The SBS Bank lifted annual net profit nearly 22% but its assets have fallen slightly.
The Southland-based bank's net profit for the 12 months to the end of March rose to $14.3 million compared with $11.8 million in the previous year.
Advances to customers dropped by $200 million to $2.2 billion in the year while deposits from customers and redeemable shares, which are similar to deposits, fell by $66.7 million.
Finance general manager Tim Loan said the bank is actually backing away from deposits business because of the need to match them against its loan book.
He said there is not really growth in the markets that SBS is in, it's in Auckland and Christchurch.
Mr Loan said growth in Christchurch is currently more commercial than residential and SBS is not in Auckland at this stage.
He said the rest of the country is relatively flat and there is huge competition coming from the entire banking sector.