ASB has announced its half-year profit figures. Picture/File
Strong loan growth and a decline in impairments contributed to a 22% rise in ASB’s cash profits, with the bank making $742 million for the six months ending Dec. 31.
ASB’s total lending increased 8% in the first half of its fiscal year, with home loans up 8% and business loans up 10% from the first half of its fiscal 2021.
Vittoria Shortt, chief executive of ASB, said that through the arrival of the Delta strain of Covid-19, the prolonged lockdown in Auckland in particular, and now Omicron in the community, ASB had maintained its aim of help its customers and its people to pass.
The bank posted statutory net profit of $762 million, up 23% from the same prior period, while its net interest margin increased 7 basis points to 219 basis points on a cash.
Total loans and advances rose 8% to $102 billion, while its deposits also rose 8% to $83 billion.
While impairment losses on financial assets fell by $42 million. Its cost/income ratio fell 240 basis points to 35.3%, although its operating expenses rose 5%.
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 3,000 individual and professional customers have subscribed to assistance, compared to 25,000 during previous confinements and, at the end of December, less than half were still benefiting from assistance.
“It’s a positive sign that personal and business customers are now better prepared to handle the unexpected, but with Omicron in the community, there will be other challenges ahead.”
Shortt said the bank also reduced fees during the half-year, including waiving its administration fee on its KiwiSaver offering and reduced monthly service fees for retail, SMB and enterprise customers, including including relief from contactless debit card transactions for small businesses.
“Small businesses are the backbone of New Zealand’s economy, and they continue to face a range of impacts related to the pandemic, so we have deliberately taken a broad approach to the ways in which we could help the beyond mere finance.
“This included offering a series of Backing Business workshops open to all New Zealand business owners to help them address wider issues, including partnering with leading law firm Russell McVeagh on how to handle vaccination issues in the workplace.”
ASB lent to 6,200 first-time home buyers during the half-year and Shortt said he reaffirmed his commitment not to make any forced sales of owner-occupied homes for clients wishing to work with the bank.
“While the housing market remains a challenge, our backlog data shows no significant change and our advice to anyone struggling is to start talking to us early so we can work together on a positive path.”
The bank had tapped into Reserve Bank funding for programmed loans with more than $4 billion in loans, including $1.5 billion for new construction loans and $1.3 billion for large corporations. who were committed to developing infrastructure and sustainability initiatives.
ASB’s parent, the Commonwealth Bank of Australia, reported interim cash profit of A$4.7 billion, up 23% from the previous first half. It will pay an interim dividend of AUD 1.75 per share.