NZ Post drags down Kiwibank credit rating outlook 1 Feb 2012
- NZD gains after failing to break through support levels Business
- Labour's tests for govt's urban planning directive Business
- Brilliance Steel allowed to sell steel mesh again Business
- G3 Group's major shareholders likely to sell down Business
- ExxonMobil NZ reports narrower loss in 2015 Business
- Pumpkin Patch shares extend slump, down 9% in trading Business
- Shaw downplays talk of Ohariu electorate stitch up Business
- Kirkcaldie board holds firm on Brierley bid Business
- Two Degrees reports $33.1M full-year loss Business
- NZ terms of trade rise 4.4% in March quarter 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.
16 May 2016 News
Asia New Zealand Foundation Shanghai trip to inspire New Zealand teachers A group of teachers hailing from Invercargill to Whangarei... more
16 May 2016 News
New Zealand Government Hon Louise Upston Minister for Women 15 May 2016 Highest ever percentage of women on state sector boards New... more
17 May 2016 Business News
Tuesday 17 May 2016 05:10 PM NZ dollar tumbles vs Aussie after RBA minutes, extends slide on inflation outlook May 17 ... more
29 May 2016 Arts
The Ageas Salisbury International Arts Festival, recently awarded silver for Best Tourism Event in South West Tourism Awards, is now... more
16 May 2016 Lifestyle
Crossing The Bridge Exhibition to Showcase Ashburton’s Migrant Community 16 May 2016 A photography and film exhibition... more
16 May 2016 Property
By Jonathan Underhill May 16 (BusinessDesk) - Kiwi Property Group, the country's biggest listed property investor by market value,... more
30 Mar 2016 Migration
British High Commissioner Jonathan Sinclair is defending changes to skilled migrant rules for Britain but suggests they won't affect... more
16 May 2016 NZ Tourism
Article - BusinessDesk Monday 16 May 2016 12:20 PM Jucy plans to expand pod-style hotel chain to Australia in 2017 By Fiona... more
16 May 2016 Sport
Kids' Lit Quiz New Zealand’s ‘other’ national sport has its time to shine Monday, May 16 2016: There’s no... more
16 May 2016 Column
Column - Gordon Campbell Gordon Campbell on New Zealand’s support for the Kazakh dictatorship Thanks to Sacha Baron... more
12 May 2016 Appointments
New Zealand Government Hon Anne Tolley Minister for Social Development 12 May 2016 New appointments to Vulnerable Children’s... more
28 Apr 2016 Appointments
University of Otago University of Otago appoints next Dean of Pharmacy A leading researcher from Canada has been appointed as the... more
10 Mar 2016 Recruitment
New Zealand Government Hon Michael Woodhouse Minister for Workplace Relations and Safety 10 March 2016 Zero-hour contracts gone, PPL... more