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Kiwibank has declared a profit of $13.9 million after tax for the six months ended December 31, a 41% drop from its $23.5 million profit for the same period in 2009.
New Kiwibank chief executive Paul Brock described the result as having “a strong underlying performance impacted by the inevitable effects of the global financial crisis that has resulted in increased provision for bad debts”.
The bank has increased provisions for bad debts from $19.5m to $45.5m, a 133% increase.
In the six months to December 31 total lending (home loans, business banking and credit cards) increased 5% from $10.4 billion to $10.9 billion.
Retail deposits increased 10% from $6.9 billion to $7.6 billion
Total income for the period was up $15 million to $169 million (9.9%) and operating expenses were up $7 million to $118 million (6.6%).
Net-interest-income has increased from $66.3m to $89.3m (1.19% to 1.42% of total assets), the increase being driven mainly by the higher margin variable loans compared to fixed loans.
Mr Brock said the bad debts were largely from unsuccessful business investments and very few involved domestic home owners.
Mr Brock said the level of at-risk loans remained very small compared with the total lending portfolio and reflects falling value of certain classes of property collateral and remains modest when compared with other banks.
Mr Brock said there had been many positive developments during the last six months including the launch of the bank’s own Kiwisaver scheme and the Notice Saver investment product, that has attracted more than half a billion dollars in less than six months.
Mr Brock said the outlook for continued growth of the bank was very positive. “After nearly nine years we are continuing to build market share; continuing to build our loan and deposit portfolios and most importantly continuing to make a positive impact on the New Zealand banking sector.”