Kiwibank Ltd. · NZX:KWBHB
Kiwibank — Debt Investor Presentation (April 2023)
29 slides from Kiwibank's debt investor presentation, Apr 26, 2023
Slide 1: Offer of Subordinated Notes – Investor Presentation
Kiwibank Offer of Subordinated Notes – Investor Presentation Steve Jurkovich – Chief Executive Belinda Newman – Treasurer 26 April 2023 Joint Lead Managers
Slide 2: Disclaimer
Disclaimer This presentation provides information in summary form only and is not intended to be complete. The information in this presentation has been obtained from sources which Kiwibank Limited (Kiwibank) believes to be reliable and accurate at the date of preparation, but its accuracy, correctn
Slide 3: Offer highlights
Offer highlights Issuer Kiwibank Limited Description Unsecured subordinated notes (Notes) Offer amount Up to $200 million Term 10 years, ending on the Maturity Date (12 May 2033) if not repaid earlier Kiwibank has the option to repay on 12 May 2028 or on any Scheduled Interest Payment Date Early rep
Slide 4: Contents
Contents 1. About Kiwibank 2. Subordinated Notes Overview 3. The Offer 4. Questions 4
Slide 5: 1. About Kiwibank
1. About Kiwibank 5
Slide 6: Kiwibank is the largest New Zealand-owned bank
Kiwibank is the largest New Zealand-owned bank. Kiwibank's founding vision was for New Zealand to have a real, relevant and credible alternative to the offshore-owned banks. That remains at the heart of who we are and why we exist. 6 6
Slide 7: Kiwibank – who we are
Kiwibank – who we are • We are a purpose-led bank, balancing purpose with performance • We're proud to be a B Corp certified company¹ New Zealand Government • New Zealand’s largest domestically-owned bank, with approximately NZ$33b2 in total assets Kiwi Group Capital • Full-service nationwide retail
Slide 8: This is Kiwi – our strategy
This is Kiwi – our strategy What we aim to achieve Kiwi Making Kiwi 1. Making our Tamariki better off PURPOSE Better Off 2. Making Kiwi better off 3. Making Aotearoa better off To be Customers’ GOAL 1. More Kiwi and Kiwi businesses prefer us for their banking needs 2. More Kiwi choose us for their H
Slide 9: Social, environmental and cultural highlights of the half year
Social, environmental and cultural highlights of the half year1 CERTIFIED B CORP2 57,140 STUDENTS 292 COMPUTERS 141 MICRO-LOANS MEETING HIGH STANDARDS USED BANQER IN 2022 DELIVERED THROUGH OF SOCIAL AND DONATED TO SCHOOLS AND CHARITIES AT THE NGĀ TĀNGATA ENVIRONMENTAL IMPACT MICROFINANCE TRUST END O
Slide 10: Strong revenue and cost control drive financial performance
Strong revenue and cost control drive financial performance Highlights for half year 2023 Half year 2023 Financial Highlights • Improved operating income was driven by growth in customer lending along with NZ$1.1B GROWTH IN NZ$1.0B GROWTH IN NZ$98M higher NIM CUSTOMER LENDING CUSTOMER DEPOSITS PROFI
Slide 11: Profit driven by higher revenue
Profit driven by higher revenue Reported profit after tax ($m) 126 131 Highlights for half year 2023 67 71 • Profit after tax increased on prior period due to higher revenue 57 6 98 • Higher revenue is driven by net interest income 64 being 29.5% above prior period, a result of the 51 55 rising inte
Slide 12: Change in reported net profit between half year 2022 and half year 2023
Change in reported net profit between half year 2022 and half year 2023 Higher net interest Increased investment in Increased provisions Increased people and margin in rising interest technology & strategic due to rising interest technology costs rate market transformation rates and cost of living +
Slide 13: Lending portfolio
Lending portfolio • Kiwibank is primarily a retail mortgage bank • 7.1% share of NZ mortgage market 1 Net Loans and Advances2 Lending Category 31 December 2022 (NZ$b) Home Loans $23.8 Credit Cards $0.4 Overdrafts $0.2 Business Lending $4.2 Other Lending $0.4 Net Loans and Advances $29.0 Source: Kiwi
Slide 14: Mortgage portfolio
