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Kiwibank's first half profit at $37.9 million has rebounded strongly from $13.9m for the comparable period a year ago.
Chief executive Paul Brock said the state-owned bank, which is approaching its 10th anniversary, was "continuing a very positive growth path'' after its result a year ago was "severely undermined by the global financial crisis and the Christchurch earthquakes''.
"Our underlying performance has always been strong, with consistent growth in lending and deposits and improving margins.
"We have largely worked through the setbacks associated with the global economy and with the events in Christchurch. After almost 10 years in business the bank's success was "beyond question''.
"We have moved through a very challenging economic cycle in very good shape and the bank's profitability continues to grow.''
Nevertheless Mr Brock said the bank was wary of the European debt problems which could have an effect on its funding costs.
"We're not out of the woods yet.''
The bank's lending increased by 10 per cent or $1.1 billion to $12.1b and that loan book was more profitable with net interest margin rising from 1.42 per cent to 1.69 per cent.
A "reasonable amount'' of the margin increase was down to mortgage borrowers favouring higher margin variable rates, Mr Brock.
The increasing loan book and margins translated through to a 38 per cent increase in net interest income to $123m.
Meanwhile retail deposits increased from $7.6b to $8.6b.
Mr Brock said most of the growth in KiwiBank's lending and deposits was coming as customers switched from other banks, for a variety of reasons.
Another positive for the bank was a fall in bad debt charges, which went from $31m a year earlier to $18m.
The bank received $50m in additional capital from parent New Zealand Post in December and Mr Brock said future growth and new regulatory requirements meant retained earnings would not be sufficient to meet the banks capital needs over the next year. That meant Kiwibank would require further capital from NZ Post during the next 12 months.
- Adam Bennett of the New Zealand Herald