TSB chief Donna Cooper is departing from the role less than a week after the bank reported a 48% drop in profits

TSB has abruptly announced that chief executive Donna Cooper is departing from the role. This comes less than a week after the bank reported a 48% drop in profits.

A statement from the bank on Tuesday said after five years at the helm of TSB, Cooper had announced her resignation from the bank. This statement appears to have been originally released in TSB's Taranaki home region on Friday afternoon. TSB's results were announced on Thursday of last week. The bank's disclosure statement is here.

"While Donna’s term officially finishes at the end of September, she will be taking some well-earned leave from 28 July 2023," the statement said. 

Chief financial officer Gordon Davidson will take over on an interim basis from July 28 while a permanent replacement is found.

"Having steered the bank through significant regulatory uplift and growth of residential lending, Donna felt the time was right to hand over to the bank’s next CEO," the TSB statement said.

"She intends taking some time off with her young whānau before looking for her next challenge."

TSB Board chair, Mark Darrow said: “On behalf of TSB I would like to thank Donna for her hard mahi over these last five years.

"TSB is such an important organisation for Taranaki and indeed New Zealand, and we offer our thanks to her for leading the bank through a period of significant change. We wish her well."

Darrow says CFO Davidson will act as CEO from July 28 when Cooper departs, while the board appoints a permanent replacement.

"Gordon’s leadership in the interim will ensure a smooth handover and provide consistency in leadership for the organisation through this time," Darrow says.

In a comment included in the TSB statement, Cooper (pictured) says: "An incredibly busy five years has flown by quickly and I am proud of what TSB has achieved, as witnessed by the many customer and product awards gained by the Bank in that period.

"I have been warmly welcomed by the Taranaki community and will always have fond memories of working with the Toi Foundation and TSB.”

Last week interest.co.nz reported that TSB's annual profit almost halved as expenses and provisions surged.

The bank's March year net profit after tax fell $18.138 million, or 48%, to $19.948 million from $38.086 million in its March 2022 year.

The big drop came as operating expenses surged $53.130 million, or 39%, to $189.311 million. This was driven by significant increases in personnel costs being expenses associated with employees' wages, salaries and other associated costs, information technology, plus professional and legal fees.

TSB also disclosed "other" expenses of $30.483 million, up from $12.408 million the previous year.

Interest.co.nz's Gareth Vaughan questioned the bank about some of these details at the time and received this response from a TSB spokesperson:

"As a responsible bank when we assess we need to provision for matters we do so, this is part of good management.

"Like all banks, we operate in a complex and changing regulatory environment. The Bank continues to monitor, assess and respond to these changes to the extent they are relevant to it.

"Like other banks, as part of our work to implement changes to the CCCFA, we reviewed our processes around consumer credit products. During this review we identified some areas requiring attention. We are taking this seriously and are working through the detail of remediating customers as required. This work is ongoing and a conclusion date is unknown.

"We have nothing further to add to the information provided in our Disclosure Statement at this time."

Of these other expenses TSB says in its general disclosure statement; "The Bank has been undertaking a regulatory review of its products and services. Provisions have been recognised where this review has identified areas that may result in financial loss and the costs can be reasonably estimated. The information usually required under NZ IAS 37 is not disclosed on the grounds it could impact the position of the Bank."

Accounting standard NZ IAS 37 prescribes appropriate recognition and measurement bases and disclosures for provisions, contingent liabilities and contingent assets. The bank's operating expense to net operating income ratio rose to 89% from 75%.

In its disclosure statement TSB also says as part of risk strengthening it continues to focus on key areas of regulatory compliance.

"The Bank’s review of the Credit Contracts and Consumer Finance Act 2003 [CCCFA] in relation to the Bank’s products and services remains underway. Where this review has identified areas that may give rise to loss and liability and that can reliably be estimated a provision is included in other liabilities. The final outcomes and possible exposures that could be associated with this review are complex to ascertain and remain uncertain, given the wide range of matters to be considered under this legislation. This will continue to be subject to further work and consideration," TSB says.

In last year's annual report TSB said it was reviewing the CCCFA and underlying systems, processes and controls related to TSB lending products and services. It had provisioned for this, but no detail on the value of the provisioning was given.

In its new annual report Cooper and Darrow say the bank takes its regulatory obligations and commitment to delivering fair customer outcomes very seriously.

"We have an ongoing commitment to stay true to our values and do right by the people who choose to bank with us, and we apply this lens across everything we do."

Bio details on the TSB website say Cooper joined TSB in 2018 "after being drawn to the independent, New Zealand owned bank because of its customer commitment and unique ownership model, which means it has a philanthropic purpose at its heart".

Prior to that she held roles as Chief Executive of The Warehouse Financial Services Group, Director and General Manager of Baycorp Holdings New Zealand, and she worked for American Express "in multiple roles across the world for more than a decade".