CBS Canterbury looks to bonus share issue before proposed bank merger

Monday 14th June 2010

CBS Canterbury, one of the building societies looking at joining Marac in forming a South Island bank, turned a profit in its latest financial year, though it did so in spite of a slump in revenue.

The firm made a $1.9 million profit in the 12 months ended March 31, compared to a $3.5 million loss a year earlier, though revenue slumped some 37% to $32.8 million. In lieu of a cash dividend to shareholders, the NZX-listed company will make a one-for-40 bonus share issue.

"While below desired levels long term, (it) is still very positive given market conditions," said chairman Gary Leech in a statement. "This work has positioned CBS Canterbury to not only be one of the most ‘bank-like' of the non-bank sector, but also enabled CBS Canterbury to be a leader in industry consolidation having already completed two mergers with SMC Building Society and Loan and Building Society."

Earlier this month, CBS joined Marac and South Cross Building Society in signing a memorandum of understanding to investigate a merger to create the country's only locally-owned listed bank. The prospect has piqued investors' interest, and ratings agency Standard & Poor's has come out and said that the proposed entity has the potential to attract the required investment grade rating.

The bank aspirant's total assets dropped to $540.8 million over the period from $549.6 million a year ago, while deposits slipped to $486.3 million from $493.2 million.

Though CBS has some $284 million, or 58%, worth of its deposits maturing in the six months from March 31, which goes out to when the government's initial retail deposit guarantee expires, the profile has not changed much from a year ago. CBS was also successful in its application to the government's extended guarantee.

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