Kiwibank will start paying dividends to NZ Post this year   23 Feb 2015

Kiwibank will start paying dividends to NZ Post this year, CEO says

By Tina Morrison

Feb. 23 (BusinessDesk) - Kiwibank, the banking unit of state-owned New Zealand Post, expects this year to pay its first annual dividend after 13 years of operation, reflecting its increased size, record profits and its ability to fund its own activities.

Wellington-based Kiwibank increased profit 37 percent to a record $71 million in the six months ended Dec. 31, it said in a statement. The banking unit accounted for the bulk of NZ Post's $100 million profit in the period.

Launched in 2002, Kiwibank now has 880,000 customers, accounting for one in four of all bank account holders in New Zealand, with about half of those having their main banking with the state provider, giving it an estimated 11.6 percent of the market. The bank, which is focused on small to medium business and individual customers, has benefited from the wide reach of NZ Post's retail store network, and it took over management of the stores in the latest period.

"We are planning on paying a dividend to New Zealand Post this year based on this level of performance," chief executive Paul Brock told a briefing in Wellington. He declined to forecast the level of the dividend, saying it was dependent on the annual result, but said the bank expected to now continue paying dividends in future years.

"We are in a self funding position right now so we have no more intentions to look for additional capital from the shareholder at this stage," Brock said.

In the first half, Kiwibank's revenue rose 23 percent to $283 million compared with the year earlier, outpacing a 10 percent rise in costs to $176 million.

The bank's lending increased 7.9 percent to $15.05 billion while customer deposits rose 7 percent to $13.28 billion, with deposits accounting for more than 80 percent of all bank funding.

Kiwibank's net interest margin rose to 2.16 percent in the first half, from 1.82 percent in the year earlier period, as lower funding costs offset lower lending margins resulting from strong competition and a customer preference for fixed-term loans.

The future margin would probably stay in a narrow range as both wholesale and retail funding costs stabilise, Brock said.

"I don't see NIM necessarily moving up too much more at the moment."

(BusinessDesk)

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