State-owned Kiwibank has made a $52 million profit for the December half year, down from the previous record half-year profit of $58m.
Kiwibank chief executive Paul Brock said the result was "satisfactory" but fell short of last year's result, because of tighter lending profit margins and investment in the bank's infrastructure.
Kiwibank said it would make a "substantial" investment of more than $100m in the next four years, to upgrade its core banking systems. The new system would replace and supplement the bank's existing system, created when the bank was established 12 years ago.
The new system would be mainly provided by German-based international company SAP, Brock said.
"We are looking to the future growth of the bank and to make sure we have the right back-office systems and infrastructure to support our strategic plan," he said.
Kiwibank reported total lending was up almost 6 per cent to $14 billion in the half year, which the bank said was "good strong growth".
Customer deposits were up more modestly, rising 2.4 per cent to $2.4b. Deposits now accounted for 81.7 per cent of all bank funding.
At the end of December, Kiwibank had 840,000 customers representing 23 per cent of all New Zealand bank customers. About 385,000 of those were considered main bank customers, having most or all of their banking with Kiwibank. That represented a market share of 10.7 per cent.
Kiwibank's net interest income for the half year was $140m, flat on the same period last year, but up 2.9 per cent on the six months to the end of June last year.
The net interest margin was 1.82 per cent in the latest half year, compared with 1.83 per cent in the same period a year before.
Total operating revenue was $231m, up from $227m previously.
Impaired assets were $39m at the end of December, including all assets where interest charges had been suspended and a specific provision had been raised. That was down from $54m at the end of December 2012.
Kiwibank said it now had 35,500 business banking customers, with 3 per cent net growth in the half year.
- Fairfax Media