Kiwibank Ltd. · NZX:KWBHB
Kiwibank — Debt Investor Presentation (October 2021)
29 slides from Kiwibank's debt investor presentation, Oct 8, 2021
Slide 1: Offer of Perpetual Preference Shares – Investor Presentation
Kiwibank Offer of Perpetual Preference Shares – Investor Presentation Steve Jurkovich – Chief Executive Tim Main – Treasurer 8 October 2021 Joint Lead Managers Co-Manager 1
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 Perpetual Preference Shares (PPS) Offer amount Up to $250 million Term The PPS have no fixed term Optional Redemption Dates 2 November 2026 and each five year anniversary of that date Credit rating The PPS have been rated Ba1 by Moody’s Investors
Slide 4: Contents
Contents 1. About Kiwibank 2. Perpetual Preference Shares Overview 3. The Offer 4. Questions 4
Slide 5: 1. About Kiwibank
\ : 1. About Kiwibank
Slide 6: Kiwibank is the largest New Zealand-owned bank with over a million customers
Kiwibank is the largest New Zealand-owned bank with over a million customers. 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
Slide 7: The journey to better off
The journey to better off Customers’ 1st Choice Our goal is to become Customers’ 1st Choice for home lending and business. This means we will be chosen by even more customers in the moments that matter for them (e.g. buying a house or building their business). We will do this by delivering: Kiwi mak
Slide 8: Social, environmental and cultural highlights of the year
Social, environmental and cultural highlights of the year 5,144 PEOPLE WON CANSTAR AWARDS FOR: BECAME A CERTIFIED B CORP¹ 127 CUSTOMERS RELEASED OUR HAVE RECEIVED DIGITAL OVER 7,500 CREDIT CARD AND HOME MEETING THE HIGHEST HAVE PUT A VOLUNTARY EDUCATION FROM OUR CUSTOMERS HELPED WITH LOAN BANK OF TH
Slide 9: B Corp certification and customer values
We know customers are increasingly choosing businesses that align with their values. Kiwibank has achieved B Corp certification, meeting the required standards of social and environmental performance, accountability, and transparency. 9
Slide 10: Strong asset growth whilst maintaining cost discipline
Strong asset growth whilst maintaining cost discipline FY21 Financial Highlights Key focus areas • Growth in operating income was driven by a buoyant residential market and increased exposure to business customers (total net asset growth $2.9b). This was combined with higher NIM as a result of lower
Slide 11: Profit underpinned by strong lending growth and unwinding of COVID-19 provisions
Profit underpinned by strong lending growth and unwinding of COVID-19 related provisions Reported Profit after Tax ($m) 126 Key focus areas 115 108 • Kiwibank has benefited from the better than expected 46 71 performance of the New Zealand economy. Economic 73 growth, employment and house prices are
Slide 12: Change in reported net profit after tax from FY20 to FY21
Change in reported net profit after tax from FY20 to FY21 ($m) Border closures and travel restrictions heavily impacting Increased investment in Release of COVID-19 provisions in Strong lending growth coupled international spend and one-off technology & strategic response to economy with higher net
Slide 13: Lending Portfolio
Lending Portfolio Net Loans and Advances – June 2021 Other Lending Lending Category 30 June 2021 Overdrafts 0.9% ($b) 0.4% Business Credit Cards Home Loans $21.5 1.5% Lending 12.0% Credit Cards $0.4 Overdrafts $0.1 Other Term Lending $3.0 Home Loans 85.2% Other Lending $0.2 Net Loans and Advances $2
Slide 14: Mortgage Portfolio – June 2021
Mortgage Portfolio – 30 June 2021 Total home loan portfolio $21.5b Home Loan Portfolio - LVR Fixed/Floating 84%/16% 50% 47.2% 45% Average home loan balance $320k 40% Interest only 14% 35% LVR >80% - origination 9.5% % of Portfolio 30% 25% 22.4% 20.8% 20% Home Loan Portfolio - Regional Profile 15% 10
Slide 15: More Kiwi backing Kiwibank
More Kiwi backing Kiwibank Key focus areas Lending Growth (%) • Kiwibank has outperformed the system for 14% 13.3% 45% 40% the last three years in both lending and 12% 11.6% 35% deposit growth. Cumulative growth 10% 8.9% Annual growth 8% 30% • Growth of $1.8b (9%) in customer deposits in 6.8% 25% 5.
