Strong Growth And Productivity Gains Lift ASB Bank
20 August 2003
Strong Growth And Productivity Gains Lift ASB Bank To Record Result
Statement made by Gary Judd QC, Chairman, ASB Bank Limited
Strong, across the board business growth, more effective use of information technology and an ongoing focus on building customer satisfaction through service excellence has enabled ASB Bank to lift its audited, after tax operating surplus by 24% to $278 million for the year ending 30 June 2003.
This is the fourth consecutive year ASB Bank has achieved a greater than 20% increase in operating surplus.
Growth in all parts of the business has been at record levels. In the highly competitive home lending market the Bank has increased its overall market share, both nationally and in the important Auckland market, advancing $6bn in home loans. The vibrant housing market had a material impact on the levels of lending achieved, and the personal banking division and associated ASB home lending brands increased assets by 18% to $16.0 bn.
The Bank’s Rural Banking division has also performed exceptionally well. A 23% increase in rural lending for the year now positions ASB Bank as New Zealand’s 3rd largest rural lender, and good foundations are in place to further strengthen this segment of the Bank’s operations.
Good market share gains have also been achieved in Institutional, Commercial and Business Banking and ASB Bank is now a key banker to the business community. Lending to the business, commercial and institutional sectors increased by 12% to $3.7bn.
Total assets increased by 13% to $27.5bn.
Service excellence remains central to ASB Bank’s success. The 2002 University of Auckland survey rated ASB Bank the country’s leading major bank in terms of overall customer satisfaction – the fifth consecutive year the Bank has achieved this rating.
This same survey also once again rated ASB Bank as the country’s best Business Bank.
ASB Bank’s Internet banking service also continues to expand. An ongoing focus in this area has seen more and more customers transact their business through the Bank’s Fastnet Internet channel, and now more than 2 million transactions are processed online each month.
Consumer magazine has rated ASB Bank’s internet banking service as the country’s best, and the University of Auckland survey found that 93% of our customers were satisfied or very satisfied with our internet banking service. During the year the Telephone Users Association of New Zealand (TUANZ) also awarded their best financial service accolade to ASB Bank’s Fastnet Classic service.
An ongoing focus on
productivity improvement saw the Bank’s cost to income ratio
fall below 50% for the first time, reducing from 51.3% last
year to 47.9%. During the period total operating expenses
increased by 10% to $407 million.
The Bank’s full time equivalent staff numbers increased by 211 to 3261, and staff costs at $198 million represented 49% of total expenses.
Gross operating income for the Bank at $851 million was up 18%, with $620 million coming from net interest margin. Other income at $230 million was up 7%. Income derived from transaction fees and services represented less than 10% of the Bank’s gross operating income.
Half the Bank’s total lending is self funded, with customer deposits increasing during the year by 15% to $14 billion and total deposits, including treasury deposits, increasing by 13% to $25.6 bn.
In December the Group raised $200 million from the New Zealand equity market through the issue of perpetual preference shares, which are listed on the New Zealand Exchange. This issue was supported by close to 4500 shareholders.
Income from the provision of financial services such as managed funds, insurances and sharebroking was $46.7 million, an increase of 16%. Funds under management at year end had increased by 25% to $1.4 bn.
The Bank’s operating surplus allowed for provisioning for taxation of $140.8 million (up 28%) and for debt provisioning of $24.8 million (up 38%). Total doubtful debts provisioning at year end stood at $89 million.
Return on ordinary shareholders’ funds for the year was 25.43% and return on total average assets was 1.07%. The risk weighted capital adequacy ratio was 10.26% against a Reserve Bank of New Zealand minimum requirement of 8%.
Issued on behalf of ASB Bank by Dennis Lynch,