ASB says it will focus on boosting capability in its wealth business after reporting another year of record profits.
The bank, which is owned by Commonwealth Bank of Australia, this morning reported a statutory net profit of $1.069b - an increase of 17 per cent and a 13 per cent increase in its cash net profit to $1.033b for the year to June 30.
It was the seventh consecutive year of record profits for ASB.
Chief executive Barbara Chapman said the strong annual result was down to sustained lending and deposit growth despite global economic uncertainty and volatile off-shore funding costs.
"Over the past year, we have remained focused on delivering sustainable, diversified balance sheet growth across our key customer portfolios.
"All our business units performed well and we continue to experience sustained momentum, despite some external headwinds and a rapidly evolving financial services market."
The bank's advances to customers grew 8 per cent to $78b and home loans were up 7 per cent. Business, commercial and rural lending were up 11 per cent.
Loan impairment expenses fell 47 per cent from $130 million to $69m.
Chapman said this was primarily because of the continued recovery of the dairy sector.
"We have been supporting our rural customers through a challenging period and as we enter the next phase of the cycle, this has reduced the amount of provision required to set aside for bad and doubtful debts."
Deposits were up 6 per cent to $58b.
Chapman said the New Zealand economy was in good shape and she continued to see growth opportunities for the banking sector as a whole although it remained a competitive market.
One of the biggest challenges for the sector was the ongoing disruption through new fintechs coming into the market.
Chapman said it had managed keep its costs under control over the year, a factor that allowed it to compete with emerging fintechs.
The bank's operating expenses as a percentage of operating income fell to 35.8 per cent - down from 37.2 per cent in the prior year and 38.3 per cent in its 2015 financial year.
Chapman said the company would focus on its wealth management business this year by increasing its staff numbers.
"Our wealth business has been particularly fast growing."
Income from its fund management business, which includes KiwiSaver, increased 14 per cent to $97 million over the year.
ASB's interest income fell over the year from $4048 million to $4027m but interest expenses also fell from $2286m to $2176m, boosting its net interest earnings.
Chapman said wholesale funding costs had increased by 22 basis points over the year which was a large increase and meant the bank had faced lower margins.
While it was not difficult to access funding it did come at a higher price, she said.
Meanwhile its parent company, Commonwealth Bank of Australia, reported a statutory net profit of A$9.9 billion ($10.7b) in the year to June 30 - an increase of 7.6 per cent over the previous year.