Building and investment societies on hunt for customers

By KEVIN TAYLOR

Building and investment societies are revamping their products and looking for new customers, says the financial advisory arm of KPMG.

Its survey shows that the sector, made up of eight building and investment societies, enjoyed record profits in the last financial year.

The total net profit for the firms covered in the survey increased by almost 16 per cent to $18.6 million, compared with an increase of 4 per cent in the previous year.

KPMG's survey usually includes its assessment of savings institutions and is released in May. But it has now changed to releasing the details earlier, because seven of the eight groups surveyed have March 31 balance dates.

KPMG banking and finance group chairman Andrew Dinsdale said that historically the savings institutions had been hesitant about grabbing attention, in contrast to the more vocal registered banks.

"Don't be fooled, however," he said. "These are not shrinking violets."

Several were no longer content with their own patch and were "eyeing up the landscape" and revamping their products and services in a bid to take on the competition.

Dinsdale said the savings institutions had gained ground in good economic conditions over the past 18 months, and two or three were actively chasing business outside their regions.

The Southland Building Society had expanded into the North Island and PSIS was trying to take on TSB and Kiwibank.

He said that despite the overall improvement in profitability, the individual performances of the businesses were mixed.

The Hastings, Southland and Wairarapa building societies had slight reductions in profit, albeit after highs in the preceding year.

In contrast, both the Nelson and Southern Cross building societies reversed their previous year's downward trend and posted increases in their profits in excess of 60 per cent.

The sector's total assets grew almost 10 per cent to $2.59 billion.

Southland Building Society led the asset growth, recording a $118 million increase to $1.14 billion.

Dinsdale said the sector continued to be dominated by the Southland Building Society, PSIS and the Southern Cross Building Society, which together accounted for 81 per cent of the sector's total assets.

Their lending during the year continued to be dominated by residential mortgages, which made up 72 per cent of total loans.