Kiwibank profit slips 54%
(27 September 2011 – New Zealand) New Zealand owned Kiwibank announced an after-tax profit of NZ$21.2 million (A$16.8 million) for the year ended 30 June 2011, a decrease of 54 percent from the previous year’s NZ$45.8 million profit.
Kiwibank Chief Executive Paul Brock said the strong underlying financial performance of the bank has been reduced by the remaining effects of the global financial crisis and the Canterbury earthquakes. He said provision for bad debts at year end is NZ$87.1 million, compared with NZ$19.5 million for the previous year.
Mr Brock said the vast majority of the bad debt provisioning can be regarded as "one offs" which gives considerable room for confidence for the present financial year.
In the past year, Kiwibank has increased loans and advances by 10 percent from NZ$10.4 billion to NZ$11.5 billion and increased retail deposits by 14 percent from NZ$6.9 billion to NZ$7.9 billion.
Mr Brock said the bank had continued to be innovative and to challenge conventional lending and deposit products available for customers.
"We launched 32 and 90-day Notice Saver accounts which provided strong returns for customers plus having more flexibility."
"We also continued to capture more than our natural share of the mortgage market with aggressive short-term fixed and variable rate offers."
"Kiwibank continues to focus on growing its small and medium enterprise business banking client base" and Mr Brock says there are "significant opportunities for growth in this sector."
Mr Brock said competition in the domestic loan and deposit market was intense and this had put pressure on margins, but that the bank continued to perform well in both sectors. He said there were many strong and positive underlying trends:
Net interest income (NII) has increased during the year as customers switched from fixed to floating mortgages. This margin compared to average assets has increased from 1.18 percent to 1.47 percent year on year. An increased focus on cost reduction has led to an improvement in the cost to income ratio which, year on year, has improved from 72.6 percent to 68.5 percent.
Throughout the year Kiwibank has maintained a strong focus on customer funding with deposits now accounting for 80% of all bank funding.
The bank’s personal banking market share continues to grow with the bank now having more than 750,000 customers.
Mr Brock said the vast majority of the bad debt provisioning can be regarded as "one offs" which gives considerable room for confidence for the present financial year.
In the past year, Kiwibank has increased loans and advances by 10 percent from NZ$10.4 billion to NZ$11.5 billion and increased retail deposits by 14 percent from NZ$6.9 billion to NZ$7.9 billion.
Mr Brock said the bank had continued to be innovative and to challenge conventional lending and deposit products available for customers.
"We launched 32 and 90-day Notice Saver accounts which provided strong returns for customers plus having more flexibility."
"We also continued to capture more than our natural share of the mortgage market with aggressive short-term fixed and variable rate offers."
"Kiwibank continues to focus on growing its small and medium enterprise business banking client base" and Mr Brock says there are "significant opportunities for growth in this sector."
Mr Brock said competition in the domestic loan and deposit market was intense and this had put pressure on margins, but that the bank continued to perform well in both sectors. He said there were many strong and positive underlying trends:
Net interest income (NII) has increased during the year as customers switched from fixed to floating mortgages. This margin compared to average assets has increased from 1.18 percent to 1.47 percent year on year. An increased focus on cost reduction has led to an improvement in the cost to income ratio which, year on year, has improved from 72.6 percent to 68.5 percent.
Throughout the year Kiwibank has maintained a strong focus on customer funding with deposits now accounting for 80% of all bank funding.
The bank’s personal banking market share continues to grow with the bank now having more than 750,000 customers.
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