Australia and New Zealand Banking Group, Australia's third-biggest lender, said on Thursday its revenues and expenses have been at the high end of its target range in the first 10 months of its current fiscal year.
It also said provisions have risen sharply due to planned growth in consumer finance division coupled with lower recoveries in 2007 than 2006.
"However asset quality remains sound and there is no evidence that the credit environment has deteriorated," ANZ said in a trading update.
Australian banks have benefitted from 16 straight years of economic expansion, while three-decade low unemployment has kept bad debts under check.
But with interest rates rising to a decade high, analysts expect bad loans to rise.
ANZ Group's total credit provisions in the last fiscal year fell 28% to A$407 million ($333 million).
ANZ said it had targeted revenue growth in a range of 7-10% of 5-7%.
It said recent turmoil in the credit markets had so far had only negligible impact on its earnings, but cautioned the financial environment had become more uncertain.
ANZ shares, which were trading up 1.4% ahead of the update, fell 0.3% to A$28.93.
ANZ, which has named Michael Smith as its new Chief Executive Officer to replace John McFarlane from Oct. 1, said its New Zealand and Asian operations were performing well.