Speaking to the Herald, Jurkovich said that requiring Kiwibank to be 100% Kiwi-owned would be “restrictive” and see its share price discounted. This would see it receive less capital than if the share price was higher.
Jurkovich said a cap on the level of foreign ownership could still be put in place as a safeguard.
However, looking at the experience of part-Government-owned electricity companies listed on the New Zealand stock exchange,he believed Kiwis would predominantly be interested in investing in the bank.
Jurkovich was surprised by some commentary from people strongly opposed to the possibility of the Government’s 100% ownership of Kiwibank being diluted.
“I am quite surprised by the strength of views around what’s a pretty easy to understand model with Air New Zealand and the energy companies,” he said.
“You can own it directly if you want to, but you also know that the majority and influence is still owned by New Zealanders.”
Jurkovich believed Kiwibank welcoming some foreign capital wouldn’t damage its brand.
He was proud the bank grew by more than its competitors in the year to June.
Its net profit after tax rose by 15% from the previous year to $202 million, while its net interest margin fell, but remained high at 2.38%.
Kiwibank grew its loan book by 9%, above the industry average of 2.6%, increasing its market share from 5.4% to 5.7%.
The bank has been focused on deepening its broker network.
On the deposit side, it grew by 9.4%, above the industry average of 3.6%, lifting its market share from 5.9% to 6.2%.
Jurkovich said that if the bank were to keep growing at the rate it had over the past year, it might need another capital injection in two or three financial years’ time.
Given it will take a bit of time to figure out Kiwibank’s structure looking to the future (any big changes might be taken to the 2026 election), the Government might be asked to make another capital injection.
“We’re good for five years, but if we keep taking market share like this, then we might be raising capital, say, in three years’ time,” Jurkovich said.
“If you didn’t receive extra capital, then you’d slow your growth to make sure you’re always in a position where you’re above regulatory requirements.”
He said the $225m of capital Kiwibank received from the Government last year had gone a long way, allowing the bank to grow consistently.
Willis wouldn’t comment on whether she’d be prepared to possibly inject more capital into Kiwibank to tide it over, pending it being able to access capital from elsewhere.
Jurkovich was “firmly of the view” the Australian-owned banks were reallocating capital back to Australia and weren’t that focused on growing their New Zealand businesses.
“That gives us a great opportunity,” he said.
He denied that Kiwibank’s growth would come from it taking on riskier business that other banks don’t want.
“We concentrate on the markets that are really vanilla - small and medium businesses, generally, home loans, which has been a remarkably resilient asset class. You don’t need to go and chase edgy stuff,” Jurkovich said.
Kiwibank’s impaired loans have remained relatively low, despite the high interest rate, low growth economic environment.
Jurkovich said there was scope for the Kiwibank to grow its business banking.
“A lot of New Zealand businesses want to back another New Zealand business.”
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.
