The bank continues to gain market share in the mortgage market with its book growing to $1.53 billion at the end of June from $1.35 billion at the end of March and $1.02 billion at the end of June last year.

That brings its market share to 1.4% from 1.3% at the end of March and 1.09% at the end of June 2004, based on Reserve Bank figures on total bank lending on home loans.

The value of its average mortgage rose to $141,039 from $133,395 in June last year.

The bank's deposit base rose 48% to $1.42 billion, accounting for 90% of its mortgage book, while customer numbers rose 40% to 355,000 during the year.

"The home loan market was extremely challenging with significant rate cutting and price wars between the major banks. Kiwibank chose to not only compete in the rates battle, but to beat the unbeatable and to offer longer term loan deals that quite simply no other bank would match," says chief executive Sam Knowles.

Kiwibank has successfully launched small business banking services and is progressively opening offices in the main centres to meet demand for services from a New Zealand-owned bank, Knowles says.

It has also rolled out a nation-wide network of ATMs.

Knowes says perhaps the most important aspect of the result is delivering on promises.

"We said when Kiwibank opened for business in early 2002 that we would make a profit after three years of operation .... We have met our financial objectives without compromising our foundations of lower fees and better service."