ANZ New Zealand's profit jumped 18 per cent to $930 million for the six months to March 31.
The country's largest bank's cash profit rose 42 per cent to $962 million after significantly reducing credit impairment charges and because of a strong home lending market.
ANZ New Zealand chief executive officer Antonia Watson said that the full impact of Covid-19 on the New Zealand economy had yet to play out, but sectors such as housing, construction and agriculture had proven resilient during the crisis.
"Across the economy, businesses have generally fared better than we expected so we've been able to release around 25 per cent of the additional credit provisions we had put in place since the start of the pandemic," she said.
The bank's net interest income rose 1 per cent to $1.66 billion and its operating expenses fell 8 per cent to $764m.
Watson said the expenses drop was because of lower personnel costs, a series of simplification initiatives and the sale of UDC in September.
ANZ NZ dropped its credit impairment charges from a charge of $232m to a release of $70m reflecting improved economic conditions.
Deposits at the bank rose 1.6 per cent and gross lending was up 3.5 per cent, from September 30.
Home lending by ANZ NZ increased $5.8 billion over the six months to March 31.
Watson said there was room for optimism but the impact on the economy was also uneven.
"Sectors that relied on overseas visitors, such as education, hospitality and tourism, have been disproportionately affected and we've seen the challenges facing our customers in those industries.
"As we look ahead, a full recovery is still some way off. Economic confidence will take time to be restored as residual impacts of the pandemic are felt."
The bank will not pay a dividend to its parent entity ANZ in Australia.