1 Media Briefing Financial Results – 31 December 2010

2 Topics Covered Key Milestones Financial Performance Credit Quality The Future

3 Key milestones Profit after tax of $13.9m for the year ended 31 December 2010, a 41% decrease on prior year’s profit of $23.5m Continued growth in balance sheet since December 2009: Lending increased 12% by $1.2bn to $10.9bn 10% increase in retail deposits from $6.9bn to $7.6bn Capital strengthened by $150m perpetual preference shares (PPS) in May 2010 Government to provide uncalled capital on commercial terms to be utilised as protection against a significant unforeseen external event and provide credit rating support Ian Fitzgerald appointed as new Kiwibank Chairman Paul Brock appointed new Kiwibank CEO

4  Launched Kiwibank Notice Saver product – a New Zealand first in the savings and investment market. More than half a billion of new to Bank dollars invested in the Notice Saver account  Launched our new Loaded for Travel prepaid Visa card which proved to be very successful with customers. 492 card packs sold with combined total of over $1m loaded onto them between June  Awarded Bank of the Year by London-based The Banker magazine for the second year in a row  Awarded the 2010 Sunday Star Times Cannex Canstar Best Value Bank for the fifth year running  Awarded New Zealand’s most trusted bank brand by Reader’s Digest for the fourth year running Key milestones continued

5  In the 2010 NetGuide website awards held in August, Kiwibank’s website was voted number one in the Financial Services categorywww.kiwibank.co.nz  Kiwibank Kiwisaver Scheme won both the Investment Statement of the Year award and the Best Other Workplace Savings or Communication award in the industry Workplace Savings Communications award on 9 December  Finalist in two categories of the 2010 Vero Excellence in Business Supports Awards – Large Business and Individual  Heaps!, our free, personal financial management service won the TUANZ Education and Commerce Awards categories on 2 September

6 Financial Performance – Profit & Loss Financial performance impacted by significant increase in impairment losses on loans and advances from $9.7m in Dec09 to $31m in Dec10 Improvement in NII margins Dollars in thousandsDec-10Dec-09% growth Net interest income 89,373 66,357 Other income 80,016 87,754 Total operating income 169, ,1119.9% Operating expenses(118,478)(111,098)6.6% Impairment losses(31,007)(9,731) Net profit before tax 19,904 33,282(40.2%) Income tax expense(5,996)(9,733) Net profit after tax 13,908 23,549(40.9%)

7 Financial Performance - historical summary Solid underlying business performance impacted by increase in impairment allowances, reflecting falling values of certain classes of property collateral * Dec 09 excludes $0.8m profit from The New Zealand Home Loan Company and Kiwi Insurance which was sold to 100% owned NZ Post subsidiary, Kiwi Group Holdings Ltd in June 2009 Dollars in thousandsDec-10Dec-09Dec-08Dec-07Dec-06Dec-05 Interest income348,498268,334362,302241,413151,57880,055 Interest expense(259,125)(201,977)(282,707)(187,952)(107,820)(57,117) Net interest income89,37366,35779,59553,46143,75822,938 Other income80,01687,75474,88369,41262,36548,084 Total operating income169,389154,111154,478122,873106,12371,022 Operating expenses(118,478)(111,098)(110,375)(89,232)(80,566)(61,696) Impairment allowances(31,007)(9,731)(6,153)(705)(1,174) Profit before taxation19,90433,28237,95032,93625,5578,152 Income tax expense(5,996)(9,733)(12,148)(10,281)(8,311)(2,708) Profit after tax13,90823,54925,80222,65517,2465,444

8 Financial Performance - Balance sheet Loans and advances continue to grow despite retail and business customers de-leveraging as the economy remains weak Strong retail funding ratio as retail deposits grow by over 10% Capital base strengthened by $150m PPS issuance Dollars in millionsDec-10Dec-09 % growth Assets Loans and advances 10,933 9, % Wholesale & other assets 2,035 2,292 Total assets 12,969 12,0187.9% Financed by: Liabilities Retail deposits 7,621 6, % Wholesale deposits 3,520 2, % Securities issued & other liabilities 1,228 1,857 Total Liabilities 12,369 11,5976.6% Shareholder's equity * % Total liabilities and shareholder's equity 12,969 12,018 Ratio retail deposits to retail lending70%71% * Includes $150m PPS issued in May 2010

9 Financial Performance (key ratios) * Dec 10 excludes $150m perpetual preference shares issued in May 2010 Ratios in percentage terms (annualised) Dec-10Dec-09 Profitability measures Net interest inc./avg.total assets (annualised)1.42%1.19% Net profit after tax/avg shareholder's funds (annualised)8.29%17.22% Efficiency measures Operating expenses/total income69.9%71.9% Operating expenses/avg total assets1.8%2.0% Average Balances ($000's) per account Lending - Fixed Mortgages Deposits - Term Deposits 82 83

10 Financial Performance – Capital Adequacy Total Capital ratio under Basel II is 11.7% compared to RBNZ’s minimum regulatory capital ratio of 8% Total Capital increased by $177.7m to $728.5m, a 32% increase from Dec 09. Sufficient capital for immediate growth plans, aided by $150m perpetual preference share (PPS) issuance in May 2010 Strengthening of Tier 1 Capital ratio from 7.4% in Dec 09 to 9.5% in Dec 10 following $150m PPS share issuance

11 Credit Quality (Impaired Assets) The table shows our total impaired assets as a % of total assets from latest available Key Information Summaries. Kiwibank remains favourably placed against other banks The ratio has remained consistent across strong balance sheet growth as a result of targeting low LVR, seasoned (i.e. existing, switching) customers to maintain the quality of our lending book. Impaired Assets of $63.9m include all assets where interest charges have been suspended and a specific provision has been raised Source: Dec 10 GDS for Kiwibank BankLatest KIS Previous Quarter KIS Kiwibank0.49%0.31% ASB0.75%0.77% BNZ1.11%1.10% Westpac1.34%1.38% ANZ National1.72%1.59%

12 Credit Quality (Total Credit Provisions to Total Assets) A key focus from management and RBNZ is the total credit provisioning to total assets Each bank has a different product and risk portfolio to Kiwibank, which has a high % secure mortgage book and LMI insurance for assets over 80%. Source: Most recently available GDS’s BankLatest GDS Previous Quarter GDS Kiwibank0.35%0.17% ASB0.37%0.41% BNZ0.74%0.79% ANZ/National1.20%1.29% Westpac1.37%1.28%

13 The future Continue strong customer growth through being the banking leader in “value for money” Strong focus on helping customers switch to Kiwibank and driving change to make switching between banks easier Consider any investment opportunities in the market as they arise Active “customer care” programme to help financially distressed customers. Growing insurance business – Bancassurance Asset financing – Kiwi Asset Finance Diversifying and tapping into more offshore funding resources