30 May 2014

Solid Energy bonds drag on TSB profit

6:52 am on 30 May 2014

TSB Bank's annual net profit has fallen 5.8 percent thanks to the haircut it took last year on its holdings of Solid Energy bonds.

Central New Plymouth looking to Mt Taranaki from the sea.

Central New Plymouth looking to Mt Taranaki from the sea. Photo: PHOTO NZ

Its profit for the year ended March fell to $50 million after it wrote off nearly $13.8 million from the value of its near-$54 million investment in the Solid Energy bonds.

Chief executive Kevin Murphy said that without the write-off, his bank would have recorded a record profit.

"The bank is still continuing to grow and getting good growth targets right across the country in terms of growing our client base," Mr Murphy said.

"We are obviously looking to diversify our product offerings as well, particularly around in the lending space, where we've managed to gain some traction in the agribusiness sector.

"We've gained significant growth, albeit off a small base, in terms of that portfolio."

Such moves were part of an overall diversification plan for the bank's loan book, which had traditionally been residential.

The bank was looking to rebalance that and had made inroads; two years ago residential lending accounted for 90 percent of its loans but that had fallen to 84 percent.

Half the bank's business was with local clients, while the other half was from outside Taranaki, Mr Murphy said.