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PSIS Reaches $1 Billion Milestone

20 June, 2006

PSIS Reaches $1 Billion Milestone

PSIS is in very good shape. It is continuing to grow, as is evident in the 2005/06 results, and it is continuing to work diligently to meet the needs and expectations of its customers now and in the future.

Announcing the end of year results, PSIS chief executive Girol Karacaoglu said he credited customer satisfaction for its higher than expected $10.6m pre-tax profit.

“We have extended and refreshed our branch network and now have 32 branches open nationwide, and we are continuing to develop and revitalise our financial products and services,” Dr Karacaoglu said.

“The success of these efforts has been reflected not only in our repeatedly high ratings in independent customer satisfaction surveys, but also in the increases in our total deposit and loan accounts, up 14.5% and 19.3% respectively. These both well exceed growth in the market for household lending and retail deposits.

Further evidence that we are getting it right are the recently-awarded Cannex Five Star ratings for four of our deposit accounts and the national acclaim our children’s savings accounts have received.

We are growing but we are growing within our guiding principles, which recognise that we are proudly New Zealand owned, and that being a co-operative means we are owned by our customers and we exist for their benefit.

The confidence our customers have shown in us is underlined by the fact that as recently as May 2006 we achieved a milestone and reached $1 billion in total assets.

The growth in operating profit for 2005 is particularly pleasing when we had predicted a dip in profit as a result of significant costs involved in positioning PSIS for the future. Management and staff have put considerable work in not only improving our products and services, and the branch network, but also into our risk management.

PSIS‘s capital adequacy on a risk-adjusted basis (using the Reserve Bank formula) is 18%, more than double the 8% minimum required for registered banks, and we have reserves of $90m. The board has a conservative lending policy, which is reflected in impaired loans expense as a proportion of loan advances being only approximately a third of the average for savings institutions (source KPMG survey Financial Institution 2006). Another significant aspect of PSIS’s risk containment is that we are only in the personal banking business and do not offer business banking.

Our planning and our actions are always guided by our cooperative values and PSIS is in an enviable position among financial institutions of being able to return profits to its shareholding customers through better service and better pricing of products, including our fees.

Another highlight of the year was the invitation to be part of the Government’s Non-bank Financial Services Review as an adviser. This enabled us to provide encouragement and input into setting industry standards for reserves and capital adequacy like the ones PSIS already has in place.

In the year that has just ended we made a number of decisions that will place us in an even stronger position to build on our performance and develop future growth for the benefit of our customers.” Dr Karacaoglu said.

Key end-of-year results for 31 March 2006 were:

- Capital adequacy (using Reserve Bank formula) 18%, well above the 8% minimum required for registered banks.
- Total assets up 14.7% to $987m
- Deposits up 14.5% to $829.4m
- Loans up 19.3% to $827.1m
- Pre-tax operating profit up 3% to $10.6m


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