Westpac New Zealand, the local unit of Australia's Westpac Banking Corp, reported a 13 percent rise in annual cash earnings to $864 million helped by a rise in lending and improving bad debts.

Westpac's core earnings rose 3 percent to $1.22 billion in the 12 months ended Sept. 30, on a 2 percent lift in net operating income to $2.07 billion. Although impairment charges of $22 million for the second-half were up on the $4 million in the previous half, there was a 78 percent drop in the annual figure to $26 million compared to the previous year. That was a groupwide trend with Westpac group reporting a full-year decline in bad debts of 23 percent to A$197 million.

There was a 3 percent rise in Westpac NZ's second-half earnings on the back of strong growth in financial services and mortgage lending.

Total lending for the year was up 5 percent to $3 billion with mortgages increasing 6 percent to $2.1 billion, driven by good growth in mortgages with loan to value ratios of less than 80 percent. Business lending was also increased by $800 million or 4 percent, with agricultural lending particularly strong.

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The New Zealand unit contributed 10.4 percent to the Australian-based Westpac group's record profit of A$7.6 billion. Westpac, Australia's second largest bank, announced a final fully franked dividend of 92 Australian cents per share, taking total dividends for the year to A$1.82, up 5 percent on the previous year.

Westpac's dual-listed shares were unchanged at $38.92 on the NZX, and last traded at A$34.78 on the ASX.

Westpac, the latest of the big four banks to deliver bumper profits, said its good result was driven by a strong performance in its flagship retail banking business.

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Chief executive Gail Kelly said Westpac's Australian Financial Services division, which houses its core home lending and business lending arms, had a particularly strong year with profits growing at double digit rates within the division and customer numbers up 6 percent.

"We provided more than A$87 billion in new lending to Australian retail and business customers over the year, while growing in line or above system across all key markets in the second half," Kelly said.

She said customer numbers had grown at their fastest pace in four years while customer complaints were down with a 27 percent drop in complaints for AFS alone.

Last week ANZ Bank New Zealand, the country's biggest lender, reported a 17 percent rise in annual earnings and the Bank of New Zealand reported a 2.4 percent rise.

See Westpac's latest investor presentation here: