The doubling of bad loans at the Heartland New Zealand bank has not stopped it increasing its annual net profit by 34 percent.
The bank's profit rose to $48.2 million in the year to the end of June, up from $36 million for the same period last year, and slightly ahead of its forecast.
Heartland said its core consumer, business and rural divisions all grew strongly.
However bad loans more than doubled from $5.9 million to $12.1 million.
It said that was partly due to the purchase of a reverse mortgage business, the reversal of a court case decision, and higher arrears in consumer loans.
Bad loans in its rural division were low, but the company expects that to rise in the next year as the slump in dairy prices hits farmers with high debts.
The bank is sticking with its forecast for net profit to rise to between $51 and $55 million dollars for 2016.