9 February 2005
ASB Bank Grows Profit and Market Share
Statement made by Gary Judd, QC, Chairman, ASB Bank Limited
Sustained growth lifted ASB Bank’s unaudited after tax operating surplus to $183.2 million for the six months ending 31 December 2004, up 14.6% on the result achieved for the same period in 2003.
It is a good result, and is based on robust growth across the corporate, business, rural and personal sectors, and through sound productivity gains.
While most sectors of the New Zealand economy performed strongly, creating vibrant economic conditions, the competition among banks for customers and their business was also extremely active.
This led to a further reduction in our interest margin to an all time low of 2.18%, down from 2.28% for the same period last year – and New Zealanders currently enjoy the most competitive banking environment of like economies anywhere in the world.
The competitive environment was particularly visible in the home mortgage market, culminating in what became known in the media as the “mortgage war” at the end of 2004. ASB maintained its market share of household lending throughout the six months, its share of market growth rising by close to 3% to 30% in December 2004.
This highlights that borrowers factor into their decision making such critical criteria as the mortgage rate over the expected life of the loan, flexibility of the loan facility and service.
Total lending at period end was $31.55 billion, up 9.6% in the six month period.
Total liabilities increased by 9.7% to $34.5 billion for the six months. Within this, Reserve Bank data shows that ASB’s retail deposits increased by 7.2%, lifting our market share of total retail deposits by 1.2% to 18.7%.
Our financial performance continued to benefit from productivity gains, particularly through the effective use of information technology, and our cost to income ratio reduced to 46.01%.
Total assets grew by 10.8% to $36.6 billion over the six month period, putting the Bank well on track for another year of 20%+ growth.
The UK “Banker” magazine named ASB Bank New Zealand Bank of the Year, for the third consecutive time. Criteria counting towards the award include growth, service leadership and providing value to customers.