Kiwibank grows home loans at twice its market share

The government-owned Kiwibank lent on mortgages at the rate of more than twice its market share in the six months ended December.

Kiwibank’s on-balance sheet mortgage book grew to $29.7 billion at Dec 31, up by $1.4 billion from $27.8 billion at June 30 and up by $2.6 billion from $26.6 billion at the previous Dec 31.

Based on Reserve Bank data, Kiwibank’s market share of mortgages held by registered banks was 8% while its lending in the latest six months was 16.8% of all mortgage lending by registered banks.

In the year, Kiwibank’s mortgage lending accounted for 18.1% of all mortgage lending by registered banks.

However, the bank’s net profit for the six months was down 12% to $92 million which chief executive Steve Jurkovich said was due to “a lower net interest margin (NIM) in a challenging economic environment.”

As well, Kiwibank increased its investment in its transformation programme “to better serve future customer needs and to further accelerate growth.”

Finance minister Nicola Willis has expressed support for floating Kiwibank on NZX but has said its transformation project needs to be completed first.

Kiwibank’s operating expenses grew 8.7% to $311 million in the latest six months while charges against profit for bad debts rose to $21 million from $15 million in the previous first half.

Kiwibank’s NIM for the 6 months fell to 2.29% from 2.47% in December 2023 and 2.38% at June 30 last year.

By contrast, the other bank with a June 30 balance date, Commonwealth Bank of Australia-owned ASB Bank reported a nine basis point rise in NIM to 2.30% from 2.21% a year earlier and 2.24% at June 30 last year.

Kiwibank said its overall lending growth of $2 billion took its book to $34.4 billion with lending to businesses growing at more than six times faster than the market.

Deposits grew by $1.8 billion, or 6%, to $30 billion, which was 1.6 times faster than market growth.

“Over the past six months, we supported Kiwi through challenges from economic downturns to high interest rates and a subdued housing market,” Jurkovich said. 

The transformation programme is delivering more scalable and modern systems and ways of working which will ultimately drive competition and growth, he said.

Jurkovich said he expects retail and business confidence to return as lower interest rates provide relief and stimulus.

RBNZ has cut its official cash rate to 3.75% from 5.5% since August last year including a 50 basis point cut last week when it indicated about another 75bp of cuts to come later this year.

Jurkovich said the forecast cuts “are needed for Kiwi households and businesses looking to borrow and to create momentum in the economy.”

“While inflation is forecast to be volatile with an upward bias in the near term, primarily due to the highly uncertain global environment, the second half of 2025 should see growth gather pace, including a rebound in employment demand.”