Westpac New Zealand's cash earnings shot up by 56 per cent to $1.01 billion in the year to September, boosted by a $404 million turnaround in asset impairment charges. 

Net interest income benefitted from a 3 basis point increase in margins and lending growth of 5 per cent driven by $5.7b in mortgage growth. 

Deposits increased by 7 per cent, or $4.9b, which fully funded the bank's loan growth and lifted its deposit-to-loan ratio to 82 per cent, the bank said. 

Westpac said strong momentum in the economy has contributed to a "solid" full year result. 

Acting chief executive Simon Power said Covid-19 was causing significant strain and uncertainty for parts of the community but economic activity in the year leading up to the latest outbreak had been very strong. 

The Delta variant of Covid-19 posed serious health and financial challenges. 

"Looking to the horizon, we're optimistic increasing vaccination rates will reduce the impact of the virus on New Zealanders' health and the economy," Power said. 

The bank last year increased our lending provisions to $657m to reflect the economic outlook from expected Covid-19 impacts. 

"The economy has performed better than expected and, as such, our lending provision levels have reduced to $525m, representing 0.6 per cent of our total lending portfolio," he said. 

There was a 9 per cent lift in core earnings on the prior comparative period, arising from growth in lending and deposit volumes and a 3bps increase in net interest margin to 2.00 per cent, partially offset by increased spending on risk and regulatory compliance activities. 

Power said first home buyers were very active in a buoyant housing market. 

Westpac helped first home buyers to purchase 6,598 homes during the reporting period – up 24 per cent on the prior comparable period.