As The Co-operative Bank issues its annual financial results, CEO Mark Wilkshire is making a pitch for HSBC's retail banking customers as their bank starts shutting up shop in New Zealand.
On Tuesday HSBC announced it's winding-down its NZ wealth and personal banking business over several years, and stopped accepting new NZ retail customers with immediate effect. HSBC advised its customers "to start engaging with other financial services providers to understand your alternative options."
As of December 31 HSBC NZ had residential mortgages of $1.6 billion, and customer deposits of $4.8 billion.
Wilkshire told interest.co.nz the HSBC customers could be "a very good fit with us."
"As the bank with the highest customer satisfaction from Consumer NZ, we would certainly look to be an alternative for those customers who now might be looking for somewhere else to go," Wilkshire says.
"We certainly position ourselves as a bank that is a better way to bank, and sometimes bigger isn't always better when it comes to banking."
"Some of those customers are quite premium customers and are looking for good service. So we certainly position ourselves to be an option for those customers," says Wilkshire.
Pays rebates, grows mortgages
For its March financial year, The Co-operative Bank posted a $1.095 million, or 9%, drop in profit after tax to $11.661 million as operating expenses and impairment losses on loans rose. It'll pay rebates of $2.5 million to customers, unchanged year-on-year, in July.
In its March year the bank grew residential mortgage lending by 8%, well above the overall market growth rate of 3.5%. The Co-operative Bank's mortgage book grew by $204 million to just under $2.8 billion. Deposits increased 5%, or $135 million, to $2.83 billion.
The Co-operative Bank says it has returned $4.9 million to customers after reviewing credit fees and other Credit Contracts and Consumer Finance Act processes, alongside a review of historical customer experiences.
"During full-year 2023 all current customers affected have been contacted and a total of $4.9 million returned to them. We are now focused on identifying and remediating past customers, and we expect this work to be completed by the end of June 2023," the bank says.
In its 2022 financial results the bank provisioned $5.8 million to cover this remediation.
Loan provisions increased
Against the backdrop of a rising interest rate environment, The Co-operative Bank increased its provisions for loan impairments by $600,000 to $9.477 million. Its assets at least 90 days past due but not impaired rose $4.975 million to $8.278 million. Gross impaired assets dropped $239,000 to $3.536 million.
Wilkshire says whilst the number of customers behind in payments has increased, it's from "really low historic levels."
"We've got about half our [mortgage] customers coming up again in the next 12 months for rate adjustments...But the size of that change is now getting smaller as we work our way through the increased rate environment," he says.
Wilkshire says the lowest mortgage serviceability test rate the bank used for new borrowers was about 6.25%.
"And you're talking about rates in the mid 6s now, so they're pretty close to where they were tested at. And with the outlook from the Reserve Bank... we may be somewhere near the top of this recent round [of interest rate increases]."
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