Strong home lending boosts Kiwibank's profit

Kiwibank has announced its full year result. Photo / Supplied

Strong home lending and deposit growth, and an anticipated release in bad debt provisioning has helped boost Kiwibank's full year profits by 121 per cent.

The bank has reported a net profit of $126 million for the year to June 30, up from $57m in the prior financial year.

Chief executive Steve Jurkovich said a combination of strong lending and deposit growth, cost discipline, benefits from technology and digital investments, as well as the anticipated release of bad debt provisioning for Covid-19, all contributed to the positive result.

The bank grew its overall lending by $3 billion, up 13 per cent, with residential mortgage lending growth of $2.2b, up 11 per cent, while business lending was up $0.8b or 51 per cent.

Kiwibank's operating income rose from $533m to $577m while its operating expenses were also up from $408m to $422m.

A credit impairment loss of $51m had turned into a reversal gain of $19m during the 2021 financial year.

Jurkovich said the bank had assisted more Kiwis with their home ownership aspirations than ever before.

"The strong housing market has played a significant role, as well as our consistently competitive and market-leading interest rates.

"In addition, the focus on growing our frontline banking expertise and starting to expand our reach via advisers, demonstrates our changing business and the shifts we are making to better meet customer preferences, as well as how we are showing up to help more Kiwi homeowners in a variety of ways."

Jurkovich said the record growth in business lending of $0.8b was off a relatively small base compared with competitors and was driven by customer confidence in Kiwibank's ability to deliver what they needed.

"Many businesses have had to adapt to the ever-changing environment. While it's been a challenging time for businesses, many have had strong performances."

Jurkovich said he was pleased with the progress but it was just the start.

"Our focus is to support even more Kiwi businesses to grow, invest or diversify in the year ahead."

Lockdown support

Jurkovich said the bank was working hard to support any customers impacted by the latest level 4 lockdown and acknowledged the anxiety and uncertainty that many customers were likely to be feeling.

"We urge customers worried about their financial situation to get in touch so we can work through the options available."

Last year the bank provided support to over 6000 personal and 2000 business customers. It also approved close to its allocation of Business Finance Guarantee Scheme loans supporting nearly 180 business with $120m in term loans.

Jurkovich said the scheme was successful in that it helped customers adjust to a post-lockdown environment.

"Following this latest outbreak, we have moved quickly again to ensure we have support packages and other measures in place. With the situation changing day-to-day we'll continue to monitor and respond as necessary."

During the year the bank also achieved B Corp certification - a global standard which assesses social and environmental performance, transparency, and accountability.