ANZ says demand for lending remains subdued. The bank made a profit of $386 million in the six months to March, a decrease of 8% on the same period last year.
The Australian-owned bank set aside $330 million to cover potential bad loans in the period - 13% more than the same time last year, but almost half what it put aside in the six months to September.
ANZ New Zealand's chief executive Jenny Fagg says she hopes the underyling economic improvement will offset the usual seasonal rise in provisions.
Jenny Fagg says households remain prudent with their spending and there is not the rush on credit like there was a few years ago.
She says businesses have also tightened their purse strings and are reducing debt, rather than borrowing more.
The bank has not yet made a final decision about whether it will participate in the Government's extended retail deposit guarantee, but Ms Fagg does not think major banks in New Zealand need it.