For the half year ending 31 December 2018 the Kiwibank Banking Group, delivered a net profit after tax (NPAT) of $62 million up from $42 million for the six months ending 31 December 2017.
“Kiwibank is back to the performance levels it enjoyed before the Kaikoura earthquake and the abandoned technology project CoreMod,” Mr Jurkovich said.
“Kiwibank’s profits have always been modest in comparison to our Australian-owned competitors. We make an impact by returning profit to, and reinvesting in New Zealand. To maintain this momentum, we’ll continue to chip away at market share,” he promised.
“Our customers are getting a better deal than ever before. We have worked hard to simplify transactional fees and this value is illustrated in our results with net fees and other income down 20 percent year-on-year.”
Kiwibank’s capital position has remained strong. Capital ratios are well above regulatory minimums and higher than most other banks. During the six-month period, rating agency Standard & Poor’s moved Kiwibank credit rating outlook from ‘stable’ to ‘positive’.
“Capital adequacy is an area we need to consider when planning. We have now had time to digest the Reserve Bank’s capital review proposal. It creates more of an even playing field in several areas, like how capital requirements are calculated, but it is not without implications. We understand and support the Reserve Bank’s philosophy. It is in everyone’s interest to have a strong local banking system that is deeply invested in New Zealand and supports great customer outcomes. Kiwibank’s capital levels are currently significantly above the regulatory requirement but we’ll need to continue to review this position over the transition period proposed.
“Another area of focus is our cost-to-income ratio. While an eight percent improvement is pleasing, looking forward, operating expenditure sitting at 67 percent of income is unsustainable. We are finding ways to improve efficiency and work smarter while better serving our customers.
Kiwibank Banking Group financials for the half-year ended 31 December 2018
1. Other impairment losses: Impairment loss recognised in relation to computer software (the CoreMod IT project)
2. Operating costs incurred to wind down CoreMod: Operating costs incurred in relation to the CoreMod IT project subsequent to the Board decision to close the project.
3. Net earthquake (recoveries)/costs: Earthquake costs are operating expenses incurred by the Group as a result of the November 2016 Kaikoura earthquake net of insurance receipts recognised to date.