Little lending at The Rock

The Rock Building Society ran down its loan book by six per cent over the year to December 2008, to $1.1 billion, as the the Rockhampton-based lender adjusts to the credit crunch and subsequent downturn.

New lending over the December 2008 half was only $30 million and down from $190 million a year earlier. Retail deposits also fell over the half by six per cent to $501 million.

Net profit decreased marginally to $2.2 million in the half year to December while though the lack of new lending may erode earnings this year. The Rock did say that profit guidance for the year to June 2009 was "broadly in line with the 2007/08 result".

The Rock continues to sit on unrealised losses on a collateralised debt obligation tied to loans of US financiers such as AIG, Ambac, Countrywide and Washington Mutual. In October 2008 these losses appeared to be more than 30 cents in the dollar and they may now be higher.

The board and management of The Rock view the CDO investment differently. Given that interest payments are being met, and the ratings and the default history the company position is that the investment is not impaired.

The Rock appears to have a deposit gathering strategy at the core of its plan for 2009, with plans to open four new agencies or "mini branches", following the opening of eight over the last year.