Kiwibank gets $40m boost
State-owned New Zealand Post is pumping another $40 million into Kiwibank to help it grow even bigger, after 150,000 customers flocked to the new bank in just over a year.
“It is now clear to us that the future of Kiwibank is as a much larger bank,” NZ Post chief executive John Allen said yesterday.
But ACT NZ finance spokesman Rodney Hide damned the extra $40 million capital injection as proving the “critics right”, while the National Party’s Gerry Brownlee said Kiwibank was being “propped up” by taxpayers.
“Kiwibank is just another expensive Jim Anderton failure where, once again, he didn’t listen to advice,” Mr Hide said.
The extra $40 million will come from NZ Post and would not affect its ability to pay a dividend to the Government, or invest in the rest of the postal business, NZ Post said.
Kiwibank had expected to take three years to hit its target of 165,000 customers, but it was well ahead of its most optimistic projections and needed the extra $40 million to keep up the strong growth of home loans.
Kiwibank has lent out $500 million in home loans – well ahead of target. It has also taken in $450 million of retail deposits.
But that was not an indication that the loan book was growing too fast for its deposits, a banking expert said.
Nationally, there are home loans of more than $70 billion and retail deposits of just $45 billion, with the balance made up mainly by wholesale market borrowing overseas.
It cost taxpayers $83 million to set up the bank 16 months ago.
As expected, Kiwibank has also lost money so far – $17.5 million to the end of March this year, eating away at its original capital base. It expected to come into profit in 2004-2005.
Banking experts said the extra $40 million capital injection was no great surprise given the lending growth and Kiwibank’s $17.5 million of losses so far.
Kiwibank chief executive Sam Knowles said its assets would be significantly bigger over 10 years than the $2.7 billion originally outlined in the business plan two years ago.
NZ Post chairman Jim Bolger said NZ Post’s and Kiwibank’s boards were unanimous in deciding to invest more.
Seeking an extra $40 million in capital was no mark of “success or failure”, Massey University’s centre for banking studies senior lecturer David Tripe said.
“If you grow your loan portfolio you need the capital to sustain that.”
Cameron and Company’s initial report into Kiwibank said it would need at least $100 million capital and $83 million was not enough.
“The taxpayer has now had to stump up a total of $123 million for Jim (Anderton’s) bank,” Mr Hide said.
Kiwibank was created to bring down big bank “monopoly profits”, but was still tiny, with 1 per cent of household deposits, while banking profits were up, he said.
The big five banks collectively made $2.35 billion in profit last year, up $452 million. The increase included nearly $200 million in one-off gains.
One Wellington banking expert said Kiwibank was still only “a pimple” on the backside of banking in New Zealand and had made no difference to banking costs recently.
