Westpac New Zealand is working on making its business less risky, particularly in the mortgage market.
Westpac New Zealand chief executive Peter Clare says he wants his bank to be safe and solid but that's coming at the expense of profit margins.
He says it's time to work on ensuring the company is able to withstand any shocks.
Mr Clare says Westpac started this half with the highest relative percentage of loan-to-value (LVR) home mortgage ratios above 80%.
The bank was not comfortable with that and decided to increase the number of mortgages with LVRs below 80%.
Mr Clare says subject to the customer meeting certain credit criteria Westpac will lend up to 100% of a home's value.
Loans above 95% attract a premium but Mr Clare says Westpac encourages its customers to pay down debt and once the loan moves below 80% LVR that margin disappears.
Massey University's Centre for Banking Studies director David Tripe says Westpac has had a greater proportion of high LVR lending than the rest of the market, but has gradually moved that down.
Dr Tripe says Westpac is now in the middle of the pack, while a number of other banks have increased their proportion of high loan-to-value lending.
