ANZ New Zealand is expecting reasonable earnings growth in the second half of the year, despite rising funding pressures and a tepid economic recovery.
The Australian-owned bank made an underlying profit of $684 million in the six months to March, an increase of 13% on the same period last year.
Revenue rose 6% to 1.8 billion, helped in part by a shift by households to more profitable floating mortgage rates, while provisions for bad debt fell, costs remained flat, and lending fell due to customers, particularly farmers, continuing to repay debt.
Net interest margins rose to 2.65%, but ANZ New Zealand chief executive David Hisco says that's peaked.
He says the bank is paying more for its deposits now than it was and it's paying as much as it's ever paid for overseas money.
"We were a little bit behind the market in our deposit pricing as we went into the half and as we've finished the half I think we were right up there with our pricing which has helped us gain some share back", he says.
In Australia, the major banks lifted mortgage rates due to higher funding costs, and Mr Hisco says that pressure is coming to bear in New Zealand though it will be difficult to predict when banks will act on that.
ANZ has been streamlining its business, cutting down on the number of products it sells, and it's moving to one IT system for its ANZ and National Bank brands.
Looking ahead, Mr Hisco says the stuttering economy means keeping a lid on costs will help drive reasonable earnings growth.
He says the bank is also looking to grow its business by bringing on more customers.
Meanwhile, Sir Dryden Spring will retire as chairman and director of ANZ New Zealand's board from 22 June, after serving on it, and before that, National Bank, since 1994.
Another director, John Judge, will take over as chairman.
