Between the first and second halves, there was a 3 basis point contraction in the margin.
Customer deposits grew strongly over the year, with average volumes increasing by $3.4b or 10.9 per cent as the business continued to focus on growing deposits to support asset growth, reducing reliance on offshore funding markets, and further strengthening liquidity and capital positions.
The bank expects to see the trend in strong deposit growth to continue by about 7 or 8 per cent into 2012-13, BNZ chief executive Andrew Thorburn said.
The full year charge for bad and doubtful debts fell by $53 million or 35.1 per cent from 2011 driven by lower collective provisions as customers benefited from low interest rates.
Thorburn said BNZ had grown market share in key segments over the past year,
including agribusiness from 20.8 per cent to 21.9 per cent. BNZ's share of the business lending marked increased from 26.5 per cent to 26.7 per cent.
Asked whether he thought the bank's profit was excessive, he repeated what has became the bankers' mantra: A strong bank is more preferable than the alternative.
"Weak banks, as we can see around the world, stress the economy because they can't lend, which puts pressure on taxpayers, and do not facilitate growth in the economy,'' he told APNZ.
"Strong banks might not be something that that people intuitively think are good, but the opposite to that is a disaster,'' he said.
BNZ has about $5b in capital and about $70b in assets. "So you have to look at the size of the company to put the profit in perspective.''
The BNZ's result follows a string of similarly strong bank profits from the New Zealand operations of the Australia-owned banks. Last week, ANZ reported a 10 per cent increase in its underlying net profit to $1.37 billion for the September year. In August, CBA's Auckland-based unit, ASB, reported a 15 per cent lift in earnings to $580 million in the June year.
Lachlan Colquhoun, banking analyst with East and Partners in Sydney, said he expected increased "political noise'' to arise from the stronger bank earnings.
"The New Zealand subsidiaries of the Australian banks are humming along pretty nicely,'' he told APNZ.
"I would still think that if there was a challenger bank who could get their act together in New Zealand, that they would find some traction there,'' he said.
Green Party co-leader Russel Norman said the near record profits from the BNZ today came at high cost to New Zealand businesses and households.
"Most of these profits will flow offshore and they constitute the single biggest income outflow in our current account deficit,'' Norman said in a statement.
The so called Big Four australian banks - National Australia Bank, Westpac, Commonwealth Bank of Australia and ANZ - dominate the local banking scene.
State-owned Kiwibank represents about 4 per cent of New Zealand's total banking assets.
Westpac is set to report its result next weak.
