CBS Welcomes Investor Scrutiny

NZX/MEDIA STATEMENT

UNDER MEDIA EMBARGO UNTIL 6PM

27 JULY 2006.

CBS Welcomes Investor Scrutiny

Investor interest in the underlying quality of a financial institution’s lending profile is likely to become more of a feature of the financial markets, says the chairman of the building society CBS Canterbury Mr Graham Kennedy.

“We welcome that increased scrutiny, particularly on the part of ‘Mums and Dads’ investors,” said Mr Kennedy. “Investors must take some personal responsibility for the consequences of their own investment decisions but what will assist them is readily available information on the composition of a lending book.”

“CBS Canterbury expects to see an extended period of adjustment within the New Zealand economy and market participants will face the challenge of intense competition” Mr Kennedy told the CBS Annual Meeting in Ashburton on Thursday evening.

“There is a significant quantum of 2-3 years fixed term mortgage lending moving towards either roll-over or re-negotiation in the overall market and CBS Canterbury is well placed to increase market share during this phase.”

CBS Canterbury increased total assets 19% to almost $300m in the latest twelve months ended 31 March 2006.

Net surplus was improved slightly to $1.69m ($1.60m) producing earnings per share of 26.4 cents.

Mr Kennedy said the merger of the SMC Building Society and the former Ashburton Building Society into the Canterbury Building Society, has been completed on schedule and directors were “very pleased with the progress made on integration of banking services.”

“One of the most satisfying outcomes is the retention of the customers of both former businesses in what is now a significantly enlarged banking operation. Another is that the cash portion of the merger settlement has substantially been reinvested in CBS, which reflects confidence by customers in the objectives of the merger.”

Commenting on lending criteria, Mr Kennedy said CBS has an “excellent level of credit control quality, a high quality lending book at balance date. Total lending rose to $228m in the latest year and at balance date we had no loans causing concern.”

He said the lending profile is: residential lending 48.33%, commercial lending 44.69% and farming sector lending 6.96%.

Mr Kennedy said that over the medium to longer term the merger will provide economies of scale. “Given the bigger footprint of the business, Directors believe CBS will increase its share of the market, with continued support from a loyal customer base. “

‘Concurrent with the expansion, we have successfully re-introduced a range of rebranded investment and banking products to our significantly increased customer base and undertaken some high profile regional marketing initiatives.”

ENDS

Analysts’ Notes:

1. In respect to the March 2006 result, issued capital was 5,500,000 ordinary shares and 3,000,000 preference shares. Post-merger post-balance date, Canterbury Building Society (‘CBS Canterbury’) has 6,546,260 ordinary shares and 3,000,000 preference shares on issue.

2. The final dividend of 7.5 cents per share on ordinary shares and 4 cents per share on preference shares, paid on 31 March 2006, were fully imputed. These payments took total dividends to 15 cents per share as projected in March 2006, payable on the increased ordinary share capital, and 8 cents per share on preference share capital.

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