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Source: ONE News
State-owned Kiwibank restored first-half profitability, posting net income of $37.9 million, compared with a slump to $13.9 million a year earlier.
Chief executive Paul Brock put the rebound down to a combination of growth in the bank's lending portfolio and recovery from the impact of the Canterbury earthquakes, the first of which hit on September 4, 2010, during the comparable period under review.
Improving economic conditions following the recession exacerbated by the global financial crisis also contributed to Kiwibank reporting its strongest first-half profit to date.
Net interest income for the half year was $123 million, up 38% from $89 million in the same period last year, and the bank has worked to become more reliant on retail deposits for its funding.
Although the proportion of retail deposits to total retail lending was stable at 71%, total retail deposits were up 13% to $8.6 billion, compared with the first half of the previous financial year, while wholesale deposits fell 11% to $3.1 million.
Total loans and advances were 10% higher than the prior period, at $12.1 billion.
Cost to income ratios have also been improving, falling to 65% from 70% in 2010 and net interest margin increased from 1.42 to 1.69%age points.
Impaired assets also showed improvement at 0.76% of total assets, placing Kiwibank towards the bottom end of the range for impairment exposure among New Zealand banks.
With more than 800,000 customers, Brock said Kiwibank was on its way "inevitably" to a customer base of more than one million, and would be targeting growth in the small and medium enterprise sector.
On a net interest income to average total assets basis, profitability improved from 1.42% to 1.69% between the two comparable periods, while net profit after tax to average shareholders' funds rose from 4.68% to 11.42%.
