The taxpayer will continue to pump as much as $40 million a year into state-owned Kiwibank to support its ambition to grow into a serious rival to the big four Australian banks.
Kiwibank chief executive Sam Knowles said the bank had so far received a total of $155 million in
funding from parent New Zealand Post since it opened for business in 2002.
That included a $20 million injection in November last year to maintain capital ratios as the bank's loan book grew at a rate of about $1 billion a year, putting it on the path to "to become a big bank".
"Although we are now starting to sustain our own growth through profit, we'll still need further injections of capital. Our shareholder has indicated they're happy to support the ongoing development of Kiwibank because of the successes we've achieved to date."
A continuation of present levels of growth would require about $20 million of further funding every six months. "Over time, those capital needs will come down as we increase profits.
"There will come a time when we'll be self-sustaining and there will be a time when we pay dividends but that does depend on the rate of growth."
Knowles said the more vigorous the bank's growth, the longer it would take to begin paying dividends. However, those dividends would be greater.
He said NZ Post was "very comfortable" supporting Kiwibank's growth and its bid to become a significant competitor to the big four. Kiwibank was looking to expand market share by about 1 per cent a year.
"It takes 10 to 20 years at that rate to become a big bank, so that is the ambition I have for Kiwibank."
Knowles said the bank was on track to double last year's full-year profit of $7 million.
During the half, home lending grew to $1.5 billion, up 35 per cent on the previous same period and retail deposits increased 23 per cent to $1.60 billion.
The bank now had more than 400,000 customers and was signing up more at a rate of about 450 a day.
The bank has about 2000 business customers through its 12 business banking centres operating in seven cities. It plans to further extend that network.
Knowles was confident Kiwibank's growth would not be derailed by softer economic conditions.
"We are positioned for more competitive markets. Clearly when people's pocket books or cashflow get pressed they are looking more at value in banking, so there's more opportunity.
"I believe in a downturn we can continue the same rate of growth and possibly as we develop our distribution capability we could up that rate of growth a little bit."
He said Kiwibank had taken a conservative stance in terms of risk in its lending and was not expecting problems with bad loans in tougher times.
Elsewhere, Knowles said the bank was preparing to extend its range of mobile phone banking services, which he saw as the future of banking.
The taxpayer will continue to pump as much as $40 million a year into state-owned Kiwibank to support its ambition to grow into a serious rival to the big four Australian banks.
Kiwibank chief executive Sam Knowles said the bank had so far received a total of $155 million in
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