ASB lifts full-year profit by 28% even as lending falls
Aug. 10 (BusinessDesk) – ASB full-year profit rose 28%, even as lending fell, as the lender fattened its interest margin and reduced charges for impairments, enabling it to pay $280 million in dividends to parent Commonwealth Bank of Australia.
Net profit was $568 million in the year ended June 30, up from $445 million a year earlier, ASB said in a statement. The year-earlier profit excludes a one-time tax charge of $209 million. Operating incomes rose 13% to $1.6 billion, outpacing a 9.4% gain in expenses to $721 million.
Like other lenders, ASB has been reducing the amount it has to recognise for bad or doubtful debts, a sign that the local economy is becoming more resilient. ASB chairman Gavin Walker said New Zealand “is continuing along the road to recovery from the global economic downturn.”
Parent Commonwealth Bank today reported a 13% rise in annual profit to A$6.4 billion while saying global financial market volatility had the potential to drive up borrowing costs. Cash profit, the measure preferred by many analysts because it strips out non-cash items, rose 12% to A$6.8 billion.
At the New Zealand unit, interest income fell 4.3% to $3.8 billion while interest expense dropped almost 14% to $2.54 billion. The bank’s net interest margin widened to 2.08% from 1.68%. Lending fell 1.2% to $53.2 billion.
“Demand for lending has definitely weakened as customers continue to choose to deleverage debt,” Walker said.
Impairment charges fell 42% to $72 million. Total assets were little changed at $63.1 billion while liabilities fell to $59.1 billion from $60 billion a year earlier.
Total deposits fell 1.1% to $55.6 billion, though ASB grew its retail deposits by 7.1% to $33.7 billion.