"It’s going to be a more competitive product. When interest rates are rising, people like to fix and when interest rates are going down, people like a floating capability," Price says.

"More and more people are tending to mix a bit of both," he says.

PSIS’s lending grew 3% to $392 million in the year ended March while deposits grew at a much greater 11.3% to $478 million.

Price says more than $300 million of the lending is on mortgages and the lack of a fixed rate home loan product was a major reason lending growth was so sluggish.

Consumers weren’t very confident last year and interest rates were volatile. "It scared people off on home buying or upgrading. In a volatile environment, people tend to go fixed and we didn’t have a product there," he says.

PSIS provides a range of personal banking services through its 28 branches, telephone, ATMs and Eftpos machines and has recently launched internet banking.

While PSIS began life in 1928 as the Public Service Investment Society, membership is no longer restricted to public servants, Price says. Only about half its current membership are public servants.

"We only do business with people but any person in New Zealand can be a customer." It isn’t involved in commercial banking.

Nevertheless, he acknowledges PSIS has an image problem which it will be addressing from July with a television advertising campaign.