By Alice Uribe

SYDNEY--Australia and New Zealand Banking Group Ltd. said its interim profit rose by 90%, boosted in part by strong home lending and an improved economic outlook.

Australia's fourth-largest lender by market capitalization reported a net profit of 2.94 billion Australian dollars (US$2.28 billion) for the six months through March.

With 92,000 new home loan accounts, ANZ said it was now the third-largest home lender in the market.

Cash earnings--a measure closely tracked by analysts that strips out non-core items such as revenue hedges and treasury shares--rose 126% to A$2.98 billion, up from A$1.32 billion a year ago. When measured only using continuing operations, ANZ's cash profit was A$2.99 billion, up 112% on year.

ANZ Chief Executive Shayne Elliott said the lender was "in a strong position both financially and operationally."

"Work done over the past five years to simplify our operations, strengthen our balance sheet and de-risk the group helped us deliver a strong result this half, meaning we are well-placed to continue to support the ongoing economic recovery and customers doing it tough," he said.

ANZ was able to release a net A$491 million in credit provisions amid the improving economic outlook. It consisted of a collective provision release of A$678 million, offset by an individually assessed provision charge of A$187 million.

"Improving credit conditions resulted in a release of almost A$500 million during the half. While the pandemic hasn't resulted in large credit losses to date, we still have almost A$4.3 billion in reserve if conditions deteriorate," Mr. Elliott said

ANZ's net interest margin was 1.63%, while it reported a common equity tier 1 capital ratio of 12.4%. The lender declared an interim dividend of A$0.70 per share, compared with A$0.25 a year ago.

ANZ said its capital position allowed for flexibility to return surplus capital to shareholders.

"Any decision will balance the importance of capital efficiency against maintaining an appropriately strong balance sheet as we continue to get more clarity around the economic situation," said ANZ.

Despite economic conditions improving for Australia and New Zealand, Mr. Elliott said significant uncertainty remained.

"There is still significant uncertainty. You only need to look at how the pandemic is playing out overseas, as well as recent lockdowns, to realise how quickly the situation can escalate," he said.

ANZ's result came days after the lender said its first-half cash profit would take a A$817 million hit due to several large or notable items including customer remediation and restructuring charges.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

05-04-21 1911ET