Kiwibank posted a solid increase in profits on the back of higher mortgages and margins, but expects a slowdown in the housing market.
Key figures (six months to December 31 compared to a year ago):
- Net income $64 million vs. $55 million
- Revenue $328 million vs. $276 million
- Net interest margin 2.04% vs. 1.94%
- Loan growth $1.9 billion from $1.6 billion
- Growth in deposits $1.4 billion vs. $1.3 billion
The public bank said it had seen growth across the company and across all sectors, and was growing faster than the industry as a whole.
Chief Executive Steve Jurkovich said the bank’s strategy to improve its technology, expand its sales channels and improve customer service is paying off.
“Our strategy, which balances purpose and performance, … encourages more savers, homeowners and businesses to choose to do business with New Zealand’s largest bank.”
He said demand for housing finance drove loan growth and rising interest rates boosted his margins, while business lending was flat, which was even better than most. banks.
The bank has set aside $7 million to cover bad and bad debts from last year’s zero provision.
He said stricter lending rules in the Credit Agreements and Consumer Credit Act had led to lower mortgage applications and the bank had deferred about a third more than normal.
“Hopefully we’ll see a response and changes fairly soon and that will make the market work a bit better,” Jurkovich said in reference to the current law review.
He said headwinds have intensified for the housing market, which he expects to consolidate, with price cuts possible.
Kiwibank began operations in 2002 and Jurkovich said it had revamped its operations through technology to offer more services and products online and faster processing, and he expected the result of the full year is higher than last year.
The government is currently reviewing the ownership structure of Kiwibank, which is controlled by NZ Post, ACC and the Super Fund.
“The discussions around ownership are one for the finance minister and the owners, the bank just needs to focus on its performance.”