ANZ New Zealand CEO David Hisco said the big improvement in earnings came down to better cost control and lower provisions for bad debt after the very high levels suffered in the aftermath of the global financial crisis.
"Fundamentally, it has been strong attention to cost management and we have been simplifying the business for some time now," Hisco said.
ANZ New Zealand has cut the number of products it offers down from 309 to 139. "In the process of doing that, you strip away a lot of costs," he said.
A 6 per cent fall in ANZ's tax bill, due to the lower corporate tax rate, to $479 million also helped the bottom line.
Across the Tasman, the parent company posted a third straight year of record profits but reported an increase in bad debt charges.
The group's annual underlying profit, which excluded one-offs, non-cash accounting items and investment gains or losses, was A$6.01 billion ($7.6 billion).
ANZ said second-half bad debt provisions on an underlying basis rose to A$686 million from A$551 million a year ago.
Lachlan Colquhoun, head of market analysis at Sydney-based East and Partners, said ANZ New Zealand's result was solid and the bank had managed to avoid some of its parent's credit quality issues.
"Some of the riskier loans seem to be in Australia rather than in New Zealand," Colquhoun said.
He said the combination into one of the ANZ and National Bank brands would be difficult, politically, for the bank but that it would soon translate favourably to its bottom line.
Colquhoun said he doubted whether ANZ New Zealand could continue its double digit earnings growth path for much longer but said New Zealand was possibly one of the most stable of all the markets in which ANZ operates.
Hisco said the bank had grown its New Zealand mortgage business and he expected increased activity to arise from the Christchurch rebuild.
The bank had signed up 5000 new small business customers in New Zealand over the year and expected a similar number to come over to the bank in the current year.
The result showed that there was an 11 basis point increase in net interest margins, year on year, but the margin fell, half-on-half, due to increased competition for deposits and higher funding costs.
The bank's total provision charge for bad debt fell to $89 million in the second half, down from $102 million in the first half - and well down from $351 million for the first half of 2010.
The bank's statutory profit included a charge of $135 million related to the New Zealand simplification programme, including implementation of a single core banking system and a single bank brand.
About half of all New Zealanders are involved with ANZ through the bank or its brands, which include UDC Finance, OnePath, Direct Broking and Eftpos.
National Australia Bank, which owns the BNZ, is due to report its result on October 31.
Westpac reports on November 5 and Commonwealth Bank of Australia will update the market on its result on November 7.
ANZ shares have risen strongly so far this year, making it the second-best performer among the big four. In Sydney, the stock closed down A22c yesterday at A$25.38.
