ASB profit up again to $225m

By KEVIN TAYLOR

ASB Bank has had another record year, lifting net profit by 23 per cent to $225 million in the year to June.

In the previous year, ASB Bank, owned by Commonwealth Bank of Australia, recorded a net profit of $183.4 million, itself a 22 per cent lift on the year before.

ASB Bank chairman Gary Judd said across-the-board growth and a focus on cost management and margins helped attain the latest result.

Meanwhile, CBA subsidiary Sovereign also reported yesterday, recording a net profit in the June year of $65 million.

The result incorporates the full year's business of Sovereign and the former operations of Colonial and Colonial First State in New Zealand.

Judd said ASB Bank posted excellent performances in its corporate, rural, and personal banking divisions.

He said that for the first time the bank had lifted its return on assets to above 1 per cent - achieving 1.02 per cent. That had been a key objective of the bank for some years.

The bank's net interest rate margin for the year was 2.3 per cent, down from 2.46 per cent, and was the lowest margin the bank had achieved in recent years.

"Tight margins reflect the extremely competitive banking environment that exists in New Zealand," Judd said.

ASB Bank had achieved market share gains in all major banking sectors, with personal banking assets increasing by 16 per cent, rural assets 29 per cent, business assets 5 per cent, and corporate/treasury assets 38 per cent.

New home-lending approvals increased by 51 per cent to $4.7 billion, the highest level of lending in a 12-month period.

Judd said total advances at the end of the year were $19 billion, up 18 per cent.

While house lending remained the bank's largest lending sector, he said ASB Bank was now a significant rural and business lender with advances standing at more than $5 billion.

During the year the bank's rural lending exceeded $2 billion, a milestone achieved five years ahead of plan.

Total deposits stood at $22.7 billion, up 21 per cent. Total assets at the end of June stood at $24.3 billion, up 21 per cent.

Sovereign Group managing director Simon Swanson said the $65 million result for the enlarged group was "pleasing" and set a benchmark against which to measure future performance.

But the difficult times for wealth management - in line with industry trends - had trimmed Sovereign's inaugural financial result.

"Our earnings have been far below what we would want them to be."

Asked to quantify the impact, Swanson said if the global sharemarkets had been healthier the group would have recorded a profit "in the eighties [millions]".

He said during the year the group consolidated its position as the country's number one writer of life insurance, with 34 per cent market share. Its health insurance operations accounted for 4 per cent of the market.

He said the group was now "firmly established" as New Zealand's top non-bank home-loan provider. During the year Sovereign advanced $739 million to home owners, bringing total mortgage lending to more than $2 billion.

ASB and Sovereign's parent, CBA, yesterday revealed an 11 per cent rise in net profit for 2001-02 to A$2.66 billion ($3.1 billion), up from A$2.4 billion in the previous year.