Kiwibank notches up milestone
State-owned Kiwibank Group has notched up a milestone by posting an after-tax profit of $100 million for the year to June and expects to pay its first dividend to parent company New Zealand Post within three years.
The bank's profit is up $3m (3.1 per cent) on last year and comes as it invests in a new core banking system, its retail network and digital initiatives which have combined to increase costs.
Chief executive Paul Brock said NZ Post had "invested a lot of money into the bank" over the past 12 years and they were looking for returns.
"We can't just continue to drive the growth without driving any returns from the business overall. Importantly, we are starting to come into that space where we are paying returns.
"Our three-year business plans that we go into and negotiate with our owner have a dividend track built into them."
He expected Kiwibank, which has 860,000 customers, to provide a dividend within the next three years. The first phase of an internal reshuffle was underway to improve customer service, productivity and reduce costs, including the loss of about 80 jobs, many in middle management.
About $100 million would be spent over the next four years upgrading Kiwibank's core banking system, which includes a new regional office in Hastings.
There have also been trials on Auckland's North Shore involving in-store kiosks, particularly around Kiwibank's bill payment arm of the business. Brock said this would be rolled out progressively around the country.
The bank was also enjoying gains from its Home Hunter mobile phone app launched a few months ago as it experiences 750 per cent growth over the past two years of customers using mobile phones to do their Kiwibank business.
"We are now already seeing five per cent of our loans being approved through the Home Hunter application," Brock said.
"Interestingly, almost half of all of our online interactions are via mobile and you will continue to see us invest in that space as well."
The bank's new Air New Zealand Airpoints credit card offer to customers was also successful and has seen the bank's "credit cards growing four times faster than market".
Investor confidence in the bank was reinforced with a successful capital note offer in May which raised $100m and contributed to a total capital ratio of 12.9 per cent at the end of June.
The Dominion Post