ANZ's New Zealand operation reported a 27 per cent rise in cash profit in the first half year, more than double that of its Australian parent.ANZ's NZ chief executive, David Hisco, said a stronger local economy and continued cost savings from the merger of its ANZ and National brands and systems in late 2012 had flowed through to the bottom line.ANZ reported a cash profit for the six months to March 31 of NZ$887 million, up by NZ$190 million from the same period a year ago as lending grew five per cent and operating costs fell six per cent.Hisco said the merger had been more successful than expected and had helped drive ANZ's cost to income (CTI) ratio down to 39 per cent from 49 per cent four years ago. He said such a large improvement in CTI was unlikely to be repeated, but a solidly growing economy would help keep the business improving."A lot of the low-hanging fruit has gone. We're always looking for ways to economise, but it's getting harder," Hisco said."It was a dream a few years ago to think we could get a three in front of [our CTI], but it does get driven by the 'I' as well as the 'C', so as the economy gets better, so does the income line, so maybe we can get it lower," he said.Hisco said ANZ was now past the merger and focused on growing with one brand and one set of products."We've got some momentum and we want to keep going."ANZ's market share in the key Auckland mortgage market rose to 31 per cent and number one status in March 2014, moving from a 22 per cent share and second place behind Commonwealth Bank's ASB four years earlier. ANZ reported lending rose 13 per cent to small businesses and rose three per cent to larger businesses and farmers. Provisions for bad debts turned around to a write-back of NZ$39 million from provisions of NZ$43 million a year ago as economic conditions improved.ANZ's net interest margin fell to 2.48 per cent from 2.5 per cent a year ago as customers continued to switch heavily from more profitable floating mortgages to fixed mortgages ahead of interest rate hikes in March and April.Hisco said the two rate rises in the last two months had no major impact on lending, but further increases later in the year were likely to slow demand, although the economy continued to grow solidly.ANZ had coped well with the Reserve Bank's introduction of a speed limit on low deposit mortgages at the beginning of the half year, Hisco said. ANZ's high loan to value ratio (LVR) mortgages represented about 5 per cent of new lending in the first half, well below the regulator's 10 per cent limit.