Auckland move lucrative for SBS
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 that growth in 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 to take advantage of opportunities in the largest growth area in the country, he said.
The bank had about $2.5 billion of New Zealand-wide mortgages on its books, which had provided a 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 venture into the Auckland market but now says it was a good business move for the bank, which would now increase its resources in Auckland to see more growth.
SBS Bank would 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.
"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 - all the banks were scrapping for business and it was harder 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.
"While it has been a very competitive market, SBS has again showed it has the resources to actively compete in the market against the larger foreign-owned banks and build further on its past success," he said.
The profit result came at the same time as the creation of a centralised lending team, and the launch of SBS's upgraded personal internet banking service.
"The emphasis SBS Bank put on building relationships with its members, through a greater range of products and increased branding along with a dedicated team of staff, has resulted in a near-record profit."
Smith, who will be stepping down as chief executive at the end of July 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