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TSB annual profit more than doubles

NZN 3/06/2016 Paul McBeth

TSB Bank, the Taranaki community-owned bank, more than doubled annual profit, bolstered by a gain in writing back some of the value in its debt exposure to stricken state-owned coal miner Solid Energy.

Net profit rose to $61.6 million in the 12 months ended March 31 from $25.5m a year earlier, the New Plymouth-based bank's annual report said. Net interest income increased 1.7 per cent to $127.8m as its loan book expanded 17 per cent to $3.83 billion and deposits grew 8.3 per cent to $5.81b.

The bottom line was bolstered by a $13.7m write-back in the value of its $75m Solid Energy bonds, a security the bank had previously written off completely.

That meant TSB recognised a net reversal of impairment charges of $8.7m in the year, compared to a charge of $56.1m in 2015.

"During the previous financial year we took a full write-down of our holdings in Solid Energy, given the uncertainty of their future trading potential," chairman John Kelly and managing director Kevin Murphy said in their report.

"With more information being available as the Solid Energy sale process advanced, we used an independent report by KordaMentha to guide the revaluation of this debt."

The lender has been focusing on expanding its reach across the country, and Taranaki now accounts for 28 per cent of its loans and assets compared to 33 per cent at the end of the 2015 year. Its Taranaki deposit base was steady at 49 per cent.

"Whilst growth has been achieved across the country we did experience above-market growth in the golden triangle area of Auckland, Hamilton and Tauranga with a 36 per cent increase in registered loans in this area," Kelly and Murphy said.

The bank paid annual dividends of $19.85m in the year to its shareholder, TSB Community Trust, including a $7m special dividend which was used to increase the group's shareholding. Ordinary dividends of $12.85m were up from $5m a year earlier.

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