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Yep, OCR up 50 basis points

The Reserve Bank explains why it hiked the OCR 50 basis points today. [READ ON]

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Flat six months for Kiwibank

Scope for interest rates to drop is limited as funding costs are increasing and this could compress bank margins, according to Kiwibank.

Monday, February 22nd 2016, 12:20PM

by Miriam Bell

The bank’s chief executive Paul Brock said wholesale funding costs are going up for banks and that could have a bearing on interest rate margins.

“So if rates are going down you could see further compression of margins.”

Brock was speaking at a media briefing on Kiwibank's half-year financial results – which were flat, although there an almost 5% increase in its lending business.

Kiwibank declared an after tax profit of $71 million for the six months till December 31, 2015. 

This matches the after tax profit of $71 million it reported for the same period in 2014. 

Net interest income year-on-year rose $10 million to $189 million.

But, over the same period, total operating revenue was up just $5 million to $245 million as net fee and other income fell.

The bank’s impairment allowance dropped $3 million to $6 million year-on-year.

Kiwibank chief executive Paul Brock said the after tax profit result was pleasing given the highly competitive market and the bank’s ongoing investment in the upgrade of its core banking systems.

“It is healthy consolidation after spectacular growth for the same period reported last year of more than 35%”.

Brock said the bank’s total lending – which includes home loans, business banking and credit cards - increased by 4.8%, from $15.60 billion to $16.35 billion.

Loan growth was mainly funded through customer deposit growth which increased by 5.0%, from $13.74 billion to $14.43 billion, he said.

“Customer support has enabled Kiwibank to continue to fund lending for home loans from deposits by more than 80%.”

Growth in new customers continued to be strong with the bank’s total customer base now at 920,000, as compared to 880,000 at the same time in 2014.

The bank’s wealth business was also tracking well, with after tax profit of $6 million over the six months period. This was up 35% on the same period last year.

There was increasing growth and revenue diversification from Kiwi Wealth and Kiwi Insurance businesses with funds under management up 6.7% to $3.8 billion.

Brock said the trading period of the last six months of last year was “volatile”.

This was due to the OCR continuing to fall, interest rate margins tightening and vigorous competition for loans and deposits.

It was interesting times for the New Zealand economy, he said.

“The global scene has had quite a big impact – notably in the dairy sector. But that has been off-set by high ongoing net migration and tourism.

“The New Zealand economy has been surprisingly resilient. Going forward, it’s going to be a bit tougher for a bit longer.”

However, he doesn’t think an OCR cut is necessary “right now”.

“I think we have got low interest rates and that is helping the economy. But any further OCR cut comes down to the wisdom of the Reserve Bank based on all the stats that they see.”

Meanwhile, Kiwibank paid NZ Post a dividend of $24 million, in the six months to December 31. This bought total dividends paid in 2015 to $46 million.

Tags: Kiwibank

« HSBC offers lowest home loan rate in over 50 yearsThreats linger for banks – S&P »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 4.29 5.09 5.35
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - 4.19 - -
The Co-operative Bank - Owner Occ 5.45 4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 4.79 5.69 5.95
TSB Bank 5.59 5.14 ▼5.79 6.15
TSB Special 4.79 4.34 ▼4.99 5.35
Unity 5.65 4.80 5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 19 May 2022 10:42am

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