Kiwibank On Strong Growth Path

20 August 2009
Media Release
Kiwibank On Strong Growth Path

Kiwibank has announced a normalised after-tax profit of $52.5 million for the 12 months ended 30 June 2009. Chief Executive Sam Knowles described the result as "a clear indication that the bank is on a strong growth path".

The profit for the previous year (2008) was $36.8 million after tax. The declared profit does not include an additional $11.1 million that has resulted from a structural change in the ownership of the bank by New Zealand Post. The profit including the restructuring gain is $63.6 million.

Mr Knowles said in the last year:

* Loans and advances increased 52 per cent from $5.6 billion to $8.5 billion

* Retail deposits increased 39 per cent from $4.8 billion to $6.7 billion

Mr Knowles said the bank had experienced sensational growth in residential home loans, outperforming many of the large Australian-owned banks, particularly in the last quarter of 2008. "The lending was extremely high quality and we believe at fair interest rates."

The credit performance of the loan portfolio remains strong with impaired loans increasing from $4 million to $19 million over the year. This represents 0.2 per cent of total assets, a lower ratio than those of Kiwibank's competitors.

Mr Knowles said the deposit market had been very competitive and this had put some pressure on lending rates in the last quarter of the year. "However we have been able to increase our PIE deposits to more than a billion dollars, the largest PIE portfolio of any bank operating in New Zealand." The PIE tax regime caps tax at 30 per cent, making them very attractive for many customers that pay 38 per cent tax on deposits.

During the year the bank launched its Visa Debit Card, attracting what Mr Knowles described as a "massive uptake".

The business banking division continues to perform well and gain market share for small and medium-sized enterprises. Mr Knowles predicted strong growth in this area over the coming financial year.

In September, Kiwibank successfully raised $60 million through an unsecured subordinated bond issue, the proceeds of which were used to augment its capital base and support further expansion and growth. The issue was over-subscribed with substantial investor interest across a broad range of accounts. The strong demand was a testament to the strength of the bank, particularly given the volatile international financial markets of the time.

ENDS

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