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Summary Annual Report TSB Bank

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									        TSB Bank Summary Report 2012




Proudly New Zealand owned since 1850
TSB BANK NEWMARKET
                                                                                                       Contents


                                                                                                                           Page
Highlights 2012 ............................................................................................................ 1

Chairperson’s and Managing Director’s Report ......................................................... 2

Historical Summary of Financial Statements ............................................................. 6

Summary Income Statement ...................................................................................... 7

Summary Statement of Comprehensive Income ...................................................... 7

Summary Statement of Changes In Equity ................................................................ 7

Summary Statement of Financial Position ................................................................. 8

Summary Statement of Cash Flows ........................................................................... 8

Notes to the Summary Financial Statements ............................................................ 9

    1. Statement of Accounting Policies ...................................................................... 9

    2. Critical Accounting Estimates, Assumptions and Judgements ......................... 9

    3. Risk Management Policies ................................................................................. 9

    4. Investment Securities ......................................................................................... 9

    5. Loans and Advances to Customers .................................................................. 10

    6. Credit Risk Management and Asset Quality ................................................... 10

    7. Deposits ............................................................................................................. 11

    8. Liquidity Risk Management.............................................................................. 11

    9. Capital Adequacy .............................................................................................. 12

    10. Subsequent Events.......................................................................................... 12

Independent Auditor’s Report .................................................................................. 13

Directory ..................................................................................................................... 14
                                                   Highlights 2012
The year ending 31 March 2012 has again delivered record results and award-
winning recognition. Achievements include:

• Despite a challenging economic environment the Bank is reporting a strong
 pre-tax profit of $66.5 million - a 10% increase on the 2011 year result.

• Depositors’ funds for the year increased by $273 million to a record
 $4.7 billion.

• The Bank’s loan portfolio has increased by $114 million bringing the total
 portfolio to $2.7 billion, despite the downturn in the housing market.

• A dividend of $10 million, up from $9.1 million last year, was paid to the
 TSB Community Trust.

• Findings from independent, industry-based Customer Satisfaction research
 revealed the Bank retained its ‘best bank’ customer service rating for a record
 12th year.

• The Bank was named ‘People’s Choice’ in the Sunday Star Times Banking
 Awards - judged on service, value and product.

• Expansion of the Bank’s Auckland retail network has seen the opening of a new
 office in the heart of Newmarket - the third office in the region.

• With a network of 26 offices now open nationwide, its never been easier to
 bank with us.

• The Bank’s entry into the Social Media arena has increased customer
 convenience and the immediacy of service.

• At 15.42% the Bank’s Capital Adequacy Ratio, an industry measure of financial
 strength, remains the highest of all New Zealand retail banks easily exceeding
 the Reserve Bank’s 8% benchmark.




                                                                                   1
    Chairperson’s and Managing Director’s Report




        ELAINE GILL: CHAIR – BOARD OF DIRECTORS     KEVIN MURPHY: MANAGING DIRECTOR/CEO



       Despite the challenging economic environment and a highly competitive market it
        is pleasing to be able to report that the Bank has again been able to deliver
        positive results in the attainment of core objectives for the year. Our net operating
        profit for the year of $66.45 million represents a 10.29% increase from the
        previous year. The financial result is a reflection of the prudent financial
        management regime that exists within TSB Bank. The resultant profit enables a
        dividend of $10 million to be paid to the TSB Community Trust.

       Customer Deposits grew during the year by $273 million to a record $4.7 billion
       reflecting the continuing support for a New Zealand owned community bank.
       Achieving net growth of 4.34% in the loan book is a commendable result
       when many customers are focusing on debt repayment (commonly known as
       deleveraging), making customer lending growth difficult. The trend to floating rate
       loans continued this year with 52.71% of the portfolio on floating up from 44.59% in
       March 2011. With a ratio of 15.42% the bank continues to report the strongest Capital
       Adequacy of all the major banks in New Zealand.

