Statement made by Gary Judd, QC, Chairman, ASB Bank Limited
Strong participation in the corporate banking sector and a surge in home loan lending has lifted ASB Bank’s unaudited, after tax operating profit by 18% to $106 million for the six months ending December 31, 2001.
The result represents an extremely sound start to the year for the Bank, achieved during a period of great uncertainty as the economy responded first to the tragic events of September and then to concerns about the possible impact locally of a slowing world economy.
Home mortgage interest rates at record lows sparked renewed interest in the housing market, and during the six months we approved new home loans of $2.1 billion, up 40% on the same period last year.
This was the highest level of home loan lending by the Bank in any six month period.
Primarily through products that make use of our leading edge technology, our corporate and treasury operations continued to expand, making significant contributions to the Bank’s profit.
Business and rural banking operations also made sound contributions to the Bank’s overall profit. Lending growth for these operations increased by 41% over that for the same period last year.
Income from financial service activities, including insurance, funds management and sharebroking, increased 24%.
The Bank’s profit was achieved after allowing for a taxation provision of $50.5 million, up 6%, and doubtful debts provisioning of $11.8 million, up 74%.
The increase in debt provisioning is a conservative response on the part of the Bank to the rapidly increasing size of its business and rural lending portfolios, and caution as to possible future market conditions.
Total Bank assets at year end had increased by 20% to $22.1 billion on the position 12 months’ previously, and the Bank’s return on average assets for the six-month period was 1%, up from 0.98%.
Shareholders’ funds stood at $925 million, up 18% in 12 months.
Total deposits at period end, including amounts due to other banks, was $20.6 billion, up 20%, and total advances $17.4 billion, up 14%.
The Bank’s total operating income during the period was $353 million, up 11%. This was made up of $248 million from net interest earnings, up 12%, and from other income of $105 million, up 10%.
The Bank’s income from transaction fees was $33.1 million, up 13%.
Operating expenses were up 6% to $185 million. Total operating expenses as a percentage of operating income improved to 52.4% ( from 54.7% ).
At period end the Bank employed 3053 full time equivalent employees, an increase of 216 in 12 months.
In addition to being rated No 1 for “customer satisfaction” in Auckland University’s survey of banks for the fourth consecutive time, ASB Bank was rated “world class, and the best in New Zealand” for handling customer complaints in a survey of major service companies undertaken by TMI during the period. Our Call Centre was also rated “best in class” by TARP, and is the first New Zealand call centre to earn this international award.
It is part of ASB Bank’s commitment to customer service that sees us seek evaluation by external evaluators, and these awards are recognition of our staff’s determination to provide a world class service.
During the period we introduced a low-cost transaction account, called Streamline, that gives customers the ability to minimise the fees they pay. This account is attracting good support, 60% of customers being new to the Bank.