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We're not average: Kiwibank's new boss

Kiwibank's new chief executive is keen to grow its share in the home loan market and is considering expanding distrubution through mortgage advisers.

Friday, August 24th 2018, 1:20PM

Kiwibank plans to turn around its sluggish home loan lending and may look to do more in the mortgage broker space.

The bank’s holding company. Kiwi Group Holdings, reported a net profit after tax (NPAT) of $122 million for the year ended June 30. The bulk of the profit was provided by Kiwibank which achieved a net profit after tax of $115 million.

Chief executive, Steve Jurkovich described it as a “solid” result with the star performer being its managed funds business.

Home loan lending was well below system growth at 2.7%. However, Jurkovich said the bank was determined to turn that around be be well above system.

Running at system growth level is being average, he says. "I don't think of Kiwibank as being average."

Jurkovich says he's "not a massive fan of being rater driven." Rather the focus was on things like turn around times, onboarding and supporting the right customers. He says the bank may expand what it is doing with mortgage advisers in the market place. He is "open-minded" to expanding third party distribution and said "I anticipate modestly expanding" what it does in this area.

Subsidiary, NZ Home Loans remains a big part of the the bank's operations and driving mortgage growth. 

Jurkovich said part of the reason that lending growth was done was due to the issues it had with the Reserve Bank regarding capital. The central bank determined last year that two bond issues did not qualify as regulatory capital.

Consequently the bank was conservative towards lending. 

Jurkovich said the bank is now well-funded, with around 85% of its book self-funding, which "sets us up nicely" to chase credit growth

During the financial year Kiwibank's loan book grew from $17.82 billion to $18.3 billion and customer deposits climbed from $15.98 billion to $16.17 billion.
Net interest income rose 12% to $419 million and its net interest margin widened to 2.06% from 1.92%, in line with those of the big four Australian-owned banks.

Jurkovich sees the government's Kiwibuild programme and first-home buyers generally as an opportunity, with a shortage of housing ensuring there's market demand at a time when prices are cooling in parts of the country.

Net interest income (NII) is up largely due to the cost of borrowing money improving. Bad debts were very low for the fifth year running, with net impairment losses of only $1 million for the year. This reflected a benign credit environment but also the quality of Kiwibank’s lending portfolio.

Tags: Kiwibank

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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