ANZ Banking Group more than halved its loans to inner city apartment developments over the past six months to $300 million as projects in Melbourne and Brisbane completed and it did not finance new ones.

The third-largest residential lender said on Tuesday loans on CBD high-rise projects fell from $700 million in September even as total apartment development lending ticked up to $3.5 billion from $3.4 billion.

"Growth has been subdued as appetite tightening strategies have taken effect and market conditions slow," the bank said. "New inner city apartment developments continue to be subject to tight LVR, pre-sale and percentage of foreign buyer parameters."

An apartment project in Brisbane. ANZ development loans in inner city Brisbane have fallen to $100 million from $300 million over the past six months. Tammy Law

The figures, reported as ANZ announced first-half profit rose 4.1 per cent to $3.49 billion from $3.36 billion a year earlier, show the dramatic pull back by local banks from high-rise apartment development in favour of lower-rise residential projects in established suburbs.

Lending on apartments in the six months to March was unchanged at 36 per cent of the bank's total residential lending limits but the move in favour of projects outside of capital city CBDs shows the bank chasing the growing market of local apartment buyers, particularly downsizing baby boomers.