ASB‘s annual earnings surged by 6% to reach a new record, bolstered by a broader interest margin and robust growth in lending and deposits.
In the span of 12 months ending in June, the bank’s profit climbed to $1.56 billion, marking a rise from the previous year’s $1.47 billion, as stated in a release to the NZX on Wednesday.
Home lending experienced a 3% uptick, reaching $74.09 billion, while business lending saw a 5% expansion to $21.48 billion, and rural lending grew by 6% to reach $11.7 billion. Customer deposits showed an 8% increase, reaching $67.88 billion. The bank’s net interest margin, which represents the difference between its loan earnings and deposit costs, increased by 22 basis points, reaching 2.44%. In the latter half, the net interest margin slightly softened to 2.36% from the 2.52% in the first half, attributable to competitive pressures, elevated wholesale funding expenses, and customers transitioning to higher-yield deposits. Nonetheless, the margin remained higher than the 2.26% recorded in the second half of the previous year.
The bank’s net interest income ascended by 16%, reaching $3 billion, while operating expenses witnessed a 13% increase, amounting to $1.26 billion. CEO Vittoria Shortt acknowledged that the bank’s performance tapered in the second half after a robust first half, reflecting a more challenging operational landscape.
ASB elevated its provision for impaired debts by 56%, reaching $64 million, due to factors like inflation, interest rate pressures, and a decline in housing prices. The majority of impairments, amounting to $51 million, were attributed to residential mortgages.
Shortt remarked, “We are observing clear indicators of a deceleration in growth, reflective of the broader economic environment. Nevertheless, our balance sheet remains sturdy and resilient, positioning us well to sustain our support for customers and the New Zealand economy.”
In light of the current economic cycle, Shortt highlighted the strain on household budgets nationwide. ASB proactively implemented measures to equip customers with practical tools and guidance to facilitate informed financial decisions. She noted, “We have engaged with over 12,000 customers to extend our support as they renegotiate their home loans. While many are managing well and are adequately prepared, we have enhanced our support options for those experiencing financial pressures.”
Furthermore, the bank established a dedicated team to offer customized assistance to customers concerned about their financial well-being and expanded their community banking team to enhance access to banking services for individuals in vulnerable circumstances.