ASB chief executive Barbara Chapman says it is seeing a gradual pick-up in the New Zealand economy with businesses beginning to talk about the future again.
The bank yesterday reported a record profit of $685 million for the year to June 30 - up 21 per cent on the prior year.
Part of that increase was driven by a fair value tax gain on its derivative business of $51 million. Excluding the tax gain ASB's profit was up 11 per cent to $658 million.
ASB's parent company the Commonwealth Bank of Australia also reported a record profit of A$7.1 billion ($9.25 billion).
Chapman described the bank's result as solid in the face of headwinds from global economic turbulence and subdued credit growth.
The bank's operating income after impairment losses rose from $1.54 billion to $1.68 billion.
Chapman said the increase was partly driven by people switching from fixed to floating rate mortgages.
A year ago 59 per cent of the bank's home lending was on floating rates, that has now risen to 63 per cent although Chapman said the switching trend had subsided in recent months.
ASB's own branded home lending book grew above market share but its total lending book remained flat due to a decrease in third party lending.
Chapman said the bank had also seen 6 per cent growth in its business lending book driven by a marked increase in business activity, particularly over the second half of the financial year.
"There are certainly signs that some of the hesitation is subsiding," she said. "It has been a rocky path for people. It's been hard for three to four years."
But she said businesses had adapted to the the hard times and were now coming out of it in a good position.
"[They are] saying we have gone through that and done quite well. We are having more conversations with customers about their future."
It also increased its total share of the rural lending market after securing its largest ever share of June 1 farm settlements.
Deposits grew by 7 per cent to $38.975 billion outpacing its lending while the bank also saw a reduction in its impairment costs.
Impairment losses on loans fell 35 per cent from $72 million to $47 million during the year mainly driven by the non-recurrence of the Christchurch earthquake provision recorded in the prior year.
Chapman said she expected impairment costs to rise over the next year as they were now at a historic low.
ASB's operating costs were flat over the year rising just 1 per cent to $737 million.
Chapman said there had been a small reduction in staff over the last year of fewer than 150 people.
The bank has over 4750 staff in total.
Massy University banking expert David Tripe said the bank appeared to have done well but it was difficult to undertake a full analysis of the results because they were split off from the Commonwealth Bank of Australia and did not include a full set of financials.
Tripe said ASB's deposit figures also did not appear to be consistent with the bank's disclosure documents which showed as of March 31 the bank had over $40 billion in deposits.