Westpac was, however, taking a measured approach to growing its rural footprint.
"It's a truism in banking that you write your best loans at bottom end of the cycle and your worst loans at top end of the cycle, when underlying conditions can disguise the performance of particular borrowers," McLean said. "We're quite comfortable writing business at this level."
Westpac New Zealand said the proportion of its agribusiness portfolio graded as "stressed" reached 7.8 per cent at the end of March from 3.9 per cent at the end of September and 2.9 per cent a year earlier.
"The whole market is seeing some stress emerging in that [rural] space," said Westpac NZ chief financial officer Jason Clifton.
However, impaired agri assets fell to 0.32 per cent as of March 31 from 0.34 per cent at the end of September 2015. Westpac New Zealand's total lending rose 8 per cent to $71.7 billion in the half-year. That included a 6 per cent increase in mortgage lending, to $43.4 billion, and a 9 per cent lift in business lending, to $26.6 billion.
The bank said its total exposure to the agri sector sat at $8.1 billion at the end of March, up from $7.3 billion a year earlier. The dairy sector accounts for 71 per cent of its agricultural exposure.
Meanwhile, McLean said Auckland's heated property market would continue to surge ahead as long as a "supply and demand imbalance" existed.
He said the bank had carried out stringent "stress testing" of its mortgage book. Impairment charges on bad debts fell to $9 million in the half-year compared with $31 million a year earlier.
The bank's Australian parent reported a first-half cash profit of A$3.9 billion.
Westpac shares closed down 5.1 per cent at $32.34 on the NZX last night.