Thursday 24th February 2011
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State-owned Kiwibank reported a 41% 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% from a year earlier to $10.9 billion, while retail deposits were up 10% 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 financial crisis that had resulted in increased provision for bad debts.
The bad 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 remained modest when compared with other banks.
Total income for the period was up 9.9% to $169 million and operating expenses were up 6.6% 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.
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