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Kiwibank credit rating cut

Kiwibank’s credit rating has dropped back below that of the big Australian banks after it was cut by one notch by ratings agency Standard & Poor’s.

Tuesday, October 30th 2012, 4:46PM 1 Comment

by Niko Kloeten

S&P has lowered the credit rating of Kiwibank and its parent company, the state-owned enterprise NZ Post, by one level from AA- to A+ (outlook stable). Kiwibank’s short-term credit rating has also been lowered to A-1, while its standalone credit profile is unchanged at ’BBB’. The rating returns Kiwibank to one level below the large Australian banks. For the last eight months it had been at the same level.

S&P said the cut reflected NZ Post’s growing reliance on Kiwibank and falling revenues from its postal services. S&P credit analyst Adrian Chow described Kiwibank as a significant contingent liability for the group. "The downgrade reflects our view of the group's significant contingent exposure to its large and growing banking operations, Kiwibank, as well as our expectation that NZ Post's revenue and earnings will increasingly be focused on the group's more-competitive businesses such as parcels, express courier and financial services," Chow said.

NZ Post’s underlying net profit after tax increased 38% to $79.8 million in the year to June 30, with record earnings from Kiwibank offsetting a $17 million decline in the postal business. Kiwibank chief executive Paul Brock said “the downgrade is disappointing but Kiwibank remains among the highest rated banks in the world”. S&P flagged a possible downgrade for NZ Post earlier this year when it changed the company’s ratings outlook to negative.

Last December it downgraded all four of the big Australian-owned banks by one notch from AA to AA- (with stable outlooks) after a change in its ratings methodology.


 

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« Floating rate rise riles customersBNZ not targeting NBNZ customers »

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Comments from our readers

On 31 October 2012 at 4:48 pm Amused said:
“In the 2012 budget Treasury noted that NZ Post was reaching constraints in its balance sheet to support Kiwibank and listed the bank as an unquantified potential fiscal risk”

It would be nice to see some transparency from Kiwi Bank on the issue of its capital reserves as clearly all is not as rosy as they paint things out to be (hence this downgrade) This subject however seems to be “taboo” and off limits to any open discussion in public. Last time I checked the NZ taxpayer owned Kiwibank so I think we are all entitled to know just what is going on.

Kiwibank’s continued reliance on its external insurer QBE to write certain home loans clearly illustrates they have growing pains with them running their business like a Government Department where the tax payer is expected to continually fund them each year with more capital.

That’s not how the other NZ owned banks like TSB and the Co-operative Bank are run. Do you see these banks going cap in hand to the Government asking for more money? No of course not.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online ▲7.75 ▲6.65 ▲6.35 ▲5.99
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society ▼8.60 6.75 6.40 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.49 6.49 6.49
TSB Special 7.89 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 6.05 5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.10 6.09 5.69

Last updated: 20 November 2024 9:45am

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