Auckland pushes SBS Bank profit to $22m

NEAR-RECORD PROFIT: Ross Smith has announce a near-record profit of $22 million for SBS Bank.
NEAR-RECORD PROFIT: Ross Smith has announce a near-record profit of $22 million for SBS Bank.

SBS Bank has recorded a near-record profit of $22 million for the 2014 financial year, which has been attributed to the bank's growth in the Auckland housing market.

SBS Bank chief executive Ross Smith said growth during the past 12 months had predominantly come from the Auckland market, which largely contributed to the 5.4 per cent increase in operating surplus.

The move into the Auckland market about a year ago was designed to take advantage of opportunities in the largest growth area in the country, Smith said.

The bank had about New Zealand-wide mortgages worth about $2.5 billion on its books, which had provided the bulk of the revenue for the business.

''From a growth perspective, Auckland has been the shining light in the past 12 months and that is a reflection of the economy. This is where the bulk of the growth of house sales has been ... outside of Auckland and Christchurch, the rest of the country is just flat.''

Last year, Smith said he was cautious about the move into Auckland but now accepts it was a good business move for the bank, which will now increase its resources in Auckland in an effort to see further growth.

SBS Bank will now employ mobile managers to go out to the customers, rather than wait for them to come into the branch, he said.

''Initially an Auckland regional manager was appointed to service mortgage brokers in the Auckland area," Smith said.

"The success of this move prompted the establishment of a Centralised Lending Unit based in Invercargill. The Unit is a virtual SBS branch and now provides support to all mortgage brokers throughout New Zealand."

The Auckland market was tough and while all banks were scraping for business it was tougher for SBS being based in Invercargill. Getting its brand into the marketplace was challenging because people tended to go for a bigger brand they recognised, he said.

The profit result came at the same time as the creation of a centralised lending team, and the launch of upgraded personal internet banking service.  

Smith, who will be stepping down as CEO at the end of next month after 22 years at the helm, said he was proud to be leaving SBS in the hands of a great team and in far better shape than when he came on board in 1992.

The Southland Times