Kiwibank makes milestone early

By KEVIN TAYLOR and NZPA

Kiwibank has signed its 100,000th customer a few weeks before its first anniversary, reaching the milestone far sooner than expected.

The bank, owned by state-owned New Zealand Post, is targeting about 160,000 customers within three years to be profitable and needs 100,000 customers to make a positive return on capital.

"We are reaching our [customer] target earlier than expected," Kiwibank spokesman Bruce Thompson said. "What that means is that it loads some of the costs of acquiring customers up front, rather than further down the track."

This meant the company, which made a net loss of about $3 million in the three months to the end of September, was likely to post a larger than forecast loss for the year to June, he said.

"It will still be three years before we make a profit," Thompson said.

Kiwibank would report its result for the six months ended December in February and provide further details, he said.

However, a banking academic has questioned the value of the customers Kiwibank is attracting and thinks it is getting too many poorer people.

The bank, which opened in February last year, calculated it reached the 100,000 mark on January 17, the day Waiuku couple Richard and Shea Malloy drew down their home loan.

Yesterday, chairman Jim Bolger and chief executive Sam Knowles visited the Malloys' home to present them with a Mitre 10 voucher.

Kiwibank now has 279 branches in postshops and franchises, more than any other bank.

Since the end of last May it has signed an average of 500 customers daily.

a senior lecturer in banking studies at Massey University, David Tripe, said that despite the milestone questions still hung over the value of the customers the bank had gained, and what business they were bringing across from their old banks.

Kiwibank stated that when it got to between 100,000 and 160,000 customers it would have assets of $1.5 billion to $3 billion.

"Well, they are a long way behind that figure," Tripe said.

As at September 30, Kiwibank had only $326 million in total assets.

"One suspects they are picking up a lower socio-economic profile than originally projected," he said. "That is not necessarily a good thing for them."

Chief executive Sam Knowles said Tripe did not understand the way customers were coming to them, nor the time it took people to switch their banking business.

He said the average customer balances were "pretty much" in line with plan, but people were taking longer than expected to switch all their banking business over.

"Our current figures are totally consistent with the business case."

Herald feature: KiwiBank