Kiwibank has had a solid lift in profit on the back of increased mortgage lending and margins, but is looking to a slowdown in the housing market.
Kiwibank reported an increased half-year profit. Photo: RNZ / Nate McKinnon
Key numbers (six months to 31 December vs year ago):
- Net profit $64m vs $55m
- Revenue $328m vs $276m
- Net interest margin 2.04 pct vs 1.94 pct
- Lending growth $1.9b vs $1.6b
- Deposit growth $1.4b vs $1.3b
The state-owned bank said it had seen growth throughout the business and in all sectors, and its growth was faster than the broader industry.
Chief executive Steve Jurkovich said the bank's strategy to improve its technology, expand its sales channels, and lift customer service was paying off.
"Our strategy, which balances purpose and performance, ... is driving more savers, homeowners and businesses to choose to bank with the largest New Zealand-owned bank."
He said the demand for housing finance had driven the growth in lending and the rise in interest rates had boosted its margins, while business lending had been flat, which was still better than most other banks.
The bank set aside $7m to cover bad and doubtful debts against last year's zero provision.
He said the tighter lending rules in the Credit Contracts and Consumer Finance Act had led to fall in mortgage applications and the bank had deferred about a third more than normal.
"Hopefully we'll see some response and some changes pretty quickly and that will allow the market to perform a bit better," Jurkovich said referring to the current review of the Act.
He said the headwinds have grown for the housing market, which he expected to consolidate, with price falls possible.
Kiwibank started operations in 2002 and Jurkovich said it's revamped its operations through technology to offer more services and products on line, and speed up processing, and he expected the full year result to beat 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 Minister of Finance and the owners, the bank's just got to concentrate on its performance.."