Impaired assets rise sharply at TSB

Impaired assets more than doubled at TSB Bank in New Zealand over the six months to September 2009. Over 12 months impaired assets multiplied more than threefold, to NZ$5.3 million.

Surprisingly, the bank made new provisions for impairment losses of only NZ$1.28 million, marginally higher from NZ$1.25 million the year before.

TSB was one of the beneficiaries of the loss of customer confidence in finance companies in New Zealand over the last year, reflected by a 20 per cent growth in retail deposits compared with the year before.

The rate of deposit growth rate slowed over the September half to six per cent. The TSB deposit book stands at NZ$3.7 billion.

Most of the increase in deposit growth was achieved in the on-demand deposits.

Separately, the bank increased the amount of capital allocated to cover extra risks to NZ$114 million from NZ$89 million a year earlier. The risks - which include strategic risk, reputational risk, environment risk, additional credit risk and liquidity risk, and ownership structure - were identified under an additional review required by new Reserve Bank of New Zealand rules.