MEDIA BRIEFING Financial Results – 30 June 2013

Topics Covered  Key Issues  Profit Performance  Balance Sheet Growth  Key Ratios  Capital Adequacy  Credit Quality  The Future 2

Key issues  The Kiwibank Banking Group achieved a profit after tax of $97.1m for the year ended 30 June 2013, a 22.8% increase on previous year’s profit of $79.1m  Continued growth in balance sheet since June 2012:  Lending increased 6.5% from $12.4bn to $13.2bn  Customer deposits increased 4.3% from $11.6bn to $12.1bn  Customer growth continued and now about 850,000  Kiwibank has now been operating for 11 years 3

Key issues continued  Provisioning for bad debts reduced from $91m to $72m  Customer deposits account for 84% of all bank funding  Kiwibank’s credit rating revised from AA– to A+ by Standard and Poor’s (the same rating as NZ Post)  Raised $150m in term subordinated debt  CHF150m covered bond issue 4

Business Banking  We’ve built a business bank for SME’s with a full suite of services and specialist products.  Our customer satisfaction and likelihood to recommend are number 1 in the SME market.  As a result we have grown our customer base by over 8% in the last year to over 34,500 in a market that is at best flat.  Our current and future focus is to enable our customers to spend more time on their business by making their banking easy. 5

Wealth – Gareth Morgan Investments  Distribution of Gareth Morgan KiwiSaver (GMK) through the Kiwibank/Post network  Build out of the Investment Strategy Team with key appointments  Increasing Kiwibank/Post network sales from 3,500 in 2011/2012 to over 13,000 in the 2012/2013 year.  17% increase in GMK members  18% increase in FUM for GMI  GMK - winner of the Workplaces Savings NZ People’s Choice Award 6

Insurance  Kiwi Insurance Limited continues the transition to full in-house manufacturing capability for Life Insurance  Kiwi Insurance building a platform for profitable growth while maintaining current profitability  Kiwi Insurance received a Financial Strength Rating of A- (Excellent) from AM Best in September last year  Launched the innovative “Life & Living” product in October last year  Received a full licence from the Reserve Bank under the Insurance (Prudential Supervision) Act 2010 this year  Continuing to facilitate House insurance in Christchurch 7

Canterbury  Tangible leadership in the regions recovery with continued lending and facilitation of insurance.  Transitional and bespoke lending solutions to assist those in need and to accelerate the rebuild through ‘Canterbury Tools for Living’  Kiwibank’s local market share now estimated to exceed 12%  New Canterbury lending exceeding pre-quake growth rates.  Committed to the region with over 50 local community based events and activities undertaken or financially supported by Kiwibank in the last year. 8

Awards and achievements  Global Finance Best Bank in NZ 2013  Sunday Star Times Bank of Year Award  Canstar Best Value Everyday banking Award  Highest level of customer satisfaction (Roy Morgan)  Most trusted bank brand (Reader’s Digest) 9

Financial Performance – Profit & Loss  Kiwibank increased net interest income and controlled expenses resulting in profit after tax rising 23% Dollars in millions 30 June June 2012% growth Net interest income Other income Total operating revenue % Total expenses(311)(308)1% Profit before tax % Income tax expense(38)(32) Profit after tax % 10

Financial Performance-Historical Summary 11 Dollars in millions 30 June June June June June 2009 Financial performance Interest income Interest expense (514)(516)(529)(430)(485) Net interest income Other income Total operating revenue Operating expenses (304)(273)(242)(219)(215) Impairment allowances (7)(35)(79)(18)(14) Net profit before taxation Income tax expense(38)(32)(11)(19)(20) Net profit after taxation

Financial Performance-Balance sheet Lending growth continues despite a static home loan rate market Strong depositor support continues to maintain retail funding ratio 12 Dollars in millions 30 June June 2012% growth Assets Loans and advances13,20212,4456% Wholesale & other assets2,0072,300 Total assets15,20914,7453% Financed by: Liabilities Customer deposits12,12011,5655% Securities issued & other liabilities2,2312,433 Total Liabilities 14,351 13,9983% Shareholder's equity % Total liabilities and shareholder's equity 15,209 14,745

Financial Performance (key ratios) Ratios in percentage terms 30 June June 2012 Profitability measures Net interest income/average interest bearing assets1.81%1.8% Net profit after tax/average shareholder's funds12.1%11.7% Efficiency measures Operating expenses/total income68.1%65.1% Operating expenses/average total assets2.0%1.9% Capital ratios Total capital ratio 12.6% 11.3% 13

Financial Performance-Capital Adequacy  Following the implementation of the more punitive Basel III regulations on 1 January 2013, Kiwibank’s capital ratios remain strong and in excess of RBNZ required minima  As at June 2013, Kiwibank’s Common Equity Tier 1 Ratio was 8.4%, 3.9% above the required RBNZ minima  Total capital increased by $157m to $942m, a 20% increase from 30 June 2012  Total capital ratio under Basel III was 12.6% at 30 June 2013  Kiwibank raised $150m of term subordinated debt in December 2012, the first issue of Tier 2 qualifying securities in New Zealand under the Reserve Bank’s new Basel III rules, of which $108m can be recognised as Tier 2 capital 14

Credit Quality (Impaired Assets)  The table shows total impaired assets as a % of gross loans and advances from Disclosure Statements dated 30 June 2012 and Kiwibank remains favourably placed against other banks  Impaired Assets of $54m include all assets where interest charges have been suspended and a specific provision has been raised. Down from $84m in Source: 30 June 2012 and 2013 Disclosure Statements. 15 Bank 30 June June 2012 Kiwibank0.41%0.67% ASB0.52%0.47% BNZ0.72%0.86% Westpac1.04%1.61% ANZ/National1.14%1.65%

Credit Quality  A key focus from management and RBNZ is the total credit provisioning to gross loans and advances Credit Provisions as a % of Gross Loans and Advances 16 Bank 30 June June 2012 Kiwibank0.54%0.73% ASB0.34%0.41% BNZ0.73%0.86% Westpac0.92%1.08% ANZ/National0.99%1.26% Source: 30 June 2012 and 2013 Disclosure Statements.

The future  Roll out of new branch layouts for Post and Kiwibank following North Shore (Auckland)and Kapiti pilots  Continued focus on helping customers switch to Kiwibank  Push harder to increase market share in small and medium enterprise market  Growth opportunities in the insurance business – Bancassurance  Consolidate market position as a bank of national and strategic importance  Continued growth of Kiwisaver  Continued support of the Kiwibank New Zealander of the Year and local heroes awards 17