Lending up at state-owned bank

Kiwibank's bad debt provision more than doubled. Photo / Richard Robinson

State-owned Kiwibank reported a 41 per cent fall in half-year net profit to $13.9 million, as provisions for bad debts were increased to $45.5 million from $19.5 million.

In the six months to the end of December, total lending - home loans, business banking and credit cards - rose 5 per cent from a year earlier to $10.9 billion, while retail deposits were up 10 per cent to $7.6 billion.

Kiwibank chief executive Paul Brock, who replaced Sam Knowles in the top job during the half-year, said the bank's strong underlying performance was affected by the inevitable effects of the global crisis that had led to higher provision for bad debts.

The debts were largely unsuccessful business investments and few involved domestic home owners, Brock said. The level of at-risk loans remained small compared with the total lending portfolio and reflected the falling value of certain classes of property collateral and was modest when compared with other banks.

Total income was up 9.9 per cent to $169 million and operating expenses were up 6.6 per cent to $118 million. Net-interest-income had risen from $66.3 million to $89.3 million, driven primarily by higher margin variable loans compared to fixed loans.

Brock said the outlook for 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 sector."

- NZPA

KIWIBANK
* Total lending: $10.9b, up 5pc
* Profit: $13.9m, down 41pc