Home loan surge aids ASB profit rise

By KEVIN TAYLOR

ASB Bank has lifted its after-tax profit by 25.3 per cent in the last half of 2002 as it enjoys greater productivity and growth across the business, particularly in home lending.

Mortgage lending, at $2.72 billion, was a record for any six-month period and was up 31.2 per cent on the last half of 2001.

The total after-tax profit for the six months, the first half of its new financial year, was $132.3 million.

Chairman Gary Judd said the bank's excellent first-half performance was achieved through gains across a broad range of initiatives and product areas, reflecting the bank's broader provision of diversified financial services and the strong focus on customers.

He said that in the past 12 months the bank had enjoyed strong home-lending growth and was meeting its objective of above-market growth in that key area.

ASB Bank managing director Hugh Burrett said the bank had grabbed more market share in the home-loan market across the country, not just in Auckland.

Overall bank lending also rose, by 17.8 per cent to $20.5 billion.

Rural lending rose 25.4 per cent during the period.

ASB, owned by the Commonwealth Bank of Australia, increased its total operating income by 17.7 per cent to $415.4 million in the six months.

Of that income, 27.7 per cent or $114.9 million, came from non-interest margin sources, including insurance, funds management, sharebroking, and card services.

Judd said more than a quarter of ASB's customers now used internet banking, with "fastcheque" - the ability to make a single secure payment to any New Zealand bank account - being the fastest growing service.

During the period the small- and medium-sized business market also grew strongly, with lending increasing by 6.8 per cent and deposits by 10.2 per cent.

Judd said ASB continued to fund a major proportion of its lending through retail deposits, which stood at the end of the year at $24.1 billion, up 16.9 per cent in 12 months.

He said a significant contributor to the improved profit result was increased productivity and a reduction in the operating expense ratio to 48.29 per cent from 52.41 per cent.

Productivity gains came from use of state of the art technology and continued automation.

That had not resulted in a reduction in staff numbers. During the year the bank increased staff by 64 full-time equivalents to 3117. The number of branches increased by two to 120.

Judd said ASB Securities increased its customer base by 24 per cent in the 12 months and had "rapidly established itself" as one of the country's more significant share brokers.

He said the bank's share of managed funds at the end of December was close to 6 per cent, a 1.2 per cent improvement in 12 months, with total funds under management exceeding $1.1 billion.

Burrett said the outlook for the second half would still be favourable but would not be quite as good as the first half because the previous corresponding period had been "fairly slow".