This article reviews developments in the New Zealand banking system for the year ending December 2001. Financial information extracted from registered banks' disclosure statements highlights a banking industry that is performing well and in a sound financial position. Banks' revenue sources have been subject to pressures from competition and funding constraints in recent years, but they have been able to offset those negative revenue influences through asset expansion, efficiency gains, diversification strategies, and the use of sound credit risk management techniques, so as to enable overall profitability to be maintained and enhanced.