Kiwibank has doubled its interim profit and for the first time is looking beyond owner New Zealand Post to raise capital for expansion.
The state-owned bank reported an after-tax profit of $11.37 million in the six months ended December 31, double the $5.45m for the same period lastyear.
In March, the bank will launch a sale of $75 million of unsecured subordinated bonds. The tapping of the local debt market for the first time is a milestone for the bank as NZ Post has so far provided all of its capital in the form of $200 million of equity.
The bonds are likely to have a 10-year maturity and will rank as Tier Two capital.
Chief executive Sam Knowles said the bond sale was the logical next step for the bank.
"We're doing what other banks are doing already," he said.
There is no sign of a dividend to the government for years to come but the state-owned bank many people said should never have opened its doors is continuing to sign up 400 to 500 new customers a day, around the level it has consistently notched up since opening.
The bank has averaged 2000 to 2500 new customers a week for five years. It now has 500,000 customers.
Still, Kiwibank's profit pales in comparison with the $250 million reported for the six month period by ASB bank last week.
Kiwibank is a leader in text banking and has developed a service that texts customers if an automatic payment fails and gives them a day to put it right. It has also trialing bill paying services via text messages for electricity companies.
The bank will record a leap in growth next year when a transaction announced last week to buy AMP sourced mortgages from Hong Kong & Shanghai Bank fully impacts.
The bank did not have any other similar purchases in the pipeline, Mr Knowles said.
He attributed the continuing growth in new customers per day to the brand becoming better known, immigration and the attraction of online products.
Every year about between 8 per cent and 10 per cent of bank customers change banks and Kiwibank is getting about a third of those who change.
Total lending increased 21 per cent to $3.1 billion. Retail deposits increased 43 per cent to $3b.
