Lower credit demand behind fewer loan approvals

Friday 27th May 2011

TSB Bank's loan approvals in the past financial year of $600 million were down 15% on the previous year due to lower credit demand in a slowing New Zealand economy, the bank says.

The New Zealand-owned bank today reported underlying profit, excluding accounting for changes in hedges, rose 1.5% in the year to March 31 from the same period last year.

The after-tax profit of $38.7 million was down from $51.2 million last year.

Depositors' funds increased by $418 million to a record $4.4 billion and the loan portfolio increased by $219 million to $2.6 billion.

The bank's capital adequacy ratio, a measure of financial strength, remains the highest of local retail banks at 15.78%, mostly because it sources funds domestically, particularly from deposits.

The bank is still quantifying its exposure to the earthquakes in Christchurch but said it had a relatively small market share in the earthquake-affected market.

"Allowing for the extraordinary derivative-based income that artificially inflated last year's profit, this is a solid result in what continues to be tough economic conditions for many sectors of the community," chief executive Kevin Murphy said.

TSB Bank celebrated 160 years of operation last year.

NZPA

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