ASB cash profit up 22pc to $742 million

ASB has announced its half year profit figures. Photo / File

Strong lending growth and a fall in impairment losses helped drive a 22 per cent rise in cash profits at ASB with the bank making $742 million for the six months to December 31.

ASB's total lending rose 8 per cent over the first half of its financial year with home lending up 8 per cent and business lending up 10 per cent compared to the first half of its 2021 financial year.

Vittoria Shortt, ASB chief executive, said through the arrival of the Delta strain of Covid-19, the extended lockdown of Auckland in particular, and now Omicron in the community, ASB had maintained its focus on supporting its customers and people to get through.

The bank made a statutory net profit of $762m, up 23 per cent on the same prior period while its net interest margin increased by 7 basis points to 219 basis points on a cash basis.

Total loans and advances rose 8 per cent to $102 billion while its deposits were also up 8 per cent to $83b.

While impairment losses on financial assets fell $42m. Its cost to income ratio fell 240 basis points to 35.3 per cent although its operating expenses rose 5 per cent.

Shortt said ASB responded to the August 2021 lockdown by reinstating its financial support options which were originally introduced in 2020 but there was less demand.

Fewer than 3000 personal and business customers took up the support compared to 25,000 for the previous lockdowns and by the end of December less than half were still receiving support.

"It's a positive sign that both personal and business customers are now better prepared to manage the unexpected, but with Omicron in the community there will be further challenges ahead."

Shortt said the bank had also cut fees during the half year including removal of its admin fee across its KiwiSaver offering and discounted monthly services fees across retail, SME and commercial customers including relief on contactless debit card transactions for small business customers.

"Small businesses are the backbone of New Zealand's economy, and they continue to face a range of pandemic related impacts so we deliberately took a broad approach to the ways we could help beyond just financial.

"This included offering a series of Backing Business workshops open to all New Zealand business owners to help them navigate broader issues including partnering with top tier law firm Russell McVeagh on how to navigate workplace vaccination issues."

ASB lend to 6200 first home buyers during the half and Shortt said it had reaffirmed its commitment to make no forced sales of owner-occupied homes for customers willing to work with the bank.

"While the housing market remains a challenge, our arrears data shows no significant change and our advice for anyone finding it tough is to start talking to us early so that we can work together on a positive pathway forward."

The bank had tapped into the Reserve Bank's funding for lending programmed with over $4 billion in loans including $1.5b for new build lending and $1.3b for large businesses who had committed to developing infrastructure and sustainability initiatives.

ASB's parent company Commonwealth Bank of Australia reported an interim cash profit of A$4.7 billion up 23 per cent on the prior first half. It will pay an interim dividend of A$1.75 per share.