Australian banks made $772 profit for every person in New Zealand this year, with a large chunk of it heading over the Tasman.
The "super" profits have sparked outcry from unions and the Greens, who say the big four Australian banks are milking the New Zealand economy.
But the banks say bigger profits are good news, reflecting an improving economy and stable finance sector.
Despite tough economic headwinds, the "big four" Australian banks - BNZ, ANZ/National, Westpac and ASB - reported a combined $3.4 billion profit after tax in New Zealand, up an average of 20 per cent on last year.
The biggest bank, ANZ, reported a record $1.27b profit, exceeding the unprecedented windfalls in the leadup to the global financial crisis.
Massey University banking lecturer David Tripe said the Australian banks were making big profits, but they were massive businesses. It was hard to measure whether bank profits were "excessive", but their profitability was not out of kilter with other big New Zealand firms. "There is a bit of excitement generated because the numbers are big, but these are big companies."
If New Zealand was not profitable for banks, they would cut lending, which could be disastrous for the economy.
But Greens co-leader Russel Norman said the sheer size of the profits was unjustifiable. Banks were a domestic service that should roughly reflect the financial health of their customers.
But while many New Zealand businesses and families were still struggling in the wake of the global financial crisis, banks were reporting "super" profits.
"They insulated themselves because of their dominant position in the market at the expense of everyone else," Dr Norman said.
Far from being good for the economy, such big profits were generated by putting New Zealand further into debt. "What is good for the bank is as much debt as humanly possible, and that is not what is good for this country."
First Union finance secretary Andrew Casidy said a 20 per cent jump in profits was simply excessive in the post-financial crisis world. "I think they are milking the system." Banks were slowly returning to bad habits, relaxing lending restrictions in a bid to attract more customers.
"Have they learnt any lessons from the global financial crisis? The short answer is no."
The jump in profits for Australian banks coincides with the banking ombudsman receiving a "historically high" number of complaints in the year till June.
While overall complaints dropped, cases that became formal disputes spiked 20 per cent, in line with the average rise in profits for Australian banks.
Banks paid customers more than $500,000 in compensation this year. Nearly 90 per cent of all complaints were about the big four Australian banks.
A raft of announcements in the past few months have shown bank profits grew through less bad debt, more deposits and slightly wider lending margins - the difference between the cost of funding and the interest rates on loans.
With each announcement, the banks have carefully emphasised the billions of dollars they are pumping into the New Zealand economy through wages, taxes and contractors.
Together the big four paid $1.3b tax this year but in the past they have been among the country's biggest tax-avoiders.
In 2009, the banks agreed to pay the Government $2.2b in unpaid tax after a lengthly legal battle. It is thought to have been the largest commercial deal in New Zealand history.
AUSSIE BANKS IN NEW ZEALAND
ANZ (and National)
Profit: $1.27b (record), up 17 per cent
Tax paid: $479m, down by $28m
Reduction in staff: 300
Profit: $741m, up 21 per cent
Tax paid: $279m, up $14m
WESTPAC NEW ZEALAND
Profit: $707m, up 22 per cent
Tax paid: $273m, up by $26m
Profit: $685 million (record), up 21 per cent
Tax: $262m, up $16m
- The Dominion Post