ANZ's Australian division has the right settings to maintain above-system growth in retail and commercial banking, the bank's chief executive, Mike Smith, told analysts at the bank's results briefing yesterday.Smith said the division's cost-to-income ratio of 37.5 per cent, compared with 44.8 per cent for the bank overall, was "world class". The bank increased its allocation of capital to the division by nine per cent during the 2012/13 financial year to drive growth.It launched a new Smart Choice superannuation product and signed up 50,000 customers. It also installed 200 smart ATMs. And it increased the proportion of branch staff qualified to sell wealth products and home loans.In retail banking, ANZ's home loan portfolio grew by 6.4 per cent during the year to September - 1.3 times the system growth rate. Deposits grew by 8.8 per cent, or 1.2 times system.Consumer card balances grew by 1.7 per cent, compared with system growth of 0.1 per cent.In corporate and commercial banking, lending grew 3.1 times system and deposits grew 2.4 times system.ANZ cited a Roy Morgan Research survey of the traditional retail banking market (deposits, cards and loans) to claim an increase in retail banking market share from 13.7 per cent to 14.4 per cent over the 12 months.Smith said the bank was achieving this growth while maintaining its funding discipline. Customer deposits increased by 12.5 per cent, while lending grew by 9.6 per cent."You still have to grow funding above system to achieve that balance," he said.The Australian division's provision for credit impairment rose from A$642 million, in 2011/12, to $820 million in the year to September, prompting a question during the investor briefing about whether the bank was going after growth at the cost of credit quality. Smith said the bank had strengthened its stress testing for home loan applicants. It asks whether a borrower can continue to service their loan if rates go up to 2.5 percentage points. "Generally that test is to a tolerance of 1.5 per cent. It made sense to increase it a little," he said.ANZ's chief financial officer, Shayne Elliott, said growth and a change in the business mix of the finance company, Esanda, were behind the increase. Also, there had been write-backs, involving Queensland disaster provisions, in 2011/12 that did not recur in the year to September.