Kiwibank in the red, but growing

By KEVIN TAYLOR

Kiwibank lost $6.5 million in the six months to December.

But the state-owned bank continued growing more quickly than it expected.

Announcing the half-year result yesterday, chief executive Sam Knowles said he was heartened by support for the bank from people across the income spectrum.

Home loans increase from $42 million in the first half of last year to $262 million by the end of December, and retail deposits rose from $86 million to $286 million.

Kiwibank, started in February last year with $80 million of taxpayers' money, made a planned-for loss of $10.2 million in the year to June.

The New Zealand Post subsidiary does not plan to turn a profit until its third year of operation.

Knowles said the bank had 95,000 customers at the end of last year, and that had risen this year to nearly 120,000.

Between 400 and 500 customers were signing up each day.

Knowles said that when Kiwibank started the aim had been to have 160,000 customers after three years. That target would probably now be reached this year.

"We don't have a final target, but clearly we have a range of scenarios where we are quite a lot bigger, sooner, than we had planned."

He said the growth was well balanced between lending and deposits.

"Obviously in the longer term it's a question we have to look at, but that presumes the growth level continues at the same rate."

Growth had been consistent across the country.

Knowles said there had been pleasing growth in average customer savings and in wages and salaries being direct-credited to Kiwibank. .

The bank had promoted competitive deposit rates across a broad range of accounts, resulting in a $7.5 million-a-week average increase in deposits during the period.

Knowles said Kiwibank's variable home loan rate had consistently been between 0.5 and 1 percentage point below other main banks.

"We have been the only bank under 7 per cent through most of the half year," he said.

"We added $220 million to our loan portfolio during the period, and are continuing to increase our momentum."

Kiwibank would introduce a credit card at the end of April.

Knowles said the new supermarket bank, Superbank, was not yet regarded as a threat.

Started last month with a savings account only, Superbank is a joint venture between supermarket group Foodstuffs and St George Bank of Australia.

"They've got a grand name," Knowles said. "But at this stage we have only seen a very minor product."

New Zealand Post's half-year result will be announced on Thursday.