Kiwibank report $202 million after-tax profit

Kiwibank has featured in the news a lot recently, from the Commerce Commission’s recommendation that the Government should consider what is necessary to make Kiwibank a disruptive competitor, to the release of Kiwibank’s latest financial results.

Kiwibank posted a record $202 million after-tax profit for the year to June 30 2024, up 15% from the previous year. Kiwibank were able to grow their lending book by 9.3% to $32.4 billion. Impressively, home lending grew 2.7 times faster than the market and business lending grew 3 times faster than the market. Deposits increased by $2.4 billion, growing the deposit book by 9.4% to $28.2 billion

Steve Jurkovich, Kiwibank CEO, has said a $500 million capital infusion would

“give us a lot of runway to keep growing as fast as we are now, which is 9.5%, 10% [per annum], which is pretty large gains. That sort of investment over the next three, four years would give good runway.”

"With the right support and delivery of the right business plan and right initiatives, I think we could double our size in five years.”

Jurkovich has also said it may not be essential for the bank to remain 100% NZ owned, pointing to other examples of successful majority owned businesses like Air New Zealand. Jurkovich cautions that any requirement to pay sizeable dividends could impact their ability to grow, given that capital growth to date has mainly been via retained earnings.

Mortgage advisers now account for around 35% of Kiwibank’s total mortgage book, having originated 71% of Kiwibank home loans this year. Kiwibank’s accredited advisers have grown to about 1,000 now, up from 250 at June 30, 2022.

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Links between financial and mental wellbeing

Beyond Blue have produced a guide for those who work in the finance and mental health sectors to inform them of the relationship between money and mental health. The guide was produced as the ‘Money and Mental Health: Social Research Report’ – a collaboration between Beyond Blue and the Australian Securities and Investments Commission (ASIC) – found people experiencing financial challenges are at least twice as likely to encounter mental health issues than those who aren’t. While the guide has information on what services are available in Australia, we’ve pulled out some insights that are likely to correspond to the New Zealand market.

In 2023, 37% of people living in Australia reported that cost of living pressure was the issue having the greatest negative impact on their mental health. The productivity commission found that poor mental health is currently costing Australia up to A$70 billion a year. Small businesses accounted for over 97% of the 2.6 million Australian businesses in 2021-22 (similarly, 97% of all NZ businesses have fewer than 20 employees). In Australia, 22% of small business owners were diagnosed with a mental health condition.

One of the key takeouts is that financial challenges can cause a decline in mental health, and mental health challenges can cause a decline in financial wellbeing. The guide illustrates how people struggling can get into downward spirals that can progress faster than those experiencing them anticipate, and it can be hard to stop or reverse them.

While anyone can be affected by money and mental health issues, there are several population groups who experience disproportionate risk, including young people, first nations people, women, culturally diverse communities and small business owners. Those who fall into multiple groups are even more susceptible to financial and mental health challenges. The guide covers some of the key reasons why these population groups are at higher risk.

They give examples of ‘turning points’ – interventions or experiences that have led to improvements in people’s financial wellbeing and/or mental health. They showcase a major Australian bank that refocused their collections department on providing solutions that respond to root causes of mental and financial hardship and the turnaround was dramatic. Within 90 days of starting the program, 97% of customers were back on track with financial commitments, employee engagement soared by more than 25% points, and they had an AUD$70 million reduction in costs associated with loan defaults and operational efficiencies.

Beyond Blue have developed a continuum that can help you evaluate a person’s financial and mental wellbeing and suggestions on what you can do support them to move towards a more mentally and financially healthy future. If you or someone you know needs mental health support or is experiencing financial challenges, there are a range of organisations and resources available to help in New Zealand, you can find out more here and here.

Political parties announce policies requiring financial literacy to be taught in schools

Labour has announced a financial skills in schools policy that would require financial literacy to be taught at all levels in all schools by 2025, if Labour are re-elected.

Labour leader and Prime Minister Chris Hipkins said

“We know that our young people, to set them up for success, we need to make sure they understand the basics of budgeting, they need to understand basic financial concepts, they need to understand how to be good with money, they need to understand things like interest rates, KiwiSaver, insurance, debt, borrowing."

"We want to make sure they’re learning those core skills while they are at school, because we know that that's going to set them up well for a prosperous life beyond school.”

National Party deputy Leader Nicola Willis has said that, if elected, a National-led government would also make financial literacy compulsory in schools.

With both major parties backing the proposal, it is likely to become Government policy, regardless of the results of the election.

We share a view that poor financial literacy is a problem – as many acknowledge. Yet it is not clear to us how successful schools can be in addressing the issue. One is that skills taught in school tend not to be retained unless they are something that children have a particular interest in. Understanding prices, money, borrowing and saving, are likely to be useful at an earlier stage, for example, than insurance and home loans. As with all curriculum changes, making it relevant and balancing it against other educational needs is something that requires careful consideration.