ASB's settlement in a long-running tax dispute with Inland Revenue has hit its full-year profits, but the bank says it's still in a good position.
The Australian-owned bank made $236 million in the year to the end of June, down significantly on the previous year's $425 million profit.
Once dividend payments and the tax settlement are excluded, it made an underlying profit of $428 million, down only slightly on last year's $431 million.
ASB chairman Gary Judd, QC, says the bank continues to maintain a strong and stable position in a difficult market.
Lending edged up by almost 1% to $54 billion and total deposits remained steady at just over $56 billion.
Home loan lending rose 2% to $38 billion during the year, but business lending fell by 2% to $7 billion and rural lending remained flat.
The bank set aside $125 million to cover bad loans during the year, almost half what it put aside in 2009.
Mr Judd says impairment charges have turned a corner since the market peaks of 2009, and the reduction reflects New Zealand's emergence from the economic downturn, and the quality of the bank's loan book.
Meanwhile, ASB's owner, the Commonwealth Bank of Australia, has pulled in a record profit of $A5.6 billion, a 20% increase on last financial year.