Kiwibank posts maiden half year profit

By NZPA

Monday 21st February 2005

State-owned Kiwibank today reported a maiden net profit for the December half year.

The bank posted a net profit of $2.5m for the six months, compared to a loss of $1.5m for the same time the previous year.

Income rose 44%, from $36.3m to $52.3m.

Chief executive Sam Knowles said the bank's growth had exceeded expectations. He said the bank expected the steady growth to continue, and said Kiwibank would post its first full year profit for the year ending June 30.

During the six months to December, home loans increased 22%, from $1b to $1.22b. Knowles said the home loan price war late last year affected the growth rate, but said things had since picked up.

He said the bank's home loan focus was on refinancing mortgages for customers moving from other banks.

"We think in an environment where interest rates are going up, that strategy is probably going to be more successful. So we are not highly reliant on underlying growth in the [housing] market," he said.

Customer numbers increased 20% over the half year to 299,760. Knowles said the bank was attracting about 400 new customers a day.

Average customer balances were also on the rise. The average mortgage rose from $127,500 in the half year to December 2003 to $135,859. The transaction account average balance rose from $2,220 to $2,994; the average savings account balance rose from $759 to $849l while the average term deposit balance rose from $31,860 to $41,805.

Knowles said the bank's business banking service will roll out in Auckland in late March. This follows a successful pilot which launched in Wellington in November last year.

The bank was also looking at expanding it text banking services. Currently customers can receive account balances via text messages, but other transactional functions were being looked at.

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