New ASB boss wants to expand wealth arm

ASB bank CEO Vittoria Shortt said there had been great growth across all portfolios.

ASB's newly minted chief executive Vittoria Shortt sees opportunities for the bank to expand its wealth arm on the back of another strong result.

Shortt, who took over from Barbara Chapman on Monday, announced a record half-year profit for the bank today with a 13 per cent rise in net profit to $593 million.

ASB's cash net profit - the bank's preferred measurement, rose 15 per cent to $575m for the six months to December 31.

Shortt said the strong result was driven by a combination of balanced lending and deposit growth across the business as well as stabilising margins.

"We have seen some great growth across all portfolios."

Shortt paid tribute to her predecessor and said her focus was on continuing the strong momentum at the bank

"The first thing that is on my mind is continuing the fantastic momentum."

Beyond that Shortt said there were some great opportunities for ASB.

"Just like we have seen a real focus on business we would like to see the wealth side fulfil its potential."

"There is a lot of opportunities to help New Zealanders with their wealth needs."

Shortt said with New Zealand's ageing population there was a need for good financial advice.

ASB is the second largest KiwiSaver provider in a market now worth more than $40 billion.

But it is also bound to be fielding questions from investors about the recent volatility in global and local sharemarkets.

Shortt said she was not concerned about the volatility in terms of single days and said it was more about being aware that global volatility existed and how that might impact on its business settings.

She said New Zealand's economic fundamentals were still good with low levels of unemployment.

"But we always have to be watchful."

Shortt said the bank was seeing a continued trend around customers focusing on increasing savings and taking advantage of the current low-interest rate environment to pay down debt.

The bank's advances rose 6 per cent to $80b over the half while its deposits grew 8 per cent to $61b.

Home loans increased 5 per cent while its business, commercial and rural lending was up 8 per cent.

Its loan impairment expense fell 47 per cent to $26 million following a lower provisioning needed for the dairy sector which continued to recover.

Shortt said impairment expenses within the home lending portfolio continued to remain subdued.

The bank's cash net interest margin increased 1 basis point compared to the prior comparable half.

"We have continued to see NIM [net interest margin] stabilising after a period of decline over recent years," Shortt said.

"This has primarily been driven by improved lending margins, partly offset by the impact of competition for term deposits."

Its cost to income ratio also improved after its operating income rose 8 per cent, a faster rate than its operating expenses, which rose 3 per cent, driven by regulatory compliance costs, technology and staff costs.

ASB's parent Commonwealth Bank of Australia reported a half-year net profit of A$4.895b ($5.3b) up 1.2 per cent while its cash profit was down 1.9 per cent to A$4.735b.