       The regulatory landscape continues to demand increased focus from the Bank.
       The pace of change with regulatory compliance dictates we have to dedicate more
       resource, both human and capital, to ensure compliance requirements are met.
       The implementation of the Settlement before Interchange System (SBI) during
       the year marked the culmination of a 5 year industry wide project that now sees
2
       banks settling intra-day with each other, thus achieving the key project objective
Depositors’ Funds                       Net Profit                           of reducing the systemic risk in the banking system. The Bank is well positioned to
1980 - 2012 ($M)                        Before Tax ($M)                      meet the requirements of the proposed changes of the Reserve Bank to the Basel III
80 90 00 11 12                          08 09 10 11 12                       regulations and the implementation of the new Open Bank Resolution rules.
                                4,715




                                                      74.3


                                                                     66.5




                                                                             The way customers choose to interact with their bank is rapidly changing. Gone are the
                                               61.3


                                                              60.2
                        4,442




                                        58.7




                                                                             days where a bricks and mortar branch was the only avenue open for a customer to
                                                                             access bank products and services. Over the years TSB Bank has been at the forefront
                1,112




                                                                             of technology innovation and now with the recent launch of [my]bank we are at the
                                                                             leading edge of mobile banking applications. With a presence on Facebook and Twitter
        301
71




                                                                             the Bank is responding to customers who are increasingly looking for immediacy and
                                                                             convenience to satisfy their banking needs.

Shareholder’s                           Dividend to TSB                      During the year the expansion of bank outlets continued with the opening of a new
Equity ($M)                             Community Trust ($M)                 service centre in the heart of Newmarket. The Newmarket centre complements our
08 09 10 11 12                          08 09 10 11 12                       existing Auckland centres in Queen Street and Takapuna, enabling us to better serve the
                                                      11.15
                                395.6




                                                                             needs of customers in New Zealand’s largest and fastest growing city.
                                                                     10.00
                                               9.20


                                                              9.05
                                        8.80




                                                                             The impact of the Christchurch earthquakes has had a profound effect on the whole of
                        358.3




                                                                             New Zealand. We continue to support our staff, customers and indeed the Christchurch
                331.1
        303.0




                                                                             Community at large as they work to rebuild a broken city. As a bank we remain
                                                                             committed to Christchurch. At the time of the February 2011 earthquake we believed
253.2




                                                                             our beautifully restored heritage building, just off the Square, had come through the
                                                                             impact of the quakes relatively unscathed. Subsequent quakes and a rupture in the
                                                                             floor meant we had no alternative but to acquiesce to demolition. A little over nine
                                                                             months on, and after a stint in less than adequate temporary premises, we are open for
                                                                             business again, still on Colombo Street albeit at a new address.

                                                                             TSB Bank continues to perform well relative to our peers. The strong financial
                                                                             performance of the bank is reflected in the recently released 2011 KPMG Financial
                                                                             Institutions Performance Survey where TSB Bank is ranked in the top three banks in five
                                                                             key performance indicator areas. As an indication of the strength and performance of
                                                                             the Bank it was pleasing that during the year Standard and Poor’s affirmed our current
                                                                             credit rating with no change, at a time when a number of financial institutions around
                                                                             the world continue to see their credit ratings under pressure.                            3
                                                                                    A strong brand is an important asset in retaining and attracting customers. The ‘TSB
    Total                                   Residential
    Lending ($M)                            Lending ($M)                            Bank’ brand alongside our Expect More brand promise is indeed contributing to the
    08 09 10 11 12                          08 09 10 11 12                          on-going success of the Bank. A new brand campaign launched this year ‘new to earth’
                                                                                    resonated strongly with customers.
                                                                            2,448
                                    2,758




                                                                    2,365
                            2,643




                                                                                    Findings from the recent independent Nielsen Company research revealed more than
                    2,424




                                                            2,184




                                                                                    60% of people banking with TSB Bank would be likely to recommend the Bank to family
            2,145




                                                    1,908
                                            1,841




                                                                                    and friends. A sincere ‘thank you’ to our customers for the enduring support and loyalty
    2,061




