Kiwibank profits up 43pc, Mercer ditched

Kiwibank has announced a normalised after-tax profit for the year of $52.5 million, up 43 per cent from $36.8m last year.

Chief executive Sam Knowles described the result, for the year ended June 30, as "a clear indication that the bank is on a strong growth path".

The profit does not include an additional $11.1m that resulted from a structural change in the ownership of the bank by New Zealand Post. The profit including the restructuring gain is $63.6 million.

Knowles said in the last year loans and advances increased 52 per cent from $5.6 billion to $8.5b and retail deposits increased 39 per cent from $4.8b to $6.7b.

He said the bank had experienced "sensational growth" in residential home loans, outperforming many of the large Australian-owned banks, particularly in the last quarter of 2008.

"The lending was extremely high quality and we believe at fair interest rates."

The credit performance of the loan portfolio remains strong with impaired loans increasing from $4m to $19m over the year. This represents 0.2 per cent of total assets, a lower ratio than those of Kiwibank's competitors, he said.

Knowles said the deposit market had been very competitive and this had put some pressure on lending rates in the last quarter of the year.

Kiwibank also announced today that it is ending its links with the Mercer KiwiSaver scheme, with effect from September 30.

Knowles said Kiwibank had acted as a retail partner for Mercer, making information about the scheme available in brochures and on its website.

The nature of this role meant Kiwibank was not involved in investment decisions.

"However, because we now have our own wealth management division and are considering being more actively involved in the superannuation and managed funds sector, we believe it is essential that we bring our involvement with Mercer to an end."

Mercer has about 70,000 KiwiSaver members and Mercer's New Zealand business leader, Martin Lewington, said it was business as usual for these members.

"Mercer has managed the funds of these members during our relationship with Kiwibank and we will continue to do so now it has ended," he said.

- NZPA