Excellent Growth Lifts ASB Bank Financial Result
Statement made by Gary Judd QC, Chairman, ASB Bank Limited
Excellent growth in market share, and from new products and services, were the key factors behind ASB Bank achieving a 22% increase in audited, after tax operating profit to $183 million for the year ending 30 June, 2001.
This gain is the culmination of the initiatives we have undertaken over the past decade in broadening the range of banking and financial services ASB Bank offers, extending our geographical representation, and using advanced technology to develop and deliver our banking and financial services to customers.
The combination of these enhancements, supported by the Bank’s focus on minimising operating costs, resulted in an extremely sound financial performance in a year when the economy overall showed only modest growth.
The Bank registered gains in market share across all sectors of mainstream banking, with particularly strong results being achieved by treasury operations and rural banking.
We also maintained our leadership position as a home mortgage lender, approving $3.14 billion in advances. While this was a decline of 5% on the level of loans made the previous year, it was a solid performance given the static state of the housing market, particularly at the start of the year.
Total income for the Bank at $645 million was up 14%. Net interest earnings of $457 million increased 19%.
Other income, which includes income from the Bank’s range of financial services and card products, and income from fees, increased by 3% to $188 million. Income from transaction fees, at $59.7 million was 5% above last year due to an increase in transaction volumes.
Total operating expenses were held to an 8%
increase at $352 million, and the Bank’s
ratio of total operating expenses to total operating income improved to 54.5% ( from 57.6% ).
The Bank’s provisioning for taxation was $96.7 million, up 23%, and debt provisioning was $13.5 million, up 18%.
Total advances at year end were $16.2 billion, an increase of 12% on the position 12 months’ previously.
Personal and business lending both registered sound growth ( both up 8% respectively) but the sector that performed outstandingly was rural lending ( up 25% ). The Bank participated in the strong rural economy though providing international trade finance, and assisting farmers to invest in land, livestock and plant, and in dairy conversions.
Total deposits at period end were $18.8 billion, up 17 %. A feature of the Bank’s operations remains the strong investment support it receives from customers, and during the year savings and term deposits increased by 13%.
Total assets at year end stood at $20.1 billion, up 16.5% on the figure 12 months’ previously.
The Bank’s return on equity increased to 22.3% ( 19.73% ) and return on total average assets was up to 0.96% ( 0.92% ).
The Bank’s capital adequacy ratio increased to 9.98% ( 9.69% ) against the Reserve Bank of New Zealand’s minimum requirement of 8%.
The Bank’s entry into the securities advice and trading sector through ASB Securities has been an outstanding success, and ASB Bank is building a profitable and sustainable new business. In the space of 12 months ASB Securities has positioned itself as a market leader, and it remains the only sharebroker to offer advisory, telephone discount and on-line services.
ASB Bank’s range of managed funds remain among the fastest growing in the country, with over $900 million in funds under management.
During the year the Bank achieved the milestones of registering its 100,000th online customer and online transactions in a calendar month surpassing one million. Combined, ASB Bank and BankDirect are the country’s most popular Internet banking provider.
Note to media: ASB Bank’s result does not incorporate the result of Sovereign Limited.