Heritage Bank has maintained a strong underlying profit in a six-month period in which it has continued to increase staff numbers and build its capital base.
The profit before tax of $24.520 million for the six months to 31 December 2013 was down 12.1% on the same period in the previous year. However that 2012 figure was boosted by several abnormal items including a substantial gain from the sale of Visa shares. Excluding that item, the pre-tax profit was down just 1.6%.
Similarly, the after tax profit of $17.929 million was down 8.3% on the same period the previous year but, excluding the Visa share gain, the after tax profit was actually up 2.6%.
Chairman Mr Kerry Betros said the profit outcome was a pleasing result given the fierce competition in the marketplace, Heritage's focus on delivering value for customers, and the need to build capital reserves.
"Heritage exists to provide the best value and banking experience to our customers that we can. We do that by offering extremely competitive rates on our home loans, term deposits and other products," Mr Betros said.
"We also added an extra 13 positions to our payroll in this six-month period, after adding 40 positions in the 2012/13 financial year, enhancing our ability to provide great customer service
"Our focus is not on maximizing profit at any cost. However we are still mindful of the need to build our retained earnings and lift capital ratios, to meet increased prudential requirements.
"Our half-year profit maintains the balance between delivering great value for customers while still strengthening our capital base."
Mr Betros said one of the biggest positives in this period was a significant increase in non-interest income compared to the corresponding period in the previous year.
"This was the result of a number of factors, including the benefits of our involvement in a number of new ventures in the pre-paid cards area. Growing non-interest income is a key aim moving forward," Mr Betros said.
Loan approvals totalled $657 million in the period, down 18.4% on the amount achieved in the same period in 2012.
CEO Mr John Minz said: "This was a factor of both the continuing fierce competition in the marketplace and also our desire to soften asset growth to strengthen our capital ratio position.
"Pleasingly, loan approvals rebounded well toward the end of 2013 and have continued to track well in early 2014, reflecting our determination to offer pricing that is extremely competitive."
Retail deposit growth remained solid at $256 million in the six months to 31 December 2013.
Consolidated assets decreased marginally, down 1.6% to $8.369 billion from $8.507 billion at 30 June 2013.
"We chose to early mature $400 million in Government Guaranteed debt in this period," Mr Minz said.
"This assisted in increasing margin without adversely impacting our customers, and contributed to the slight reduction in assets."
Heritage's capital adequacy ratio of 13.37% and liquidity ratio of 21.51% have lifted significantly and remain well above regulatory requirements.
Mortgage Loan arrears greater than 30 days sat at just 0.33% of the total mortgage portfolio balance. This result is still the envy of most other banking institutions and is around one third the industry average.