Kiwibank declares $36.8 million profit
Kiwibank has announced an after-tax profit of $36.8 million for the 12 months ended 30 June 2008. Chief Executive Sam Knowles described the result as "very satisfactory in a challenging economic environment".
The profit for the previous year (2007), has been restated under new accounting procedures adopted by banks, from $25.5 million to $30.9 million.
Mr Knowles said in the last year:
Loans and advances increased 57 per cent from $3.6 billion to $ 5.6 billion
Retail deposits increased 46 per cent from $ 3.3 billion to $ 4.8 billion
Mr Knowles said the continued growth in loans and deposits was an excellent result for the bank. "Our very strong deposit growth enabled the bank to be largely self-funded for residential and small business loans. This reduced the bank's exposure to the more expensive and volatile wholesale markets and enabled us to maintain competitive home loan rates. In fact the bank continually led the market down in loan interest rates, but still maintained some of the best term deposit and online call rates available."
The increase in the loan portfolio included the acquisition of the AMP home loan portfolio of $700 million.
An aggressive and cheeky advertising campaign encouraging New Zealanders to 'join the movement' to the Kiwi-owned bank also helped maintain customer growth momentum. "We still sign up 2000 customers most weeks and now close to 650,000 have joined the bank since it was launched. No one could have expected that kind of result after only six years of operation." Mr Knowles said the underlying performance of the bank was very strong. "The financial result has been affected by new accounting procedures that change the way in which the profitability of loans is assessed. The impact of that has been to increases last year's profit, but slightly constrain the result for this year. But the really important fact is that the bank continues to increase profit month by month, year by year."
He singled out small to medium business banking as one of the key strengths in the continued improved performance by the bank. "We clearly have struck a chord with small businesses in New Zealand. They like our rates and they like our service. We are getting very solid growth in our business-banking portfolio, but at a level that we can ensure we maintain excellent service."
Mr Knowles said the deposit market in New Zealand over the last year had offered great opportunities for innovation. "We launched the new PIE accounts that offers significant tax advantages for people in the higher tax brackets. The bank has been promoting Term Deposit and Online call PIE accounts and attracted more than $120 million of deposits in the first four weeks after the accounts were launched."
From 1 July, 2007 Kiwibank adopted the New Zealand International Financial Reporting Standards (IFRS) that have changed the accounting procedures for assessing various aspects of the business (goodwill, asset valuations and taxation). The profit for the 12 months ended 30 June, 2007 using previous accounting procedures was $25.5 million. This has been restated in the current financial statements using the IFRS procedures.
For further information:
Bruce Thompson, Communications Manager
(04) 460 6831.