The agriculture sector's demand for loans is increasing, the BNZ says.

Chief executive Andrew Thorburn said BNZ had increased its exposure in agriculture. Its market share was now 21.85 per cent; about 18 months ago it was 19.5 per cent.

In Canterbury, BNZ's agri-lending book had grown 52 per cent since January 2011.

One farmer client is proceeding with a $100 million dairy farm and irrigation conversion in Central Otago. The project involved the conversion of existing farmland to dairying, including installing 15 pivot irrigation systems, worth up to $2m each, plus the building of dairy sheds and other facilities.

"He's going to irrigate a big plains area, and it will create about 15 dairy farms. "It was a visionary plan, and its like a 10-year plan ... he's bought the land up over time but it's a long way from the water," Thorburn said.

BNZ had provided some backing to the $82m Rangitata South Irrigation Scheme. The scheme, which involves Timaru businessman Gary Rooney, is due to be finished next year to provide water to up to 16,000 hectares.

This was just one of many water infrastructure or irrigation-based plans to improve productivity, some of which BNZ was backing through its Christchurch agri-team, which had a detailed knowledge of the dairy sector, he said.

Despite the earthquakes, which the Canterbury Earthquake Recovery Authority says caused a 5 per cent fall in gross domestic product in the Canterbury region, the health of the regional economy had proved resilient, Thorburn said.

"The condition of our lending book has been pretty stable. Where we thought it would deteriorate quite significantly, it hasn't ... If you look at arrears rates at 90 days, which is where we know it's getting bad, Christchurch is only marginally above the rest of the country."

Mid-to-large-size firms with annual revenues of $20m or more generally had strong balance sheets and good credit lines, and were starting to look at acquisitions of smaller companies within their fields or "how to grow". Fairfax NZ

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