ASB Bank profits surge 27pc

Photo / Natalie Slade

Improved economic conditions contributed to ASB Bank recording a 27.6 per cent increase in its net profit after tax to $568 million for the year to June 30, the company said.

For the prior year, the result was $445 million, excluding a one-off tax charge of $209 million.

ASB chairman Gavin Walker said New Zealand is continuing along the road to recovery from the global economic downturn, as evidenced by a significant reduction in ASB's impairment charges over the year, which was down 42.4 per cent to $72 million.

Another key factor had been customers continuing to shift from fixed to floating rate loans. The re-pricing of some new fixed rate loans has also contributed. Retail deposits grew by a 7.1 per cent to $33.7 billion.

But Walker said demand for lending had "definitely weakened" as customers continued to choose to pay off debt.

New Zealand's improved export commodity prices, growing demand for limited housing stock in some regions and low interest rates are all expected to contribute to New Zealand's steady economic recovery, he said.

ASB's operating profit, before impairment and tax, was up 15.7 per cent to $886 million.

Operating income improved by 12.8 per cent to $1.6 billion, while operating expenses rose 9.4 per cent to $721 million, driven by investment in strategic initiatives and Christchurch assistance and support packages.

Net interest margin increased by 0.4 per cent to 2.08 per cent.

ASB's total assets remained steady at $63.1 billion (June 2010: $63.6 billion).

Lending reduced by 1.2 per cent to $53.2 billion (June 2010: $53.8 billion).

The bank's home loan market share was steady at 22.2 per cent.

Total liabilities stood at $59.1 billion (June 2010: $60.0 billion), with total deposits marginally down 1.1 per cent to $55.6 billion (June 2010: 56.2 billion).

ASB offered relief packages for customers after the September earthquake and a set up a further $250
million investment programme to kick-start the rebuild following the February aftershocks.

The bank's parent company, Commonwealth Bank of Australia, reported a 12 per cent increase in its full-year cash profit to a record A$6.84 billion but warned that global financial volatility could push up borrowing costs.

CBA declared a final dividend of A$1.88 per share, up 11 per cent on 2009/10 final dividend, taking total dividends for the year to A$3.20.