ANZ New Zealand has lifted its half year profit by a quarter, driven by a drop in bad debts.
The Australian-owned bank made a profit of $478 million in the six months to March - an increase of 24% on the same period last year.
Underlying profit rose by two-thirds to $605 million compared with the same period a year ago.
Much of the improvement reflects a substantial drop in money set aside to cover potential bad loans, falling by three-quarters to $85 million due to the gradual economic recovery in activity.
Revenue rose 7% to $1.7 billion, helped in part by higher net interest margins because more customers moved to floating mortgage rates.
But lending to households and businesses remains flat at $95 billion, as customers and firms continue to reduce debt or are reluctant to take on any more.
Deposits rose 6% to $63 billion, reflecting intense competition among banks for funds to meet new Reserve Bank rules.
Costs rose by 4% to $759 million.
ANZ cautions the Christchurch earthquakes are likely to lift bad debt provisions as firms fail, but it's too early to fully quantify the quake's impact.
Overall, ANZ's underlying profit rose 23%, to $A2.8 billion, driven by a sharp fall in bad-debt charges.