ASB records 22 per cent jump in half-year profit to $742 million

Wednesday, 9 February 2022

The test rates banks use to calculate affordability on loans is high to ensure borrowers are able to afford to make loan repayments, even if their home loan rates rise, says ASB chief executive Vittoria Shortt.

ASB has reported a profit after tax of $742 million for the six months to December 31, a 22 per cent increase on the same period last year.

The result was driven by an 8 per cent growth in total lending by the bank, with home and business lending up 8 per cent and 10 per cent respectively compared with the same period last year.

During the last 12 months, the bank had many customers pay down their non-mortgage debts to the bank, with overdraft and credit card debts owed by customers falling sharply.

Vittoria Shortt, ASB chief executive, said the profit rise came despite the bank removing many fees for customers.

* ASB: Up to 30,000 customers entitled to benefits but not getting them

* Women spend less than men, save more but still worse off**

How do I tidy up my spending to impress the banks? New figures released by the Reserve Bank show lending across the board has dropped by $1 billion.

'We delivered more than $21m in fee reductions, rebates, and removals to customers in the six months to December 2021,' she said.

'One of the important changes was the removal of the administration fee across all ASB KiwiSaver accounts in October,' Shortt said.

She said this had led to an additional $3.9m being invested on behalf of the bank's KiwiSaver customers by December 31 and she expected that to rise to almost $12m during the bank's current financial year.

The move followed ASB losing its default KiwiSaver status in May.

ASB's Australian parent company, CBA, faces multiple lawsuits in Australia, while ASB faces just one class action lodged in September by borrowers seeking to have their costs of borrowing paid back to them for bank failures in home loan disclosure by the bank.

CBA said it was not possible to determine the ultimate impact of the claim on the whole group.

During the half year ASB provided mortgages to nearly 6200 first-home buyers, Shortt said.

Despite the move back into lockdown in August, most ASB customers had not needed extra support from the bank.

The bank reinstated financial support options offered in 2020, Shorttt said.

'Fewer than 3000 personal and business customers took up this support during the August lockdown, compared with up to 25,000 for previous lockdowns.

'It's a positive sign that both personal and business customers are now better prepared to manage the unexpected, but with Omicron in the community there will be further challenges ahead.'

ASB's half-year profit followed a record year for the bank, which posted a $1.321 billion profit in the year to June 2021, as the bank rode a 'better than expected' wave of recovery.

Shortt said ASB had committed to a programme allowing many of its staff to work flexibly.

'Our Work Anywhere NZ policy builds on the experience of the past two years where we continued to operate safely and robustly with an almost entirely remote workforce,' Shortt said.

The move could also lead to more senior roles being filled by people throughout the country, she said.