Thursday 25th August 2011
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Kiwibank's full year after tax profit fell 54 percent to $21.2 million, with a big jump in provisions for bad debts.
Kiwibank chief executive Paul Brock said a strong underlying financial performance of the bank had been reduced by the remaining effects of the global financial crisis and the Canterbury earthquakes.
Provision for bad debts at year end was $87.1m, compared with $19.5m for the previous year.
The vast majority of the bad debt provisioning could be regarded as one offs, which gave considerable room for confidence for the present financial year, Mr Brock said.
During the year to June Kiwibank increased loans and advances 10 percent to $11.5 billion, while retail deposits rose 14 percent to $7.9 billion.
Brock said competition in the domestic loan and deposit market was intense which had put pressure on margins, but that the bank continued to perform well in both sectors.
Net interest income rose 43 percent to $191.3m as customers switched from fixed to floating mortgages. The net interest margin rose from 118 basis points to 147 basis points year on year.
An increased focus on cost reduction led to an improvement in the cost to income ratio from 72.6 percent to 68.5 percent.
Throughout the year Kiwibank maintained a strong focus on customer funding with deposits now accounting for 80 percent of all bank funding, Mr Brock said.
Kiwibank's personal banking market share continued to grow, and it now had more than 750,000 customers.
"We also continued to capture more than our natural share of the mortgage market with aggressive short term fixed and variable rate offers."
Brock said he believed the worst was behind the state-owned bank and signs for growth and an improved financial performance were positive.
Kiwibank also continued to focus on growing its small and medium enterprise business banking client base, with significant opportunities for growth in the sector.
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