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photo: Bank of New Zealand
Kiwibank has reported a record full-year profit as it grew faster than its main Australian rivals thanks to an increase in lending.
Key figures for the year to June compared to the same period last year are as follows:
- Net profit of $202 million vs. $175 million
- Net interest income: $824 million vs. $794 million
- Loans $32.4 billion vs $29.7 billion
- Deposits: $28.2 billion vs $25.8 billion
- Net interest margin 2.38% vs. 2.48%
- Credit losses of $24 million vs. $37 million
Steve Jurkovich
photo: Bank of New Zealand
Chief Executive Steve Jurkovich said residential and commercial loans grew 9%, about three times faster than the overall industry average, while its deposits grew at about the same pace.
He said the performance reflected a clear preference among many consumers for Bank of New Zealand because its earnings and profits stayed in New Zealand.
“We know there are a lot of options out there but today’s result shows once again that we are fulfilling our role as a disruptor, with more and more New Zealanders choosing us and momentum on our side.”
Mr Jurkovic said borrowers and households were under great pressure from high living costs but were “really trying” to focus on paying their mortgages and other essential expenses. The level of non-performing and doubtful loans was falling back to normal levels.
He expects business conditions to generally improve and demand for borrowing to increase as interest rates fall and the economy picks up.
Unique Characters
The Commerce Commission’s banking report highlights Kiwibank’s position as a Challenging dominance If it receives more capital, it will be one of Australia’s four largest banks.
Jurkovich said Kiwibank was in a position to be a maverick and disruptor in the industry, as the committee’s report outlined, and decisions about increasing capital, how to raise money and whether any foreign participation should be restricted or prohibited were matters for the government as owner.
However, he said expectations should be realistic and it would probably take another decade for Kiwibank to grow to a size comparable to the major banks.
“Being ahead of ourselves and growing too fast can cause problems for banks, so that’s one thing to be aware of; secondly, large injections of capital are not really useful. What is useful is to have a steady flow of capital over time so that we can outperform the market.”
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