Latest / Best of Business / Steve Jurkovich: Kiwibank CEO on the bank's 15 percent rise in net profit

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Steve Jurkovich: Kiwibank CEO on the bank's 15 percent rise in net profit · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk Z'B. Follow this
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  Speaker 2: Kiwibank has just reported its highest ever profit at two
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  Speaker 2: hundred and two million dollars. Lending grew nine point three percent,
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  Speaker 2: deposits grew also nine point four percent, and Steve Yukovic
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  Speaker 2: is the bank's chief executive. Hey, Steve, Hi, Heather, what
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  Speaker 2: are you putting this down to?
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  Speaker 3: Look?
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  Speaker 4: I think we've had really balanced growth. We did well
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  Speaker 4: in deposits, we did well in home lending. Business banking
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  Speaker 4: was difficult for the whole market, but we still grew
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  Speaker 4: a lot fast in the market. So overall, you know,
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  Speaker 4: we've sort of ticked a lot of boxes, which was great.
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  Speaker 2: Why do people like you so much at the moment?
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  Speaker 2: Is there something you're doing right?
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  Speaker 4: I think we're on the front FOD and trying to
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  Speaker 4: support people as best we can. I do think there
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  Speaker 4: is a bunch of people that really like things like
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  Speaker 4: being b Corp, Being New Zealand owned, and then others
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  Speaker 4: just want, you know, a competitive deal with good easy
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  Speaker 4: things to turn around times all those sorts of good stuff.
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  Speaker 2: You you're obviously into the idea of capitalizing ki We Bank.
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  Speaker 3: Right, I certainly am.
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  Speaker 2: How much money do you people need?
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  Speaker 3: Look, I think about half a billion dollars five hundred million.
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  Speaker 4: That's sort of twice what we got when kei We
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  Speaker 4: Wealth was sold, and that gave us a lot of
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  Speaker 4: room and runway for a couple of years and another
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  Speaker 4: couple to come. So, look, you don't want all of
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  Speaker 4: your capital at once because obviously you know you've got
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  Speaker 4: to be able to put it to work. So you know,
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  Speaker 4: I think that sort of the five hundred million dollar
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  Speaker 4: mark would be really attractive, would allow us to keep
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  Speaker 4: growing really fast and live up to that idea that
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  Speaker 4: the ComCom want once, which is, you know, more competition,
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  Speaker 4: lower prices, better offer for customers.
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  Speaker 2: So are you saying what you want to see as
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  Speaker 2: a coupital of recapitalizations rather than just one.
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  Speaker 4: Yeah, I think that's I mean continuity of capital and
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  Speaker 4: having regular capitals better than just one big chunk, because
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  Speaker 4: that allows you to put that money to work, make
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  Speaker 4: sure that you know you're balancing the returns for owners
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  Speaker 4: and you're also growing and so you know, having a
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  Speaker 4: huge amount of capital that you can't put to work
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  Speaker 4: is probably not the best use of anyone's investment.
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  Speaker 2: Yeah, and so if you were to be able to
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  Speaker 2: get a billion over a couple of bursts, how where
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  Speaker 2: would that put you in terms of the size of
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  Speaker 2: the other banks? The big one.
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  Speaker 4: I'd love to see this, I'd love to see this
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  Speaker 4: double in size, Heather. So I think we could get
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  Speaker 4: to you know, sixty five seventy billion, and during the
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  Speaker 4: course of that growth really put some pressure on profitability.
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  Speaker 2: Here are you still smaller than the big four?
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  Speaker 3: Yep?
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  Speaker 4: We are where thirty nearly thirty three billion dollars in lending.
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  Speaker 4: That's sort of you know, probably a third to a
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  Speaker 4: quarter the size of r you know, the really big banks.
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  Speaker 2: Yeah, yeah, Okay, How do you have any preference as
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  Speaker 2: to how Nikola goes about getting this money for you?
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  Speaker 2: Would you prefer a float or what?