                                                                                    they show us. We’re delighted to have earned their confidence and trust in this way.
                                                                                    Our staff are passionate about customer service and delivering on our brand promise of
                                                                                    ‘Expect More’ It is testament to the commitment of our people that we were awarded
                                                                                    Sunday Star Times – Cannex Banking Awards, People’s Choice Award for Best Bank.
                                                                                    The award captures the spirit of what this organisation stands for. To sustain national
    Depositors                              Total
    Funds ($M)                              Assets ($M)                             leadership in customer service for a 10 year period is something we are immensely
    08 09 10 11 12                          08 09 10 11 12                          proud of. Our staff continue to be our biggest asset, they are 100% committed and
                                                                                    engaged to provide the best customer experience. They are central and pivotal to the
                                                                            5,165
                                    4,715




                                                                    4,850




                                                                                    success of the Bank. To each and every one of them a huge vote of thanks.
                            4,442




                                                            4,405
                    4,024




                                                    3,832




                                                                                    Although the business of banking is becoming more technology driven with the likes
                                                                                    of internet and mobile phone banking options, we remain committed to deliver a
            3,474




                                            3,169




                                                                                    customer experience like no other.
    2,874




                                                                                    It was with sadness that we note the deaths during the year of former bank trustees
                                                                                    Carole Shaw and Arthur Middleton. Both played a key role in the early 1980’s in the
                                                                                    fight by the Bank to retain independent ownership.

                                                                                    Over the years the Bank has been well served by Directors who have strived to
                                                                                    ensure that the Bank not only remained a 100% independent New Zealand owned
                                                                                    institution but that as an organisation we grow our New Zealand footprint. Marise
                                                                                    James joined the board in June replacing the retiring Colleen Tuuta who had served her
                                                                                    term as Director of the Bank and trustee of the TSB Community Trust. In line with best
                                                                                    practice, changes are being made to the Bank constitution to give us the flexibility to
                                                                                    complement the skills and passion of the Taranaki based directors with the skills and
                                                                                    experience of up to two non-Taranaki resident directors. The change to the composition
                                                                                    of the directorate has been agreed following consultation with both the TSB Community
4                                                                                   Trust as Shareholder and the Reserve Bank of New Zealand.
It is likely in the year ahead we will continue to face challenging headwinds as a result
of the fallout from the continuing uncertainty on the global economic front.

TSB Bank however is a strong and dynamic organisation with 162 years of history to call
upon. The board and management are positive about the future and look forward with
confidence that 2012-13 will again see the organisation continue to grow and prosper.




E. Gill                           K.J. Murphy
Chair – Board of Directors        Managing Director/CEO
31 May 2012                       31 May 2012




                                                                                       PHOTO: JAY RODGER   5
WOMAD AT TSB BOWL OF BROOKLANDS                   TSB BANK NEW ZEALAND SURF FESTIVAL
    Historical Summary of Financial Statements


                                                                   2012                 2011                  2010                 2009                 2008

    All in $000‘s
    Financial performance
    Interest Income                                              277,604              271,730               263,984              284,442              255,749
    Interest Expense                                             174,528              179,052               153,713              192,826              166,601
    Net Interest Income                                          103,076               92,678              110,271                91,616               89,148
    Other Income                                                  15,222                12,884               13,709               15,409               12,023
    Net Operating Income                                         118,298              105,562              123,980              107,025               101,171
    Impairment Losses                                               3,430                3,314                4,492                4,152                2,485
    Operating Expenses                                            48,418                41,999               45,131               41,587               39,985
    Net Profit before Taxation                                    66,450               60,249               74,357                61,286               58,701
    Taxation                                                      18,622                20,402               23,179               18,394               19,371
    Net Surplus Attributable to Shareholder                       47,828               39,847               51,178                42,892               39,330
    Dividend                                                      10,000                 9,050               11,150                9,200                8,800

    Retained Surplus for the Year                                 37,828               30,797               40,028                33,692               30,530

