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Kiwibank reports $52 million profit

Kiwibank’s changes to the way it insured low-deposit loans meant it was already pulling back before the Reserve Bank rules forced it to, its chief executive says.

Monday, February 24th 2014, 11:22AM

by Susan Edmunds

The bank today declared an after-tax profit of $52 million for the six months ended December 31, down from a record $58 million for the same period in 2012.

Kiwibank also announced it would be making a substantial investment, estimated to be more than $100 million over the next four years, upgrading   its core banking systems. 

Chief executive Paul Brock said total lending had increased by 5.7% over the period to $14 billion.

It moved to self-insure low-equity loans in August, a couple of months before the rules limiting low-deposit lending came into force.

Brock said that meant it had already pulled back on its lending in that area. “We were sorting that out anyway so were in good shape when the rules came out.”

He said Kiwibank gave about 9% of its new loans to borrowers with a deposit of less than 20% in January, just under the 10% required by the Reserve Bank. He said it was tracking well to remain within 10% over the first six-month period.

The bank had just $8 million in off-balance sheet home loan exposures for borrowers with LVRs over 90%, compared to $251 million for borrowers with equity of more than 20%.

Banks that had completely turned off low-deposit lending had forced customers to look elsewhere, he said.

“We have seen a lot of extreme reaction in the market, and that’s driven activity overall and we’ve seen some of that come to us. It’s been challenging for customers, who’ve had to figure out what they can do.”

Brock said most banks would target 2% or 3% below the 10% threshold to ensure they did not breach the rules.

He said the bank was seeing more pressure on interest rate margins, especially as customers shifted to fixed rates.

Brock expected that it would not be long before 70% of customers were on fixed rates, from the 60% at present.

Anti-money laundering legislation had required a significant investment in the half, he said. “It was not a cheap exercise, there was a lot of investment into the customer information part of the system.”

« Firms charged over non-reportingShort-term fixers keep market competitive: Report »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 ▼4.65 ▼4.80 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank 5.15 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.55 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society 5.50 3.95 4.05 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.97 4.05 4.39

Last updated: 24 January 2020 8:55am

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