Monday 28th May 2018
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Cooperative Bank took a crack at its larger Australian rivals shipping profits across the Tasman while reporting flat annual earnings and an unchanged rebate for its customer-owners, while fellow minnow SBS Bank also talked up its local ownership while posting a small dip in profit.
The two lenders are in a different league to their Australian rivals, with the value of loans between them totalling about $6 billion, compared to $118.5 billion sitting with the nation's largest lender ANZ Bank New Zealand. However, Australia's Royal Commission into financial services has highlighted some questionable practices among the 'four pillars' (the big four banks), prompting New Zealand's Reserve Bank and Financial Markets Authority to demand they prove they're clean.
Cooperative Bank chief executive David Cunningham said the royal commission has cast some aspersions over the practices among some Australian financial institutions and talked up his firm's own capital structure, which shares profits with customers in the form of rebates.
"I believe a strong factor in Co-op's continued growth is concern about the scale of banking profits - close to $5 billion - sent offshore to Australia each year," he said in a statement. "This coupled with public recognition that, as a customer-owned bank, we exist for the benefit of our members with a strong focus on conduct and culture."
SBS Bank, which is similarly owned by its members and remains the nation's biggest building society, echoed that sentiment without making an overt reference to the drama across the Tasman.
"Our inherent focus on delivering value to our members is our absolute priority as an organisation, given that they are not only our customers but also our owners," chair John Ward said. "They can have confidence in their bank's future following another strong financial result, as well as initiatives that demonstrate our ongoing commitment to meeting changing consumer needs."
Both lenders reported flat earnings, even as their respective loan books expanded.
Wellington-based Cooperative Bank posted a 1.3 percent gain in net profit to $10.5 million in the year ended March 31. The former PSIS grew its loan book 9 percent to $2.23 billion, with an 8.5 percent increase in mortgage lending to $2.12 billion. Non-mortgage lending grew 16 percent to $177 million. Meantime, its deposits expanded 8.1 percent to $2.2 billion.
Customer rebates were unchanged at $2.1 million for its 115,000 customers.
Meantime, SBS Bank reported a 2.6 percent decline in net profit to $26.7 million in the year ended March 31, due in part to a 38 percent jump in impairment charges to $14.9 million. The bulk of that came from its recently acquired Warehouse Group Financial Services, which added $6 million of collective provisions in the year. SBS wrote off $12.6 million of bad retail debts in the year.
The Invercargill-based bank bought Warehouse's financial services unit last year for $18 million, adding to its diversification of recent years with a 50 percent stake in Staples Rodway Asset Management, and controlling stakes in Funds Administration New Zealand, Southsure Assurance and Finance Now.
SBS Bank's loan book grew 11 percent to $3.8 billion in the year, while retail depositors holding redeemable preference shares – the bulk of the bank's funding profile - grew 13 percent to $3.09 billion.
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