    Financial position
    Total Assets                                               5,164,756             4,849,952            4,405,082            3,832,020            3,168,673
    Total Impaired Assets                                           4,770                3,991                3,421                2,429                    905
    Deposits                                                   4,715,272             4,441,969            4,023,884            3,474,351            2,874,235
    Total Liabilities                                          4,769,196             4,491,636            4,073,957            3,529,031            2,915,514

    Shareholder‘s Equity
    Retained Surplus for the Year                                 37,828                30,797               40,028               33,692               30,530
    Total Shareholder’s Equity                                   395,560              358,316               331,125              302,989              253,159

    Performance
    Return on Shareholder’s Equity                                12.09%               11.12%               15.46%               14.16%               15.54%
    Return on Total Average Assets                                 0.96%                0.86%                1.24%                1.23%                 1.30%
    Growth in Total Assets                                         6.49%               10.10%               14.95%               20.93%               10.48%
    Growth in Depositors’ Funds                                    6.15%               10.39%               15.82%               20.88%               10.06%
    Residential Lending                                        2,448,476             2,364,311            2,184,121            1,909,325            1,840,680
    Total Lending                                              2,739,909             2,625,884            2,407,158            2,130,669            2,049,780
    Operating Surplus after Tax
    - as a % of Average Shareholder’s Equity                      12.69%               11.56%               16.14%               15.42%               16.53%
    - per employee                                                177.14                152.09               187.47               157.11               143.54
    Expenses to Net Operating Income                              40.93%               39.79%               36.40%               38.86%               39.52%
6

    Prudential
    Shareholder’s Equity as a % of Total Assets                    7.66%                7.39%                7.52%                7.91%                 7.99%
    Capital Adequacy Tier 1                                       15.42%               15.78%               15.90%               16.71%               17.66%
    Capital Adequacy Total                                        15.42%               15.78%               15.90%               16.71%               17.66%


    The amounts set out in the Financial Summary have been prepared from audited financial statements of the Bank. The Bank has no extraordinary items or
    minority interests.
Summary Income Statement for the year ended 31 March 2012

                                                                                                                                2012       2011
All in $000‘s

Interest Income                                                                                                               277,604    271,730
Interest Expense                                                                                                              174,528    179,052
Net Interest Income                                                                                                           103,076     92,678
Other Operating Income                                                                                                         15,222     12,884
Net Operating Income                                                                                                          118,298    105,562
Operating Expenses                                                                                                             48,418     41,999
Net Profit before Impairment Loss and Taxation                                                                                 69,880     63,563
Impairment Losses                                                                                                               3,430      3,314
Net Profit before Taxation                                                                                                     66,450     60,249
Taxation                                                                                                                       18,622     18,091
Effect of Change in Tax Legislation                                                                                                 -      2,311
Net Profit after Taxation                                                                                                      47,828     39,847
Dividend                                                                                                                       10,000      9,050
Retained Surplus for the Year                                                                                                  37,828     30,797




Summary Statement of Comprehensive Income for the year ended 31 March 2012

                                                                                                                                2012       2011
All in $000‘s

Net Profit after Taxation                                                                                                      47,828     39,847
Other Comprehensive Income                                                                                                       (584)    (3,606)
Total Comprehensive Income for the Year                                                                                        47,244     36,241




Summary Statement of Changes in Equity for the year ended 31 March 2012

                                                                                                                                2012       2011
All in $000‘s

Balance at 1 April 2011                                                                                                       358,316    331,125    7

Total Comprehensive Income for the Year
Net Profit after Tax                                                                                                           47,828     39,847


Total Other Comprehensive Income                                                                                                 (584)    (3,606)
Total Comprehensive Income for the Year                                                                                          (584)    (3,606)


Dividends to Equity Holders                                                                                                   (10,000)    (9,050)
Balance at 31 March 2012 1                                                                                                    395,560    358,316
1   2012 Equity of $395.6m comprises Share Capital $10.0m; Cash Flow Hedge Reserve $0.056m; and Retained Earnings $385.50m.
1   2011 Equity of $358.3m comprises Share Capital $10.0m; Cash Flow Hedge Reserve $0.64m; and Retained Earnings $347.68m.
    Summary Statement of Financial Position as at 31 March 2012

