NZ Post best of state pair

New Zealand Post and Kiwibank profit results differ. Photo by Gerard O'Brien.Government-owned New Zealand Post yesterday delivered a much improved interim result for the six months ended December but its subsidiary Kiwibank suffered from tight margins, reporting a lower profit for the period.

NZ Post reported an operating profit of $94 million in the period, up 19% on the $79 million reported in the previous corresponding period (pcp).

The profit after tax was up 12% at $71 million.

Kiwibank's interim profit fell 10% to $72 million in the period and its after-tax profit was down 7% to $52 million.

NZ Post will pay an interim dividend to the Government of $2.5 million.

Chief executive Brian Roche said the overall improved result was largely attributed to a reduction in expenditure of $32 million, which more than offset a $12 million fall in revenue.

''The steps taken were in line with the group's refreshed strategy introduced in November. It's encouraging that the strategic decisions we made last year are already starting to yield results.''

The group had made a good start to the year and it was determined to build on it, he said. NZ Post would balance ongoing cost reduction with a strong focus on growing new and profitable revenue and developing new ways to serve customers and meet their changing demands.

The transformation plan, for the next three to five years, focused the group on finding lower-cost ways of working to manage the falling volume of mail coming into the network as well as growing its logistics, parcels and financial services businesses and delivering new products and services, Mr Roche said.

''Work is under way to develop new opportunities from the growing e-commerce parcels market domestically and internationally.''

Kiwibank continued to perform strongly in a highly competitive market, amid tight lending margins.

The group would continue to invest in Kiwibank's infrastructure to support its strategy for profitable growth which included offering different types of products such as insurance and fund management to its customers, he said.

Kiwibank chief executive Paul Brock announced the bank would spend more than $100 million upgrading its core banking systems.

The upgrade would take place over three to four years and involved several IT providers and a banking system created by Germany company SAP.

''We are looking to the future growth of the bank and to make sure we have the right back office systems and infrastructure to support our strategic plan.''

The core system upgrade project would take place progressively to avoid any disruption to existing services, Mr Brock said.

Kiwibank's balance sheet showed total lending (home loans, business banking and credit cards) increased 5.75% from $13.2 billion to $14 billion in the period.

Customer deposits increased 2.4% from $12.1 billion to $12.4 billion.

Impaired assets to gross loans and advances improved from 0.41% in June 2013 to 0.28% at December 31.

Mr Brock said the result was satisfactory but fell short of the ''excellent result'' last year as a result of tighter lending margins and investment in the bank's infrastructure.

The accounts showed Kiwibank's operating expenditure rose nearly 9% in the period to $160 million.

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