Kiwibank's profits sank 13% in the last year as it competed fiercely with Australian-owned rivals for deposits.State-owned Kiwibank this morning revealed a net profit of $45.8 million for the year to June 30, down $6.7 million or 13% on last year's net pr
Kiwibank’s profits sank 13% in the last year as it competed fiercely with Australian-owned rivals for deposits.
State-owned Kiwibank this morning revealed a net profit of $45.8 million for the year to June 30, down $6.7 million or 13% on last year’s net profit of $52.5 million.
Outgoing chief executive Sam Knowles described the result as “solid and consistent with a tough environment.”
Financial performance had been affected by very strong competition in the domestic retail deposit market, not only affecting the amount of funds deposited with the bank, but also affecting the margin between borrowing and lending, he said.
The deposit market had been affected by the Reserve Bank’s core funding ratio requirements for banks to secure 65% of their funding from domestic deposits and bonds with terms of more than one year.
Despite this, Kiwibank had emerged from the world recession in strong shape and was on track to increase profits over the coming year.
Kiwibank, which is 100% owned by NZ Post, is now eight years old and has more than 700,000 customers.
In the last year the bank:
· increased loans and advances 23% from $8.5 billion to $10.4 billion; and
· increased retail deposits 3% from $6.7 billion to $6.9 billion.
Mr Knowles said the quality of the bank’s lending remained strong, with the lowest volume of impaired loans among the country’s main banks at 0.3%.
During the year Kiwibank raised $309 million through a bond issue and $150 million of tier 1 capital through a share issue by a related company, Kiwi Capital Securities.
This year Kiwibank also launched its own KiwiSaver scheme that it said would be the most transparent on the market in terms of fee disclosure. Customers can also choose whether they take an active role in managing their own investments or let fund managers make some investment decisions for them.
Mr Knowles resigned in May after 10 years in the job and is continuing as chief executive while a replacement is found.
