Count the cost of Safe investment

A policy of making safe investments - especially in New Zealand home mortgages - appears to be paying off for TSB Bank.
It had a pre-tax profit of $74.3 million for the year to March 31, an increase of $13.1 million on the previous year. In the same year, depositors' funds increased by $549 million to a total of $4 billion, and loans increased to $2.4 billion.
More than 65 per cent of the bank's assets go into providing home loans for New Zealand households, CEO Kevin Murphy said. And the bank goes for other high-quality, low-risk investment - primarily government bonds, other registered banks and local authorities.
All banks need enough capital to support the risks in their business. The Reserve Bank recommends a capital adequacy ratio of a minimum of 8 per cent. TSB Bank's ratio is 15.9 per cent, the highest of all New Zealand's retail banks, Mr Murphy said.
Other possible reasons for its popularity are good service and a commitment to staying New Zealand-owned. The bank has a long and proud history.
It started in 1850, when the fledgling European town of New Plymouth had only 600 adult settlers.
Governor Grey wanted the country's new settlements to be more self-reliant, with their own banking systems. Twenty-four New Plymouth people rose to the challenge of becoming trustees for a new savings bank. The town's police station was their first office.
It was three months before they got their first deposit, £35 from Waitera Te Karei, a sizeable sum at the time. Mr Te Karei had travelled 100km south along the coast from Mokau to make it.
That first bank was called the New Plymouth Savings Bank. By 1960, it had 14 branches throughout Taranaki and in 1964 the name was changed to Taranaki Savings Bank. In 1981 it was the first bank in New Zealand to install automatic teller machines (ATMs).
Later in the 1980s the Labour Government deregulated the banking industry. Trustee savings banks in all the other provinces decided to band together and formed Trust Bank.
The Taranaki Savings Bank considered it was strong enough to stand alone and refused to join in.
"After considerable debate, particularly within the community, the bank did manage to remain independent," Mr Murphy said.
In 1989 its name was changed to TSB Bank.
The new Trust Bank formed by the country's other trustee-owned banks didn't stay New Zealand-owned for long. It was sold to Australia's Westpac bank in 1996.
Each of the provinces where it had operated got a share of the proceeds. That money was invested, and the dividends have been paid out to benefit community projects ever since.
TSB Bank does the same thing. It is owned by the TSB Community Trust, which distributes an annual dividend as donations to Taranaki community groups. This year the dividend was $11.15 million.
After deregulation people from outside Taranaki wanted to use TSB Bank's services.
In 1996 people nationwide were able to open accounts, through TSB Bank Direct. In 1998, home loans were extended outside Taranaki.
As demand continued, branches were opened all over New Zealand, the first one in Auckland. Now there are 26 branches in total with about 300 staff. Nine of them are outside Taranaki and another is expected to open in Nelson soon. Customers have access to the whole range of banking services, from credit cards to foreign currency exchange and internet and phone banking. Surveys have ranked the bank as New Zealand's best for 10 years in a row.
Its website boasts that it has no unexpected fees, and that telephone calls during working hours are answered by helpful people rather than recorded messages.
"We have been prudent and we have also not relied on outside sources for funding, so we have had a lot more control over our own destiny than many multinationals," Mr Murphy said.