Wellington, Feb 26 NZPA - Kiwibank has announced a 13.7 percent increase in its half year profit to $25.8 million after tax.

The profit for the six months to the end of 2008 was up on the figure of $22.7 million for the same period in 2007.

The result was "satisfactory in a challenging financial environment," said chief executive Sam Knowles.

In the six months, total lending (home loans, business banking and credit cards) increased 25 percent from $5.6 billion to $7b and retail deposits increased 31 percent from $4.8b to $6.3b.

Mr Knowles said Kiwibank had taken a very aggressive position in the home loan market, holding rates below major competitors and "front-footing" decreases late last year.

"We stuck to our plan of being slow to rise and fast to fall with home loans rates and it produced excellent results."

Mr Knowles said there was a significant increase in property owners switching their loans from existing banks to Kiwibank's floating rates.

During the period the bank attracted $60m in term subordinated debt and joined the Government's retail deposit guarantee scheme.

Kiwibank paid $12.1 million in tax for the period.

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