Hon Jim Anderton

Kiwibank stays in Kiwi market - and makes a profit

Kiwibank has made a profit during the worst recession in decades by staying in the New Zealand market and refusing to gamble on overseas currencies like the big Australian banks, says MP for Wigram and Progressive Party leader Jim Anderton.

“This is a remarkable achievement, worth celebrating.”

Kiwibank announced today that it had made a profit of $23.5 million after tax for the six months ended December 31, 2009.

“It’s succeeded because it gets most of its deposits from, and does most of its lending in the New Zealand market,” says Jim Anderton.

“One of its strongest areas is its support for small and medium sized businesses in New Zealand.”

Kiwibank was the only bank to front up at last year’s Parliamentary Banking Inquiry. The inquiry established that the ‘big four’ Australian owned banks did not pass on all of the cut in the OCR (Official cash Rate) to home owners, credit card holders and businesses in New Zealand.

The inquiry also criticised the Australian owned banks for contributing to our volatile exchange rate. Exporters are particularly hurt by sudden and frequent changes in the exchange rate.

“In contrast to Kiwibank, the Australian banks borrowed a lot of money from overseas to fund their lending in New Zealand. This has a significant effect on our exchange rate by holding it up regardless of the real economic circumstances of New Zealand.

“The export sector, including farmers make up roughly 30% of our GDP - about $40 billion per year. But suffer the most from currency instability.

“I would like to see the government provide more capital funding for Kiwibank in order to promote more competition amongst banks and increase the share of local funding for lending.

“The Australian owned banks don’t have a vested interest in strengthening the New Zealand economy. Kiwibank does. It stayed in the New Zealand market, and today its success is our success too,” says Jim Anderton.

ENDS

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