                                                                                        2012         2011
    All in $000‘s

    Assets
    Cash and Cash Equivalents                                                           97,542       86,170
    Investment Securities                                                            2,298,695    2,110,334
    Loans and Advances to Customers                                                  2,739,909    2,625,884
    Other Assets                                                                        28,610       27,564
    Total Assets                                                                     5,164,756    4,849,952



    Liabilities
    Deposits                                                                         4,715,272    4,441,969
    Other Liabilities                                                                   53,924       49,667
    Total Liabilities                                                                4,769,196    4,491,636


    Total Shareholder’s Equity                                                        395,560      358,316
    Total Liabilities and Shareholder’s Equity                                       5,164,756    4,849,952




    Summary Statement of Cash Flows for the year ended 31 March 2012

                                                                                        2012         2011
    All in $000‘s


    Net Cash Flow from Operating Activities                                           208,556      242,327
    Net Cash Flow from Investing Activities                                          (188,104)    (239,270)
    Net Cash Flow from Financing Activities                                             (9,080)     (10,950)


    Net Increase/(Decrease) in Cash and Cash Equivalents                               11,372        (7,893)
    Add Cash and Cash Equivalents at beginning of the Year                              86,170       94,063
    Cash and Cash Equivalents at End of Year                                           97,542       86,170




8   For and on behalf of the Board of Directors




    E. Gill                                                  K.J. Murphy
    Chair – Board of Directors                               Managing Director/CEO
    31 May 2012                                              31 May 2012
Notes to the Summary Financial Statements for the year ended 31 March 2012

1. Statement of Accounting Policies
General Accounting Policies
TSB Bank Limited is a profit-oriented company registered under the Companies Act 1993 and incorporated in New Zealand. The Bank’s principal business activity is
retail banking in New Zealand.
These summary financial statements have been prepared in compliance with FRS-43: Summary Financial Statements and comply with New Zealand Generally
Accepted Accounting Practice (NZ GAAP) as it relates to summary financial statements. The specific disclosures included in the summary financial statements have
been extracted from the full financial statements dated 31 May 2012. The full financial statements from which the summary financial statements have been
produced have been audited by KPMG, who expressed an unmodified opinion in relation to those statements at 31 May 2012. These summary financial
statements have been reviewed by KPMG for consistency with the full financial statements.
Users should note that these summary financial statements cannot be expected to provide as complete an understanding as provided by the full financial
statements. A user may obtain a copy of the full financial statements by accessing the TSB Annual Report on the TSB website at www.tsbbank.co.nz.
The full financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and NZ GAAP. They comply with New
Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for profit-oriented
entities. The full financial statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
The full financial statements were approved by the Board of Directors on 31 May 2012.
The measurement base adopted is that of historical cost as modified by the fair value measurement of Financial Instruments at Fair Value through Profit or Loss,
and all Derivative contracts.
The amounts contained in these summary financial statements are presented in New Zealand dollars and are rounded to the nearest thousand dollars. There have
been no changes in accounting policies and accounting policies adopted are consistent with those used in previous periods.

2. Critical Accounting Estimates, Assumptions and Judgements
The preparation of the full financial statements, on which these summary financial statements are based, requires the use of certain critical accounting estimates
and requires management to exercise its judgement in the process of applying the Bank’s accounting policies. Some areas involve a high degree of judgement or
complexity and there are areas where assumptions and estimates are significant.

