After a pause in the March quarter, the impairment cycle for Rabobank New Zealand was again on an uptrend as the bank made big provisions in the second quarter of 2010.Rabobank NZ made provisions for a total NZ$35 million for impairment losses in the six-month period to June 2010, which included just NZ$500,000 in the first quarter. Impairments in the same period last year were NZ$37.4 million and in the full year period to December 2009, they totalled NZ$80.9 million.The rise in impairments is a reflection of worsening asset quality of the bank, with NZ$101 million of assets added to the impaired category in the six-month period, taking the total impaired assets to NZ$377 million. This is nearly 5.4 per cent of the bank's gross loans.The bank also has its own internal credit ratings system to rate the credit quality of its assets. Interestingly, according to this rating nearly 33 per cent of the total loans belong to a group that have the capacity to meet financial commitments but are "vulnerable to adverse business, financial or economic conditions."About 46 per cent are considered to have adequate capacity to meet current financial commitments and only 12 per cent are regarded as having the capacity to meet both current and future financial commitments to the bank.Rabobank reported a net profit of NZ$17.2 million for the half year, compared with NZ$10.2 million in the same period the year before.  Net interest income rose to NZ$93.6 million, up from NZ$85.7 million a year earlier.Loans increased seven per cent over the year to NZ$6.8 billion. Deposits fell slightly to NZ$2.2 billion. The bank increased its funding by borrowing from its related entities.