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The statutory profit increased 16% to $403 million from $347 million in the previous corresponding period. The cash profit rose 18% to $459 million.
Expenses fell 3%, or 4% after adjusting for charges associated with a change to the application of ANZ’s software capitalisation policy announced in March last year.
Net interest income rose 3% against the pcp, primarily reflecting continued lending growth.
However, ANZ New Zealand chief executive David Hisco said net interest margin had contracted because of increased funding costs and demand for fixed-rate home lending.
"More New Zealanders are switching from floating to fixed home loans, taking advantage of lower interest rates ahead of possible changes in market conditions."
The increase in other operating income reflected higher global markets trading income and valuation gains, he said.
ANZ New Zealand’s parent, ANZ, lifted first-quarter cash profit to $A2 billion ($NZ2.13 billion) and expected its full-year charge for bad and doubtful debts to be lower than previously thought.
The lender’s net profit of $A1.6 billion was up 8% on the prior corresponding period, which was affected by the impairments leading to an 18% decline in full-year profit.
Stripping out the effect of those impairments, earnings were still up 20% as revenue rose 7% on a strong performance from ANZ’s local retail and institutional businesses.
ANZ said in a statement it increased its market share of both deposits and Australian home lending, the latter helping to reduce the average risk weight of the lending book by 0.5%.
"It is still too early to be definitive about the year as a whole. However, the first quarter, together with our experience during the first six weeks of the second quarter, suggests the credit environment is marginally better than we expected at the time of our 2016 full-year result," chief executive Shayne Elliott said.
Announcing its $A5.9 billion full-year profit in November, ANZ said it had expected its provision charge in 2017 to remain broadly the same in percentage of gross lending assets terms.