3. Risk Management Policies
The Bank is committed to the management of risk and has management structures and information systems to manage individual risks. Senior management are
accountable to the Board for maintaining an adequate and effective control environment. The Board of Directors has overall responsibility for the establishment
and oversight of the Bank’s risk management framework.
A number of tools are used to manage risk on a day to day basis, including: the Bank’s Treasury Management Policy; The Liquidity Risk Management Policy; Asset
Management Policy; Credit Risk Management Policy; an Asset and Liability Management Committee; and an Audit and Compliance Committee. An Internal Audit
function ensures that aspects of the Bank’s operational, compliance, financial and systems operations are reviewed based on an assessment of risk on an ongoing
basis.
Principal risk areas are as follows:
Credit Risk: the potential risk for loss arising from failure of a debtor or counterparty to meet their contractual obligations, and arises within the Bank from its core
business of providing lending facilities.
Interest Rate Risk: where the Bank is exposed to an adverse movement in interest rates, which would significantly affect the Bank’s net interest income.
Liquidity Risk: the risk that the Bank is unable to meet its obligations as they become payable as a result of an unanticipated change in customer demand; an
unexpected difficulty in accessing adequate funding; or unanticipated level of asset write-down.

Operational Risk: the risk of economic gain or loss resulting from inadequate or failed internal processes and methodologies, people, systems or external events.

                                                                                                                                           2012                   2011      9

All in $000‘s
4. Investment Securities
Local Authority Securities                                                                                                              531,658                640,751
Registered Bank Securities                                                                                                              575,313                399,671
Registered Bank Term Investments                                                                                                        520,000                545,000
Other Investments*                                                                                                                      671,724                524,912
                                                                                                                                      2,298,695              2,110,334
* Other Investments relate to investments in Utility Companies, SOE’s and Commercial Paper and Bonds of an investment grade of New Zealand corporates.
     Notes to the Summary Financial Statements for the year ended 31 March 2012

     All in $000‘s                                                                                                                              2012                   2011
     5. Loans and Advances to Customers
     Loans and Advances to Customers covers all forms of lending to customers, and includes mortgages, overdrafts, personal loans and credit card balances.

     Gross Loans and Advances                                                                                                              2,758,298               2,643,089
     Provisions for credit impairment                                                                                                         (18,389)               (17,205)
     Net Loans and Advances                                                                                                                2,739,909              2,625,884



     6. Credit Risk Management and Asset Quality
     The Accounting Policies in the full Financial Statements set out all technical definitions in compliance with Accounting Standards. The following definitions are for
     guidance purposes in order to provide a general understanding.
     The loan portfolio is predominantly residential mortgages which are secured by a first mortgage over freehold dwellings. For overdrafts and visa balances, some are
     unsecured as well as secured by obligation mortgages, which cover all undertakings with the Bank.
     An internal rating system is maintained by the Bank to assess the credit quality of Loans and Advances to Customers. At the origination of Loans and Advances to
     Customers, loans are risk graded based on debt servicing ability and Loan-to-Valuation (LVR) ratios. These risk grades are reviewed periodically for adverse changes
     during the loan’s life.
     TSB Bank Limited has a policy of providing a Collective Provision for Doubtful Debts over its lending portfolio. Specific allowances are made against individual Loans
     and Advances to Customers that are identified as being impaired in order to reduce the carrying amount to their estimated recoverable amounts.
     A Past Due Asset is any credit exposure where a counterparty has failed to make payment when contractually due.
     Impaired Assets arise where original terms have been changed to grant the counterparty a concession that would not otherwise have been available; or where
     revised terms of a facility are not comparable with the terms of new facilities with comparable risks; where the Bank assumes ownership of an asset (primarily real
     estate) in settlement of all or part of the debt; or other individually impaired assets.


     Gross Loans and Advances to Customers by Credit Quality
     Neither Past Due or Impaired                                                                                                          2,703,556               2,581,134
     Past Due Assets Not Impaired                                                                                                              49,972                 57,964
     Impaired Assets                                                                                                                            4,770                  3,991
     Total Gross Loans and Advances to Customers                                                                                           2,758,298              2,643,089


     Specific Provision for Doubtful Debts
     Balance at Beginning of Period                                                                                                             1,105                  1,760
     Net increase (decrease) charged to Income Statement                                                                                          684                   (655)
     Balance at End of Period                                                                                                                   1,789                  1,105
     Collective Provision for Doubtful Debts
     Balance at Beginning of Period                                                                                                            16,100                 15,100
     Net increase (decrease) charged to Income Statement                                                                                          500                  1,000
     Balance at End of Period                                                                                                                 16,600                  16,100
10   Total Provision for Credit Impairment                                                                                                    18,389                  17,205


