Westpac New Zealand, the local unit of Australia's Westpac Banking Corp, reported a 3 percent rise in second-half earnings on the back of strong growth in financial services and mortgages with a loan to value ratio of less than 80 percent.

Core earnings for the half-year ending September 2014 were $622 million compared to $600 million in the first half. Cash earnings were unchanged from the first half at $432 million due to a jump in impairment charges of $22 million compared to just $4 million in the first six months of the financial year, which Westpac said had been very low. Operating income was up 3 percent on the previous half-year to $1.04 billion.

Funds under management and funds under administration were up 13 percent in the half to $7.2 billion while total lending increased 2 percent, or $1.4 billion, with mortgages increasing $1 billion to $39.6 billion and business lending, particularly rural, up $800 million to $23.1 billion.

Westpac said highlights for the half-year included increasing its digital and mobile solutions, with more than 90 percent of retail products capable of being applied online. Mobile mortgage applications were up 26 percent and now represent 16 percent of all mortgage applications.

Westpac's New Zealand annual cash earnings rose 13 percent to $864 million in the 12 months ended Sept. 30, on a 2 percent lift in net operating income to $2.07 billion, and helped by a 78 percent drop in full-year impairment charges to $26 million.

The New Zealand unit contributed 10.4 percent to the Australian-based Westpac group's cash earnings of A$7,628 million. Westpac, Australia's second largest bank, announced a final fully franked dividend of 92 Australian cents per share, taking total dividends for the year to A$1.82 cps, up 5 percent on the previous year.

Westpac's dual-listed shares were unchanged at $38.92 on the NZX, and last traded at A$34.78 on the ASX.

The Australian group said its Australian Financial Services division had a particularly strong year with a 6 percent increase in banking customer numbers and double-digit growth in all businesses within AFS.

"We provided more than A$87 billion in new lending to Australian retail and business customers over the year, while growing in line or above system across all key markets in the second half," chief executive Gail Kelly said .

She said customer numbers had grown at their fastest pace in four years while customer complaints were down with a 27 percent drop in complaints for AFS alone.

Last week ANZ Bank New Zealand, the country's biggest lender, reported a 17 percent rise in annual earnings and the Bank of New Zealand reported a 2.4 percent rise.