National Australia Bank's New Zealand arm, BNZ, reported a 3.1 per cent fall in cash earnings between the first and second halves of the year as its net interest margin fell slightly and it was forced to take bad debt provisions against dairy farm loans.BNZ's cash earnings fell to NZ$405 million in the second half of the year to September 30 from NZ$418 million in the first half after its net interest margin fell to 237 basis points from 241 bps. It cited a four basis point increase in funding margins.NAB said in its presentation to shareholders that BNZ's bad and doubtful debt charges rose to NZ$88 million in the second half from NZ$46 million, largely due to provisions related to lending to dairy farmers, who have been hit by two years of loss-making milk payouts. The presentation showed about 20 per cent of BNZ's loans are to farmers, with about 62 per cent of those to dairy farmers. Dairy loans represent about NZ$844 million of loans out of BNZ's total loans of NZ$68.1 billion.NAB pointed to BNZ's new "Auckland-focused growth strategy" in its presentation, referring to a move this year to restart using mortgage brokers after being out of that part of the market for more than a decade.BNZ's mortgage market share fell from 16.3 per cent in September 2012 to 15.5 per cent by August 2015 after bigger rivals ANZ and Commonwealth Bank of Australia's ASB ramped up their competitive activity in Auckland from late 2012. ANZ moved its head office from Wellington to Auckland in 2012 when ANZ CEO David Hisco took over and ASB, the former Auckland Savings Bank, fought to retain its dominance in New Zealand's biggest and fastest growing city. House prices have risen 83 per cent in Auckland since the beginning of 2009.BNZ Chief Executive Anthony Healy said BNZ had exceeded its targets for lending through brokers in the four months since re-entering the mortgage broker market."Our primary focus in housing has been to expand our presence in Auckland, having already accredited 197 brokers and hired more than 30 additional mobile bankers," Healy said in BNZ's results statement.Healy said BNZ had taken a conservative approach with its adjustment to its collective provisions for dairy loans by making an "economic cycle adjustment to recognise a period of lower and more volatile dairy prices."BNZ also reported a drop in market share in credit cards to 23.9 per cent from 20.2 per cent a year ago after its 15-year partnership with Air New Zealand's Airpoints loyalty scheme ended in May when Westpac signed a ten year partnership deal with the airline.