ANZ National Bank yesterday claimed its decision to maintain two separate retail brands had paid off as it posted a flat quarterly profit.
The December-quarter profit after tax - including goodwill amortisation and integration costs - was $180 million, identical to the September quarter.
The bank had warned on Mondaythat "severe" price competition in mortgages had flattened earnings.
Chief executive Sir John Anderson told analysts yesterday that the group had done the "hard yards" since ANZ bought the National Bank from Lloyds TSB for $5.5 billion in 2003.
With the ANZ and National Bank largely run separately, Anderson said it was no traditional merger.
Closing branches and laying off staff might make sense if market share was small, but ANZ National had 40 per cent of the market.
"We've maintained that across all our market segments and we have now achieved growth in a year when we didn't expect quite the growth that happened," said Anderson.
Total lending and advances rose 3.8 per cent, or by $2.3 billion, to $62.7 billion. Customer deposits rose 2 per cent, or $839 million, to $43.36 billion.
ANZ National's home lending grew by $1.14 billion in the quarter to $34.8 billion as a BNZ-led price war in the two-year fixed home loan market raged.
Asked about the price war, Anderson quipped: "How do you define insanity?"
He said ANZ National Bank had 40 basis point margins on mortgages written during the price war.
He believed these were better than those achieved by ASB and BNZ.
"It really got quite silly."
Anderson said National Bank had taken 23 per cent of new mortgage business during the quarter.
For December, ASB claims 30 per cent and BNZ 26 per cent.
Anderson said the ANZ had its best period in four years.
The ANZ retail banking "turnaround programme" was making good progress but about 24 months' work remained.
