ANZ's first quarter-profit slumped 29 per cent on the same period in 2011, as softer margins and hedging activities bit into the bank's revenue stream.

The local operations of the country's largest bank made a net profit of $296 million in the three months to December, down sharply from $415m the previous year.

Operating income fell 17 per cent to $847m, but expenses were only 1 per cent lower at $398m.

Most of the drop in revenue can be attributed to a fair value loss on the bank's hedging activities and financial liabilities.

ANZ lost $23m in fair value this quarter while in the previous corresponding period it had made $97m, creating a total disparity of $120m between the years.

Mike Smith, chief executive of the Australian-based parent company, said economic conditions had been softer in New Zealand.

Margins had declined from their 2012 peak, hit by a short-term tactical campaign in December.

The bank said the integration of the ANZ and National brands had gone smoothly, and brought about productivity benefits including a reduction in technology costs.

ANZ's New Zealand results include its banking operations, UDC Finance, fund manager OnePath and brokerage Direct Broking. It claims to have a relationship with one in two New Zealanders.

Meanwhile, the overall ANZ group posted a profit of A$1.53 billion (NZ$1.87b), up 6.2 per cent from a year ago.

The update was the first time ANZ reported profit adjusted for distortions and one-off events, having previously used underlying profit measure rather than the statutory one.

ANZ shares, which are dual-listed on the Australian and New Zealand stock exchanges, were placed in a trading halt this morning.

That has since been lifted and the stock was recently trading at $34.30, down slightly by 0.23 per cent.

ANZ's update follows ASB's half-year result released on Wednesday. The lender, which follows a different financial year to the other big banks, reported a half-year profit of $365n, down 1.9 per cent from the previous year's record high.

- © Fairfax NZ News