Kiwibank growth on track

By PAUL PANCKHURST

The state-owned Kiwibank yesterday reported a loss of $8 million for the year to June 30 - and gave a snapshot of its progress as a fast-growing minnow.

The loss was expected as part of the start-up phase - and is down from the previous year's $10.2 million.

It was the first full year of operation for the bank, which is a subsidiary of New Zealand Post and launched in February last year.

Chief executive Sam Knowles said the bank remained on track for a smaller loss in the current financial year and a profit in 2004-2005.

He said Kiwibank had captured just over 1 per cent of the personal retail banking market ($465 million) and a little under 1 per cent of home loans ($500 million).

A year earlier, the respective figures were $42 million and $86 million.

The bank had 147,000 customers at June 30 - a number that has since reached 170,000. Knowles expects to hit 200,000 in January.

Early business plans provided for 165,000 customers within three years of launch.

Knowles said that by the end of this year the bank's retail deposit and lending business would be "very similar" in size to that of Taranaki Savings Bank.

The bank had assets of $771.4 million and liabilities of $711.5 million. Income, after provisions, was up from $19.7 million to $48.8 million.

Shareholder's equity was $59.9 million.

The Government announced in July that $40 million would be poured into Kiwibank over the next two years - on top of the initial $72 million of funding.

The extra capital was needed to satisfy Reserve Bank requirements.

The Reserve Bank requires banks maintain a ratio of capital to assets of at least 8 per cent. Kiwibank now has a ratio of 16 per cent but that will fall to 10 per cent as it builds rapidly.

The bank had to consolidate its customers into a solid, mature client base if it wanted long-term growth and had to decide whether to rely on customers other banks did not want or become a price leader.

The bank was looking at moving into business banking.