ASB has lifted its annual profit by a fifth due to higher margins and a drop in bad debts.
The country's main banks have all produced solid gains this year, despite subdued lending and a tepid economic recovery.
ASB is no exception, with profit rising 15% to $580 million. Including its wealth management arm, Sovereign, the bank made $685 million in the year to June, an increase of 21% on the previous year.
Excluding one-off items, underlying profit rose 11% to $658 million.
A key indicator, net interest income, rose 10% to $1.2 billion due to customers shifting from fixed mortgage loans to higher margin floating rates.
The improving economy also helped reduce potential bad loans, with the money set aside falling 35% to $47 million.
Home loans, which make up the bulk of lending, remained flat at $37 billion but business borrowing increased 4%.
Customer deposits grew 4% to $37 billion, which ASB says has reduced its reliance on wholesale funding markets.
Chief executive Barbara Chapman says the increase is due to higher margins and lower bad debts.
"It's a very strong performance, it reflects an improving net interest margin and a strong reduction in bad debt, but it's also reflecting the focus that our people have had over the year on delivering excellent service to our customers and growing our business with them".
Ms Chapman says firms are used to the subdued recovery, and are investing more in their operations.
She says there has been good growth in demand for lending in the commercial and rural markets.
But Ms Chapman says it's unlikely lending growth will outstrip deposit growth this year.
She expects the year ahead to have its challenges and says wholesale funding costs are still high, but overall around New Zealand there are signs of investment going on which bodes well for the year ahead.
Meanwhile, profit at its Sovereign arm fell 40% to $52 million.
ASB's parent, Commonwealth Bank of Australia, lifted its full year profit by 11% to $A7.1 billion.
