The bank outpaces market in lending growth
Kiwibank reported a net profit after tax of $92 million for the six months ending December 31, marking a 12% decline from the prior half-year period.
This drop is attributed to a lower net interest margin (NIM) and rising operational costs, driven by a challenging economic environment and increased investments in transformative programs.
Despite the profit dip, Kiwibank demonstrated resilience with continued strong performance in lending and deposit growth.
Lending and deposit growth outpace market
Kiwibank achieved net lending growth of $2 billion, expanding its lending book by 6% to $34.4 billion, which is 2.1 times faster than the market for home lending and more than six times faster for business lending.
Similarly, deposits increased by $1.8 billion, boosting the deposit book by 6% to $30 billion, growing 1.6 times faster than the market average.
Strategic investments fuel growth and security
Kiwibank CEO Steve Jurkovich (pictured) stressed that Kiwibank’s growth was supported by substantial investments in products, services, and technology.
“To support our faster than market growth, we made significant investments in products, services, and technology to enhance the experience for our customers,” Jurkovich said.
Key investment areas included a transformation program to enhance operational efficiency and customer satisfaction through scalable systems, expanded fraud prevention initiatives with a specialist fraud team and the Confirmation of Payee service, and branch upgrades and relocations to improve accessibility and customer experience in locations such as Papanui, Hornby, Riccarton, and New Plymouth.
Navigating economic challenges and looking forward
The lower NIM, which fell to 2.29% from 2.48%, reflects the impact of a subdued housing market and high interest rates. Additionally, the cost-to-income ratio increased, and loan impairments rose by 29% to $21 million, indicating a cautious approach to economic uncertainties.
“Over the past six months, we supported Kiwi through challenges from economic downturns to high interest rates and a subdued housing market,” Jurkovich said.
Despite these headwinds, Kiwibank remains optimistic about future growth prospects, supported by easing interest rates and anticipated economic recovery.
“The OCR track signals more cuts to come, which are needed for Kiwi households and businesses looking to borrow and to create momentum in the economy,” Jurkovich said.
The bank anticipates improved retail and business confidence as lower interest rates stimulate economic activity.
Capital boost and market expansion plans
Late last year, Finance Minister Nicola Willis revealed that Kiwibank had been approached to raise up to $500 million from local institutional investors through a private capital raise. This initiative is aimed at strengthening the bank's capital base for sustained growth and is seen as a precursor to a potential share market listing in 2028.
The move to scale up Kiwibank aligns with recommendations from the Commerce Commission’s banking market study published in August, which highlighted a lack of competition within the sector.
