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Canterbury Building Society posts loss, rallies support for merger

Wednesday 17th November 2010

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Canterbury Building Society posted a first-half loss, on one-time costs for merger deliberations, funding changes and tax, and urged shareholders to support its tie-up with Marac and Southern Cross Building Society.

The only building society listed on the NZX reported a loss of $1.69 million in the six months ended September 30, from a profit of $1 million a year earlier. Revenue fell 4.4% to $17.1 million. The shares fell 1.8% to $2.75.

CBS Canterbury is in talks to create a bank by merging with Pyne Gould's Marac unit and Southern Cross, which is already being marketed as a "Heartland" bank, locally owned and listed on the NZX.

The first-half loss "clearly outlines the operational scale required in today's banking environment," said chairman Gary Leech. It "further reinforces the directors reasoning in recommending to shareholders that by far the best option for the future is to proceed with the current merger plan and its objective to obtain a banking licence."

He said the sluggish economy had put pressure on margins, while compliance costs rose. Depositor reinvestment rates continued to be between 80% and 90%, with overall deposits little changed from March 31 at $483 million.

Lending fell by $4.1 million from March 31 to $445 million, which Leech said was "an understandable and satisfactory result in the light of the flat property market nationally, the competitive behaviour of the banks, and the recent turmoil of the Canterbury earthquake."

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