Kiwibank profit halves on bad debts
by Paul McBeth
Aug. 25 (BusinessDesk) - State-owned lender Kiwibank Ltd. has posted its worst profit since 2006 when its interest income was almost a quarter of today’s levels. Kiwibank posted a net profit of $21.2 million in the 12 months ended June 30, less than half last year’s $45.8 million, and the worst since 2006.
The weaker result came from a $79 million impairment charge on bad loans, more than four times the $17.9 million booked in 2010, and adding a further $22.2 million in the last three months of the year.
Still, interest income climbed 28% to $720.4 million as the lender increased its loan book 10% to $11.5 billion and attracted 14% more retail deposits to $7.9 billion.
That goes against the trend with privately-owned Westpac Banking Corp., ANZ National Bank Ltd. and Bank of New Zealand all boosting profits on fewer bad debts.
Provisioning for bad debts rose to $87.1 million from $19.5 million, though the bank managed to cut past due assets to $184.8 million from $217.9 million.
Chief executive Paul Brock, who took over at the lender in September, said most of the provisioning was regarded as ‘one-offs’ and left room for upside next year.
“The global financial crisis compounded by the earthquake has made things tough, but the bank is in strong shape and has weathered the storm,” he said.
In March, Michael Cullen, the chairman of Kiwibank parent NZ Post, told a Parliamentary select committee the lender was operating a high-cost model and will look to cut costs in anticipation of slower growth for the rest of the financial year.