Kiwibank Six-Month Profit Announcement

24 FEBRUARY 2011

Kiwibank has declared a profit of $13.9 million after tax for the six months ended December 31, 2010. This compares with a profit after tax of $23.5 million for the same period in 2009.
Kiwibank Chief Executive Paul Brock described the result as having “a strong underlying performance impacted by the inevitable effects of the global financial crisis that has resulted in increased provision for bad debts”.
In the six months from July 1, 2010 to December 31, 2010:
• Total lending (home loans, business banking and credit cards) increased 5% from $104 billion to $10.9 billion
• Retail deposits increased 10% from $6.9 billion to $7.6 billion
The bank has increased provisions for bad debts from $19.5m to $45.5m.
During the six-month period a new chief executive was appointed (Paul Brock replacing Sam Knowles) and a new chairman (Ian Fitzgerald replacing Jim Bolger).

Mr Brock said the most significant impact on the result had been increased provision for bad debts. He said these were largely unsuccessful business investments and very few involved domestic home owners. Mr Brock said the level of at-risk loans remained very small compared with the total lending portfolio and reflects falling value of certain classes of property collateral and remains modest when compared with other banks.

Mr Brock said total income for the period was up $15 million to $169 million (9.9%) and operating expenses were up $7 million to $118 million (6.6%).Net-interest-income has increased from $66.3m to $89.3m (1.19% to 1.42% of total assets), the increase being driven primarily by the higher margin variable loans compared to fixed loans.

Mr Brock said there had been many positive developments during the last six months including the launch of the bank’s own Kiwisaver scheme and the Notice Saver investment product, that has attracted more than half a billion dollars in less than six months..

Mr Brock said the outlook for continued growth of the bank was very positive. “After nearly nine years we are continuing to build market share; continuing to build our loan and deposit portfolios and most importantly continuing to make a positive impact on the New Zealand banking sector.

ENDS

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