Buoyant housing market boosts ASB half-year result

By PAULA OLIVER

A potent housing market has helped ASB Bank post a healthy half-year profit and continue down a path of relentless growth - but there are signs that a main driver of the good times is slowing.

ASB yesterday reported a $159.8 million after-tax profit for the six months to December 31, an increase of just over 20 per cent when compared with the corresponding period a year before.

The bank has reported a series of strong results underpinned by growth in the home lending market over the past two years.

Yesterday's figures reiterated that, with the home and personal loan portfolio growing 15 per cent during the half year to reach $17.9 billion.

But the bank's managing director, Hugh Burrett, said the first signs of a slowdown in the housing market were apparent.

"It would be fair to say that the volumes are flattening off."

Burrett said that real estate agents had reported a greater supply of properties on the market.

"You've got to remember that the market has run pretty hot from October 2001, so we're probably getting into the stage of satisfied demand."

Burrett said a lot of new buildings arriving on the market meant that it would probably become steady rather than display the past "exponential" growth rates.

ASB pointed out that rural and business lending also grew.

The bank's exposure to the agriculture sector increased by 10 per cent in the half year, taking the total lending to $2.7 billion.

Asked if that was a concern as the dairy sector was expected to fall on more difficult times next year, Burrett said ASB was comfortable with its situation.

"We've always targeted larger, more experienced operators. A lot of the business we've seen is just good farmers buying the property next door."

The bank's other business lending grew by 3 per cent to $9.4 billion, and its rural and business portfolio now makes up 40 per cent of its overall lending.

Strong competition meant that the bank's net interest margin fell to 2.28 per cent. Total assets topped $30 billion.