Kiwibank profit falls by almost half - result was “expected”

Kiwibank has announced its full-year results, and has recorded a net profit after tax of $57 million for the 12 months to 30 June 2020 - down from $108 million for the prior corresponding period.

Kiwibank CEO Steve Jurkovich says this result was “expected,” and reflects the impact of COVID-19 and a lower interest rate environment. He says operating expenses have increased in line with the bank’s growth, and it has also set aside $51 million in credit impairment provisions - up from $12 million on the prior corresponding period.

“As expected, this result reflects the impact of COVID-19 and a lower interest rate environment on the bank,” Jurkovich said.

“At the same time, we continued to increase our investment in good customer outcomes and our transformation to be an even better bank.”

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“Kiwibank continued to grow at a faster rate than the market, with lending growth of 9% and deposit growth of 13% in FY20. The market grew at a slower pace of 5% and 9% respectively,” Jurkovich added.

“As a result, we are growing our lending and deposit rates faster than the market to help more New Zealanders into homes, more Kiwis to save, and support more businesses – living up to our purpose of Kiwis making Kiwis better off.”

Jurkovich highlighted the “leadership role” that Kiwibank had taken over lockdown, where it rolled out initiatives such as the Kiwibank Relief and Resilience programme, which provided support to over 8000 personal and business banking customers. It also switched to paying its suppliers on a weekly basis, and introduced a “significant reset” of its variable home loan rates with a one percentage point drop.

“Looking ahead, we will continue to play our role in New Zealand’s economic recovery by offering a better banking alternative that’s committed to being fair and easy for Kiwis, the businesses they own, and for future generations,” Jurkovich said.