By Gareth Vaughan
The Co-operative Bank, formerly PSIS, recorded a 77% drop in September quarter profit with operating income falling, expenses rising and profit from fair value adjustments on the likes of interest rate swaps down significantly.
Profit after tax attributable to the co-operative's members fell NZ$1.469 million to NZ$448,000 in the the three months to September, the group's last quarter before it obtained banking registration from the Reserve Bank, from NZ$1.917 million in the same period of 2010, according to its General Disclosure Statement.
PSIS became a registered bank and changed its name to The Co-operative Bank Limited on October 26. It has about 130,000 members.
September quarter net operating income was down NZ$1.248 million, or 8%, to NZ$14.536 million and operating expenses rose NZ$843,000, or 7%, to NZ$ 13.635 million. Net interest income fell NZ$1.448 million, or 13%, to NZ$9.920 million.
Meanwhile, profit before fair value adjustments on the likes of interest rate swaps, derivatives and assets backing insurance contracts fell NZ$2.091 million to NZ$901,000.
The Co-operative Bank's impairment losses fell to NZ$553,000 from NZ$725,000 and assets more than 90 days past due fell NZ$455,000 to NZ$2.291 million.
Loans to members rose NZ$13.438 million to NZ$1.194 billion and deposits rose NZ$16.390 million to NZ$1.189 billion. Total assets fell NZ$4.471 million to NZ$1.453 billion and total liabilities dropped NZ$4.910 million to NZ$1.327 billion.
Both the bank's tier one capital ratio and total capital ratio dropped, with the tier one ratio down to 16.9% at September 30 from 17.4% at June 30 and the total down to 17.5% from 18.1%. They are both, however, well ahead of the Reserve Bank mandated minimums of 4% and 8%, respectively. Total members' reserves rose NZ$439,000 in the three months from June 30 to NZ$125.715 million.
The Co-operative Bank has a BBB- credit rating from Standard & Poor's, which is S&P's lowest investment grade rating.
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