Kiwibank grows mortgage book 2.7 times faster than market
Kiwibank grew its mortgage book at 2.7 times the rate for banks as a whole and says that's one of the reasons it is “fulfilling our role as a disruptor.”
Thursday, August 22nd 2024, 10:12AM 
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The government-owned Kiwibank grew its mortgage book by $2.48 billion in the year ended June with growth accelerating from $1.19 billion in the first half to $1.29 billion in the second half, even as the Reserve Bank maintained interest rates at 16-year highs.
Total net lending grew $2.8 billion, or 9.3%, to $32.4 billion.
The bank's net profit for the year ended June rose 15.4% to $202 million with net interest income growing 3.8% but charges against profit for bad debts fell to $24 million from $37 million the previous year.
The bank's net interest margin (NIM) fell 10 basis points to 2.38% - the other bank with a June 30 balance date, ASB, reported NIM of 2.24% at June 30 and its mortgage book grew by just over $1 billion in the year, even though it is almost three times larger than Kiwibank by total assets.
Chief executive Steve Jurkovich says it wa the fifth consecutive year that Kiwibank has improved profitability and grown faster than its competition.
“We know there's plenty of choice out there but today's result shows once again that we are fulfilling our role as a disruptor, more Kiwi are choosing us and momentum is on our side,” Jurkovich says.
On Tuesday, one of the Commerce Commission's key recommendations stemming from its study of personal banking services was that the government should provide Kiwibank with access to more capital.
“In the shorter term, capitalising Kiwibank appears to have the greatest potential to constrain the major banks and disrupt a market that is otherwise stable due to lack of competition,” the commission said.
Jurkovich says that Kiwibank is “up for the challenge of fulfilling the role of 'maverick' and taking on the large four banks.
“Kiwibank has been successfully growing market share for some time now, supported in part by $225 million of additional capital injected in July 2023 by our 100% shareholder, Kiwi Group Capital,” he said.
“We would welcome more access to capital over time to deliver on our purpose.”
Kiwibank is focussed on a multi-year transformation “that will deliver more scalable systems to enable it to further accelerate its current growth. Any future capital investment would need to take timing of the transformation into account in order to maximise value,” Jurkovich says.
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What a load of horse manure. The fact that the NZ taxpayer is still having to prop Kiwibank up after 20+ years illustrates that the Government’s experiment owning a bank hasn’t worked. New Zealanders have not seen a significant impact on the cost of borrowing money since Kiwibank’s arrival. To say Kiwibank has a unique role to play in the NZ banking sector as a “disruptive force” is false. As a country we can’t afford to continue throwing taxpayer money down a bottomless pit which is what has essentially been happening at Kiwibank since its inception. More capital been provided to Kiwibank now will not lead to increased competition from the banks on home loans.
If we really want to increase competition in the NZ banking sector, we need to remove the overregulation that has occurred within the industry to allow more new lenders to enter the market. I see the NZ banking association making this very recommendation earlier this week. They acknowledge that the regulation we have currently makes it too hard for new competitors to enter the NZ market.
Time to put the horse that is Kiwibank out to pasture and open up the playing field to new contestants.