More than half of ANZ's lending growth in the June quarter came from its Asia Pacific, European and American (APEA) businesses, giving the bank a good source of diversification away from the low-growth Australian lending market.ANZ's chief executive, Mike Smith, highlighted a number of ways in which ANZ's growing Asian business is increasingly integrated into the overall business, and is having a positive impact, when the bank released its June quarter update on Friday.Smith said 59 per cent of loan growth in the quarter came from APEA markets. "European banks are not going to be able to grow assets in Asia as they have before," Smith said."We can move in that market more aggressively. There is a real opportunity for us. Conditions are buoyant in Asia, with consistent demand for credit."Deposits on ANZ's balance sheet from Asian sources stood at A$11 billion at the end of June, down from $15 billion at the end of March.Smith said deposits sourced from Asia would move up and down, depending on the strength of domestic flows. The bank had "very strong" deposit flows in Australia during the June quarter and, therefore, less need for deposits sourced overseas.This ability to source deposits offshore has taken some pressure off the bank to compete on deposit rates in the local market. Smith said the bank's margin went up a couple of basis points during the quarter. Smith said: "We are competitive on deposits but we want to maintain our margin. Competition in deposits has eased a bit."The bank has reduced its loan-to-deposit ratio, so customer funding now makes up 61 per cent of its funding base (up from 50 per cent in 2008). The bank has completed its wholesale term funding program for the year, after raising less than it originally estimated would be necessary.The bank reported an unaudited underlying net profit of $1.4 billion for the June quarter - up 1.3 per cent on the March quarter.The provision charge for the quarter was $328 million, bringing the total provision charge for the nine months to June to $989 million. That is 31 per cent lower than the previous corresponding period.Loan arrears (payments 90 days or more past due) rose from $1.9 billion in March to $2.1 billion in the June quarter. Smith said the increase in arrears came from the mortgage book.