NZ Post drags down Kiwibank credit rating outlook 1 Feb 2012
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- Budget provides $321m for RS&T activities News
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
The rating agency affirmed Kiwibank’s ‘AA-minus‘ credit rating, but put it on a negative outlook, giving it a one-in-three chance of a downgrade over the next two years, aligning the bank with its parent company. S&P said the ratings would mirror each other “unless there is a significant dilution or withdrawal of the guarantee provided by New Zealand Post.”
The affirmed rating reflects Kiwibank’s “moderate” risk position that recognises its “high growth and its adequate-but-less-developed risk management capability,” S&P said. The bank’s asset quality compared favourably with its peers and is sound by global standards. Still, impairments shot up in the last financial year because of its exposure to Christchurch and changes to its credit provisioning policy.
“We believe that there are no significant changes in rating factors, other than the change in the outlook of the bank’s parent, that affect our rating assessment of Kiwibank,” S&P credit analyst Nico de Lange.
S&P affirmed NZ Post’s AA-minus rating and put it on negative outlook, saying the decline in standard letter delivery business will make the state-owned enterprise “will become increasingly reliant on more competitive earning streams such as parcel and express courier deliveries, which will place further pressure on its business risk profile.”
NZ Post last week increased its parcel rates and introduced rural delivery charges to cover rising fuel costs, and has had to contend with declining earnings over the past couple of years as people eschew traditional postal services for electronic delivery.
Kiwibank was flagged as a “significant contingent liability for the group” and is a weight on NZ Post’s credit quality. The bank’s borrowings and mainly at-call deposits have shorter maturities than its loan book, though that’s mitigated by its holdings of good quality liquid investments.
S&P said the bank had a moderate business position, with its exposure to potential competitive pressure from the big four Australian-owned banks, but is looking at ways to tap into NZ Post’s distribution networks to grow its operations.
The bank had strong capital and earnings factors with its risk-adjusted capital ratio able to accommodate growth, and a satisfactory capital structure.
“Although Kiwibank generates sufficient earnings to cover our estimation of normalised losses (the three-year average earnings buffer is about 136 basis points), the bank’s key earnings metrics are weaker relative to peers, largely due to its lower net interest income level,” S&P said.
The bank’s funding was deemed to be “average” owing to its rapidly growing retail deposit base, supplemented by wholesale borrowing, and liquidity was “adequate.”
Last month, Kiwibank bought Gareth Morgan Investments, including its KiwiSaver business, for an undisclosed amount as it seeks to broaden its exposure to wealth management.
31 Dec 2016 News
31 December 2016Some of New Zealand’s most inspiring women have been recognised in the 2017 New Year’s Honours list... more
26 Dec 2016 Business News
The New Zealand economy continued to grow solidly in the September quarter, posting a higher than expected 1.1 per cent growth rate... more
23 Dec 2016 Business News
23 December 2016 Trade Minister Todd McClay today welcomed the World Trade Organization's (WTO) decision upholding New Zealand's... more
21 Nov 2016 Lifestyle
Emirates Team New Zealand EMIRATES TEAM NEW ZEALAND CLOSES IN 3rd POSITION THE LOUIS VUITTON AMERICA’S CUP WORLD SERIES
14 Nov 2016 Property
Article - BusinessDesk Monday 14 November 2016 10:28 AM NZ house prices gain 11% in October, driven by sales of higher value homes By... more
11 Nov 2016 Property
Article - BusinessDesk Thursday 10 November 2016 04:04 PM RBNZ sees pressures building in Auckland construction sector By Paul ... more
8 Dec 2016 Migration
Economic Development Minister Steven Joyce has welcomed news that New Zealand is attracting a higher level of quality international... more
1 Nov 2016 Migration
New Zealand Government Hon Paul GoldsmithMinister of Commerce and Consumer Affairs 1 November 2016 Changes to Financial Markets... more
8 Dec 2016 Travel & Tourism
Hon. Simon Bridges 8 December, 2016 Prime Minister John Key and Transport Minister Simon Bridges have turned the sod on th... more
2 Dec 2016 Travel & Tourism
Air New Zealand has paired up with singer Ronan Keating and rising Kiwi actor Julian Dennison to rejig a Christmas classic. 'Summer... more
31 Dec 2016 Cricket
29 Dec, 2016 In ShortA composed maiden ODI century from the recalled Neil Broom and an unrelenting bowling performance on a tough... more
26 Dec 2016 Rugby
World Rugby and the Japan Rugby 2019 organising committee have been looking ahead to an important year of preparation as Rugby World... more
11 Nov 2016 Opinion
Column - Gordon Campbell Gordon Campbell on the Gareth Morgan crusade First published on Werewolf more
10 Nov 2016 Opinion
Column - Gordon Campbell Gordon Campbell on the US election outcome more
8 Dec 2016 Appointments
Hon. Murray McCully 7 December, 2016 High Commissioner to India announced Foreign Minister Murray McCully today... more
8 Dec 2016 Recruitment
Hon. Paula Bennett, Hon. Michael Woodhouse, Hon. Louise Upston 24 November, 2016 The Government will update the Equa... more
2 Nov 2016 Recruitment
Article - BusinessDesk Tuesday 01 November 2016 04:42 PM Fisher Funds hunts for new head to replace founder Carmel Fisher By Paul ... more