ASB reports income rise, but class action settlement wipes out profit growth

Wednesday, 11 February 2026

ASB has reported a flat half-year profit despite increasing the income it earned from customers, saying the result reflects higher costs, including its $136.5 million settlement to end a class action lawsuit against it.

On Wednesday, the bank reported a net profit after tax (NPAT) of $765m for the six months to the end of December, up by just $2m on the same period in 2024.

That delivered a return on equity for the bank of 12%, slightly lower than in the same period the previous year.

The result reflected increased lending, increased income, and increased margins, but also far higher operating expenses, which increased by 21% from $695m to $839m.

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The increase in expenses was largely the result of the bank settling a class action case against it taken by borrowers on whose loans ASB had failed to meet all its disclosure requirements under law.

Asked whether ASB would have delivered a large profit rise, had it not been for the settlement, chief executive Vittoria Shortt said: “In theory, yes, that would have obviously added to our profitability”.

However, she said ASB’s profitability had been driven by growing its market share.

“We are growing above market across everything,” she said.

ANZ continues to defend the class action, with hearings likely to start later this year.

ASB has also been going through a costly technology modernisation programme, and improving its fraud and scam detection and defences.

Shortt said the bank’s customers were finding life easier as the economy improved. The proportion of loans on which borrowers had asked for hardship relief were falling.

“What's really pleasing is we're seeing a decrease, and that's certainly because of the interest rate environment,” she said.

“We've seen late arrears down by about 25% on credit cards, and about 20% on home loans,” she said.

“More than 90% of our customers are now on home loan rates of less than 6%, and that 6% mark is one that we really watch out for,” Shortt said. “More than 45% of our customers are on rates under 5%.”

On the business lending side, there had been a stabilisation in what the bank calls “troublesome and non-performing” loans.

“There is a recovery but it's still uneven,” said Shortt.

“Some sectors are doing very well, like the continuation of great commodity prices for rural. We're seeing some great tourism, for example in Queenstown. But we still see challenges, for example, in construction, and retail.

ASB had seen liquidators appointed on 153 small businesses it banked in the six months to the end of December. It had not had a hand in calling liquidators into those businesses. However, it had appointed receivers to some businesses it had made loans with, but there had been only three, she said.

Increased lending has seen ASB’s income increase, with the bank earning $1.6 billion in net interest income in the six-month period, which is income earned from loans minus the interest paid to funders including depositors.

Net interest income was up from $1.47b in the six months to the end of December 2024.

ASB is part of the Commonwealth Bank of Australia Group.

Its shares are traded on the Australian ASX sharemarket.

The group delivered a net profit after tax of A$5.4 billion in the half-year, up 5% on the previous year, in part as a result of a decrease in bad debts as a result of an improving Australian economy, and low unemployment.

Competition in the home loan market in Australia had seen its margins contract slightly.