Kiwibank 1H profit recovers from quake, GFC impacts

Thursday 23rd February 2012

State-owned Kiwibank restored first-half profitability, posting net income of $37.9 million, compared with a slump to $13.9 million a year earlier.

Chief executive Paul Brock put the rebound down to a combination of growth in the bank’s lending portfolio and recovery from the impact of the Canterbury earthquakes, the first of which hit on Sept. 4, 2010, during the comparable period under review.

Improving economic conditions following the recession exacerbated by the global financial crisis also contributed to Kiwibank reporting its strongest first-half profit to date.

Net interest income for the half year was $123 million, up 38 percent from $89 million in the same period last year, and the bank has worked to become more reliant on retail deposits for its funding.

Although the proportion of retail deposits to total retail lending was stable at 71 percent, total retail deposits were up 13 percent to $8.6 billion, compared with the first half of the previous financial year, while wholesale deposits fell 11 percent to $3.1 million.

Total loans and advances were 10 percent higher than the prior period, at $12.1 billion.

Cost to income ratios have also been improving, falling to 65 percent from 70 percent in 2010 and net interest margins increase from 1.42 to 1.69 percentage points.

Impaired assets also showed improvement at 0.76 percent of total assets, placing Kiwibank towards the bottom end of the range for impairment exposure among New Zealand banks.

With more than 800,000 customers, Brock said Kiwibank was on its way “inevitably” to a customer base of more than one million, and would be targeting growth in the small and medium enterprise sector.

On a net interest income to average total assets basis, profitability improved from 1.42 percent to 1.69 percent between the two comparable periods, while net profit after tax to average shareholders’ funds rose from 4.68 percent to 11.42 percent.

(BusinessDesk)

BusinessDesk.co.nz

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