Kiwibank's profit dives 40% but mortgage book surges in Dec Qtr
The bank's December quarter general disclosure statement (GDS) shows net profit for the three months ended December fell 40% to $9.7 million, largely because of a 27% drop in net interest income to $33 million.
Managing director Sam Knowles says the fall is primarily a consequence of new Reserve Bank regulations which has intensified competition for retail deposits. "As a consequence, the premium paid for retail deposits is very high," Knowles says.
Kiwibank is heavily reliant on deposits to fund its lending although it is now sourcing more funding from wholesale deposits. In the six months ended December, retail deposits funded 71% of retail lending, down from 90% in the same six months a year earlier.
"We're making a call to largely carry the transition costs of Reserve Bank policy, which supposedly is going to improve New Zealand's financial stability," Knowles says.
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