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Solid Result by CBS Canterbury

NZX AND MEDIA STATEMENT
12 DECEMBER 2006.

Solid Result by CBS Canterbury

CBS Canterbury reports a further period of significant business growth, together with a successful amalgamation of SMC Building Society into CBS Canterbury, during the six months ended 30 September 2006.
“A continuation of a sound level of economic activity in Canterbury has once again seen demand continue from both borrowers and depositors during the period,” said the chairman, Mr Graham Kennedy.

Trading
Total assets rose by 16.9% during the 6 months and as at the 30 September 2006 amounted to $345.894m.
Gross revenue from operations increased by 31% on the corresponding period in 2005 and this year amounted to $4.032m.
Profit after tax increased by 20.4%, to $948,683, compared with $788,028 in the corresponding period.

Mr Kennedy said, “During the past six months the building society has been trading in a particularly competitive interest rate market and the directors do not expect any change in those market conditions during the remainder of the March 2007 year.

“The board remains comfortable with the quality of the society’s mortgage portfolio, which at 30 September amounted to $272m compared with $227m at 31 March 2006 – an increase of 19.8%.”
“We are conscious that investors overall have become more aware of the importance of lending policies and we confirm the society’s commitment to a strong lending book.”

The current lending profile is residential lending 57.68% (51.61% at 31 March 2006), commercial lending 37.91% (42.95%) and farming sector lending 4.30% (5.39%). There is no change in the doubtful debt provisioning and there are no loans causing concern.

During the period, CBS Canterbury has substantially completed the business consolidation of the former SMC Building Society and the combined business now trades under the new brand.

Mr Kennedy commented, “Although the directors are very happy with the progress being made on the amalgamation of the SMC business into CBS Canterbury, there have been, and will continue during the next six months to be, additional costs of operation. The full benefits of the amalgamation will, therefore, not be felt until the 2008 financial year.”

Dividend

Interim Dividends of 7.5 cents per share on ordinary shares and 4 cents per share on preference shares were paid on 30 September 2006. Both dividends were fully imputed.
Outlook
The CBS directors forecast that the financial results for the full year to 31 March 2007 will be higher than last year, when a net surplus of $1.69m was achieved.

“CBS has a broader base for our banking operation as a result of the amalgamation and we are pleased to have retained the continued support of our bigger customer base. There continue to be opportunities for well supported regional banking services in Canterbury and regional marketing initiatives have been directed at developing our Canterbury identity.”

“During the past three years CBS Canterbury has moved through a significant period of change and has now established itself as a well known Canterbury brand with three branches, a well structured Statement of Position, a quality mortgage portfolio and an experienced and skilled staff.

“The directors consider that the society is now well placed to become an even more significant player in the Canterbury market and are optimistic about the society’s future prospects.”

Ends

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