Record profit for 148-year-old NBS

Nelson Building Society has announced a before-tax profit of $2.12 million, the highest in its 148-year history.

The country's oldest building society showed the value of sticking to the home mortgage market and a prudent lending policy to almost double the $1.14m it made in 2009.

Its after-tax surplus jumped from $754,450 last year to $1.47m in the year ending in March, and total assets rose from $248m to $273m.

Borrowings were up $25m to $255m, while advances increased by $26m to $219m.

General manager Ken Beams said the board was thrilled with the result given the turbulent economic conditions. It showed there was still a place for a locally-owned institution with a strong community focus.

While the financial sector over past 12 to 18 months was littered with organisations that had either failed, merged or were in moratorium, "we're still here and doing very well".

NBS had stuck to being a first mortgage residential lender, which made up 86 per cent of its portfolio, had maintained tight control on overhead costs and had benefited from steady interest rates over the past 12 months as it dealt mainly in two-year fixed mortgages, he said.

"We do the basics and we do them well, and we've got good staff who deliver customer service."

This conservative approach meant it still had the capacity to keep growing strongly without increasing staff, even if financial times remained tough, Mr Beams said. In 10 years, NBS had more than quadrupled its asset base.

Despite moves to form a "heartland bank" through mergers, and Southland Building Society's intention to become a national player, the NBS board was content to remain local for now, he said.

The annual report confirms that while NBS will prepare an application to rejoin the Government's deposit guarantee scheme, it is unlikely to do so because it believes it is a low-risk organisation and the financial crisis is largely over.

It supports the introduction of new Reserve Bank regulations strengthening capital ratios and anti-money laundering rules, saying they will provide even greater protection for clients.

The annual accounts show interest income in the past year fell from $22.15m in 2009 to $19.23m but was more than offset by lower payouts on term and call deposits and other borrowing, which fell from $16.59m to $12.52m.

NBS didn't escape completely from the financial fallout, with bad debts written off rising from just over $276,100 in 2009 to almost $760,000. However there has been a drop in new provisions made from $844,500 to just over $303,000.

The report also reveals NBS paid out almost $229,000 in sponsorship compared with $182,600 last year.

Directors' fees were held at $95,000, while Paul Bell and Garry Dayman will be re-elected to the board when the annual meeting is held at the Theatre Royal on July 7.

- © Fairfax NZ News