![Kiwibank](/sites/default/files/2024-08/kiwibank-logo1.jpg)
The would be 'maverick' of the New Zealand banking scene, Kiwibank, has posted a record $202 million after-tax profit for the year to June and says it is up for the challenge of taking on the big four banks.
The announcement of the 100% crown-owned bank's record earnings comes amid the backdrop of release of the Commerce Commission's final report into competition for personal banking services.
The Government response has included Finance Minister Nicola Willis asking Treasury to work with Kiwibank’s parent company, Kiwi Group Capital, to provide advice before the end of 2024 on options for raising new capital, including from KiwiSaver funds, New Zealand investment funds and investment from regular New Zealanders.
Willis said she shares the Commerce Commission’s vision for a stronger, more disruptive Kiwibank. "I want it to have the growth capital it needs to become a ‘maverick’ that exerts real competitive pressure on the big four."
Well, Kiwibank's saying it's ready for it.
In announcing a 15% climb in after-tax profits and 9.3% growth in the lending book to $$32.4 billion, Kiwibank's chief executive Steve Jurkovich said Kiwibank was "up for the challenge of fulfilling the role of 'maverick' and taking on the large four banks".
"Kiwibank has been successfully growing market share for some time now, supported in part by $225 million of additional capital injected in July 2023 by our 100% shareholder, Kiwi Group Capital.
"We would welcome more access to capital over time to deliver on our Purpose. Kiwibank is currently focussed on a multi-year transformation that will deliver more scalable systems to enable it to further accelerate its current growth. Any future capital investment would need to take timing of the transformation into account in order to maximise value."
In terms of the financial year just finished, Jurkovich said Kiwibank had "once again outperformed the New Zealand banking market" while continuing to invest more than ever in its transformation to enable future growth and "deliver on its Purpose of Kiwi making Kiwi better off".
"For the fifth consecutive year, Kiwibank has improved its profitability and grown faster than our competition, as we continue to build a stronger asset for New Zealand with all our earnings staying right here.
"We know there’s plenty of choice out there, but today’s result shows once again that we are fulfilling our role as a disruptor, more Kiwi are choosing us, and momentum is on our side.”
Mr Jurkovich said Kiwibank recorded positive gains across nearly all key financial metrics in FY24, in a challenging economic environment.
The bank achieved net lending growth of $2.8 billion, growing its lending book by 9.3% to $32.4 billion. Home lending grew 2.7 times faster than the market and business lending more than 3 times faster than market. Deposits increased by $2.4 billion, growing the deposit book by 9.4% to $28.2 billion and 2.6 times faster than market growth.
"We’ve worked incredibly hard to build and maintain the trust of our customers during FY24 and to be there in those moments that matter."
Jurkovich said the Reserve Bank's decision to cut the Official Cash Rate last week [from 5.5% to 5.25%] was the "right thing to do" and that Kiwibank was forecasting twelve, 25 basis-point cuts, or 300bps in total.
"The magnitude of these rate cuts will be positive for Kiwi households and businesses looking to borrow and create momentum for the New Zealand economy.
"As inflation and interest rates come down, we expect to see a rise in confidence and a much more positive outlook heading into 2025 and beyond."
29 Comments
For those that have an account it's not so good news, it's them that they made the money off.
Just look at uncompetitive their rates were last week. They have just dropped rates again today, and so did ASB, but kiwibank drops are twice the size, and at best match the ASB rates (1y) or are higher (everything else).
... that depends upon how you define " selling Kiwibank " ... Willis has indicated that they could almost double Kiwibank's balance sheet by diluting the governments share from 100 % , down to 51 % ... allowing a massive expansion of the bank via an NZX listing ...
Which is a good thing , right ?
Comparing apples & mangoes there ... the eclectic gentailers were sold down , $ billions pocketed by the Key gumnut ... and subsequently $ billions pocketed by KS funds & private investors as those eclectic companies grew their profits mightily... ...
... a different story here , the Luxom gumnut pockets nothing , nada , $ zero ... but ... KB pockets $ billions to fund it's growth ...
"Home lending grew 2.7 times faster than the market....."
That's all that matters ....as long as the property market doesn't go belly-up. (NB: That... "and business lending more than 3 times faster than market" will more than likely be backed by the same collateral - property. And if Kiwibank wants to be anything but a small, mainstream bank, being a maverick is lending to business' based solely on business' case)
Not at lot, they are still small, eg total assets above of 36.65B, the registered banks have $490billion in housing, personal loans and business lending, so they are still well less than 10% of that. (I left out agriculture, $63 billion as KB doesn't play in that market afaik)
From my mate Chatgpt. The trend is good, albeit a bit slow.
Also of interest, ANZ lost 10% market share in the last 20 years, going from 40% to 30%.
Here are the approximate mortgage market shares for Kiwibank over the last 10 years:
- **2014**: ~4.1%
- **2015**: ~4.3%
- **2016**: ~4.5%
- **2017**: ~4.7%
- **2018**: ~5.0%
- **2019**: ~5.3%
- **2020**: ~5.7%
- **2021**: ~6.0%
- **2022**: ~6.5%
- **2023**: ~7.0%
- **2024**: ~7.3%
These figures are based on estimates and growth trends from various financial reports and sources.
If that's correct, at the current growth rate they will hit 20% market share in ~15 years, which would put them on a similar scale to ASB, BNZ and Westpac, who are all around 20%, but would lose some market share to Kiwibank.
But as others have noted, to me Kiwibank's only real point of difference these days is that they're NZ owned and their profits stay in NZ. Interest rates appear to be broadly similar to the other banks, and the types of accounts are similar across all the major banks.
Given interest rates are actually reasonable at the moment, one idea would be an everyday chequing account that also carries interest similar to the various savings accounts. At the moment it's a bit of a pain moving money between accounts to get interest, but also ensure you always have enough for bills. I think something like that could be a reasonable draw card, though the other banks would likely match it.
Strange comments - but new business are going around banks. Emerge.NZ - Business Credit Card app that connects to Xero - set up 10 cards in a day for a business team. ASB please fill in paperwork..talk to many people in the Bank...secure your life and we may issue you one begrudgingly in about 4 weeks.
... no , they have repeatedly said that they will not sell it ... emphasis on the word " not " ...
But they can add $NZ Billions to KB's balance sheet by allowing KS fund investment / or an NZX listing ...
... ergo , the governments net share of KB drops from 100 % ownership , to 51 % ... but the $ value of the state stake in KB remains unchanged ...
Prof Robert MacCulloch opines that if the government gifted every Kiwi kid a KS account with $ 100 in it , at age 10 ... we would create a new generation who's banking life & interest starts with KS ... an awesome advantage to take future kiwi bank customers away from joining the big 4 Aussie banks ... a true disruptor to their cosy pillow fight competition ...
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