New Zealand bank profits rose 9 per cent in the first three months of the year, shrugging off a fall in new lending and lower returns from interest.

Profits rose to $1.45 billion, according to the KPMG Financial Institution Performance Survey (FIPS) March 2019 quarterly analysis.

This is a big bounce back for the sector which had seen profits fall after the housing market peak in 2017.

While profit was up 8.9 per cent from the December quarter it was up more than 17 per cent on the same period in 2018.

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But the report notes that while profits have