12 February 2003
ACROSS THE BOARD GAINS LIFTS ASB BANK
Statement made by Gary Judd QC, Chairman, ASB Bank Limited
General market recovery from a slow corresponding period last year, growth in contribution from new financial services, and greater productivity all combined to lift ASB Bank’s after tax operating profit by 25.3% to $132.3 million for the six months ending 31 December 2002.
The Bank’s excellent first half performance was achieved from gains across a broad range of initiatives and product areas, reflecting the Bank’s now much broader provision of diversified financial services and the strong focus we continue to place on our customers’ requirements.
In the past 12 months the Bank has enjoyed strong growth in residential housing lending and is meeting its objective of above market growth in this key area. Retail funding growth has also performed ahead of target for the period.
Total Bank operating income increased by 17.7% to $415.4 million in the six months, generating a net surplus before tax of $201.5 million, up 29.1% on the corresponding period.
Of this income, 27.7% or $114.9 million, came from non interest margin sources including insurance, funds management, sharebroking and card services.
Individual and personal banking services remain a core ASB Bank activity and increasingly our customers are interacting with us on-line. Over one quarter of our customers are now using Internet banking services, with fastcheque, the ability to make a single payment to any New Zealand bank account through our secure fastnet channel, being our fastest growing service.
During the period small and medium sized business markets experienced strong growth, increasing lending by 6.8% and deposits by 10.2%. Business customers continue to embrace Internet banking through fastnet office, with transaction volumes increasing throughout the period.
This strong performance in business and personal lending, combined with an equally strong 25.4% lift in rural lending during the period, increased the Bank’s overall lending to $20.5 billion at period end, up 17.8% on the corresponding period last year.
Home mortgage lending for the six months at $2.72 billion was a record in any six month period, and was up 31.2% on that for the corresponding period.
Our market share of funds under management at period end was close to 6%, a 1.2% improvement in 12 months with total funds under management exceeding $1.1billion. Throughout the period ASB Bank’s share of fund inflows remained consistently high compared to all fund managers.
ASB Securities increased its customer base by 24% in the 12 months and has rapidly established itself as one of the country’s more significant share brokers.
The Bank continues to fund a major proportion of its lending activities through retail deposits, and at period end total deposits stood at $24.1 billion, up 16.9% in 12 months.
A significant contributor to the improved profit performance was increased productivity and a reduction in the operating expense ratio against income to 48.29% ( from 52.41% 12 months previously ).
A major contributor to increased staff productivity was the use of state of the art technology and the continued automation of core processes. During the 12 month period the Bank also increased staff numbers by 64 full time equivalent employees, bringing staff numbers to 3117, and increased the number of branches by 2, to 120.
Total operating expenses increased by 8.5% to $200.6 million.
Total assets increased to $26 billion, up 7.3% on the position six months previously, and the Bank’s return on total average assets on an annualised basis improved to 1.05% ( 1.00% for the corresponding period ).
The Bank’s net interest margin for the six months was 2.39% ( compared to 2.35% for the previous period ) and its return on ordinary shareholders’ funds 24.29% ( 24.21% ).
The Bank’s profit result was after making provision of $69.2 million for taxation ( $50.5 million for the corresponding period ) and debt provisioning of $13.3 million ( $11.8 million ), reflecting the increase in size of the Bank’s lending portfolio.