Half-year profits at three of New Zealand's major banks are expected to be flat on the back of a slowing housing market and a squeeze in margins.

ANZ, the country's largest bank, is due to report its six months to March 31 result tomorrow, followed by the BNZ on Thursday and Westpac next Monday.

ASB, whose financial year matches the calendar year, reported net profit after tax for the six months to December 31 of $593 million - a new record high for the bank.

But David Tripe, a banking expert at Massey University, said ASB and Rabobank had reported increased impaired assets in their last results which could mean the other banks also had an increase although he said there was no sign it was an industry-wide problem at this stage.

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Property price growth has slowed in the last year. Tripe said he expected to see a little bit of asset growth at the New Zealand arms of the Australian-owned banks but they could report a squeeze on markets.

"We haven't seen any thing much in the way of interest rate increases but we have seen some increase in funding costs so we may see an impact on margins."

The banks have managed to hold their margins flat in recent years by pulling in more deposits from local investors.

But that could change as the cost of borrowing money offshore rises in the wake of rising interest rates globally.

"Overall the impact on profits is possibly slightly down. But no big surprises," he said.

John Kensington, partner at KPMG which produces a six-monthly report on the banking sector, said he expected the results to be a little bit subdued on the back of weaker business confidence.

"I can't think of anything spectacular that will drive it up a long way," he said.

Kensington said New Zealand had been hit by the post-election blues and there was uncertainty over the timing and impact of proposed changes by the new Labour-led government.

"It is not easier than it was six months ago and it is not harder but it is subdued."

He said provisioning for unpaid loans and advances could tick up slightly but that was more of a feature of things being so good in previous years.

Andrew Bascand, managing director at Harbour Asset Management, said he expected to see some provisioning from the Australian banking inquiry come through in the half-year results.

ANZ has already said it will take a A$50m ($53.5m) hit in its full financial year because of the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Bascand said lower lending growth combined with a rise in funding costs meant margins were also likely to be under pressure.

"Banks are going to say it has been a fairly tough quarter."

He said the Australian banking inquiry would make it hard for the banks to increase mortgage rates out of cycle without a lift in the official cash rate.

"I think it will be very hard for banks to conduct an out-of-cycle interest rate rise."

He said usually banks would be expected to increase rates by 10 to 15 basis points to cover the increased funding costs which have crept up in recent weeks.

But he expected the quality of the loan books to remain strong as there continued to be low unemployment in both New Zealand and Australia.

The banks were also benefiting from there being no sectors under strain unlike previous years where the New Zealand dairy sector was under pressure from low milk price payouts and the mining sector in Australia had a downturn.

Bank results
Net profit for six months to March 31 2017
ANZ $869m
BNZ $416m
Westpac7 $462m (cash profit)