Scoop has an Ethical Paywall
ASB delivers strong half year performance
ASB today reported statutory net profit after taxation (NPAT) of $593 million for the six months ended 31 December 2017. This represents a 13% increase on the prior comparative period.
Cash NPAT was $575 million, an increase of 15% on the prior comparative period. Cash NPAT is the preferred measure of financial performance as it presents ASB’s underlying operating results and excludes items that introduce volatility and/or one-off distortions, and are not considered representative of ASB’s on-going financial performance.[1]
Key financial points
• Cash NPAT of
$575 million, an increase of 15% over the prior comparative
period
• Statutory NPAT of $593
million, an increase of 13%
•
Cash net interest margin increased by 1bp to 2.20%
•
Advances to customers up 6% to $80 billion
•
Customer deposits up 8% to $61 billion
•
Loan impairment expense was $26 million, down 47%
•
Sustained momentum in funds management with income growth of
17%
• Cost to income ratio (cash basis) of
34.1%, an improvement of 160bps
• Costs
(cash basis) increased by 3%, following higher regulatory
compliance costs and higher technology expenses, partly
offset by continued simplification and productivity
gains
Solid growth, stabilising margin
and lower impairment drive result
Incoming ASB
Chief Executive Vittoria Shortt said the result was the
product of a combination of balanced lending and deposit
growth across key portfolios along with stabilising margins.
The result was also influenced by lower impairment expense
with the continued improvement in the dairy sector allowing
for provision releases.
“This was a strong first half performance, driven by balanced, business-wide growth and a continued focus on cost management, despite some significant regulatory compliance costs, and higher technology expenses,” says Ms Shortt. “At the same time, we are continuing to accelerate our digital transformation while leveraging our strengths in customer service and innovation.”
Ms Shortt also paid tribute to her predecessor Barbara Chapman who departed in early February. “Barbara and the team have done an exceptional job in building a high-performing, diversified business during a period of unprecedented change and disruption for the industry,” says Ms Shortt. “It’s my great privilege to be stepping into the Chief Executive role during such an exciting time for ASB as we continue to build on the momentum established over the past several years under Barbara’s leadership.”
Solid lending and
deposit growth
Home loans increased by 5%
against the prior year while business, commercial and rural
lending grew by 8%. This contributed to an increase in total
customer lending of 6% on the prior comparative period.
In addition, customer deposits grew by 8% in a competitive market for bank deposits. “We are seeing a continued trend around customers focusing on increasing savings and taking advantage of the current low interest rate environment to pay down debt,” says Ms Shortt. “We are also making it easier for customers to achieve this by enhancing our Wealth product offering to provide easier access to a range of investment options, with funds under management increasing by25%[2] over the period. In addition, ASB was once again recognised by Canstar, achieving 5-star ratings across all funds in the KiwiSaver Scheme, the only KiwiSaver provider to achieve this in 2017.”
Stabilising margin
ASB’s cash net
interest margin (NIM) increased by 1bp over the prior
comparative period. “We have continued to see NIM
stabilising after a period of decline over recent years,”
says Ms Shortt. “This has primarily been driven by
improved lending margins, partly offset by the impact of
competition for term deposits.”
Reduction
in impairments
Loan impairment expense reduced
by 47% (-$23m) over the prior comparative period, following
the release of provisions, particularly in the dairy sector
which continues to recover. Impairment expense within the
home lending portfolio continues to remain subdued.
Cost to income ratio continues to
improve
ASB’s cost to income ratio for the six
months to 31 December 2017 was 34.1%, an improvement of
160bps. Operating income growth was 8% (on a cash basis)
while operating expenses grew by 3%, driven by regulatory
compliance costs, technology and staff costs.
ASB in the community
“ASB’s
vision and values are at the heart of the way we do business
and our corporate responsibility strategy translates these
into tangible actions to make a positive impact on the
communities in which we operate, on our environment and the
New Zealand economy,” says Ms Shortt. “Through our
sponsorship of the 2017 Lions’ Tour, and through a range
of other fundraising efforts, ASB people helped raise more
than $200,000 for Starship Children’s Hospital over the
six month period. And once again, our annual St John toy
ambulance campaign helped raise more than $100,000 for St
John.”
In December 2017, ASB celebrated the opening of its new South Island regional centre in the heart of Christchurch’s central city. The High Street and Cashel Street tenancy also marks the return of a permanent ASB branch in central Christchurch. “This new facility represents an exciting new chapter in ASB’s history in Christchurch and there’s no doubt our new home will be a base from which we’ll be delivering outstanding service to our customers long into the future,” says Ms Shortt.
ENDS
ASB Bank
Helping you get one step ahead.
In 1847, ASB opened as the Auckland Savings Bank with the pledge: 'to serve the community; to grow and to help Kiwis grow'. And that is very much what ASB is about today.
ASB is a leading provider of integrated financial services in New Zealand including retail, business and rural banking, funds management and insurance.
ASB strives to consistently provide its customers with outstanding service and innovative financial solutions. They're dedicated to providing simple financial products that allow their customers to bank with them how and when they want.
We all have our own ways to measure progress, and our own stories about the things that matter to us. Whatever way you choose to measure progress, and whatever your goals, ASB is there to help you get one step ahead.
John Mazenier: Gaffer Tape And Glue Delivering New Zealand’s Mission Critical Services
Earthquake Commission: Ivan Skinner Award Winner Inspired By Real-life Earthquake Experience
Reserve Bank: Consultation Opens On A Digital Currency For New Zealand
NIWA: Ship Anchors May Cause Extensive And Long-lasting Damage To The Seafloor, According To New Research
New Zealand Customs Service: A Step Forward For Simpler Trade Between New Zealand And Singapore
Horizon Research: 68% Say Make Banks Offer Fraud Protection
