Low numbers of bad loans has helped three of New Zealand's major banks pull in close to $2 billion in half-year cash profits but one expert is warning that it could be as good as it gets.

Westpac yesterday joined BNZ and ANZ in reporting its half-year result to March 31, with a cash profit increase of 4 per cent to $482 million.

Combined the three banks made cash profits of $1.92b up from $1.85b in the same period the previous year.

ASB, reports out of sync with the other banks, and has a June 30 full-year balance date.


David Tripe, a banking expert with Massey University, said there had been no negative surprises in the results this time around.

"It hasn't been too bad but whether it is going to get much better I don't know. It is a matter of what is going to turn up and bite them."

The banks have all been helped by strong economic conditions in New Zealand. Low levels of unemployment have ensured people can continue to pay their loans while deposits have continued to come in the door despite low interest rates.

Tripe said the banks had been able to push their costs down in recent years but there was a limit to how far that could go before cut backs began to cost money.

"I don't know what the lower limit of costs is," he said.

Tripe said the margins across the banks had improved in the last six-month results but recent increases in funding could see margins squeezed in the second half if banks did not increase mortgage rates.

"I wouldn't be surprised to see a squeeze in margins."

Andrew Bascand, managing director at Harbour Asset Management, who analyses the Australian parent company results, said the half-year profits showed the banks continued to have low bad and doubtful debts across the sector.

He said the Westpac result had been a bit better than expected while the National Australia Bank result was a bit worse and ANZ was inline with expectations but had a lot of moving parts.

He said the banks' net interest margins were "hanging in there" but balance sheet growth was weak across the board and he expected that to continue.

"Going forward I'm not expecting strong growth across the sector."