TSB says lending outside Taranaki helped lift annual net profit

TSB is banking on its brand.

TSB Bank lifted annual net profit 11.9% and says that shows it's delivering on its strategy to become a national bank and that the majority of its lending is now outside its Taranaki home base.

Net profit for the year ended March rose to $51.9 million from $46.3m the previous year.

“These growth results meet our expectation to provide a customer-first banking experience to all of New Zealand,” acting managing director Murray Bain says in a statement.

“We’ve grown to be the seventh-largest bank in the country and are proud to report that even in a difficult economic climate, our residential lending led our growth at nearly 2.5 times market,” Mr Bain says.

TSB’s disclosure statement shows its mortgage book reached $4.37 billion at March 31, up from $3.83 billion a year earlier.

That’s 14% growth for TSB compared with total growth in mortgage lending by registered banks of 5.8%, based on Reserve Bank figures, putting TSB’s share of the market at 1.8%, up from 1.6% a year ago.

The growth did reduce TSB’s capital ratios a little but they remain strong at 14.28% for both the tier one and total capital ratios, well above the Reserve Bank-required minimum of 6% and 8% respectively, with a 6.28% buffer, well above the minimum of 6.28%.

Strong deposit growth
TSB says its deposits rose 9.5% in the year to $6.7 billion.

“Such a strong result for the bank is particularly positive when taken into consideration with some of the significant changes we faced last year,” Mr Bain says.

“The bank launched its new brand in October and, following that success, the bank’s chief executive of nine years, Kevin Murphy, announced his retirement. Externally, there was a change of government and some uncertainty in the economic climate,” he says.

The new brand, responding to research of customers and New Zealanders, has increased brand awareness “by a significant 6.6% across New Zealand.”

The campaign entitled “Life changes. We’ll be there” won two Gold Ingots at the Midas Awards in early 2018, the bank says.

“As we continue to grow across the country, it is essential that our customers still feel they’re receiving the first-class service we promise,” Mr Bain says, adding that such awards “provide fantastic recognition that this is the case and that we are continuing to lead the industry when it comes to putting our customers first.”