Transcript Media Briefing Financial Results – 31 December 2006

Media Briefing
Financial Results – 30 June 2010
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Topics Covered
 Key Achievements
 Profit Performance
 Balance Sheet Growth
 Key Ratios
 Capital Adequacy
 Credit Quality
 The Future
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Key achievements

Profit after tax of $45.8m for the year ended 30 June 2010, a 13%
decrease on previous year’s profit of $52.5m *

Continued growth in balance sheet since June 2009:
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Lending increased 23% by $1.93bn to $10.42bn (52% 2008/9)
3% increase in retail deposits from $6.72bn to $6.91bn
( 39% 2008/9)
wholesale deposits from $1.55bn to $3.38bn, (118%)

Continued growth in market share – Main Bank from 6.9% to 7.8%
(Roy Morgan)

Capital strengthened by $150m perpetual preference shares in May
2010

A$250m five year fixed rate Kangaroo bonds issued in Oct 09
* (June 2009 excludes $11.1m one-off gain for sale of group subsidiaries
to 100% NZ Post subsidiary, Kiwi Group Holdings Ltd)
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Key achievements continued
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Launched Kiwibank Kiwisaver with more transparent pricing and
opportunity to actively manage investment
Loaded for Travel card which is a pre-paid, 5 currency reloadable
travel card launched in June 2010 – a world first
Prime sponsor of the New Zealander of the Year Awards
“Best Value Bank” four years in a row (Canstar and Sunday Star
Times)
Coveted Bank of the Year award by London-based The Banker
magazine
Awarded New Zealand’s most trusted bank brand by Reader’s
Digest
Launched Heaps! personal financial management tool as part of
internet banking
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Key achievements continued
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Launched 3 new Go Fly (Air New Zealand) credit cards with
family bundling of airpoints and grabaseat Thursdays
Created Kiwi Connector, a youth website providing information,
competitions and music
Payments introduced Passport renewal service for British High
Commission
Relaunched Business Banking internet banking
Launched Kainga Whenua loan scheme with Housing New
Zealand Corporation
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Financial Performance – Profit & Loss
 Financial performance impacted by very strong competition in the
domestic retail deposit market reducing margins between borrowing
and lending.
Dollars in thousands
Jun-10
Jun-09
Net interest income
133,390
163,413
Other income *
168,052
138,328
Total operating revenue
301,442
301,741
-0.1%
(236,762)
(229,291)
3.3%
64,680
72,450
-10.7%
(18,832)
(19,975)
45,848
52,475
Total expenses
Profit before tax
Income tax expense
Profit after tax
% growth
-12.6%
* June 09 excludes $11m for sale of group subsidiaries to 100% NZ Post subsidiary, Kiwi Group Holdings Ltd
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Financial Performance - historical summary

Bank emerged from recession with good volume growth, strengthened
capital base and is on track to increase profit over the coming year
Dollars in thousands
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
563,886
648,891
559,105
318,963
188,157
119,337
65,197
(430,496)
(485,478)
(444,004)
(239,965)
(136,222)
(83,046)
(42,791)
Net interest income
133,390
163,413
115,101
78,998
51,935
36,291
22,406
Other income *
168,052
138,328
122,997
124,558
98,373
75,038
58,839
Total operating revenue
301,442
301,741
238,098
203,556
150,308
111,329
81,245
(218,902)
(214,946)
(179,432)
(158,414)
(125,155)
(99,504)
(79,929)
(17,860)
(14,345)
(4,097)
(460)
(1,892)
(946)
(1,887)
64,680
72,450
54,569
44,682
23,261
10,879
(571)
(18,832)
(19,975)
(17,748)
(13,830)
(7,490)
(3,640)
81
45,848
52,475
36,821
30,852
15,771
7,239
(490)
Interest income
Interest expense
Operating expenses
Impairment allowances
Profit before tax
Income tax expense
Profit after tax
* June 09 excludes $11m for sale of group subsidiaries to 100% NZ Post subsidiary, Kiwi Group Holdings Ltd
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Financial Performance - Balance sheet
 Lending growth continues despite slowdown in the housing market
 Strong depositor support continues to maintain retail funding ratio
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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
10,418,502
1,819,873
12,238,375
8,492,013
1,879,022
10,371,035
23%
Financed by:
Liabilities
Retail deposits
Wholesale deposits
Securities issued & other liabilities
Total Liabilities
6,911,909
3,383,416
1,354,287
11,649,612
6,717,042
1,548,534
1,750,293
10,015,869
3%
118%
Shareholder's equity
*
Total liabilities and shareholder's equity
588,763
12,238,375
355,166
10,371,035
66%
Ratio retail deposits to retail lending
Jun-10
66%
Jun-09
% growth
18%
16%
79%
* Includes $15m capital injection in Dec 2009 and
$150m perpetual preference shares issued in May 2010
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Financial Performance (key ratios)
Ratios in percentage terms
Jun-10
Jun-09
1.2%
1.9%
11.5%
15.4%
Operating expenses/total income **
72.6%
71.2%
Operating expenses/avg total assets
1.9%
2.4%
Lending - Fixed Mortgages
148
142
Deposits - Term Deposits
81
84
Profitability measures
Net interest inc./avg.total assets
Net profit after tax/avg shareholder's funds *
Efficiency measures
Average Balances ($000's)
* June 10 excludes $150m perpetual preference shares issued in May 2010
* *June 09 excludes $11m for sale of group subsidiaries to 100% NZ Post subsidiary, Kiwi Group Holdings Ltd
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Financial Performance – Capital Adequacy

Total Capital ratio under Basel II is 12.0% compared to RBNZ’s
minimum regulatory capital ratio of 8%

Total capital increased by $203.1m to $722.1m, a 39% increase
from June 09.
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$150m perpetual preference share issue in May 2010
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$15m share capital injection by NZ Post to support business growth
in December 09
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Credit Quality (Impaired Assets)
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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 remained consistent across
strong balance sheet growth as a result
of targeting low LVR, seasoned (i.e.
existing, switching) customers to
maintain the quality of our lending book.
Latest KIS
Previous Quarter
KIS
Kiwibank
0.31%
0.37%
ASB
0.60%
0.50%
BNZ
1.09%
0.91%
Westpac
1.30%
1.23%
ANZ/National
1.51%
1.00%
Bank
Source: June 10 GDS for Kiwibank and latest published
GDS’s for other banks
Impaired Assets of $37.8m include all
assets where interest charges have been
suspended and a specific provision has
been raised
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Credit Quality (Total Credit Provisions to
Total Assets)
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A key focus from management and
RBNZ is the total credit provisioning to
total assets
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%.
Latest GDS
Previous Quarter
GDS
Kiwibank
0.17%
0.13%
ASB
0.49%
0.48%
BNZ
0.76%
0.66%
Westpac
1.26%
1.02%
ANZ/National
1.28%
1.08%
Bank
Source: Most recently available GDS’s
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The future
 Continue strong customer growth through being the banking leader
in “value for money”
 Strong focus on helping customers switch to Kiwibank and driving
change to make switching between banks easier
 Continued development and promotion of financial management
tools (heaps!) and encouraging savings
 Consider any investment opportunities in the market as they arise
 Active “customer care” programme to help financially distressed
customers.
 Growing insurance business – Bancassurance
 Not currently intending to renew Government Retail Guarantee
(comes up for renewal in October)
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