Kiwibanks Mortgage Growth Outpaces Market by 2.7 Times

Highlights:

• Mortgage Growth Leadership: Kiwibank's mortgage book expanded at 2.7 times the market rate, adding NZ$2.48 billion over the past year, solidifying its position as a market disruptor.
• Strong Financial Performance: The bank reported a 15.4% increase in net profit to NZ$202 million, with a significant decrease in bad debt charges, despite a slight dip in net interest margin.
• Future Expansion and Capital Needs: CEO Steve Jurkovich welcomes the potential for increased government capital, as Kiwibank continues its multi-year transformation to accelerate growth and challenge the major banks.

Kiwibank's Disruptive Growth Strategy

Kiwibank has reported impressive growth, expanding its mortgage book at 2.7 times the rate of the overall banking market, reinforcing its role as a market disruptor. In the year ending June 2024, the government-owned bank increased its mortgage portfolio by NZ$2.48 billion. Notably, this growth accelerated from NZ$1.19 billion in the first half of the year to NZ$1.29 billion in the second half, despite the Reserve Bank keeping interest rates at a 16-year high.

Financial Performance and Market Position

Kiwibank’s total net lending rose by NZ$2.8 billion, or 9.3%, reaching NZ$32.4 billion. The bank’s net profit for the year grew by 15.4% to NZ$202 million, driven by a 3.8% increase in net interest income. Additionally, charges for bad debts decreased to NZ$24 million, down from NZ$37 million the previous year. However, the bank’s net interest margin (NIM) dropped by 10 basis points to 2.38%. In comparison, ASB Bank, which has a significantly larger asset base, reported a NIM of 2.24% and a mortgage book increase of just over NZ$1 billion during the same period.

Future Outlook and Capital Requirements

CEO Steve Jurkovich highlighted that this marks the fifth consecutive year of profitability growth and market outperformance for Kiwibank. He emphasized that the bank's strong results demonstrate its continued role as a challenger to the major banks, attracting more Kiwi customers and gaining momentum in the market. Jurkovich also responded positively to the Commerce Commission’s recent recommendation that the government provide Kiwibank with more capital to further disrupt the market. He noted that the bank is well-positioned to take on the challenge, bolstered by a recent NZ$225 million capital injection and a multi-year transformation plan aimed at sustaining its growth trajectory.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com