Key Points:

ANZ National Bank is still making about a billion dollars profit a year in New Zealand and is arguing there is no need to rush into a guarantee scheme to cover wholesale areas of bank business.

The country's largest bank today reported a $990 million net profit after tax in the year to September 30, down from $1.039 billion in the same period last year.

The profit meeting general disclosure statement rules was flat at $1.163b this year from $1.168b last year.

The profit is after a $286m provision for credit impairment, up from $78m in the same period last year.

"It is not where we were looking to be when we started the year," said chief executive Graham Hodges.

"A year ago none of us really expected the worst financial market conditions in anyone's working experience in the banking industry," he said.

The volatility in the markets meant more customers used institutional bank services like foreign exchange dealing, which helped the institutional bank make a $263m profit, up from $215m last year.

The bank is expressing comfort with its position in a world where banks are collapsing. It is one of only 14 banks with a AA credit rating and has $8b in liquid assets at September 30.

But it said there was a fall off in the number of people wanting home mortgages from about February this year.

A family with a $350,000 mortgage faced an increase in mortgage payments of about $600 a month when fixed mortgages were rolled over when interest rates were at their peak around April.

The Reserve Bank of New Zealand today cut the official cash rate by one percentage point to 6.5 per cent and Hodges welcomed the move.

The Government has announced a guarantee scheme for retail bank deposits but is under pressure to extend it to wholesale funding.

"My advice to the officials is we need to think carefully through what we want to do here," Hodges said.

He said New Zealand was currently a "two-speed" economy with strong performances in rural and businesses segments contrasting with a weakening household sector. The small business market was now also feeling pressure.