ANZ New Zealand has reported a 29 per cent improvement in annual profit during a year when it merged both its two computer systems and brands, to cut operating costs, while also fending off attacks from rivals and growing its market share.ANZ NZ reported it had reduced its cost-to-income ratio by 750 basis points, to 43.1 per cent, in the year to September 30, as it finally reaped the rewards of merging the ANZ and National brands and their computer systems in late October 2012, one year later than originally planned. The bank reported a net profit after tax of NZ$1.068 billion for the year, thanks to a 15 per cent fall in operating expenses and a 76 per cent fall in provisions for bad debts. New Zealand net profit rose 37 per cent in Australian dollar terms, to A$881 million, for the year, thanks to a strong New Zealand dollar.The merger of ANZ and National into a single ANZ brand on National Bank's Systematics computer system, on the weekend of October 27-28, helped unleash a market-share war which was most keenly focused on the key Auckland home mortgage market. But ANZ fought back and reported winning 30 per cent of the new mortgage share in Auckland for the year, up from 24 per cent three years earlier, and taking the top spot off ASB, which was on 28 per cent. ANZ's CEO, David Hisco, said that the market-share war, combined with a shift from more profitable floating-rate mortgages to less profitable fixed-rate mortgages created a "perfect storm" for ANZ's net interest margin in the first half. It fell 14 basis points, to 2.49 per cent, as ANZ competed hard to keep and win business in Auckland."In the first half it was pretty competitive from October to December, with people trying to take our customers. But we saw them all off and everything got back to normal after that," Hisco said. ANZ's net interest margin was flat, at 2.49 per cent, in the second half."Things are a lot more stable rolling into this New Year than they were last year. So we'd like to think we won't see that sort of movement again," Hisco said, in regard to net interest margins. Hisco said ANZ's merger with National had outperformed ANZ's expectations in terms of efficiency improvements, brand recognition and staff engagement. It also surprised its rivals, he said."We think we're off to a pretty good start. People probably under-estimated how much planning and research we'd done, and how much we'd put ourselves in our customer's shoes, to work out what would upset them. We had a military plan. Probably our competitors under-estimated how we'd come out of the blocks," he said.ANZ does not expect to repeat its improvement in cost-to-income ratio in the coming year, given the benefits of its merger have now been achieved, but net interest margins have also stabilised and ANZ's loan books are growing along with the New Zealand economy, particularly in Christchurch and Auckland, where