Kiwibank half year profit rises 53pc to $98 million

"Banks have to be able to be resilient to significant shocks, tougher market cycles and conditions," Kiwibank chief executive Steve Jurkovich. Photo / Supplied

Strong lending growth has helped bolster the first half profits of Kiwibank but its chief executive is expecting a tougher second half ahead.

The Government-owned bank saw its half year net profit rise 53 per cent to $98 million for the six months to December.

Chief executive Steve Jurkovich said the strong first half reflected the resilience of the New Zealand economy but its second half would be dominated by the impact of higher interest rates, rising inflation and the recent extreme weather events.

“Banks have to be able to be resilient to significant shocks, tougher market cycles and conditions. We are ready to do that,” he said.

The bank’s net interest income rose from $416m to $628m while its interest expense was also up from $118m to $242m. It’s total operating income rose from $328m to $415m.

But operating expenses also rose from $232m to $263m.

Credit impairment losses also increased from $7m to $12m.

Jurkovich said to date Kiwibank had seen no significant uplifts in home lending defaults within normal seasonal levels, but that could change and had been reflected in the bank’s provisioning.

The bank’s home lending book grew by $600m during the first half while business lending was up $500m.

Jurkovich said while business lending had returned to pre-Covid levels as confidence returned, the bank was taking action to support customers during this latest downturn.

“This means working with businesses to understand where they are in the cycle, how this impacts their business, and providing the appropriate level of support they need.”