Steve Jurkovich: Kiwibank CEO on the latest cut to the OCR

Don't bank on any further cuts to the Official Cash Rate. 

The Reserve Bank's dropped the cash rate 25 basis points to 2.25%. 

It expects to see inflation ease and the economy recover. 

Kiwibank Chief Executive Steve Jurkovich told Mike Hosking this could very well be the bottom of the current OCR cycle. 

He says there's lots of talk about green shoots in the economy, although much of this has been in farming. 

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Episode Transcript

Speaker 1 (00:00):
It looks like one and done. The door technically remains

(00:02):
open for another cup. At the twenty five of yesterday
from the Reserve Bank is well, it has a finality
about it, doesn't it? The governor shortly, of course. But
first at retail level, are the banks moving? Steve Yukovic
is the CEO, of course of Kiwi Banking is back
with the Steve, very good morning to you. Co Operative
Bank is making a big deal of their three point
one on floating. Is everyone moving and moving to the
appropriate measure?

Speaker 2 (00:24):
Well, I think you appropriates in the eye of the beholder,
but the everyone is moving. I think you've got to
also be aware that those moves will also impact savers
as well. Might but I think most people have shown
some activity yesterday. There'll be some unfolding today, I'm sure.

Speaker 1 (00:38):
Do you think that people were waiting for some sort
of signal that we were done and now they'll start
making some decisions around money?

Speaker 2 (00:46):
Jeez, I hope. So we've had nine cats now, haven't we,
And so lots of talk about green shoots that you know,
I suppose understand anybody. Those green shoots are namely in grass,
which is turned into meat and dairy but I mean
the market pricing is showing that this is very near
the bottom, if not the bottom. And there's a famous
saying that they don't ring the ball at the bottom,
all the top, so you know, all the market says

(01:08):
that this is very close or is the bottom? Okay?

Speaker 1 (01:11):
One of the committee members yesterday in the press conference
suggested there's plenty of money out there to be borrowed.
Is there there's no shortage of equity?

Speaker 2 (01:19):
No, there's not. I think there is plenty of money
that wants to be put to work. I think there's
a lot more private capital as well. You know, people
looking around the world trying to find attractive returns, and
that rates in New Zealand are still relatively attractive to
some places.

Speaker 1 (01:33):
They talked yesterday too about the banks, the retail bank's
margins back to being where they were. The inference, I
think was that you guys are creaming at a little bit,
are you well?

Speaker 2 (01:42):
Ours is flat, so we definitely aren't. But I think
that's a good question for everyone when they look around
to say are the returns appropriate? You know, we've had
a pretty good crack at one and Finance and Expenditure
Committee to say and argue that the present capital rules
mean that the Aussie owned banks make about three quarters
of billion dollars more than they should if the rules

(02:02):
were changed. So we're hoping we're going to get an
update on that. On the eleventh of December.

Speaker 1 (02:06):
When you said, jeez, I hope. So what what's your
view of the power of cuts, because those guys have
talked for an entire year about the so called flow
through to the economy and it hasn't happened, or if
it has, it's made no difference.

Speaker 2 (02:19):
Now I'm with you on that front. I think it's
up to each individual person to feel like they're confident
about that they're ready to go. I mean, there is
absolutely no doubt in my mind that the wealth effect,
which comes from seeing your home go up and price,
makes a big difference. I think, you know, we have
to see a bit more activity in that residential home
market that helps. We've got a lot of businesses that

(02:40):
have been sitting on their hands, you know, they're hiring intentions,
their investment intentions have been really, you know, pretty loop warm.
I'm really hoping that through the next three to six months,
people make that individual decision, which is Fay it's time
to invest and stop the lying on a small bunch
of people in Wellington.

Speaker 1 (02:57):
You sound trepidacious about twenty six. Is that fair as
opposed to balls?

Speaker 2 (03:02):
Na No, I feel like you know, this has got
to be the bottom and so as a result of this,
I do believe that business owners and individuals don't want
to sit around on their hands forever. They've done a
good job of paying their bills. Things like rates and
insurance have been hardgoing. Hopefully we see a bit of
relief on those fronts as well in twenty six and
then at the end of the day, people have got

(03:23):
to grow if they want to have a better retirement,
so let's get investing.

Speaker 1 (03:26):
Good stuff. Well done. Steve Yeakovic is the boss of
kV Bank.

Speaker 2 (03:29):
Of course.

Speaker 1 (03:30):
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