Kiwibank's profit has taken a big hit from Covid-19 impairments and lower interest rates.

The state-owned bank today announced its net profit after tax was down 47 per cent to $57 million for the year to June 30.

Kiwibank chief executive Steve Jurkovich said the result reflected the impact of Covid-19 and lower interest rates.

The bank recognised $51m in credit impairment provisions, up from $12m in the previous financial year, because of Covid-19.

Advertisement

Operating expenses also increased from $375m to $428m and its interest income fell from $933m to $894m.

But Jurkovich said the bank continued to grow at a faster rate than the market, with lending growth of 9 per cent and deposit growth of 13 per cent while the market grew at a slower pace of 5 per cent and 9 per cent respectively.

"As a result, we are growing our lending and deposit rates faster than the market to help more New Zealanders into homes, more Kiwis to save, and support more businesses – living up to our purpose of Kiwis making Kiwis better off."

Loans and advances by the bank rose from from $20.4 billion to $22.2b and deposits and other borrowers grew from $18.2b to $20.6b.

Jurkovich said the bank had provided support to more than 8000 personal and business banking customers for loans totalling more than $2.6b.

It had also moved to support businesses by switching from paying suppliers on the 20th of the month to paying accounts on a weekly basis.

"We will continue to play our role in New Zealand's economic recovery by offering a better banking alternative that's committed to being fair and easy for Kiwis, the businesses they own, and for future generations," said Jurkovich.