Public Trust reports improved result for 2009/10

Public Trust reports improved result for 2009/10

Public Trust has today released its audited financial results for the year ended 30 June 2010, reporting a net profit of $4.8 million. The improved result was driven principally by the reversal of investment losses, a higher operating surplus and lower mortgage provisions.

Chair, Trevor Janes, commented; “the result confirms the progress made by Public Trust, as it works to transform the organisation to become more customer centric and ensure its ongoing financial sustainability.”

He noted Public Trust is operating in an environment that is undergoing substantial regulatory change including the Non-Bank Deposit Takers (NBDT) and the Financial Advisers Act regimes.

“As part of its ongoing compliance with the NBDT regulatory changes, Public Trust was assigned a long-term issuer rating of Aa3 with a stable outlook by Moody’s Investors Service in August, and has also been assigned a deposit rating of Aaa with the same stable outlook,” said Mr Janes.

“The ratings are a positive result for Public Trust and reflect the organisation’s established trustee franchise, funding profile, sound strategic direction and the support provided by the Crown,” he said.

Chief Executive, Grenville Gaskell, said; “Public Trust’s focus on improving the customer experience while closely managing costs was beginning to show results.

“We are seeing improvements in productivity levels and that bodes well for the longer-term.”

Fee and commission revenue increased by $3 million or 8.5% year-on-year while operating costs decreased by 3% over the previous period. Fee and commission revenue now comprises 61.8% of total revenue up from 56% last year. Planned changes in the investment risk position within the Common Fund and competition for retail deposits have seen a reduction in income from the Common Fund of $4.4 million or 18.9%.

Mortgage impairments have also reduced materially from the 2008/09 year with significant progress made in improving portfolio quality in a difficult market. This has been achieved by moving the mortgage portfolio to a lower risk position by focusing on residential lending to customers with whom Public Trust has a broader relationship.

“The changes made as part of our transformation programme, PTON, coupled with those that we will undertake in the next two years, will place us in a stronger position as an organisation,” said Mr Gaskell. “We have been closely managing our response to compliance with the current regulatory changes and have a programme of work in place to ensure we are best positioned to leverage competitive opportunities that will come from these.”

Mr Gaskell commented that the credit ratings assigned by Moody’s confirm Public Trust’s compliance with the risk and credit rating requirements of the NBDT regime. “The strong investment grade credit and deposit ratings, combined with the Crown guarantee on Common Fund deposits, provide customers with confidence as to their investments with Public Trust,” he said.

Reflecting on the 2009/10 year Mr Gaskell concluded; “The progress achieved in the last year confirms that our strategic direction is delivering results and that Public Trust is a stronger organisation now than it was a year ago. While the next year presents new opportunities and challenges I am confident that we are making considerable progress and have a clear strategy in place to ensure we continue to build a stronger business that engages with New Zealanders to better meet their trustee needs.”

ENDS

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