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Kiwibank aims to increase its home loan market share.
The mortgage market is getting a competitive boost from Kiwibank’s plans to expand its home loan business.
The owner of Kiwibank has announced it had invested $225 million from the proceeds of the sale of the Kiwi Wealth KiwiSaver business into growing the bank’s home loan business.
Kiwi Group Capital was set up in late 2022 as a holding company to hold the Crown’s investment in Kiwibank and New Zealand Home Loans.
And it ended up with a war chest of funds following the sale of the Kiwi Wealth KiwiSaver business last year to Fisher Funds for $310 million.
Kiwi Group Capital chairperson David McLean said the $225m investment represented the “next step in the strategic portfolio reshaping actions” for the company following the sale of Kiwi Wealth and the Kiwi Insurance business.
Kiwi Insurance was sold to Australian health insurer NIB for $45m, a move that mirrored sales of insurance operations by ANZ, ASB, Bank of New Zealand (BNZ) and Westpac as banks got out of the life insurance business.
The sales of Kiwi Wealth and Kiwi Insurance allowed Kiwi Group Capital (KGC) to focus on Kiwibank’s core banking, McLean said.
STUFF
Kiwibank senior economist Jeremy Couchman says ‘negative equity’ is not a reason to panic.
“This investment generates long-term value for shareholders and is well-aligned with KGC’s strategic objective to help Kiwibank provide a competitive banking alternative for New Zealanders,” he said.
Steve Jurkovich, Kiwibank’s chief executive, said it was a significant investment.
“This capital injection will enable Kiwibank to continue to deliver on its growth ambitions by supporting Kiwi with their home-ownership aspirations and backing local businesses to thrive,” he said.
“Kiwibank has a unique role to play in the New Zealand banking sector and this is another important step in strengthening our position further in the market,” he said.
The investment will see KGC issued with additional shares in Kiwibank.
Kiwibank remains a relatively small player in the home loan market compared to the big four Australian banks, but is growing its presence in the mortgage adviser market.
Data from the Reserve Bank at the end of March showed Kiwibank had net loans and advances of just over $29 billion.
ANZ, the largest of the banks, had net loans and advances of $147b. BNZ had just over $101b. ASB had just over $107b. Westpac had just over $98b.
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