The 17.5 per cent fall in profit ASB Bank reported yesterday, which would have been far worse but for a strong result from its Treasury and Financial Markets divisions, shows the bank is "sharing the pain of recession" with its customers, chief executive Charles Pink said.

ASB, owned by Commonwealth Bank of Australia, reported a bottom-line profit of $425 million for the year to June against last year's $515 million.

While last year's number included a $14 million one-off gain resulting from the sale of shares in credit card company Visa, this years' result featured an 89 per cent increase in Treasury and Financial Markets income "driven by a very volatile market", chairman Gary Judd said in a statement.

Pink said: "Compared to many banks in many markets it's a solid result, but it's a result that is showing the impact of the New Zealand recession. Specifically it's a result showing us sharing the pain of the recession with our customers which I think you'd expect us to do and we want to do."

The bank's net interest margin, a facet of the banking industry that has been in the spotlight in recent months, fell from 1.78 per cent last year to 1.57 per cent. "We have reduced our margins which does show us sharing the pain," Pink said.

The pressure on margins came partly from vigorous competition for retail deposits and "attractive" fixed-rate home mortgage offers.

The bottom line was hit by an increase in provisions for bad debts.

Collective provisions - money set aside to offset future loan losses - doubled to $178 million, while individual provisions to cover loans that have gone bad almost quadrupled from $22 million to $83 million.

Pink declined to make any forecasts about how far provisions would rise in the future other than to say "the trend is rising".

The bank grew its lending during the year by 4.5 per cent to $53.4 billion. However, Pink said latest market data showed contraction in business and consumer lending and slow growth in mortgage loans.

ASB is reviewing its $1 billion job creating loan scheme unveiled before the Jobs Summit early this year.

"Unfortunately we've only drawn about $40 million of that $1 billion which we're very disappointed with to be honest. We're seeing very few lending propositions that either save or increase jobs."

The bank's net interest income was down 2 per cent at $980 million but other income was up at $532 million.

However Pink said other operating income and total operating expense figures were increased by the transfer of a number of wealth management operations from sister company Sovereign Insurance to ASB.