Kiwi Group Holdings (KGH) which includes Kiwibank, Kiwi Wealth, Kiwi Insurance and New Zealand Home Loans, has made a profit after tax of $65 million for the six months ending 31 December 2016, compared with $73 million for the same 6 month period in 20151.
The Kiwibank Banking Group2 has declared a net profit after tax of $63 million for the six months ended 31 December 2016, a 11% decrease on the $71 million profit for the same period in 2015.
Kiwibank Chief Executive Paul Brock said the Group result was in line with expectations. Key underlying performance indicators were continuing to improve (deposit and lending growth) but financial results had been impacted by funding pressures, continued investment in the bank’s infrastructure, and to a lesser extent the Kaikoura earthquake.
Kiwi Wealth continued its strong growth, with digital initiatives recently introduced to provide an enhanced customer experience.
Since the previous reporting period (30 June 2016):
- Total lending (home loans, business banking and credit cards) increased 4.4% from $16.69 billion to $17.43 billion
- Customer deposits increased 3.9% from $14.78 billion to $15.36 billion
- Impaired assets fell to 0.05% of total loans and advances
- Personal and business banking customer showing good growth
- Funds under management increased 8% to $4.2 billion
Lending activity continues to grow, although at lower margins than previous periods. Mr Brock said most banks have a renewed focus on increasing customer deposits. Domestic deposits continue to provide essential funding for more than 80 per cent of Kiwibank’s lending, which insulates it to a degree from volatile international markets.
Mr Brock said the continued growth in small to medium business banking was particularly encouraging. “This has always been a major target area for Kiwibank and the potential for further growth is significant. New Zealand is built on small businesses and there is a natural alignment between those businesses and a New Zealand-owned company like Kiwibank.
During the reporting period Kiwibank introduced New Zealand’s first FinTech Accelerator Programme to help grow the country's share of a burgeoning global $1 trillion (NZD) industry. Kiwibank has joined with Callaghan Innovation and Creative HQ for the programme that is initially providing funding and support for eight Kiwi FinTech start-ups to build, launch and expand products in global markets.
Operationally, the Kaikoura earthquake of November 14 had forced the immediate relocation of more than 1000 staff from New Zealand Post House.
"The quake proved the value of our investment in the satellite operation in Hastings which enabled banking services to continue without interruption. We immediately transferred additional staff to Hastings and Auckland and set about finding alternative premises for our Wellington staff."
"We now have a number of alternative sites in Lower Hutt and Wellington City to ensure we’re as close to business as usual as we can achieve."
In October 2016, one of the most significant events to occur since Kiwibank’s launch was the diversification in ownership of the bank’s holding company, Kiwi Group Holdings. Once totally owned by New Zealand Post, KGH now has three Government entity shareholders: New Zealand Post 53%; New Zealand Super Fund 25% and ACC 22%.
1Underlying, unaudited results of the KGH Group. 2Disclosure Satatement dated 31 December 2016
Kiwibank Banking Group Financial Summary:
Profit and Loss
|
$m* |
6 months to 31 Dec 2016 |
6 months to 31 Dec 2015 |
12 months to 30 June 2016 |
|---|---|---|---|
|
Net interest income |
182 |
189 |
373 |
|
Other income |
66 |
56 |
104 |
|
Total operating revenue |
248 |
245 |
477 |
|
Operating expenses |
(164) |
(146) |
(301) |
|
Impairment reversals/(losses) |
2 |
(6) |
(11) |
|
Profit before taxation |
86 |
93 |
165 |
|
Income tax expense |
(23) |
(22) |
(41) |
|
Dividends paid on ordinary shares |
(5) |
(24) |
(29) |
|
Dividend paid to holders of perpetual capital |
(6) |
(6) |
(11) |
|
Dividends paid to non-controlling interest |
(1) |
— | — |
Balance Sheet
|
$m* |
As at 31 Dec 2016 |
As at 31 Dec 2015 |
As at 30 June 2016 |
|---|---|---|---|
|
Assets |
|||
|
Loans and advances |
17,428 |
16,349 |
16,689 |
|
Other assets |
2,580 |
2,647 |
2,668 |
|
Total assets |
20,008 |
18,996 |
19,357 |
|
Liabilities |
|||
|
Deposits and other borrowings |
15,362 |
14,430 |
14,782 |
|
Debt securities issued |
2,446 |
2,507 |
2,207 |
|
Other liabilities |
905 |
985 |
1,239 |
|
Total liabilities |
18,713 |
17,922 |
18,288 |
|
Equity |
|||
|
Share capital |
490 |
400 |
400 |
|
Reserves |
805 |
674 |
729 |
|
Total equity |
1,295 |
1,074 |
1,129 |
|
Total liabilities and shareholders equity |
20,008 |
18,996 |
19,357 |