Kiwibank's annual profit has more than halved as provisions for bad debts surged more than four times.
Despite this the state owned bank grew net interest margins as home loan customers switched to more lucrative floating mortgages from fixed-term ones, and Kiwibank increased lending by $1.08 billion, or 10 per
cent, which was a faster rate that its bigger Australian owned rivals.
Kiwibank said today its profit after tax for the year to June 30 tumbled $24.6 million, or 54 per cent, to $21.2 million from $45.8 million the previous year. The drop came as provisions for bad debt surged $67.6 million to $87.1 million from just $19.5 million.
Kiwibank chief executive Paul Brock said the "vast majority" of the bad debt provisioning could be regarded as "one-offs" which gave a him "considerable" room for confidence for the present financial year.
"The Global Financial Crisis compounded by the (Christchurch) earthquake has made things tough, but the bank is in strong shape and has weathered the storm," Brock said.
Looking ahead Brock said he "strongly believed" the worst was behind Kiwibank and there were positive signs for growth and an improved financial performance.
Over the year the bank grew loans by 10 per cent, or $1.08 billion, to $11.5 billion in an overall market that saw anaemic credit growth at best.
Retail deposits rose 14 per cent to $7.9 billion from $6.9 billion.
Meanwhile, the bank's net interest income rose $57.9 million, or 43 per cent, to $191.3 million as customers switched from fixed to floating mortgages. The net interest margin rose 29 basis points to 147 basis points from 118 basis points
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