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CORRECT: Kiwibank first-half profit falls 11% on funding, infrastructure costs

Monday 20th February 2017

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(Fixes supplied percentage move in lede and 1st paragraph)

 Kiwibank Banking Group, the state-owned lender, posted an 11 percent drop in first-half profit as the costs of funding, infrastructure investment and the Kaikoura earthquake weighed on earnings.

Net profit after tax profit fell to $63 million in the six months ended Dec. 31, 2016, from $71 million in the year-earlier period, the Wellington-based bank said in a statement. Kiwibank grew its total lending on home loans, business banking and credit cards by 6.6 percent to $17.43 billion, while its customer deposits increased 6.5 percent to $15.36 billion. Operating expenses increased 12 percent to $164 million. Its net interest margin slipped to 1.94 percent from 2.10 percent.

Chief executive Paul Brock said that while the key underlying performance indicators of lending and deposits continued to improve, the bank's earnings were impacted by funding pressures, continued investment in bank infrastructure and to a lesser extent, the impact of the Kaikoura earthquake last November, which forced the company to move from its Wellington head office. He said lending activity continued to grow, although at lower margins than in previous periods.

The bank paid a total of $12 million in dividends in the latest period, compared with $30 million in the same period a year earlier.

The bank's holding company, Kiwi Group Holdings, which includes Kiwibank, Kiwi Wealth and Kiwi Insurance, posted an 11 percent drop in profit to $65 million. 

The ownership of the holding company was diversified during the year. Previously wholly owned by the state-owned postal service New Zealand Post, the group now has three government shareholders, with NZ Post owning 53 percent, the New Zealand Superannuation Fund 25 percent and the Accident Compensation Corp 22 percent. The bank highlights its local ownership in its advertising to distinguish it from the country's dominant Australian-owned banks.

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