A strong housing market has helped boost ANZ NZ's first half profit by 18 per cent to $1.096 billion.

The country's largest bank saw its operating income rise 6 per cent $2.144b over the six months to March 31.

Although its operating expenses also rose 8 per cent to hit $824 million due to high compliance costs. The bank's cash profit was up just 1 per cent to $968m.

ANZ NZ chief executive Antonia Watson said the solid result reflected ongoing strength in the housing market despite recent headwinds including from rising interest rates.

"Spring and summer are the busiest time for the housing market, and while property values have fallen 4.1 per cent since the November peak, they are still a good deal higher than they were a year ago."

The bank grew its home loan market share from 30.38 per cent in September 2021 to 30.66 per cent in March 22.

During that time the official cash rate has risen substantially from a record low of 0.25 per cent to 1.5 per cent in April pushing up mortgage rates.

Watson said the Reserve Bank of New Zealand had taken an understandably cautious approach to the home loan market, tightening loan to value restrictions.

"The Government regulations enacting the changes to the Credit Contracts and Consumer Finance Act in December have also had an impact."

Net loans and advances rose 3.8 per cent over the half while deposits were up 3.4 per cent.

Watson said while the New Zealand economy had again proved more resilient than expected in the first half of the financial year, there had been a noticeable change in consumer sentiment.

"With rising inflation and interest rates, and increasing uncertainty globally, we're starting to see New Zealanders tighten their belts and the current environment remains a challenge for many small and medium-sized businesses."

She said the bank was watching the situation carefully given ongoing economic uncertainty due to Covid-19, significant supply chain issues and heightened geopolitical tensions across the globe.

Credit impairment provisions were flat with a $20m release recognised for the half.

"Since the first lockdown in 2020 many New Zealanders have been cautious with their finances and this appears to be continuing. Our data shows while interest rates were low people took the opportunity to pay down debt where they could, and they've also kept up their savings habits."

Watson said ANZ data showed more than a third of customers were ahead on their home loan by six months or more.

Business and Institutional customers continued to manage well through ongoing uncertainty and the disruption caused by the pandemic in the first half of the financial year.

In contrast to home lending growth, non-housing lending to Business and Institutional customers remained muted for the first half, increasing by $900m.

"Many of our business customers tell us that borrowing more money is often not the solution. While we do work with those seeking additional working capital support, many are using their existing cash resources or facilities," Watson said.

KiwiSaver hit

The bank's fund management arm took a significant hit from the loss of its default provider status.

It transferred $513m of KiwiSaver default customers in December to newly appointed default providers which meant its KiwiSaver funds under management dropped overall by $665m from $19.1b to $18.5b.

The bank remains the largest KiwiSaver provider.

Meanwhile ANZ NZ's parent ASX-listed ANZ announced its half year profit was up 10 per cent to A$3.53 billion while its cash profit fell 3 per cent to A$3.113b. The bank declared an interim dividend of A72 cents per share.