The Invercargill-based bank has reported its pre-tax profit is up 41% to $20.9 million for the nine months to December 31.

SBS’s new chief executive Wayne Evans said the positive lending growth, underpinned by $66.3 million in the December quarter, was as a result of the bank’s increased presence in the North Island, particularly Auckland, competitive pricing and additional marketing activity.

“We have invested heavily in increasing our Auckland presence and our mobile and online capability. Our strong growth over the last quarter shows that these initiatives are bearing fruit.”

SBS doesn’t have a branch network in Auckland and relies on mortgage advises and its four mobile managers for distribution.

Evans won’t disclose how much business came from Auckland in nine-month period, but said volumes were “ahead of expectations.”

He said the residential loans in Auckland were much bigger than what the bank usually wrote.

“They are three times the size of what we would write in Invercargill.”

He also said the bank had continued with its prudent and conservative lending policy, and the Auckland loans required some different thinking from the bank’s credit department at underwriting time.

“Similarly, over the past six months we’ve expanded our marketing and advertising efforts and adjusted our retail activity which new-to-bank members have responded to favourably.”

Evans said asset growth was a key driver for banks and the moment and there was a lot of competition for business as margins were good.

Overall SBS’s lending book grew 2.6% to $2.3 billion for the year to date

In its results interest margin were one of the key contributors to the profit increase alongside continuing strong performances by subsidiary companies that include personal lending business Finance Now, its funds management operation FANZ and its insurance business.

During the period SBS increased its stake in Finance Now buy shares owned by Evans and also it had acquired an insurance company Abbott Insurance.