Kiwibank six-month financial result

22 February 2016

MEDIA RELEASE

Kiwi Group Holdings and Kiwibank six-month financial results

(July 2015 – December 2015)

Kiwi Group Holdings, which includes Kiwibank, Kiwi Insurance and Kiwi Wealth, has declared a profit of $73 million after tax for the six months ended December 31, 2015.

This compares with a profit after tax of $72 million for the same period in 2014. Kiwi Group Holdings is owned by New Zealand Post Group.

Kiwi Group Holdings and Kiwibank Chief Executive Paul Brock described the results as “a healthy consolidation after spectacular growth for the same period reported last year of more than 35%”.

The Kiwibank contribution to the result was $71 million, matching the $71 million for the same period last year.

Focusing on the bank result, Mr Brock said that in the six months from July 1, 2015 to December 31, 2015:

Total lending (home loans, business banking and credit cards) increased 4.8%
from $15.60 billion to $16.35 billion

Customer deposits increased 5.0% from $13.74 billion to $14.43 billion

Mr Brock said the Group was on track to match and possibly exceed last year’s full year result of $127 million after tax which was a pleasing result in a period of significant spend on strategic initiatives.

Mr Brock described the trading period of the last six months of last year as “volatile” with the Official Cash Rate continuing to fall, interest rate margins tightening and vigorous competition for loans and deposits.

“Customer support has enabled Kiwibank to continue to fund lending for home loans from deposits by more than 80%.

“We have also maintained customer growth with our total customer base at the end of the year at 920,000 (880,000 at the same time in 2014). The critical measure of Main Bank Customers increased from 418,000 in December 2014 to 435,000 at the end of 2015.

“This is very encouraging support of a New Zealand-owned bank in an internationally competitive banking environment.”

Mr Brock said there were a number of other significant events during the reporting period including:

Continued investment and progress in upgrading the bank’s core technology systems

On-going investment in digital business strategies including digital on-boarding

Increasing growth and revenue diversification from Kiwi Wealth and Kiwi Insurance businesses with funds under management up 6.7% to $3.8bn

Reaching agreement on two stand-alone Kiwibank branches in central Christchurch and Hamilton (all branches previously operated through Post Corporate or franchise shops)

Standard and Poor’s Rating Services affirming Kiwibank’s credit rating as A+ stable (previously negative)

Dividend paid to NZ Post of $24m, bringing total dividends paid in 2015 to $46m.

Profit and loss

Dollars in millions6 months ended6 months ended6 months ended
KGHL

Net interest income192 183 4.9%182

Net gains/(losses) on financial instruments7 2 Large3

Net fee and other income72 72 0.0%73

Total operating revenue271 257 5.4%258

Operating expenses(160)(165)-3.0%(146)

Impairment allowance(6)(4)50.0%(9)

Finance costs(7)(4)75.0%(3)

Net profit before taxation98 88 11.4%100

Income tax expense(25)(24)4.2%(28)

Net profit after taxation73 64 14.1%72

Kiwibank

Net interest income189 182 3.8%179

Net gains/(losses) on financial instruments7 2 Large3

Net fee and other income49 49 0.0%58

Total operating revenue245 233 5.2%240

Operating expenses(146)(151)-3.3%(133)

Impairment allowance(6)(4)50.0%(9)

Net profit before taxation93 78 19.2%98

Income tax expense(22)(22)0.0%(27)

Net profit after taxation71 56 26.8%71

31 Dec 201530 Jun 2015% Growth31 Dec 2014

2

Balance Sheet

Growth

6 months to

12 months to

31 Dec 2015

Growth

31 Dec 2015

Dollars in millions31 Dec 201530 Jun 201531 Dec 2014

KGHL

Assets

Loans and advances16,332 15,581 15,041 4.8% 8.6%

Wholesale & other assets3,076 3,186 2,549 (3.5%)20.7%

Total assets19,408 18,767 17,590 3.4% 10.3%

Financed by:

Liabilities

Customer deposits14,410 13,723 13,272 5.0% 8.6%

Securities issued & other liabilities3,694 3,768 2,952 (2.0%)25.1%

Total liabilities18,104 17,491 16,224 3.5% 11.6%

Shareholder's equity1,304 1,276 1,366 2.2% (4.5%)

Total liabilities & shareholder's equity19,408 18,767 17,590 3.4% 10.3%

Kiwibank

Assets

Loans and advances16,349 15,598 15,054 4.8% 8.6%

Wholesale & other assets2,647 2,746 2,107 (3.6%)25.6%

Total assets18,996 18,344 17,161 3.6% 10.7%

Financed by:

Liabilities

Customer deposits14,430 13,740 13,283 5.0% 8.6%

Securities issued & other liabilities3,492 3,571 2,840 (2.2%)23.0%

Total liabilities17,922 17,311 16,123 3.5% 11.2%

Shareholder's equity1,074 1,033 1,038 4.0% 3.5%

Total liabilities & shareholder's equity18,996 18,344 17,161 3.6% 10.7%

ends

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