The Co-operative Bank lifts profit, increases rebates for member-customers and unveils $30 mln issue of debt securities

The Co-operative Bank has posted a 16% increase in annual profit, grown its customer base by a net 9%, and unveiled a $30 million offer of debt securities.

The bank also says its increasing rebates paid to member-customers by almost 17%. Most customers will receive a rebate of between $10 and $600, with the average proportional rebate payment increasing to $33.80 from $29.20. 

Over the next month the bank will pay a total of $2.1 million in rebates to 75% of eligible customers for its 2015-16 financial year. The size of a rebate is based on how much business a customer has with the bank.

An offer of up to $30 million of unsecured, subordinated, loss absorbing, Tier 2 regulatory capital debt securities (subordinated notes) to New Zealand investors was also announced.

CEO Bruce McLachlan says 15,000 new customers joined the bank over the March year, boosting its customer numbers a net 12,000 to 147,000. 

Profit before rebates and tax rose 18% to $15.8 million, and net profit after tax climbed 16% to $10.3 million.

The bank says this was driven by a 7% increase in income, with expenses up 3.7% and bad debt expenses remaining low, increasing by $350,000 to $1.3 million. The Co-operative Bank has no direct dairy farming exposure.

The bank achieved lending growth of 16% and deposit growth of 13.5%, increases “well ahead” of the overall retail banking sector. Net interest income increased by 5.5% to $2.7 million.

“We have continued to be prudent with our resources and focused our attention on the areas where we expect the best return, and continue to provide quality service to our customers,” McLachlan says.

“We’re the only bank in New Zealand to share our profits with its customers and that genuinely puts the customer and their needs at the very heart of everything we do, because as a co-operative, our customers are the people we’re working for.”

The Co-operative Bank’s total capital ratio has slid back a little from last year, but is still very comfortable at 15.8%. The Reserve Bank requires a minimum capital ratio of 8%, plus a 2.5% buffer ratio.

Expenses rose, McLachlan says, in part due to digital investment.

“The bank’s mobile app continues to be rated number one in New Zealand by customers, our new interest banking site has been awarded an Honoree Webby Award 2016 in the Financial Services/Banking category, and Canstar has awarded us the Most Satisfied Customers Award for Banking for the third time,” McLachlan says.

“More and more Kiwis are discovering that our bank has a different vision of what a bank can be, and there’s still more to come as we launch our new credit card later this year and continue to grow the functionality and accessibility of our digital services.”

Formerly PSIS, the Co-operative Bank received banking registration from the Reserve Bank in October 2011.

More to come.