ANZ chief executive Mike Smith faced some persistent questioning from analysts yesterday about the group's conservative capital position. With many of the view that the worst of the financial crisis and economic downturn has passed, the bank's 10.2 per cent tier one capital ratio looks a bit over the top.Smith agreed: "We have excess capital. We will stay on the high side but we are looking at opportunities."As to what those opportunities are, Smith said that in Australia "in terms of significant franchises" there was not much available."International banks may want to reduce their portfolios."The bumper capital ratio for ANZ is the result of the bank opting to sell new shares to every retail shareholder that elected to buy them under a share offer two months ago, and following an institutional raising. ANZ sold $2.2 billion in shares to retail investors and $2.5 billion to institutional investors.Smith, speaking on a conference call for investors, to elaborate on the bank's trading update, conceded that, with things picking up in the finance industry and the economy generally, prices for assets were moving up. But, he argued, there were still good deals to be done."We have to be cognisant of where prices are in the US and Europe. Assets in those regions are still very reasonable."It is a question of who has the ability to buy assets at the moment. The traditional competitors are not in a position to do so." In the update on the bank's performance for the nine months to June, Smith said he thought the bank's provisioning had reached bottom. He said the second half of the year would be "similar" to the first half, as would be the first half of the 2010 financial year. The increase in second-half provisions has been driven entirely by the New Zealand business.  He said the group had strong revenue growth in its global markets operation and lending both in both retail and commercial. Asia-Pacific profit would be up 60 per cent year on year.The bank noted that the "net funding costs of the portfolio continue to rise".