Kiwibank has shaken off the effects of its ill-fated - and abandoned - technology project CoreMod, delivering a net profit after tax of NZ$62 million for the six months ended 31 December 2018. This is a step up from the NZ$42 million NPAT posted by Kiwibank Banking Group for the half year ended 31 December 2017. The New Zealand-owned bank said it "hit one billion dollars in growth in both deposits and lending" during the 2018 year. Steve Jurkovich, Kiwibank's chief executive officer, said balance sheet growth for the six months was funded entirely through domestic sources. Charts provided by the bank show local wholesale investors lifted their share of funding from 4 per cent to 6 per cent in the second half of 2018, at the expense of offshore money investors, although the majority (87 per cent) of funding came from retail deposits in each of the half years to June and December. Kiwibank's balance sheet remains strong, with capital levels that are well above the regulatory requirement, even allowing for the transition period proposed by the RBNZ for new capital rules to take effect. "Another area of focus is our cost-to-income ratio," said Jurkovich. "While an eight per cent improvement is pleasing, looking forward, operating expenditure sitting at 67 per cent of income is unsustainable." Other financial highlights: •    net interest income is up 13 per cent following strong lending growth and a recovery in net interest margin: NIM was 2.15 per cent, an improvement on 2.00 per cent for the corresponding prior year period; •    customer deposits were up 9.2 per cent on the previous comparable period; and •    net loans and advances to customers at 31 December 2018 were up 7.2 per cent on the prior comparative period: total residential mortgage loans were NZ$18.0 million (31 December 2017: NZ$16.8m). This included term loans - ie housing and other residentially secured lending included within "other term lending".