ASB bank hits record profit of $393m

ASB chief executive Barbara Chapman. Photo / Richard Robinson.

ASB's cash profits rose 12 per cent in the six months to December 31 to $393 million - breaking another record for the bank.

The bank's loan book grew from $55.5 billion to $59.3 billion despite the Reserve Bank's clamp down on home lending which kicked in from October last year.

Deposits also rose from $39.9 billion to $43.7 billion.

See the bank's profit announcement here.

ASB's parent company Commonwealth Bank of Australia also saw an increase in its profits with its cash net profit rising 14 per cent to A$4.268 billion.

Chief executive Barbara Chapman said the result reflected a strong performance across the bank.

"All divisions made significant contributions with an especially strong performance from ASB's Wealth and Insurance business that saw revenue growth period-on-period of 19 per cent and growth in KiwiSaver funds under management of 30 per cent.

Chapman said it had managed to maintain momentum over the first half of its financial year through improved market conditions as well as improving productivity.

The bank also saw its loan impairment rate fall with losses down from $28 million to $21 million.

"As the New Zealand economy continues to strengthen, we have seen loan impairment expenses reduce significantly by 25 per cent against the same period last year," said Chapman.

"Improving economic conditions, a low interest rate environment and a robust housing market, particularly in Auckland and Christchurch have impacted favourably on impairments."

Chapman said 10 per cent income growth had been partly offset by an increase in operating expenses of 8 per cent.

The increase in increases was driven by a number of factors including ASB's move to its new headquarters in Wynyard Quarter and investment in technology.

"Rapid advancements in internet and mobile technology are continuing to change the way we do business and to reshape the financial services industry in New Zealand and globally."