ANZ delivered a "surprising" lift in its first-half earnings, according to a banking expert.

The local unit of Australia & New Zealand Banking Group increased first-half earnings one per cent as mortgage lending continued to grow.

Banking expert Claire Matthews, of Massey University, said this was slightly unexpected.

"Overall the fact they had an increase in their performance compared to last year was something of a surprise," Matthews said.

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"The general expectation was that it wasn't going to be a significant downturn but it was more likely there would be a weakening in their performance rather than a strengthening, so overall the strengthening was a bit of a surprise."

Cash profit, the preferred earnings measure for the Australian-owned banks, rose to $941 million in the six months ended March 31 from $928 million a year earlier, the Auckland-based lender said in a statement.

Statutory profit rose 11 per cent to $964 million, as revenue rose 3 per cent to $2.1 billion.

The New Zealand banking business posted an 11 per cent gain in earnings to $793 million, while the institutional business saw earnings fall 38 per cent to $122 million.

Dual-listed parent Australia & New Zealand Banking Group reported that it posted a cash profit of A$3.5 billion, up 4 per cent, and a 14 per cent lift in statutory profit to A$3.3 billion, on a 2 per cent drop in revenue to A$9.8 billion.

The board declared a fully-franked interim dividend of 80 Australian cents per share, unchanged from a year earlier.

In the first half, ANZ's New Zealand banking division expanded its loan book 3 per cent to $118.5 billion, with mortgage lending up 5 per cent to $73.7 billion, and commercial lending up 3 per cent to $41.5 billion.

Customer deposits increased 4 per cent to $84.4 billion, and net interest margin rose 10 basis points to 2.37 per cent due to higher lending margins.

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"ANZ has grown in home lending and deposits, which reflects the continuing strength of the New Zealand housing market and of the economy generally," said ANZ New Zealand chief executive David Hisco.

"Major infrastructure and building projects across the country are providing jobs and fuelling consumer spending and saving, and will do so for the foreseeable future."

Operating expenses rose one per cent to $642 million in the first half.

ANZ New Zealand said this was due to increased spending on digital capability and inflation, but was partially offset by a 2 per cent reduction in full-time equivalent staff to 6,319, which was "driven by customer migration to lower cost channels", with 1.4 million of its local customers now using online banking.

The bank has slashed its total FTE workforce worldwide by 5 per cent to 41,580 in the past 12 months.

Net funds management and insurance income rose 3 per cent to $189 million in the first half, which the bank said was due to higher funds under management.

As at the March 31 balance date, the bank had $29.2 billion, up 8 per cent from the same time a year ago.

Group chief executive Shayne Elliott warned today that the bank expects difficult trading conditions in Australia to continue for the foreseeable future, and expects revenue growth for the second half of 2018 to continue to be constrained by intense competition as well as the impact of increased regulation.

In Australia, the bank expects economic growth to pick up in the coming year but "historically high levels of household debt and low wage growth will offset some of the positive impact of recent strong employment data, so consumers are likely to remain cautious", Elliott said.

Additionally, the bank is currently part of the royal commission into financial services in Australia which has become a scandal as unethical behaviour across the industry has been revealed.

Elliott said the bank "will learn from this inquiry and continue to take real action to restore trust within the community."

In March, ANZ New Zealand said it was gauging interest in its New Zealand life insurance division after selling its life unit in Australia.

Three of Australia's four major banks have sold their life insurance units as they contend with tighter prudential requirements, selling assets and raising capital to ensure they meet the regulator's levels.

Commentators expect financial services to be one of the busier sectors for corporate takeover activity this year due in part to the Australian lenders scaling back the breadth of their services.

ANZ had also planned to sell its New Zealand finance company, UDC Finance, although that deal was scuttled by the Overseas Investment Office when it couldn't uncover the ultimate owners of the proposed buyer, HNA Group, and separately the lender sold its online trading platform Direct Capital to First NZ Capital.

It has said it's exploring an initial public offering for UDC, amongst other options.

The NZX-listed shares last traded at $28.70, down 19 per cent from a year earlier.