ASB profit up 10% to record $840m for half year

ASB has announced its half year result. Photo / NZME

Growth in its business and home lending book has driven profits higher at ASB with its net profit after tax rising 10 per cent to a record high $840 million for the six months to December 2022.

The bank released its half-year financials today saying the result was driven by 4 per cent growth in total lending to $107 billion with home lending up 5 per cent to $73.4b and business lending rising 6 per cent to $21.1b to push its cash profit up 11 per cent to $822m.

Its cash net interest margin increased 33 basis points to 252 basis points. The margin is the difference between what it earns on loans versus what it has to pay out on deposits.

Chief executive Vittoria Shortt said the result came at a challenging time with many New Zealanders feeling the effects of recent interest rate rises and the increased cost of living.

“We know 2023 will be challenging for our home loan customers, particularly those experiencing large interest rate increases. Even though loan approvals are tested at rates significantly higher than the approved rate, we want to make sure customers are well placed to manage as these rates come up for renewal.”

Shortt said for many, it would be the first time they had experienced the impacts of increased interest rates.

“We’ve already reached out to more than 4,000 of our home loan customers to help them understand the options open to them, and by the end of the year, we expect to have contacted a further 9,000 customers who could face financial challenges.”

She said ASB had recently established a new process to support customers who were becoming financially stressed due to cost-of-living impacts which gave customers more time to help reset their finances, including referral to an external financial mentoring agency to independently assess their position and consideration of short-term relief options.

The bank’s total capital rose 21 per cent to $10.8b with its Common Equity Tier 1 capital up 23 per cent to $9.77b.

Total deposits at the bank also rose 6 per cent to $88b with interest-bearing customer deposits up 4 per cent to $65.1b.

Its net interest income rose 21 per cent to $1.539b, up from $1.27b in the prior comparable period while its other operating income dipped 3 per cent to $263m to give a total operating income of $1.8b up from $1.54b.

But the bank also saw a rise in the impairment losses on financial assets which increased by $62m. Operating expenses for the bank rose 17 per cent to $611m although its cost-to-income ratio fell 10 basis points to 33.9 per cent.

Shortt said the bank had continued to recruit staff in the tight labour market growing its workforce by 1 per cent.

Looking ahead it was heavily focused on its technology and digital transformation.

“This will enable us to launch new products and experiences and bring together the best of digital and support from our people for the sort of personalised guidance and advice that really makes a difference to New Zealanders’ long-term financial wellbeing.

”The bottom line for us is we want to help our customers get ahead and reach their goals. We are an integral part of New Zealand’s community and we want to continue to help build a more financially resilient nation,” Shortt added.

ASB parent Commonwealth Bank of Australia declared a cash profit up 9 per cent of A$5.15b ($5.6b) for the half year.