ASB reports flat $1.45b profit as home loan margins rise

Wednesday, 13 August 2025

ASB has announced a flat profit in a stagnant economy.

ASB saw its full-year profit dip by 1% to $1.45 billion for the 12 months to the end of June as households and the economy continue to struggle.

In the previous 12 months, the bank posted a profit of $1.46b.

The bank grew its home loans by 7%, which was faster than the general market, and made higher margins on those loans, but less on deposits.

It grew rural lending by 2%, while KiwiSaver funds under management grew by 12%.

CBA’s annual report, published on the Australian ASX sharemarket, showed ASB chief executive Vittoria Shortt received $3.47 million in remuneration during the financial year, down from $4.71m the previous year.

Shortt identified signs that things were improving for households, as many were refixing home loans at lower borrowing rates.

“While there is uncertainty in the global environment, lower inflation and falling borrowing costs have provided some respite for households and businesses and our exports have held up,” Shortt said.

Finance Minister Nicola Willis says listing Kiwibank could help raise capital — but any sale would need to preserve its Kiwi identity.

And, she said: “Over the past five years, ASB has grown business lending more than any other bank, with net business lending up $4.5b.”

Shortt said: “Since last July, we’ve extended more than $2b to new business lending customers, and cut our floating base rate by 2.25%.”

Higher costs, including for wages and investment in anti-scam protection technology, dragged on after-tax profit.

ASB’s parent company is Commonwealth Bank of Australia (CBA), which is listed on Australia’s ASX stock exchange, and which draws around 12% of its profits from ASB.

CBA reported a 7% rise in net profit after tax of A$10.1b (about NZ$11.1b).

ASB paid a $1.1b dividend to its parent in the financial year, Shortt said.

The bank published a presentation for shareholders showing ASB had the highest reputation score of any of the major banks in New Zealand, and was expecting a recovery in lending volumes in its current financial year, during which it expected unemployment to peak at 5.2%, and then start to fall.

ASB chair Therese Walsh and chief executive Vittoria Shortt present at the Finance and Expenditure select committee banking inquiry late last year.

But it also showed that it had increased its margins, through higher margins on home loans.

It’s not been a financial year without controversy for ASB.

Parliament’s banking inquiry saw Shortt, and other bank chief executives, defending their banks.

Farmers accused the bank of not favouring rural lending, charging formers too much for their loans, and putting “undue” pressure on them, while anti-monopolists called for a radical overhaul of the banking sector.

Federated Farmers unsuccessfully complained to the Commerce Commission about banks, including ASB’s parent company Commonwealth Bank of Australia, being members of the United Nation’s Net-Zero Banking Alliance, which they felt might be responsible for weak lending into rural businesses.

It has also faced criticism for its lobbying, alongside other banks, to make a retrospective law change that would derail a class action law suit taken against it and ANZ bank by borrowers.

ASB’s disclosure statement, released on Wednesday, showed the bank had set aside another $64m for remediation, a term used to cover refunds and compensation for customers who have been overcharged.

Shortt did not say what the issues that needed remediating were, but said: “We're a large business and some of our issues can be large.”

Palestine protesters outside ASB Lambton Quay Wellington at the start of the year.

But, she said: “The key thing as I say when we come back to it if we find a mistake we'll fix it.

Some of ASB’s branches were also picketed by anti-war protesters during the year.

The protesters were calling for its KiwiSaver funds to sell investments in companies they said were helping Israel in its war in Palestine, which former New Zealand prime minister Helen Clark said was “an unfolding genocide” on a visit to the Gaza border this week with former Irish president Mary Robinson.