Bank of New Zealand's asset quality worsened during the year to September 2010, as the bank continues to face pressure from commercial property and the dairy farming sector.The bank's level of impaired assets and 90-day plus past due loans as a percentage of gross loans rose to 1.75 per cent, up 22 basis points on year. Key industry risk areas continue to be in commercial property, mainly residential sub-division and development land, and the dairy farming sectors, BNZ said.  The two sectors together make up 12.5 per cent and 10 per cent respectively of its total lending portfolio, it said.Provision for impairments was little changed during the year, down just NZ$1 million to NZ$187 million. However, 27 per cent or NZ$52 million of the provisions came in the last quarter of the financial year, indicating the impairment cycle hasn't really stabilised yet.For the full year, BNZ reported a 1.4 per cent increase in cash earnings, to NZ$524 million, thanks to a 6.1 per cent increase in net interest income, mainly due to repricing of the asset portfolio and an increase in variable rate home loans.BNZ's net interest margin rose 10 basis points, to 216 bps, as the negative impact from higher deposit rates and an increase in wholesale funding costs was more than offset by a rise in variable rate products and repricing of assets.Deposits from customers grew five per cent, with almost half of that growth coming in the final quarter of the year.Loans fell during the year, to NZ$54.9 billion, from NZ$55.1 billion, although the bank recorded net growth in lending in the final quarter.