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BNZ trumps Kiwibank in deposit rate war during June quarter

The Bank of New Zealand beat out Kiwibank for retail deposits in the June quarter.

Wednesday, August 18th 2010, 9:08PM

by Paul McBeth

The two banks are the first to lodge their General Disclosure Statements for the three months through June, and BNZ came out on top in the deposit rate war, attracting $277 million of new deposits, taking its total to about $17 billion. That beat out Kiwbank's flat quarter which saw it stay around $6.9 billion.

Kiwibank blamed a tough market for retail deposits as the reason behind its 13% decline in bottom-line profit to $45.8 million in the year through June, as the bank's margins came under pressure as it tried to compete aggressively against the Australian-owned banks, which took a more conservative stance. Banks have to raise more money locally to meet pending prudential requirements that demand lenders have more funds on hand in case of a credit crunch.

On the other side of the ledger, Kiwibank lifted its loan book $300 million in the quarter to $10.4 billion, a bigger gain than BNZ's $244 million increase. The Australian-owned bank's mortgage ledger is at about $26 billion.

Separately, Kiwibank secured the promise of uncalled capital support from the government should its AA- credit rating come under pressure from an unforeseen event. The terms and conditions are being worked out, and though the figure is commercially sensitive, NZ Post chief executive Brian Roche reportedly told a media conference it was in the "low hundreds of millions".

The bank rapid expansion, which includes looking to tap the corporate sector, has put its double-A credit rating under stress.

 

Paul is a staff writer for Good Returns based in Wellington.

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