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  Speaker 4: No, I'm really encouraged by the idea that she's popped forward,
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  Speaker 4: which is, you know, all options are on the table.
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  Speaker 3: That's what you want.
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  Speaker 4: That will allow us to find the right people, you know,
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  Speaker 4: who see us as the right investment and have a
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  Speaker 4: sheared philosophy, which I think is really but.
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  Speaker 2: This sounds like a partial float for mum and Dad investors.
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  Speaker 2: Is off the table.
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  Speaker 4: Well, I think she's already said that she would would
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  Speaker 4: not do that before the next selections. So you'd want
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  Speaker 4: to mandate from you know, the country, which I think
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  Speaker 4: makes sense. And you know, look, I think you know,
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  Speaker 4: growing strongly just would make it a more attractive offer.
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  Speaker 4: So Luck, I think you know, there is a great
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  Speaker 4: opportunity for New Zealand investors to own us even more directly.
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  Speaker 3: Yeah, but I think that's a few years away. Yeah.
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  Speaker 2: Now, the thing is, okay, there is a little bit
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  Speaker 2: bit of concern about you guys being a disruptor because
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  Speaker 2: by its very nature, a disruptor has to take risks
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  Speaker 2: and that's not actually what we want our banks to do.
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  Speaker 4: No, Lucky, I mean you've absolutely hit the nail on
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  Speaker 4: the head right that the definition of memoric I much
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  Speaker 4: prefer is independent and so we don't have people to
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  Speaker 4: answer to in Sydney and Melbourne. We've got one market
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  Speaker 4: we care about, which is New Zealand.
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  Speaker 3: So you know, we are.
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  Speaker 4: Independent in that sense, which we're one hundred percent focused
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  Speaker 4: on what we can do for New Zealand and ki
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  Speaker 4: Wei and that's what we want to do.
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  Speaker 2: Steve answers something for me that's been I've been puzzling
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  Speaker 2: over this for the last week or so. Right, Normally,
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  Speaker 2: if you don't have enough competition, it's because you've only
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  Speaker 2: got you've got a monopoly or a duopoly, you haven't
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  Speaker 2: got a lot of players. But actually we've got a
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  Speaker 2: lot of players. We've got four big banks and a
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  Speaker 2: whole bunch of small banks. So how is it going
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  Speaker 2: to make a difference if we just add a fifth
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  Speaker 2: one in there to actual competition.
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  Speaker 4: Well, I think as long as that fifth player is
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  Speaker 4: pushing for a different level of return, then they're going
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  Speaker 4: to be offered more value for the customer.
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  Speaker 3: So that's really the answer.
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  Speaker 4: Your point you make is a really good one, though,
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  Speaker 4: which is, you know, we need to get to a
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  Speaker 4: scale where we're really influencing the way the other banks respond.
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  Speaker 3: What's difficult for the smaller banks.
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  Speaker 4: You know, the next biggest one is about twenty five
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  Speaker 4: percent the size of us. You know, it's difficult for
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  Speaker 4: them to really influence things outside of their home patch.
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  Speaker 4: And I know they're focused on trying to do that
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  Speaker 4: just that we are. But actually you need a certain
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  Speaker 4: scale to really make a difference, and that's what we
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  Speaker 4: want to do.
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  Speaker 2: Okay, fair enough, and listen, where do you see that?
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  Speaker 2: I see you guys have cuts already twice in the
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  Speaker 2: last two weeks. This is the lending rates. Where do
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  Speaker 2: you see it ending up?
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  Speaker 4: Well, we see it really grinding down. So our economics
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  Speaker 4: team is saying that's going to be twelve cuts. So
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  Speaker 4: you know we are we are calling for more cuts
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  Speaker 4: in but we've been pretty accurate so far. So I've
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  Speaker 4: got a lot of faith in our team. So that
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  Speaker 4: would see us get down to sort of three and
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  Speaker 4: a half percent.
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  Speaker 2: How good, Steve, Thank you very much. I has some
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  Speaker 2: good news. Steve Yukovic, the chief executive at Kiwibank.
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