     Movements taken to Income Statement
     Bad Debts written off during the year                                                                                                      2,246                  2,969
     Movement in Specific Provision                                                                                                               684                   (655)
     Movement in Collective Provision                                                                                                             500                  1,000
     Provision for Credit Impairment to Income Statement                                                                                        3,430                  3,314
Notes to the Summary Financial Statements for the year ended 31 March 2012

All in $000‘s                                                                                                                                     2012                2011

7. Deposits
Retail Term Deposits                                                                                                                          2,318,069            2,141,652
On Call Deposits Bearing Interest                                                                                                             2,170,617            2,083,248
On Call Deposits Not Bearing Interest                                                                                                           176,771             172,267
Wholesale Deposits                                                                                                                               49,815               44,802
                                                                                                                                             4,715,272             4,441,969

All creditors and depositors are ranked equally and have equal priority to any creditor claims. Wholesale Deposits consist of Registered Certifcates of Deposit.


8. Liquidity Risk Management
The following tables analyse the Bank’s financial assets and financial liabilities into relevant maturity groupings based on the remaining period as at balance date
to the contractual maturity date. The amounts disclosed in the tables are the contractual undiscounted cash flows and include principal and future interest cash
flows, and therefore will not agree to the carrying values on the Statement of Financial Position.


                                                                 31 March 2012                                                       31 March 2011
Contractural Maturity Profile                       Current          Non-current                                        Current          Non-current
                                                     Assets               Assets                    Total                Assets               Assets                   Total
Assets
Liquid Assets and Securities                      1,004,011              1,697,210             2,701,221              1,061,229               1,418,691            2,479,920
Loans and Advances to Customers                     997,747              3,575,422             4,573,169              1,106,236               2,750,607            3,856,843
Other Financial Assets                                 5,677                        -               5,677                  4,028                        -              4,028
Total Financial Assets                            2,007,435              5,272,632            7,280,067               2,171,493              4,169,298             6,340,791


                                                   Current           Non-current                                       Current           Non-current
                                                 Liabilities           Liabilities                  Total            Liabilities           Liabilities                 Total
Liabilities
Deposits                                          4,336,657                 370,596            4,707,253              4,488,379                 205,688            4,694,067
Other Financial Liabilities                           40,193                    167               40,360                  37,986                     487              38,473
Total Financial Liabilities                       4,376,850                370,763            4,747,613               4,526,365                206,175             4,732,540
Net Financial Assets/ (Liabilities)             (2,369,415)              4,901,869            2,532,454             (2,354,872)              3,963,123             1,608,251


For the purposes of the Table above, Current Assets/Liabilities are where contractural maturity is 12 months or fewer; and Non-current Assets/Liabilities are
where contractural maturity is over 12 months.
The Bank holds the following financial assets for the purpose of managing liquidity risk:


Cash Holdings                                                                                                                                      4,647               3,728
Balances with Reserve Bank                                                                                                                       92,895               82,442   11
Registered Bank Investments                                                                                                                     520,000             545,000
Total Core Liquid Assets                                                                                                                       617,542              631,170
     Notes to the Summary Financial Statements for the year ended 31 March 2012

     9. Capital Adequacy
     The Bank’s objectives for the management of capital adequacy are to comply at all times with the regulatory capital requirements set by the Reserve Bank of
     New Zealand (RBNZ); to maintain a strong capital base to cover the inherent risks of the business in excess of that required by rating agencies to maintain an
     investment credit grading; and to support the future development and growth of the business to maximise shareholder’s value.

     The Bank is subject to regulation by the RBNZ. The RBNZ has set minimum regulatory capital requirements for banks that are consistent with the internationally
     agreed framework developed by the Basel Committee on Banking Supervision. These requirements define what is acceptable as capital and provide for
     methods of measuring the risks incurred by the Bank. The Bank must comply with RBNZ minimum capital adequacy ratios under its Conditions of Registration.