Slide 16: Asset quality
Asset quality • Kiwibank’s non-performing loan ratio remains among the lowest in the industry. • This reflects the high quality of Kiwibank’s lending portfolio together with active management of deteriorating customers. Source: RBNZ Financial Strength Dashboard – June 2021 16
Slide 17: High Quality Liquid Assets
High Quality Liquid Assets • Kiwibank has a diverse portfolio of liquid assets. 13% 3% • The bulk of the $3.8b portfolio qualifies as High Quality Liquid Assets as defined by the RBNZ. This represents 15.2% of total loans and advances. 36% • Internal Residential Mortgage Backed Securities 21% progra
Slide 18: Funding mix (as at 30 June 2021)
Funding mix (as at 30 June 2021) Issuer Credit Ratings Term Funding Maturity Profile by Type * Long-term Short-term Outlook Fitch AA F1+ Stable Moody’s A1 P-1 Stable Source: Kiwibank as at 30 June 2021 * Excludes AT1. Sub debt profile based on the next callable date Funding Composition Funding Compo
Slide 19: Capital ratios are comfortably above regulatory minimum requirements
Capital ratios are comfortably above regulatory minimum requirements Key focus areas • Common Equity Tier 1 capital ratio (CET1) of 10.9% declined 50bps on the prior year due 15.8% to strong asset growth. 14.8% 14.5% 15.4% 13.7% 14.4% • $275m Tier 2 capital raised in December 13.4% 13.2% 12.6% 13.6%
Slide 20: Risks of investing
Risks of investing An investment in the PPS involves risk. Kiwibank considers that the most significant risks are: • The economic impact of the COVID-19 pandemic remains uncertain, and has increased potential credit risk across Kiwibank's lending portfolio • Disruption to Kiwibank’s information tech
Slide 21: 2. Perpetual Preference Shares Overview
2. Perpetual Preference Shares Overview 21
Slide 22: Perpetual Preference Shares – Key Terms
Perpetual Preference Shares – Key Terms Issuer Kiwibank Limited Description Perpetual preference shares The PPS are ranked below all Kiwibank’s liabilities and debt obligations including Ranking deposits and subordinated debt but ahead of common equity Term The PPS have no fixed term The Distributio
Slide 23: Optional Redemption of the PPS
Optional Redemption of the PPS • Kiwibank may, subject to the conditions described below, choose to redeem the PPS: • on the first Optional Redemption Date (November 2026), or on any Optional Redemption Date after that date; or • following a Tax Event or a Regulatory Event • Kiwibank may only choose
Slide 24: Credit rating
Credit rating • Kiwibank has an issuer credit rating of A1 from Moody’s Investors Service (Moody’s) • The PPS have been rated Ba1 by Moody’s Explaining the Ba1 credit rating of the PPS Kiwibank issuer credit rating A1 - Deduction for removing shareholder support 3 Notches - Deduction for subordinati
Slide 25: 3. The Offer
\ ce 3. The Offer 25
Slide 26: Key terms of the Offer
Key terms of the Offer The Offer will raise Additional Tier 1 capital to help Kiwibank meet Purpose its regulatory capital requirements The proceeds of the Offer will be used for Kiwibank's general Use of proceeds corporate purposes Offer amount Up to $250 million Minimum subscription amount $5,000
Slide 27: Important Dates
Important Dates Important dates for the Offer Date PDS lodgement date 8 October 2021 Opening Date 18 October 2021 Closing Time 12:00 p.m. on 21 October 2021 Rate Set Date 21 October 2021 Issue Date / allotment date 2 November 2021 Expected date of initial quotation 3 November 2021 Important dates fo
Slide 28: 4. Questions
\ oO , Questions 28
Slide 29: Contact
Contact Geoff Martin Head of Funding geoff.martin@kiwibank.co.nz +64 4 439 6932 29