While the net interest margin improved for ANZ in the December 2010 quarter - in line with the experience of other banks - on Friday, management highlighted the constraints on margin improvements because of continuing price pressures on deposits and the lower pricing of corporate loans.In the trading update for the quarter, published on Friday, ANZ said that group margins (excluding the global markets' business) "showed a small increase across the quarter, but the rate of growth has slowed."Mike Smith, managing director of ANZ, said in an investor call: "I think we've just got to be realistic about the competitive pressures.  "We've seen that with deposits in Australia. We've seen it with deposits in New Zealand, in particular, and we're now seeing it in the mortgage market.  "Also, in the institutional [and] corporate [markets], we're beginning to see a little bit of margin pressure, and I think that that's inevitable. However, with the business mix we have, we will try and hold the margin for as long as we can. And I think that certainly for the half-year we should be okay."In the trading update, ANZ also said that profit before provisions increased six per cent in the December 2010 quarter over the December 2009 quarter, and increased by 2.6 per cent in the December over the September quarter (allowing for foreign exchange rate effects).Income over the last quarter increased by two per cent to $4.2 billion (allowing for exchange rate effects).Impaired loans fell three per cent over the quarter, to $6.3 billion, a figure that includes loans advanced to the Oswal chemical plant in Western Australia and on which the bank expects to make a full recovery. Excluding loans to this one borrower, the level of impaired loans fell 36 per cent over a year, the bank said.Loans 90 days or more past due increased eight per cent over the quarter to $1.7 billion.The bad debt expense was $294 million for the quarter, down by 48 per cent from 12 months ago and down 22 per cent from three months. Quarterly bad debt expenses over the remainder of the bank's financial year may be higher, with the bank confirming it expects a full-year charge in the order of $1.35 billion, which is around the existing consensus of sell-side analysts.The bad debt charge for the banking business in Australia fell modestly, the chief financial officer, Peter Marriott, said.In institutional banking, the bad debt charge fell by almost half. This charge fell "a little bit" in Asia and was flat in New Zealand, where there are "continuing problems emerging on the commercial books there," Marriott said.