An improved interim profit from Kiwibank in the six months to
December helped save face for its parent New Zealand Post,
which continues to suffer from falling letter volumes and
The NZ Post group reported an operating profit of $78.4
million for the period, up from the $35.4 million in the
previous corresponding period (pcp).
The reported profit of $59.6 million was 68% up on the $35.4
million reported in the pcp.
Kiwibank, in a separate release, reported a profit of $58
million, up 53% on the $38 million in the pcp.
NZ Post will pay the Government an interim dividend of $2.5
million for the half-year, the same as the first half of the
previous financial year.
NZ Post group chief executive Brian Roche said the result was
boosted by the performance of Kiwibank and the group's
financial services businesses.
''Kiwibank's first-half performance builds on its market
position. The bank performed well in a highly competitive
market, particularly in the face of aggressive competition in
the home loan environment.''
There were mixed results across the logistics and mail
businesses, he said.
The result reflected the benefits of the full consolidation
of the courier business - Express Couriers Ltd - following
the acquisition of the remaining 50% of the business in June
2010. However, that was against a continued decline in letter
volumes and revenue.
The courier's performance was ''very encouraging'' in the
extremely competitive courier market, Mr Roche said.
Challenges remained for the mail business, with total mail
volume falling by 35 million items compared with the
corresponding period the previous year - a drop of 8.1%.
Tight cost management helped offset the fall in revenue.
''Thirty-five million fewer pieces of mail in the network is
a stark reminder of the need for change. NZ Post is confident
it can maintain a viable and sustainable physical network if
it is given the flexibility to make necessary changes in the
Making those changes could still be achieved in a measured
and planned manner working in the best interests of the
community and the businesses, Mr Roche said.
''But the latest mail volume statistics are further evidence
that the ability to make the right decisions needs to be
given now rather than put off.''
The group's full-year financial outlook was to meet
expectations, he said.
Despite an increasingly competitive residential banking
sector, Kiwibank had maintained strong levels of
profitability, although further pressure was expected towards
the end of the year.
The mail business continued to manage the fall in letter
volumes with operation changes to ensure the business
remained viable while longer term initiatives were
Other key decisions made in the first half of the financial
year included the sale of the shareholding in Datacom, which
would result in a one-off gain on the sale, and the sale of
two office buildings in Auckland and Wellington. All of that
would free up capital for both the bank and continuing change
in the logistics and mail business, Mr Roche said.
KiwibankIn the six months ended December, Kiwibank's lending
increased from $12.4 billion to $12.8 billion and customer
deposits increased 6% from $11.6 billion to $12.3 billion.
Chief executive Paul Brock said the bank was building on the
solid growth it had achieved over the past 18 months.
Deposits now accounted for 85% of all bank funding. The
impaired assets to gross loans and advances ratio had
improved from 67% in June last year to 0.43% at the end of
The bank had successfully launched a $150 million
subordinated bond offer late last year and the level of
support indicated strong confidence in the company's strength
and future earnings, he said.
The bank had ''captured'' 10% of the personal customer market
and still believed there was strong potential for growth in
the small and medium business banking market, Mr Brock said.
At a glance
Total revenue: $872.3 million
Operating expenditure: $793.1 million
Before tax profit: $78.4 million
Reported profit: $59.6 million
Dividend to Government: $2.5 million