Rise in interest income puts bank back on growth path
Kiwibank has reported a taxpaid profit of $37.9 million for the half year to December, up from $13.9m the previous year.
The improvement in the state-owned bank’s result was largely due to a 38 per cent increase in net interest income to $123m and a substantial fall in bad and doubtful debt provisioning to $18m.
Total lending in the second half increased 5 per cent to $12.1 billion and retail deposits grew 8.6 per cent to $ 8.6 b.
Chief executive Paul Brock said the bank was back on a growth path after profits for the year to June more than halved due to a blow-out in bad-debt provisioning, mostly due to lending to struggling small businesses.
‘‘We have largely worked through the setbacks associated with the global economy and with the events in Christchurch,’’ Brock said.
Impaired lending was ‘‘travelling in the right direction largely as we get on top of some of some of the fallout from the slower economy over the last few years’’.
‘‘But I think the [small business] sector is still struggling a bit. The economy is not really coming out as fast as what people would have thought, in particularly with the slowness of the Christchurch rebuild.’’
Small business incomes were beginning to improve and owners were repaying debt which was typically secured by the family home.
‘‘It is better than what it was, but I wouldn’t say we are out of the woods just yet,’’ Brock said.
Most new lending was due to customers switching to Kiwibank from other banks, rather than growth in new lending, he said. The majority of mortgage lending was on floating rates, which had helped to improve net interest margins by 27 basis points to 1.69 per cent.