During the half-year under review, Westpac NZ's margin fell 0.33% to 2.38%.
Chief executive officer Peter Clare said it was a solid performance in a subdued and highly competitive environment.
Operating profit, or core earnings, rose 1% to $582 million in the previous corresponding period (pcp).
''Our focus has been on continuing to build a strong and sustainable business and we are well positioned to help New Zealanders as the economy improves and confidence returns.''
Improving the strength of the bank's balance sheet had been a particular focus and Westpac NZ was well funded, he said. The bank had also taken a disciplined approach to new lending with a focus on asset quality.
Westpac NZ strengthened its deposit-to-loan ratio from 67.7% to 75.1% in the period. Total deposits grew 14% to $45 billion. Term deposits grew 16%, or $3.4 billion, while other deposits increased 12%, or $2.2 billion.
Total lending rose 3% to nearly $60 billion. Home lending grew 3% to $36.4 billion.
In Australia, Westpac, the parent company, reported a cash profit of $A3.53 billion ($NZ4.25 billion), up 10% on the previous corresponding period. Morningstar analyst David Ellis said the strong result of Westpac was hard to fault, exceeding both his $A3.5 billion forecast and consensus of $A3.4 billion.
''The earnings performance confirms our long-held argument the major banks can deliver attractive profit and dividend growth, despite only moderate loan growth.''
The A86c a share tax-paid dividend was a 5% increase on the pcp, based on a 76% payout ratio.
The highlight was a 10cps tax-paid special dividend announced earlier than expected, Mr Ellis said.
''The impressive performance supports out positive outlook on Westpac and the major banks. We are increasingly confident in the medium-term outlook and will likely reassess earnings forecasts.''
