Westpac has continued to improve its profit in New Zealand, despite the recent earthquakes in Canterbury.
Bad loans are costing the bank less and it makes more money from loans.
Cash earnings rose 68% to $210 million in the first half of this financial year, compared with the same period the year before.
Group chief executive Gail Kelly says it was a very strong performance, given the quakes in February this year and September 2010 took $40 million out of its cash earnings in the first half of this financial year.
Despite the impact of the February quake, the cost of bad loans for Westpac New Zealand fell 34% to $137 million, from $208 million in the first half of 2010.
Loan growth was modest in the half-year, although above industry levels, and the bank made more money from customers choosing floating interest rates.
Margins rose 22 basis points in the half, compared with the same period last year.
Overall, the bank's group profit rose 38% to $A3.96 billion, mostly due to tax benefits from the St George merger in Australia.
The increase on a group level was also due to a fall in the cost of bad loans, which dropped 47% to $A463 million.
Westpac says the timing of recovery is still uncertain as businesses remain cautious.