Kiwibank annual profit falls as net interest margin drops and expenses rise at double the rate of income, but lending growth continues

Kiwibank's annual profit fell 9%, which the bank attributed to a 15 basis points drop in its net interest margin to 2.10%.

The net interest margin is the difference between what a bank borrows money at through the likes of deposits and what it lends it out at. 

Net profit after tax for the June year fell $17 million, or 9%, to $174 million from $191 million in the June 2025 year.

Operating income rose 3% to $938 million and operating expenses climbed 6% to $656 million. That saw the bank's cost-to-income ratio rise 206 basis points to 69.9%. Net interest income rose 2% to $873 million.

Meanwhile, Kiwibank's credit impairment charge rose 41% to $41 million. And net gains on financial instruments such as interest rate swaps and hedging, rose $8 million to $18 million.

Kiwibank said it grew home loan and business lending by $3.1 billion, topping key competitors, and lifting total lending to $38.9 billion. Home loans grew $2.1 billion and business lending grew $1 billion.

Deposits increased $2.4 billion to $32.7 billion. Kiwibank says, as of June 30, it had 6.3% lending market share and 6.6% deposit market share.

"Regardless of the economy, our focus remains on maintaining momentum through customer and market share growth while helping more Kiwi be better off," Kiwibank CEO Steve Jurkovich says.

"Kiwibank helped nearly 8,000 Kiwi get on the home ownership ladder, including more than 3,200 first-home buyers, and supported nearly 5,500 customers to refinance."

Jurkovich says Kiwibank's "investing more than ever" to boost digital capabilities and its physical banking network.

The bank says 0.27% of its gross loans and advances were at least 90 days past due at June 30, and another 0.18% were impaired.

Eye on TSB

Meanwhile, Kiwibank's parent company Kiwi Group Capital, has an eye on the proposed Heartland Group Holdings takeover of TSB, with TSB shareholder the Toi Foundation facing a legal challenge.

"We believe in building a stronger New Zealand-owned banking alternative for the good of New Zealanders and we consider opportunities that support that. We would have interest in engaging with Toi Foundation and exploring what we could do together but that would be at their discretion and following the outcome of the current process between TSB and Heartland," says Kiwi Group Capital Chairman David McLean.

1 Regulatory Loan-to-Valuation Ratios (LVR) are calculated in compliance with the Reserve Bank’s requirements.

Kiwibank's press release is here, and the bank's investor presentation is here.