SBS’s net profit jumped 38.8% to $1.9 million in the three months ended December despite its impairment charges rising from $4.5 million at September 30 to $8.3 million at December 31. Its nine-month profit fell 33.9%, reflecting both the increased impairment charge and non-cash losses in the fair value of financial instruments.

SBS didn’t provide any breakdown of the types of loans the impairment charges relate to but finance general manager Tim Loan says they mostly relate to mortgage arrears.

SBS is being more aggressive with impairment charges than normal because of the current poor economic conditions, he says.

SBS’s mortgage book stood at $1.63 billion at December 31, down from $1.64 billion at September 30, although up from $1.57 billion at March 31. That puts SBS as the second smallest mortgage lending bank ahead of HSBC which has yet to release its December quarter general disclosure statement.

Using Reserve Bank figures as a proxy for the market, SBS has a 1.04% share of the mortgage market.

SBS’s loan-to-value ratio (LVR) details show the proportion of loans with LVRs above 90% have jumped from 8.6% at March 31 to 12.2% at December 31, taking loans with LVRs above 80% from 11.9% to 15.7%.

Loan says this reflects the heavy marketing SBS has given the Welcome Home Loans scheme which is 100% guaranteed by the government. SBS’s Welcome Home Loans rose from $117.4 million at March 31 to $174 million at December 31.