Australian-owned bank ASB has lifted its half year profit, boosted by a drop in money set aside to cover bad debts.
The bank made $283 million in the six months to December, compared with a $10 million loss in the same period a year earlier.
The earlier result was affected by a one-off tax settlement.
New Zealand's major banks have increased profits over the last year, mainly because the tepid recovery meant they did not need to set aside so much money in case households and firms could not repay their loans.
That trend has continued, with ASB's provision for bad debt falling 72% to $36 million in the last six months of 2010.
However households, firms and farmers remain wary about borrowing, with total lending slipping slightly to just over $53 billion.
Within that, ASB says household lending remained steady, while farmers and firms concentrated on repaying debt.
Total deposits remained steady at $56 billion, although retail deposits rose 6% to $33 billion amid strong competition among lenders to attract people's savings to meet tougher Reserve Bank funding rules.
ASB parent Commonwealth Bank of Australia lifted its half year cash profit by 13% to $AUS3.3 billion as it too cut credit impairment provisions.
