Kiwibank has posted a net profit after tax of $57m for the financial year ending in June 2020.
The Kiwi-owned bank, which operates under parent company Kiwi Group Holdings Ltd, reported a $108m net profit in 2019. It's net profit for the current financial year represents a 47 percent decrease compared to last year.
In an announcement on Tuesday, Kiwibank chief executive Steve Jurkovich said the drop was largely due to the effects of COVID-19 impairments and low interest rates.
“As expected, this result reflects the impact of COVID-19 and a lower interest rate environment on the bank,” Jurkovich said.
Credit impairment provisions, which estimate future potential losses due to credit risk (including borrower defaults), totaled $51 million, up from $12 million in the previous financial year. Operating expenses increased from $375 million to $428 million, and interest income fell from $933 million to $894 million.
But despite challenges of COVID-19, Jurkovich said bank lending and deposits outpaced the market. Lending growth was 9 percent and deposit growth was 13 percent. In comparison, the market grew by 5 percent and 9 percent respectively.
“As a result, we are growing our lending and deposit rates faster than the market to help more New Zealanders into homes, more Kiwis to save, and support more businesses – living up to our purpose of Kiwis making Kiwis better off," Jurkovich added.
The bank remained committed to supporting borrowers, savers and businesses through competitive offerings.
Jurkovich said the bank had provided support to more than 8000 personal and business customers for loans totalling more than $2.6 billion.
It had also changed its payment process to support business cash flow, paying supplier accounts on a weekly basis rather than on the 20th of the month.
"We will continue to play our role in New Zealand's economic recovery by offering a better banking alternative that's committed to being fair and easy for Kiwis, the businesses they own, and for future generations," Jurkovich added.