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SBS grows lending book, but with less aggression

SBS Bank chief executive Shaun Drylie explains the banks latest profit result, what it's doing with mortgage advisers and his thoughts on the current state of the housing market.

Tuesday, May 29th 2018, 2:25PM

SBS Bank is reporting a solid financial result for the financial year ending March 31, with an operating surplus of $35 million.

This is marginally down on the previous year due to the acquisition costs of the Warehouse Group Financial Services.

Chief executive Shaun Drylie says if this acquisition and integration costs are taken out the bank would have been “a few million dollars” ahead of last year.

He says the bank’s growth was “balanced” with lending and funding growth running at 11% each.

Total lending was up $388 million on the previous year, and retail funding growth, up $337 million. 

SBS has managed to grow its lending book at above system growth, while not being as aggressive on pricing as it has been in the past.

“As the home loan market heated up other banks were a lot more aggressive,” he said.

SBS was willing to lend to investors, first home buyers and owner occupiers, but wanted good quality deals with good margins.

He says in the previous year the bank has been aggressive on pricing, now it was not trying to shoot the lights out, rather it aimed to have better than average pricing all the time.

The bank’s residential lending has been strong in the heartland areas of New Zealand, rather than Auckland – a market it has been focussed on in recent years.

Drylie says mortgage advisers play a strong role in distribution and account for between 45-55% of home loans written.

He says advisers particularly like SBS’s Welcome Home Loan offer.

SBS was looking at broker remuneration, particularly volume bonuses.

Drylie expects credit growth to sit around the 3% mark going forward. The expectation is that Auckland house prices will be “reasonably static”, but the regions would have stronger growth.

“We don’t see any significant correction in the property market.”

“While SBS Bank has been a key contributor, with continued growth in both residential lending and retail deposits, this also reflects strong performance across the entire SBS Group, including subsidiaries Finance Now, FANZ and Southsure.”

SBS Bank’s total capital ratio has increased across the year to 12.8% and remains well above the regulatory minimum (8%), despite the costs incurred for the acquisition of Warehouse Group Financial Services.

Drylie says SBS has been following the Royal Commission in Australia but didn’t see a need for one in New Zealand.

He said local banks “welcome further oversight” from the regulators and he expects the bank to adopt recommendations made in reports from other jurisdications.

Tags: SBS Shaun Drylie

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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