Analyst questions Kiwibank revenue

By PAULA OLIVER

The pieces that make up Kiwibank's revenue pie have been questioned by a leading banking analyst in his latest quarterly newsletter.

Massey University senior lecturer David Tripe points out that Kiwibank's income strands include money pulled in by New Zealand Post's high-profile Red Tickets arm and its bill payments service.

The figure, at $34.9 million over a year, had become significant and the bank's financial statement appeared to be more positive than otherwise as a result of this - although it was still losing money.

"It seems a good way of bolstering the profitability of Kiwibank," Tripe told the Business Herald. "It looks like they're getting some effective subsidy."

Kiwibank spokesman Bruce Thompson confirmed yesterday that the figure included sales through Red Tickets and bill payments.

It had been that way since Kiwibank began, he said, and it had always been openly disclosed.

He said it was a non-core postal activity that NZ Post had looked to expand when it came up with the concept of Kiwibank.

"If you go back to the original business case of Kiwibank, NZ Post had a vast network of shops and franchises turning over $2 billion a year. Of that, a proportion related to agency services such as bill payments and ticket sales. It was through utilising those resources that the Kiwibank concept was born," Thompson said.

Tripe said it was unclear what the long-term impact of including the agency income in Kiwibank's balance sheet would be.

Other banking sources said they found the practice puzzling because it had nothing to do with banking, and the income had been accounted for elsewhere before Kiwibank arrived.

"There's a huge amount of it. It might be a way of propping up the bank side and making it look more profitable," one said.

Kiwibank has also come under fire for its government-underwritten housing scheme that allows low and medium earners to get no-deposit mortgages.

Credit unions, TSB and PSIS have protested that they would have been keen to get a slice of the action but were never asked.

The scheme is intended to be a trial, and it has been said that it will be opened up to other banks if it is successful.

But Association of Credit Unions chief executive Doug McLaren said it was anti-competitive and it served the same market his members did.

TSB managing director Kevin Rimmington said his bank would certainly have been keen to take on the scheme.

"Absolutely we would have. We lend nationwide. But we weren't asked."