Kiwibank half-year profits down $21m on IT project write-off

Kiwibank's half year profit has been pulled down by a write-off of a major IT project. Photo/Dean Purcell.

A provision for writing off and winding up a revamp of its core IT system has weighed heavily on the profits of Kiwibank.

The state-owned bank made a net profit of $42 million in the six months to December 31, down from $63 million in the same prior period.

The result was hit by an $8 million impairment in relation to its computer software CoreMod IT project and a further $7 million operational cost incurred since its board decided to close the project down.

Excluding the IT project hits the bank's underlying net profit was also down from $65 million to $58 million.

Mark Stephen, acting Kiwibank chief executive Mark Stephen said the market had experienced a significant slowdown in lending growth during the winter months and leading up to the election.

But it had since returned to more normal levels.

Loans and advances by the bank rose 3.4 per cent to $18.03 billion while deposits increased 3.9 per cent to $15.96 billion.

The bank's impaired assets remained low at 0.05 of total gross loans and advances while its net interest margin improved from 1.92 per cent to 2 per cent.

Stephen said lower funding costs and market pricing opportunities had enabled Kiwibank's net interest margin to improve, lifting net interest income to $198 million - an increase of 9 per cent on prior comparative period.

Kiwibank's parent company Kiwi Group Holdings which also includes KiwiSaver provider Kiwi Wealth, Kiwi Insurance and New Zealand Home Loans saw a net profit of $44 million down from $65 million.

Its underlying profit was down $7 million to $60 million.