by Jenny Ruth
Its bottom line profit rebounded strongly, although the bank says underlying profitability was flat.
The bank's September quarter general disclosure statement (GDS) shows second quarter net profit more than doubled to $5.36 million from $2.64 million in the year-earlier second quarter. That followed a 55% slump in first quarter profit which the bank had attributed to its decision not to pass on rising wholesale interest rates to its customers.
Net profit for the six months ended September was up 11.6% to $6.98 million.
The second quarter improvement reflected a 6% improvement in net interest income while charges against profit for bad loans nearly halved to $2.19 million from $4 million in the second quarter last year. It also reflected a $2.28 million gain from revaluing SBS's fixed-rate loans to reflect interest rate changes compared with a $152,000 loss in the September quarter last year.
Chief executive Ross Smith says the underlying result was flat. Even so, he says the result was "extremely satisfying considering the demanding financial environment experienced by banking and financial institutions over the past two years."
During the three months, SBS acquired $3.5 million in assets from enforcing its security. "These assets are held as investment properties," the accounts say.
SBS's mortgage book grew by $5.77 million to $1.72 billion during the three months ended September after shrinking by $3.75 million in the June quarter. That means its share of mortgages written by registered banks eased to about 1.07% (exact figures won't be available until TSB Bank lodges its September quarter GDS) from 1.08% at June 30.
Mortgages with loan-to-valuation ratios (LVRs) 80% or below accounted for 77.6% of SBS's mortgage book at September 30, up slightly from 77.2% three months earlier. Those with LVRs above 90% were steady at 18.2% of the mortgage book and the government guaranteed Welcome Home Loans accounted for 79% of those loans.
SBS, which had $2.57 billion in total assets at September 30, took over fellow co-operative Hastings Building Society, which had about $185 million in assets, on October 1 - no money changed hands with HBS member becoming SBS members.
Smith says SBS's objective this year is to further consolidate its position as a mutual society - it is owned by its customers.
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