Media Briefing Financial Results – 30 June 2011

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Topics Covered

    Key Milestones Financial Performance Credit Quality The Future 2

Key milestones

     Profit after tax of $21.2m for the year ended 30 June 2011, a 54% decrease on previous year’s profit of $45.8m

Net interest income has increased by 43% to $191.3m

Strong focus maintained on customer funding with deposits now accounting for 80% of all bank funding.

Improvement in cost income ratio from 73% to 68% Continued growth in balance sheet since prior year:    Lending increased 10% by $1.08bn to $11.5bn

14% increase in retail deposits from $6.9bn to $7.9bn

Net interest margin increased from 118bps to 147bps 3

Key achievements continued

      Launched 32 and 90 day Notice Saver accounts which provided strong customer returns Personal banking market continues to grow with customer numbers exceeding 750,000 Kiwibank became a Qualifying Financial Entity (QFE) during the year “Best Value Bank” five years in a row (Canstar and Sunday Star Times) Coveted Bank of the Year award by London-based The Banker magazine Awarded New row, by Zealand’s most trusted bank brand, four years in a Reader’s Digest 4

Key achievements continued

  Appeals launched for both Christchurch Australian floods with $2m donated earthquake and Inaugural Kiwibank chairman (Rt Hon. Jim Bolger) replaced by Ian Fitzgerald and subsequently Rob Morrison.

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Financial Performance - Historical summary

Net interest income increased due to customer preference for floating mortgages and raising of cheaper ECP funding Dollars in thousands Interest revenue Interest expense

Net interest income

Other operating revenue

Total operating revenue

Operating expenses Provisions expense

Net profit before tax

Taxation charge

Net profit after tax Jun-11

720,372 (529,040)

191,332

161,668

353,000

(241,674) (78,982)

32,344

(11,116)

21,228 Jun-10

563,886 (430,496)

133,390

168,052

301,442

(218,902) (17,860)

64,680

(18,832)

45,848 Jun-09

648,891 (485,478)

163,413

138,328

301,741

(214,946) (14,345)

72,450

(19,975)

52,475 Jun-08

559,105 (444,004)

115,101

122,997

238,098

(179,432) (4,097)

54,569

(17,748)

36,821

* June 09 excludes $11m for sale of group subsidiaries to 100% NZ Post subsidiary, Kiwi Group Holdings Ltd 6

Financial Performance - Balance sheet

   Lending growth continues despite slowdown in the housing market Strong depositor support continues to maintain retail funding ratio Wholesale assets maintained at high levels to reflect liquidity requirements of uncertain environment throughout the year

Dollars in thousands Assets

Loans and advances Wholesale & other assets

Total assets Jun-11

11,494,796 2,380,541

13,875,337 Jun-10

10,418,502 1,819,873

12,238,375 % growth 10% 13%

Financed by:

Liabilities

Retail deposits Wholesale deposits Securities issued & other liabilities

Total Liabilities

Shareholder's equity

Total liabilities and shareholder's equity Ratio retail deposits to retail lending

7,902,445 2,683,825 2,681,218

13,267,488

6,911,909 3,383,416 1,354,287

11,649,612

607,849

13,875,337

588,763

12,238,375 69% 66% 14% -21% 14%

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Financial Performance (key ratios)

Ratios in percentage terms Profitability measures

Net interest inc./avg.total assets Net profit after tax/avg shareholder's funds

Efficiency measures

Cost income ratio Operating expenses/avg total assets

Capital ratios

Total Capital ratio (Pillar I ) Jun-11 Jun-10 1.47% 3.55% 1.18% 9.71% 68.5% 1.9% 72.6% 1.9% 11% 12% 8

Financial Performance – Capital Adequacy

 Total Capital ratio under Basel II is 11.0% compared to minimum regulatory capital ratio of 8%  RBNZ’s Total capital increased by $15m to $737m, a 2% increase from June 10.

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Credit Quality (Impaired Assets)

 The table shows our total impaired assets as a % of total assets from latest available Key Information Summaries. Kiwibank remains favourably placed against other banks  The ratio has increased slightly across strong balance sheet growth as a result of the Christchurch earthquake and the remaining effects of the global financial crisis (GFC)  Impaired Assets of $106m include all assets where interest charges have been suspended and a specific provision has been raised

Bank Kiwibank ASB BNZ Westpac ANZ National Latest DS 0.76% 0.55% 1.21% 1.55% 1.81% Previous Quarter 0.65% 0.79% 1.19% 1.22% 1.76%

Source: June 11 DS for Kiwibank and latest published Disclosure Statements for other banks

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Credit Quality (Total Credit Provisions to Total Assets)

 Ratio has increased due to impact of Christchurch earthquake and a more conservative approach to provisioning during the GFC  Each bank has a different product and risk portfolio to Kiwibank which has a high % secure mortgage book and LMI insurance for assets over 80%

Bank Kiwibank ASB BNZ ANZ/National Westpac Latest DS Previous Quarter 0.63% 0.46% 0.81% 1.11% 1.37% 0.49% 0.41% 0.77% 1.17% 1.38%

Source: Most recently published Disclosure Statements

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The future

 Consider any investment opportunities in the market as they arise  Expand into new segments of business markets  Retail transformation experience project aimed  Growing insurance and wealth business at improving customer  Strong focus on helping customers switch to Kiwibank and driving change to make switching between banks easier  Growing asset finance business through Kiwi Asset Finance Limited 12