Mortgage portfolio LVR1 profile Total home loan portfolio $23.8b Origination LVR Fixed/Floating 91%/9% Average home loan balance $373k Interest only (by value) 16.2% LVR1 >80% 6.3% Regional profile LVR band • The devastation caused by the recent Cyclone Gabrielle is not expected to have a material i
Slide 15: More kiwi backing Kiwibank
More kiwi backing Kiwibank Lending Growth 14% 70% Percentage growth (cumulative) 13.3% Percentage growth (period) 12% 11.7% 60% 9.5% Key Focus Areas 10% 9.0% 50% 8% 40% 6.8% 6.7% 6% 5.7% 30% • Kiwibank continues to outperform the system 4.6% 4% 4.3% 20% (banking sector) in lending and deposit 2.1% g
Slide 16: Asset quality
Asset quality Total credit exposure by industry Dec-22 Dec-21 Households 73% 75% Property and business services 7% 7% Government and local authorities 6% 6% Finance, investment & insurance 6% 5% Construction 3% 3% Other 5% 4% Non-performing loans ratio - % of total loans • Kiwibank’s non-performing
Slide 17: High quality liquid assets
High quality liquid assets Liquid Assets Portfolio • Kiwibank has a diversified portfolio of liquid assets, which can quickly be converted into cash • Liquid Assets portfolio was $3.15b, as at 31 December • In addition Kiwibank held unencumbered internal residential mortgage-backed securities availa
Slide 18: Funding mix
Funding mix Term funding maturity profile by type1 • Kiwibank maintains a diversified range of funding sources, both domestic and offshore covering short and long-term • Weighted average remaining term to maturity 2.7yrs1 2 Funding composition Funding composition: non-customer deposits Source: Kiwib
Slide 19: Capital ratios
Capital ratios Regulatory Capital Ratios1 Key focus areas • Capital as at 31 December 2022 remains more than sufficient to meet current regulatory minimum requirements • Subordinated Notes issue will increase Kiwibank’s Total Capital ratio • The RBNZ is increasing the total capital requirements for
Slide 20: 2. Subordinated Notes Overview
2. Subordinated Notes Overview 20
Slide 21: Key terms of the Notes
Key terms of the Notes Issuer Kiwibank Limited Description Unsecured subordinated notes (Notes) In a liquidation of Kiwibank the Notes will rank behind depositors and other unsubordinated creditors Ranking of Kiwibank, but ahead of Kiwibank's shareholders (including holders of perpetual preference s
Slide 22: Repayment of the Notes
Repayment of the Notes • Kiwibank must repay your Notes on the Maturity Date (12 May 2033) if not repaid earlier • Kiwibank may, subject to the conditions described below, choose to repay all (but not some) of the Notes early: a) on the First Optional Redemption Date (12 May 2028), or on any Schedul
Slide 23: Credit rating
Credit rating • Kiwibank has an issuer credit rating of A1 from Moody’s Investors Service (Moody’s) • The Notes have been rated Baa2 by Moody’s Explaining the Baa2 credit rating of the Notes Moody’s Likelihood an issuer does not Rating1 meet financial obligations Kiwibank issuer credit rating A1 Aaa
Slide 24: Risks of investing
Risks of investing An investment in the Notes involves risk. Kiwibank considers that the significant risks are: • Risks related to Kiwibank’s information technology systems • External events may adversely impact Kiwibank's operations • A material decline in property market valuations may result in h
Slide 25: 3. The Offer
3. The Offer 25
Slide 26: Key terms of the offer
Key terms of the offer The Offer will raise Tier 2 capital to help Kiwibank meet its regulatory capital Purpose requirements and manage its capital position Use of proceeds The proceeds of the Offer will be used for Kiwibank's general corporate purposes Offer amount Up to $200 million Minimum subscr
Slide 27: Important dates
Important dates Important dates for the Offer LDD Lodgement Date 26 April 2023 Opening Date 2 May 2023 Closing Time 11:00 a.m. on 5 May 2023 Rate Set Date 5 May 2023 Issue Date / Allotment Date 12 May 2023 Expected date of initial quotation 15 May 2023 Important dates for the Notes Scheduled Interes
Slide 28: 4. Questions
4. Questions 28
Slide 29: Contact
Contact Geoff Martin Head of Funding [email protected] +64 4 439 6932 29