ASB chief executive Barbara Chapman says banks will need to look offshore for more funding if credit demand expands in New Zealand.
ASB made a cash profit of $372 million in the six months to the end of December, 31% more than in the same period a year earlier.
Customer deposits rose almost 4% to more than $58 billion, but lending remained steady at about $53 billion.
However, margins improved as customers shifted from fixed to floating mortgages.
Ms Chapman says ASB is largely funding the growth in credit to its customers through local balance sheets and deposits.
She says the economy is proving to be quite resilient which is evident in terms of business momentum and also in a reduction in the bad debts the bank writes off.
Ms Chapman says confidence from business customers is running reasonably high compared to a couple of years ago, which is being seen as an increased demand for credit as customers expand their businesses and also a reduction in bad debts.
She says there has been a migration of customers from fixed to floating rate mortgages, because floating rate mortgages have been lower.
Ms Chapman says banks are able to earn a higher margin on floating rate mortgages than on fixed rate mortgages because of the shape of the yield curve.
ASB's Australian parent, the Commonwealth Bank of Australia, reported a 7% increase in cash profit, to $A3.6 billion dollars, as a fall in loan impairment charges outweighed softening demand for mortgages and rising costs.