Kiwibank first-half profit falls 10 percent on tight margins, capital spend

Monday 24th February 2014

Kiwibank, the biggest profit generator for state-owned parent New Zealand Post, said first-half profit fell 10 percent because of a squeeze on lending margins and infrastructure spending.

Profit fell to $52 million in the six months ended Dec. 31, from a record $58 million in the same period a year earlier, the Wellington based lender said in a statement.

Total lending rose 5.7 percent to $14 billion while customer deposits increased 2.4 percent to $12.4 billion. Deposits account for 81.7 percent of the bank's funding, it said.

Kiwibank said it plans to spend more than $100 million over the next four years to upgrade is core banking systems. The project will involve a number of IT providers and a banking system built by Germany's SAP, it said.

"The result was satisfactory, but fell short of the excellent result from last year as a result of tighter lending margins and investment in the bank's infrastructure," said chief executive Paul Brock.

Kiwibank accounted for about 73 percent of parent NZ Post's interim profit of $71 million, announced separately today. Kiwibank opened eight branches on the North Shore as part of its "retail transformation programme" while NZ Post is reducing its footprint.

The lender is New Zealand's fifth largest and said today it has total customers of 840,000, or 23 percent of the total market, although the number who used Kiwibank for most or all of their banking services was 385,000, or 10.7 percent market share.

BusinessDesk.co.nz

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