Good Kiwibank result is a sham

By Nick Stride

Friday 8th October 2004

Kiwibank's claim it is about to break even is a sham as its new banking services are still haemorrhaging money.

The appearance of near-profitability has been created by Kiwibank's parent, New Zealand Post, "gifting" it a revenue stream worth $38.2 million in the latest year.

Without that, Kiwibank would have run up a loss of around $39 million rather than the $490,000 deficit it reported.

In the June year Kiwibank had $22.4 million of net interest income and $20.6 million of fee revenue, but operating expenses were $80 million.

Only the addition of the "agency services fee revenue," which was previously included in New Zealand Post's accounts, allowed it to avoid reporting a heavy loss.

In March Kiwibank chief executive Sam Knowles described Kiwibank's financial performance as "very encouraging," giving the impression a forecast profit for the year ahead was based on the success of its discount banking operations.

"There has been sustained growth in our home loan book with good quality mortgages. We have been able to maintain our competitive advantage on rates, particularly in the variable loan market," Knowles said.

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