Lower impairments in its dairy lending book has helped to boost cash earnings at the New Zealand arm of Westpac bank to $970 million.
That was a rise of 9.5 per cent for the year to September 30, up from $886 million in the prior year.
But the Australian-owned bank said its core earnings were flat, falling 0.3 per cent to $1.28 billion.
Westpac New Zealand chief executive David McLean said it was a solid result in an environment where core earnings were flat and high levels of competition continued to compress margins.
Impairment recoveries at the bank improved from -$59 million to a positive $76 million.
Net loans grew 2.91 per cent to $77.3 billion with home lending up 4 per cent while business lending grew 0.7 per cent.
Deposits were up 1.6 per cent to $58.4 billion.
McLean said the result reflected a strong economy and was supported by good credit quality, with the bank continuing to focus on enhanced customer service, quality lending and targeted growth in key sectors.
"We are continuing to focus on helping our customers and the New Zealand economy grow and we are investing in our business to improve the banking experience.
"Customers are taking advantage of today's low interest rates by making extra mortgage repayments, building savings buffers and entering the property market.
McLean said the bank was experiencing strong momentum across the digital side of its business with sales through digital channels up 22 per cent across the year.
He said the bank had lifted term deposits by 3 per cent year on year and its KiwiSaver scheme was continuing to grow, increasing by 19 per cent to $5.2 billion over the year with the average balance up 17 per cent from $11,300 to $13,200.
Net interest income at the bank rose 0.6 per cent to $1.735 billion but its net interest margin fell 13 basis points to 2.02 per cent.
The bank's operating expenses rose 0.9 per cent to $963 million on the back of continuing investment in customer service.
Parent company Westpac made a net profit of A$7.99 billion, up 7 per cent while its cash earnings rose 3 per cent to A$8.06 billion.
Andrew Bascand, chief executive of New Zealand fund manager Harbour Asset Management, said the result was broadly in line with expectations.
He said as a group Westpac's capital position was strong and its net interest margin was up a little while its asset quality was good.
Bascand said growth in the New Zealand arm of the business had been strong.
Westpac shares, which are dual listed in New Zealand and Australia, last traded at $37.01 on the NZX and are up 18.6 per cent over the last year.