     As a condition of Registration, the Bank must comply with the following minimum requirements set by the RBNZ:
        • Total Regulatory Capital must not be less than 8% of Risk Weighted Exposure.
        • Tier One Capital must not be less than 4% of Risk Weighted Exposure.
        • Capital must not be less than NZ$30m.

     Total Capital Adequacy Ratios for the Bank at balance date are:

                                                                                                                                         2012                  2011
     Tier One capital as a percentage of total risk weighted exposures                                                                 15.42%                15.78%
     Total Capital as a percentage of total risk weighted exposures                                                                    15.42%                15.78%



     10. Subsequent Events
     There have been no material events after 31 March 2012.




12
Independent Auditor’s Report on the Summary Financial Statements

To the Shareholder of TSB Bank Limited
The accompanying summary financial statements on pages 7 to 12, which comprise the summary statement of financial position as at 31 March 2012,
summary income statement and summary statements of comprehensive income, changes in equity and cash flows for the year then ended and notes, are
derived from the audited financial statements of TSB Bank Limited (“the Bank”) for the year ended 31 March 2012. We expressed an unmodified audit
opinion on those financial statements in our report dated 31 May 2012.

The summary financial statements do not contain all the disclosures required for full financial statements under generally accepted accounting practice in New
Zealand. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of TSB Bank Limited.

Directors’ responsibility for the Financial Statements
The Directors are responsible for the preparation of a summary of the audited financial statements, in accordance with FRS-43 Summary Financial Statements.

Auditor’s responsibility
Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with
International Standards on Auditing (New Zealand) (ISA (NZ)) 810 Engagements to Report on Summary Financial Statements.

Our firm has provided other audit related services to the Bank. Partners and employees of our firm may also deal with the Bank on normal terms within the
ordinary course of trading activities of the business of the Bank. These matters have not impaired our independence as auditor of the Bank. The firm has no
other relationship with, or interest in, the Bank.

Opinion
In our opinion, the summary financial statements, derived from the audited financial statements of TSB Bank Limited for the year ended 31 March 2012, are a
fair summary of those financial statements, in accordance with FRS-43 Summary Financial Statements.




31 May 2012
KPMG
Wellington




                                                                                                                                                                 13
     Directory for the year ended 31 March 2012

     Directors                                                                Registered Office
     E. (Elaine) Gill, ONZM, LLB, J.P, Chair                                  Level 5, TSB Centre, 120 Devon St East, New Plymouth
     B.C. (Bruce) Richards, MNZM, B.Com, FCA, CMA, A.F.Inst.D, Deputy Chair
     M.L. (Marise) James, CA
                                                                              Principal Solicitors to the Company
     J.J. (John) Kelly
                                                                              Auld Brewer Mazengarb & McEwen
     D.L. (David) Lean, QSO, J.P
                                                                              9 Vivian Street, New Plymouth
     K.J. (Kevin) Murphy, CA, J.P, Managing Director/CEO
     D.E. (David) Walter, QSO, J.P
     H.P.W. (Hayden) Wano                                                     Auditor
                                                                              KPMG
                                                                              10 Customhouse Quay, Wellington
     Executive Management
     K.J. (Kevin) Murphy, CA, J.P, Managing Director/CEO
     C.L. (Charles) Duke, Deputy Chief Executive                              Contact us
     R.G. (Roddy) Bennett, B. Sci, ACA, Chief Financial Officer               Postal Address: PO Box 240, New Plymouth, 4310
     R. (Rod) Grant, National Business Manager - Marketing                    Phone Number: (06) 968 3700
     R. (Rod) Main, Manager - Transformation and Change                       Fax Number: (06) 968 3740
     M.D. (Marie) Collins, Manager Technology Services                        Web Address: http://www.tsbbank.co.nz/ContactUs.aspx
     P.D. (Phil) Gerrard, AAIBS, Manager Lending Services




14
GADGET 7459

								
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