Kiwibank's annual profit surged 34% as the bank's income rose 20%, easily outstripping an 11% increase in expenses.
Kiwibank says June-year net profit rose $44 million to $175 million from $131 million last year, its previous highest annual profit.
Net interest income rose $164 million, or 24%, to $794 million, helping lift total operating income $136 million, or 20%, to $816 million.
Net interest income is the difference between the revenue generated from a bank's interest-bearing assets such as loans, and the expenses associated with paying for its interest-bearing liabilities such as deposits.
Kiwibank didn't report a net interest margin (NIM). However, interest.co.nz calculations suggest the bank's annual NIM was 2.49%, up from 2.16% the previous year.
Operating expenses rose $54 million, or 11%, to $534 million, with staff pay plus higher IT and systems costs the main contributors. Loan impairment losses more than doubled to $37 million from $16 million.
Kiwibank CEO Steve Jurkovich says annual home lending growth of $1.1 billion came at a rate equivalent to 1.5 times overall market growth, following a strong first half that slowed as the housing market cooled and interest rates rose.
Jurkovich says "significant action" has been taken to support customers struggling with higher living costs.
"Our teams have contacted thousands of customers to discuss the options available to them – whether that’s extending loan terms, reducing payments, going interest only, or providing short-term cash injection to help get on top of their finances. Feedback has been overwhelmingly positive, with customers telling us they felt a sense of relief that we can provide them with meaningful support to take some of the stress out of their day-to-day lives," says Jurkovich.
Meanwhile he's "extremely pleased" with Kiwibank’s business banking performance, saying it has grown its market visibility, and "stepped up" to support Kiwi businesses when many lenders were pulling back.
"While business banking growth of $900 million was impacted by lower business confidence and general market uncertainty, we grew faster than the market, demonstrating our commitment to the New Zealand economy," Jurkovich says.
"With 100% New Zealand ownership and all earnings being retained, New Zealanders have an asset that is growing in value which can have even more impact in the banking market."
Kiwibank's total gross lending rose $1.965 billion, or 7%, to $29.783 billion. Of that, $24.248 billion is housing lending.
Total credit impairment provisions rose to $108 million from $75 million a year earlier, comprised of $103 million of collectively assessed provisions and $5 million of individually assessed provisions. Meanwhile, past due but not impaired loans rose to $157 million from $115 million, with $94 million home loans and $50 million stemming from corporate exposures. Impaired loans rose to $8 million from $2 million.
Total deposits from customers rose $1.54 billion, or 6%, to $25.756 billion, with term deposits up $1.71 billion to $14.617 billion.
Total capital at June 30 stood at $2.566 billion, up $337 million year-on-year. At the end of July, Kiwibank's parent company, government-owned Kiwi Group Capital, subscribed for an additional $225 million of common equity share capital issued by Kiwibank, thus boosting the bank's capital.
As of June 30, Kiwibank's total capital ratio, expressed as a percentage of risk weighted exposures, was 14.3% versus 13.6% a year earlier. The Reserve Bank mandated minimum is 10.5%, but will rise to at least 16% in 2028.
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