ASB's $150m profit up 28pc

ASB Bank posted an after-tax full-year operating profit of $150.1 million in the year to June, up 28 per cent on last year.

Chairman Gary Judd said the bank's expansion into new activities and increased market share were behind the increase.

Total operating income was $552.6 million, up 16 per cent, and total operating profit before tax was $421.6 million, up 22 per cent.

"A key area of growth in the past few years has been in business and rural lending, and these areas now account for 28 per cent of the bank's total advances [up from 25 per cent last year]," Mr Judd said.

Operating expenses rose 13 per cent to $325.5 million, and debt provisioning expenses were $11.4 million.

Only 6 per cent of all financial transactions were conducted within a branch.

"The main function of branches has moved to being sales centres, and the new generation of branches we are opening reflect this focus," Mr Judd said.

The ASB is wholly owned by the Commonwealth Bank of Australia.

ASB branches have dropped to 117 from 126 five years ago, but staff has increased to 2747 from 2319 during the same period.

Its internet banking subsidiary, BankDirect, had the largest customer base of any online bank, said Mr Judd.

Funds under management nearly doubled over the year to $690 million.

"For the fifth consecutive year the bank's net interest margin [the difference between interest payments received and interest payments made] declined - to 2.31 per cent from 2.36 per cent," he said.

"The continual decline in interest rate margin reflects the fundamental change taking place in New Zealand banking, where customers are charged fees for the specific services they use, rather than have those services subsidised through the interest margin.

"Ultimately, such a charging policy is in the best interests of the majority of customers."

The bank's return on equity increased 2 per cent to 19.7 per cent, and total assets were up 17 per cent to $16.2 billion.

Total advances rose 16 per cent to $14.4 billion, and total assets were up 18 per cent to $17.4 billion.

The bank will pay $43.8 million in dividends for the year, up from $22.7 million last year.

ASB's parent, Commonwealth, reported a profit of $A1.71 billion ($2.2 billion) before abnormals, and excluding financial services group Colonial, up from $A1.422 billion.

- NZPA