% as a result of a planned change in investment risk position and increased competition for retail deposits,” said Mr Gaskell.

Public Trust continues to progress the reshaping of its mortgage portfolio. Moving the portfolio to a lower risk position, with a focus on residential lending, has resulted in a 10.6% reduction of the portfolio during the period. The recent implementation of a broker channel and ongoing development of internal capability is expected to help offset the current reduction.

Commenting on recent and pending regulatory change, Mr Gaskell said, “The high level of regulatory change presents both opportunities for the business as well as challenges. We continue to manage these changes to ensure compliance while maximising competitive positioning.

“We fully support the steps being taken to improve the quality of advice available to New Zealanders through changes such as the Financial Advisers Act and are actively training employees to comply with the reforms.”

The commercial transformation of Public Trust continues to deliver results through the development of people capability, system enhancements and the introduction of new products and services.

“We have a programme of initiatives planned for delivery in the second half of the financial year. Included in these is a new customer investment product range designed to cater to investors’ needs via tailored service levels. Some of the other initiatives may be impacted by the need to re-establish services including new premises following the 22 February earthquake in Christchurch . Public Trust has extensive business operations based in Christchurch and a significant programme of work to support our people and customers and fully restore capability is in progress. A full business assessment in underway and there is potential for a significant impact on the full year result.

“Our strategies to deliver an enhanced customer experience continue to be implemented as we work to build a stronger, financially sustainable trustee business for all New Zealanders,” said Mr Gaskell.

“The extent of the loss of loved ones and devastation of the latest earthquake in Christchurch has affected us all deeply. Our thoughts are with our people, our customers and all of Christchurch and the wider community as they cope with a disaster of a level we hoped would never happen,” said Mr Gaskell. “Our primary concern has been for the safety and welfare of our employees, their families and our customers. Our focus is on supporting all those affected as they work to rebuild their lives and livelihoods once again.”
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