ASB Bank's profits have fallen 11 per cent, with the bank reporting a $238m operating profit for the six months to December 2008.
The fall includes a $41 million accounting loss that stems from applying new global accounting rules.
Profits for the same period in 2007 were $267million.
Total bank assets increased by 16.3 per cent, said ASB chairman Gary Judd, with lending balances rising 8.6 per cent.
ASB's parent company, the Commonwealth Bank of Australia, this morning reported a 16 per cent fall in cash profits and warned that it might have to cut future dividend payouts.
It is the first time in 16 years it has not raised its dividend.
Judd said that "robust competition placing intense downward pressure on margins" meant that ASB's net interest margin had fallen during the six months to 1.5 per cent, down from 1.8 per cent in the December 2007 half year.
"These record low margins are an indication of the challenging economic environment for New Zealand banks, which has seen higher wholesale funding costs and ongoing demand for competitively priced retail deposits."
Market share for ASB in the home lending market increased slightly, said the bank, to 23.4 per cent.
Asset growth was offset by higher loan impairment charges across all its asset classes.
"This recognises the very real effects, both for local business and New Zealanders, of the deteriorating economy we are all experiencing," said Judd. "Despite this, the overall quality of ASB's loan book is high, with total provisions of $157m still only representing 0.24 per cent of total assets."
In the six months to the end of June last year, this figure was 0.18 per cent.
ASB's total deposits increased by 12.9 per cent to $57.1 billion "as New Zealand investors affirmed their support for the ASB brand during these difficult times" said the bank.
