The Cooperative Bank, reporting for its last quarter as PSIS ahead of gaining bank registration on October 26, saw net profit drop to $0.44 million in the three months ended September from $1.92 million in the same three months last year.
Net profit for the six months ended September fell to $1.75 million from $4.34 million in the first half last year.
Chief executive Girol Karacaoglu says becoming a bank cost the cooperative $860,000.
Having to pay more for deposits and fewer high-margin personal loans also meant the bank's profit margin was squeezed. Net interest income fell 26.3% to $9.9 million in the quarter.
On the positive side, charges against profit for bad loans are abating, falling to $553,000 in the latest quarter from $725,000 in the September quarter last year.
The bank's mortgage book is growing at about the same pace as the mortgage market generally, Karacaoglu says.
The book grew by $15 million in the September quarter to $1.08 billion and by $53.8 million in the year ended September.
That means HSBC remains the smallest of the home-lending banks. HSBC's September quarter disclosure statement shows its mortgage book shrank $11.9 million to $979.6 million in the three months, more than reversing the $7.9 million growth shown in the June quarter.
Nevertheless, HSBC's net profit jumped 63.8% to $19 million for the three months ended September, mainly because of a write-back of previous charges against profit and a surge in fee and commission income.
HSBC wrote back $0.2 million in charges against profit for bad loans in the September quarter compared with the $2.3 million charge in the September quarter last year.
