Kiwibank declares six-month profit

21 February 2005

Kiwibank Declares Six-Month Profit

Kiwibank has announced a profit of $2.5 million for the six months ended December 31, 2004, compared with a loss of $1.5 million for the corresponding period in 2003. This is the first profit announcement by the bank since it began operating in 2002.

Chief Executive Sam Knowles said the bank has performed considerably better than originally projected in all target areas.

The highlights for the six months to December 31, 2004:
* Home loans increased 22 per cent from $1billion to $1.22 billion
* Retail deposits increased 23 per cent from $960 million to $1.18 billion
* Kiwibank outlets increased to 306
* Customer numbers increased 20 per cent to 299,760

Mr Knowles said the growth in the bank and the declaration of an audited profit was a "major achievement" for the bank.

"We are maintaining excellent momentum in building our customer base, our loans and our deposits. It is clear the public has embraced the concept of a nationwide bank owned by New Zealanders." He said the growth of the bank had exceeded everybody's expectations.

During the reporting period the bank launched its own ATM network and will have 300 machines operating across the country by the middle of the year. The bank also introduced text banking services.

Kiwibank launched its business banking pilot programme in November 2004. This involves a small number of businesses in the Lower Hutt and Wellington areas. It is planned to expand business banking across the country progressively during this year.

Mr Knowles said the growth in the home loan book was particularly pleasing as it had been a competitive environment with significant price cutting by the large foreign-owned banks. "The price war certainly had an impact on Kiwibank, but we remained competitive in the market and had the back up of our home loan guarantee." The guarantee is that Kiwibank will provide an overall lower-cost home loan over the first six years compared with any equivalent home loan product from any other bank with branches nationwide.

He said customers are progressively bringing more of their high value business to the bank and that he was confident the profit announcement will encourage those "who had been watching and waiting".

ENDS