By Gareth Vaughan
Kiwibank grew annual lending at more than 6.5 times the rate of the big four Australian owned banks combined by value, with the state owned bank's chief executive saying a focus on capturing customers' full banking relationships and refinancing mortgages brought across from other banks drove the growth.
In the year to June 30 Kiwibank grew gross loans by NZ$1.08 billion, or 10%, to NZ$11.5 billion. In contrast ANZ, ASB, BNZ and Westpac, combined, recorded June year lending growth of just NZ$165 million when the BNZ-Westpac growth of NZ$2.344 billion is offset by the ASB-ANZ NZ$2.179 billion contraction, leaving an annual rise of just NZ$165 million to NZ$256.2 billion. That's combined growth from the big four of just 0.06% versus Kiwibank's 10%.
Looking at the big four individually, BNZ recorded the strongest growth, at 2.6%, or NZ$1.4 billion, to NZ$56.6 billion, followed by Westpac with 1.8%, or NZ$930 million, to NZ$51.3 billion. Both ANZ and ASB saw their lending contract, ANZ by NZ$1.05 billion, or 1%, to NZ$95.9 billion, and ASB by NZ$1.1 billion, or 2%, to NZ$52.3 billion.
The two shrinking their lending books, ASB and ANZ, are recording profits at record levels .In contrast Kiwibank yesterday posted a 54% fall in annual profit to NZ$21.2 million as provisions for impairment losses more than quadrupled to NZ$87.1 million.
Asked by interest.co.nz how Kiwibank had grown lending much more strongly than its rivals, CEO Paul Brock said the bank had operated with a "very active focus" in its sales channels on making sure it captures customers' full banking relationship when they join Kiwibank. The New Zealand Post subsidiary, which opened for business in March 2002, says it now has "more than" 750,000 customers versus "more than" 700,000 a year ago.
Brock said Kiwibank also had "strong home lending propositions" across all markets. See all the bank's advertised home loan rates here. In the June quarter Kiwibank grew home loans by NZ$305.4 million to NZ$10.63 billion. That compares with quarterly home lending growth of NZ$334 million from BNZ, NZ$279 million from Westpac and NZ$52 million from ASB. ANZ's contracted by NZ$54 million.
'Heavy refinancing focus'
A "heavy focus" on a refinance package where Kiwibank moves a customer’s mortgage across from another bank for them, had proven the major factor in lending growth, Brock said.
"Making it easy for people has been incredibly important and we continue to see people look to leave the major banks for varying reasons and make a choice to join Kiwibank," he said. "The majority of the loan growth has come from refinancing as opposed to a lot of new loan activity in the market."
Kiwibank's General Disclosure Statement shows on July 1 the bank tipped almost NZ$4 million into Kiwi Asset Finance, its finance company subsidiary incorporated last December l to provide vehicle, plant and equipment loans. The money came from the issue of almost 4 million Kiwi Asset Finance shares to Kiwibank at NZ$1 each. Meanwhile, Kiwibank's KiwiSaver business, set up on July 1 last year and managed by AMP Capital, had NZ$40 million under management at June 30 this year.
Brock said after launching a loan insurance product Kiwibank was now aiming to roll out life insurance products this calendar year. He said he hoped the bank would have the best value life insurance offer in the market.
"(But) it will depend on the nature of the risk and those sorts of things. But certainly we'll look to have a broad mainstream (life insurance) offer that is good value for New Zealanders." See more on Kiwibank's insurance plans in this Double Shot interview with Brock.
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