Its chief executive Andrew Thorburn yesterday said the Reserve Bank's loan-to-value restrictions had had more of an impact than had been intended.
Less than six months ago, almost half its new lending was to those borrowers.
But the restrictions kicked in at the beginning of October and require banks to lend no more than one in 10 of their new loans to low-deposit borrowers.
Most banks are lending far fewer than that, due to concerns about breaching the cap.
Thorburn said BNZ had cut back significantly but prices would likely continue to rise because there was not enough housing supply in Auckland to keep up with demand.
BNZ's mortgage lending rose nearly 4% in the year ended September.
Annual net profit rose nearly 20% to $695 million but Thorburn said that with thr New Zealand side of the operation included, cash earnings were up 6.3%. As more people shift to fixed mortgages, banks' interest margins have dropped slightly.
