The group reported net interest income of $368million for the period, along with a further $118million on net fee income and $8million gains and losses on financial instruments. Operating expenses were $339million but then followed the $90million impairment loss on the system.
The before-tax profit fell to $71million compared with $165million in the previous corresponding period (pcp).
After tax of $18million, the reported profit was $53million, down from the $124million in the pcp.
The group said in a statement the impairment related to the work in progress on the IT project known as CoreMod.
"The decision to make the impairment is a result of a strategic review to ensure the bank’s future IT systems meet rapidly changing technology and customer requirements."
The group talked about its "underlying profit", as companies these days are inclined to do when things do not go as expected. Kiwi Group reported an underlying profit of $122million, only $2million down on the pcp.
Group chief executive Paul Brock said maintaining similar levels of underlying profitability to last year’s, without the full flexibility to optimise funding costs, was pleasing.
It was all the more so because of external disruptions, notably the effect of last November’s earthquake as well as regulatory challenges.
The past year was a "remarkable one" for the group as New Zealand Post divested 47% of its shareholding to ACC and the New Zealand Superannuation Fund last October. Issues with the Reserve Bank relating to capital in March, were recently resolved in favour of the bank.
Profitability across the group was commensurate with the operating environment, levels of investment and work under way to deliver on ambitions, he said.
"We’re positioning ourselves to take full advantage of the opportunities in front of us, predominantly with a digital focus. We’re committed to our customers and long-term value creation for our shareholders."
In the past year, more than 40% of sales were completed through a digital channel. More than 57% of customers digitally connected with Kiwibank, collectively more than 27 million times each month, Mr Brock said.
Those numbers were expected to climb, along with advances in the technology enabling the trend.
The decision to take the impairment now was prudent and reflected the challenges and changing nature of banking since Kiwibank first contemplated the upgrade four years ago, he said.
