27 Jun 2012

Bad debts erode SBS profit - bank

7:34 pm on 27 June 2012

Southland-based bank SBS says that the cost of bad debts means it has posted a smaller annual profit.

SBS posted a profit of $11.8 million in the year to the end of March, a decrease of 7% compared with the previous year.

Community-owned, the bank acknowledges competition from the major Australian-owned banks has curbed growth, along with a subdued housing market.

In a mixed bag for the bank, net interest income rose by 10% to $70 million boosted by a fall in expenses.

But the amount set aside to cover potentially bad loans rose 29% to $22 million.

Loans fell 6% to $2.3 billion while deposits rose 3% to $2.6 million.

SBS strengthened its financial position, with its members' equity rising to $208 million.

Total assets edged up to $2.8 billion and its capital adequacy ratio stands at more than 14%.

SBS merged with Hawke's Bay-based HBS Building Society in 2010, and the bank has signalled that it is interested in acquisitions or tie-ups to boost its presence.