25 Feb 2011

Kiwibank anticipates lowered profit

7:23 am on 25 February 2011

Kiwibank is bracing itself for a reduced full year profit, after a jump in bad debts and expectations the economy will remain weak.

The New Zealand Post-owned subsidiary made $13.9 million in the six months to December, a decrease of 41% compared with the same period a year earlier.

Provisions for bad debts tripled to $31 million, mainly related to unsuccessful business investments, though Kiwibank is not tightening credit rules because of this.

Interest income rose by 34% to $89 million, because more people moved from fixed to higher margin floating home loans.

Lending rose 5% to $10.9 billion, though Kiwibank says it has slowed, while deposits increased 10% percent to $7.6 billion.