Kiwibank is for the first time looking for funding offshore, due to the pressure on domestic funding sources.

Chief executive Sam Knowles said the move had been inevitable but was being brought forward a couple of years from what was previously expected.



The pressure on domestic funding was a consequence of the Australian-owned banks trying to raise more of their money in New Zealand, he said.



Mr Knowles was not concerned at the move and said it was just something Kiwibank had to do to manage its margins, because funds could be raised more cheaply offshore than domestically.



In the short term, Kiwibank was looking to raise small amounts offshore, in the region of hundreds of millions of dollars.



Kiwibank today reported a normalised after-tax profit for the year to the end of June of $52.5 million, up 43 percent from $36.8 million last year.



The profit did not include an additional $11.1m that resulted from a structural change in the ownership of the bank by New Zealand Post. Profit including that was $63.6m.



Mr Knowles said in the last year loans and advances increased 52 percent from $5.6 billion to $8.5 billion and retail deposits increased 39 percent from $4.8 billion to $6.7 billion.



Impaired loans increased from $4m to $19m over the year, representing 0.2 percent of total assets, a lower ratio than those of Kiwibank's competitors.



Non-performing loans had "quite an increase" between Christmas and about March, Mr Knowles said.



"But it's come right back again. So the level that we are seeing, on a month-by-month basis, of the number of customers not paying us when due, is very, very stable as a percentage of the portfolio," he said



In the first half of the financial year much of the lending growth came from people with mortgages refinancing and moving from other banks.



In the second half much more had come from first home owners.



The issue of when Kiwibank would pay a dividend was something discussed regularly with the shareholder.



"Obviously, the bigger they want it to be, then the less dividend they're going to get in the short term, and the more dividend they're going to get in the long term," Mr Knowles said.



Kiwibank also announced today it was ending its links with the Mercer KiwiSaver scheme, effective from September 30.



Mr Knowles said Kiwibank had acted as a retail partner for Mercer, making information about the scheme available in brochures and on its website.



The nature of this role meant Kiwibank was not involved in investment decisions.



"However, because we now have our own wealth management division and are considering being more actively involved in the superannuation and managed funds sector, we believe it is essential that we bring our involvement with Mercer to an end."



Mercer has about 70,000 KiwiSaver members and Mercer's New Zealand business leader, Martin Lewington, said it was business as usual for these members.



"Mercer has managed the funds of these members during our relationship with Kiwibank and we will continue to do so now it has ended," he said.