BNZ says it's winning market share in deposits and mortgages

The bank's capital base has also been boosted by a further $400 million investment by its Australian parent, National Australia Bank.

Treasurer Tim Main says rather than fuelling an aggressive growth spurt, the fresh capital will help position BNZ for the new Basle lll banking rules which the Reserve Bank is planning to phase in from the end of this year.

"We think the outlook is going to be relatively subdued in terms of the economy with low levels of credit growth in both housing and business and competition remains fairly intense," Main says.

Nevertheless, BNZ is pursuing "a deliberate strategy of increasing our retail footprint." Of all the major banks, BNZ has the smallest share of the retail market, Main says.