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Speaker 1: Kiwibank has just reported its highest ever profit at two

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Speaker 1: hundred and two million dollars. Lending grew nine point three percent,

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Speaker 1: deposits grew also nine point four percent, and Steve Yukovic

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Speaker 1: is the bank's chief executive. Hey, Steve, Hi, Heather, what

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Speaker 1: are you putting this down to?

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Speaker 2: Look, I think we've had really balanced growth. We did

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Speaker 2: well in deposits, we did well in home lending. Business

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Speaker 2: banking was difficult for the whole market, but we still

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Speaker 2: grew a lot fast in the market. So overall, you know,

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Speaker 2: we've sort of ticked a lot of boxes, which was great.

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Speaker 1: Why do people like you so much at the moment?

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Speaker 1: Is there something you're doing?

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Speaker 3: Right?

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Speaker 2: I think we're on the front food and trying to

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Speaker 2: support people as best we can. I do think there

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Speaker 2: is a bunch of people that really like things like

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Speaker 2: being b Cort, being New Zealand owned, and then others

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Speaker 2: just want, you know, a competitive deal with good easy

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Speaker 2: things to turn around times, all those sorts of good stuff.

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Speaker 1: You you're obviously into the idea of capitalizing Kiwibank, right.

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Speaker 3: I certainly am.

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Speaker 1: How much money do you people need?

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Speaker 2: Look, I think about half a billion dollars five hundred million.

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Speaker 2: That's sort of twice what we got when Kei we

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Speaker 2: Wealth was sold, and that gave us a lot of

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Speaker 2: room and runway for a couple of years and another

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Speaker 2: couple to come. So, look, you don't want all of

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Speaker 2: your capital at once because obviously you know you've got

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Speaker 2: to be able to put it to work. So you know,

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Speaker 2: I think that sort of the five hundred million dollar

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Speaker 2: mark would be really attractive, would allow us to keep

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Speaker 2: growing really fast and live up to that idea that

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Speaker 2: the ComCom want once, which is, you know, more competition,

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Speaker 2: lower prices, better offer for customers.

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Speaker 1: So are you saying what you want to see is

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Speaker 1: a coupital of recapitalizations rather than just one.

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Speaker 2: Yeah, I think that's I mean continuity of capital and

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Speaker 2: having regular capitals better than just one big chunk, because

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Speaker 2: that allows you to put that money to work, make

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Speaker 2: sure that you know, you're balancing the returns for owners

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Speaker 2: and you're also growing and so you know, having a

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Speaker 2: huge amount of capital that you can't put to work

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Speaker 2: is probably not the best use of anyone's investment.

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Speaker 1: And so if you were to be able to get

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Speaker 1: a billion over a couple of bursts, how where would

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Speaker 1: that put you in terms of the size of the

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Speaker 1: other banks, the big ones.

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Speaker 2: Look, I'd love to see this, I'd love to see

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Speaker 2: his double in size, Heather. So I think we could

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Speaker 2: get to you know, sixty five seventy billion, and during

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Speaker 2: the course of that growth really put some pressure on profitability.

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Speaker 1: Are you still smaller than the big four?

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Speaker 3: Yep?

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Speaker 2: We are where thirty nearly thirty three billion dollars in lending.

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Speaker 2: That's sort of you know, probably a third to a

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Speaker 2: quarter the size of you know, the really big banks.

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Speaker 1: Yeah, yeah, Okay. How do you have any preference as

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Speaker 1: to how Nikola goes about getting this money for you?

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Speaker 1: Would you prefer a float or what?

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Speaker 3: No.

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Speaker 2: I'm really encouraged by the idea that she's popped forward,

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Speaker 2: 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 2: That will allow us to find the right people, you know,

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Speaker 2: who see us as the right investment and have a

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Speaker 2: sheared philosophy, which I think is really but.

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Speaker 1: This sounds like a partial float for mum and Dad

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Speaker 1: investors is off the table.

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Speaker 2: Well, I think she's already said that she would not

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Speaker 2: would not do that before the next election, so she'd

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Speaker 2: want to mandate from you know, the country, which I

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Speaker 2: think makes sense. And you know, look, I think you know,

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Speaker 2: growing strongly just would make it a more attractive offer.

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Speaker 2: So look, I think you know, there is a great

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Speaker 2: 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 1: Now, the thing is okay, there is a little bit

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Speaker 1: bit of concern about you guys being a disruptor because

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Speaker 1: by its very nature, a disruptor has to take risks

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Speaker 1: and that's not actually what we want our banks to do.

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Speaker 2: No, Lucky, I mean, you've absolutely hit the nail on

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Speaker 2: the head right. The definition of memoric I much prefer

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Speaker 2: is independent and so we don't have people to answer

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Speaker 2: to in Sydney and Melbourne. We've got one market we

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Speaker 2: care about, which is New Zealand. So you know, we

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Speaker 2: are independent in that sense, which we're one hundred percent

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Speaker 2: focused on what we can do for New Zealand and

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Speaker 2: ki We and that's what we want to do.

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Speaker 1: Steve answers something for me that's been I've been puzzling

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Speaker 1: over this for the last week or so. Right, Normally,

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Speaker 1: if you don't have enough competition, it's because you've only

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Speaker 1: got you've got a monopoly or a duopoly, you haven't

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Speaker 1: got a lot of players. But actually we've got a

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Speaker 1: lot of players. We've got four big banks and a

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Speaker 1: whole bunch of small banks. So how is it going

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Speaker 1: to make a difference if we just add a fifth

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Speaker 1: one in there to actual competition.

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Speaker 2: Well, I think as long as that fifth player is

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Speaker 2: pushing for a different level of return, then they're going

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Speaker 2: 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 2: Your point you make is a really good one, though,

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Speaker 2: which is, you know, we need to get to a

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Speaker 2: 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 2: You know, the next biggest one is about twenty five

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Speaker 2: percent the size of us. You know, it's difficult for

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Speaker 2: them to really influence things outside of their home patch.

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Speaker 2: And I know they're focused on trying to do that,

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Speaker 2: just that we are. But actually you need a certain

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Speaker 2: scale to really make a difference, and that's what we

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Speaker 2: want to do.

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Speaker 1: Okay, fair enough, and listen, where do you see that?

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Speaker 1: I see you guys have cuts already twice in the

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Speaker 1: last two weeks. This is the lending rates. Where do

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Speaker 1: you see it ending up?

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Speaker 2: Well, we see it really grinding down. So our economics

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Speaker 2: team is saying that's going to be twelve cuts. So

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Speaker 2: you know we are we are calling for more cuts

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Speaker 2: than most, but we've been pretty accurate so far.

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Speaker 3: So I've got a lot of faith in our team.

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Speaker 2: So that would see us get down to sort of

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Speaker 2: three and a half percent.

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Speaker 1: How good, Thank you very much. Has some good news.

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Speaker 1: Steve Yukovic, the chief executive at Kiwibank.

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