ANZ has beaten market expectations by lifting its first half cash profit five per cent to $3.676 billion, thanks to solid growth across its Australian and international operations.

The result was slightly ahead of the four per cent rise analysts had expected.

It follows a disappointing result from rival Westpac, which on Monday unveiled a flat $3.78 billion first half cash profit, which was $100 million below market expectations.

Net profit, which includes one off items, was $3.506 billion, up three per cent from $3.392 billion for the same period a year ago.

ANZ also increased its interim dividend three cents to 86 cents.

Chief executive Mike Smith warned the subdued outlook for the economy would hurt growth but said the bank’s expansion into Asia would help boost returns.

“For the foreseeable future, we will be operating in a lower growth environment in which there will continue to be occasional volatility and shocks,” he said.

“This environment presents some challenges, however we are confident about the benefits of our Super Regional strategy over the longer term and the opportunity to continue to improve financial performance in the near term.”

ANZ’s Australian division lifted its profit eight per cent thanks to continued growth in retail and business loans.

The bank’s international and institutional banking division lifted profit seven per cent, but its New Zealand operations managed only a one per cent increase in profit.

Meanwhile, ANZ’s global wealth division recorded an 11 per cent increase in profit thanks to a strong performance from its insurance operations.