Kiwi Group, which includes Kiwibank, experienced a significant slowdown in lending growth during last winter and before the September election.
The group reported a profit after tax of $44million for the period, down 33% on the $65million reported in the previous corresponding period.
Kiwibank, which provided the bulk of the group's earnings, reported an operating profit of $54million for the six months, down 38% on the $86million reported in the previous corresponding period.
Even after paying nearly half of the amount of tax ($12million compared with $23million) in the period, Kiwibank could not lift its reported profit, which was $42million, down 34% on the $63million reported in the pcp.
The underlying profit, which included allowances for impairment losses and incurred operating costs, was $58million, down from $65million.
Acting chief executive Mark Stephen said lending had returned to more normal levels since the election.
Lower funding costs and market pricing opportunities enabled Kiwibank's net interest margin to improve, lifting net interest income to $198million, up 9%.
Net loans and advances to customers were up 3.4% on the pcp, customer deposits were up 3.9% on the pcp, impaired assets remained low at 0.05% of total gross loans and advances, and the net interest margin for the six months was 2%.
Kiwi Wealth continued to be an outstanding performer, he said.
During the six months, revenue of $22million was up 20% year-on-year, driven by increasing KiwiSaver membership and strong investment performance.
The Kiwi Wealth KiwiSaver scheme membership growth of 5.8% was nearly 3.5 times the industry rate of 1.7%.
At balance date, Kiwi Wealth had more than $5billion of funds under management, Mr Stephen said.
Kiwibank remained committed to keeping the customer front and centre as it undertook a strategic review of the business.
Kiwibank remained well capitalised and had strong shareholder support and sound underlying financial performance, he said.
The shareholders of Kiwi Group are: NZ Post (53%), New Zealand Superannuation Fund (25%), ACC (22%).
