Commonwealth Bank's New Zealand subsidiary ASB reported an eight per cent rise in first half profit after solid lending growth and tight cost control helped it overcome higher loan impairments in dairy lending and a squeeze on net interest margins. ASB reported a cash net profit of NZ$475 million for the six months to December 31, up eight per cent on the same period a year earlier after it grew its home lending eight per cent and its rural and business lending rose 14 per cent. ASB, which has aggressively grown its mortgage lending in the fastest-growing and biggest city of Auckland, said its net interest margin fell 13 basis points to 2.27 per cent as home buyers switched in ever greater numbers to lower margin short-term fixed mortgages from floating and longer term fixed deals. However, ASB did benefit somewhat from the switching as it reported a 23 per cent rise in other banking income due to increased break fees as customers switched to new fixed mortgage contracts.Loan impairment charges rose 11 per cent to NZ$41 million for the half, which ASB attributed to increased provisioning for losses on dairy loans. Dairy payouts fell to unprofitable levels in 2014/15 and are forecast to stay unprofitable until 2016/17.ASB was able to keep growing profit despite the dairy losses and interest margin contraction because of its strong mortgage lending growth, which allowed it to grow its home loan market share to 21.8 per cent from 21.7 per cent a year earlier, and because cost growth of four per cent was slower than income growth of seven per cent. ASB's cost to income ratio improved to 37.2 per cent, an improvement of 100 basis points from a year earlier.