ASB has reported an 11 per cent fall in its half-year profit, as it was hit by slower lending, reduced margins and higher costs.
The bank’s run of ever-increasing and record profits has come to an end as borrowing demand fell, and it paid higher interest ratesfor deposits which squeezed its margins.
Chief executive Vittoria Shortt said the result was a reflection of the broad economy.
“Bank profitability is inextricably linked to the New Zealand economy and the environment in which we are operating, and the interest rate cycle has been a big influencing factor on the results we’ve posted.”
She said the interest rate cycle - going from record lows to multi-year highs - had hit the bank’s funding costs, including higher offshore funding costs.
Overall lending fell 1 per cent to $108 billion, with housing demand affected by tougher competition, and subdued agricultural and business demand.
Its net interest income, the difference between what the bank pays for its funds and what it lends at, fell 7 per cent to $1.4b, while its net interest margin fell 26 basis points, which hit overall income.
