The benefits were reflected in "very sound" credit quality and lower bad and doubtful debts, but that came with increasing margin pressure as credit growth continued to exceed deposit growth in the system.
Releasing the BNZ financial report for the six months ended March, Mr Healy said strong momentum meant the bank had reported a statutory profit of $416million and a significant increase in cash earnings of 9% on the previous corresponding period. Cash earnings, the preferred profit measurement of Australian banks, increased by $40 million to $484 million.
The statutory profit was down $35 million on last year.
Net interest income increased by $25 million, or 3.1%, in the period, driven by growth in lending and deposits, partly offset by lower net interest margins.
Net interest margins fell to 2.15%, driven by higher funding costs and lower earnings on capitalCustomer deposits increased by $4.2 billion in the period as a result of a focus on deposit growth.
National Australia Bank, the owner of the BNZ, lifted its first-half cash profit 2.3% to $A3.29billion ($NZ3.54billion) and held its interim dividend at A99c.
Revenue for the six months to March 31 rose 1.8% but net interest margin declined by 0.11% on the prior corresponding period to 1.82%.
"The operating environment for banks remains challenging, including heightened regulatory change, digital disruption and increasing stakeholder expectations," chief executive Andrew Thorburn said.
Mr Healy said the BNZ continued to invest in digital and online banking and payments technology to meet customer demand.
Since the 2014 financial year, there had been a 25% increase in the number of people working in the digital teams. Nearly 90% of transactions were now either through internet banking or the BNZ banking app. That was up to 14 million sessions each month, a 25% increase overall. Mobile use was up 34%.The bank had 161 retail branches as at March 31, down from 173 a year earlier. It had 488 automatic teller machines compared with 479 ATMs in the previous period, and 745,000 internet banking customers, up from 705,000 in March 2016.
"With almost nine out of 10 transactions with our customers now happening online, this means changes in our store network. Sometimes this means reducing hours. Sometimes this means closing stores and sometimes this means opening stores in new areas.
"This reshaping of our network will continue into the future, informed by our customers’ needs and preferences."
The bank was automating and digitising things that were currently manual and did not need to be, he said.
Both those initiatives meant fewer people in parts of the business as well as growth of investment in areas of the business that did not exist 10 years ago, or even today. Mr Healy singled out housing as an area of concern.
"Housing affordability continues to be an issue, though most recently we have seen the impact of the loan-to-value restrictions in the housing market and prices, particularly in Auckland, have seemed to plateau."
Pressures on lending margins were likely to increase in coming months which would influence interest rates.
Funding costs had fallen, but not by as much as the bank’s lending rates, meaning margins had reduced, he said.
More people wanted to borrow and banks were paying more to win customers’ deposits, which would lead to higher lending costs being passed to borrowers.
