ANZ on Tuesday announced that profit had jumped 23 per cent in the six months to the end of March to $3.4 billion. It posted the result even though interest income slipped 2 per cent, partly thanks to big fall in charges for bad loans (22 per cent).

ANZ chief executive Shayne Elliott has also unleashed deep cost-cutting across the business, especially its institutional division.

In the year to March, the number of full-time equivalent staff employed by the bank fell by 2850 to 46,046.

In a sign of further job cuts to come, the bank on Tuesday said was moving to make its workforce and management ranks more "agile," which is intended to "reduce waste and bureaucracy."

The banks has also moves to sell several Asian assets and is exploring a sell-off of its wealth arm.

"The reshaping of our business over the past year has delivered strong outcomes for customers and shareholders, and has established a foundation for future growth and better returns," Mr Elliott said in a statement.

The result was below market expectations for a cash profit of $3.5 billion and, despite ANZ keeping its fully-franked dividend of 80c share, investors sent the bank's shares down 2.4 per cent to $32.14 by lunchtime.

"It's a tad below expectations. The costs were higher, the bad debts were lower. Normally the market takes a dim view of this," Bell Potter analyst TS Lim said.

Citi analyst Craig Williams also said there would be some "disappointment" in the market after a recent rally in ANZ shares, as revenue growth remained weak.

"Whilst ANZ's restructure remains on track in our view, the ride will be bumpier than many investors expect," Mr Williams said.

ANZ is the first of three major banks to deliver their half year results over the next week, with National Australia Bank reporting its interim results on Thursday and Westpac following next Monday.

The result marks an improvement compared with this time last year, when Mr Elliott used his first earnings result as chief executive to make hefty write-downs to the business and cut its dividend for the first time since the global financial crisis.

He has also embarked on a restructure of the bank, walking away from the strategy of aggressive Asian expansion led by his predecessor Mike Smith, to focus on more profitable business in Australia and New Zealand.

Bad debts from loans to large corporations had been a key drag on ANZ's profits this time last year, but the result showed a sharp improvement in credit quality. ANZ's total provisions for bad and doubtful debts was $720 million, down 22 per cent from $918 million in the same half last year. Mr Elliott said he expected credit quality to be "broadly neutral" in the second half.

A key focus among investors in these results is likely to be profit margins, and the result showed ANZ's continued to be crunched from competition.

The net interest margin - which compares the cost of funds with what it charges for loans - narrowed from 2.06 per cent to 2 per cent in the half, despite an increase in some home loan interest rates during the period. Mr Elliott highlighted the softer economic backdrop facing banks, which have been forced to discount aggressively as interest rates have fallen in recent years.

"The environment for banking remains constrained with intense competition and pressure on margins, subdued lending growth, rapidly changing customer expectations and increasing regulation," Mr Elliott said.

Bell Potter's Mr Lim said the narrowing in profit margins had been anticipated by investors, and some of this would reverse in the September half, after a recent round of home loan interest rate hikes.

"The margins came in as expected, and it's going to have some upside in the second half," he said.

There is also a keen focus on capital, after the regulator signalled it would require banks to further lift how much equity banks must hold to shield them against a downturn.

ANZ's core equity tier one capital ratio was 10.1 per cent of its assets, and it will buy back shares to make up for the impact of issuing new stock under its dividend reinvestment plan.

The dividend will be paid to shareholders on July 3.