Rural lending boosts ASB result

By ELLEN READ

ASB Bank has reported a 22 per cent jump in net profit over the year to June 30, stemming from market share growth and new products and services.

The bank, owned by the Commonwealth Bank of Australia (CBA), yesterday announced a record net profit after tax of $183.4 million, up from $150.1 million the previous financial year.

ASB registered gains in market share across all sectors of mainstream banking, with particularly strong results achieved by treasury operations and rural banking.

Managing director Ralph Norris said the bank's market share averaged across the whole country and all sectors was 17 per cent, up from 16 per cent the previous year. In Auckland, the bank's traditional stronghold, it held a 34 per cent share of the retail banking market for the year to June 30.

Personal and business lending registered growth, each up 8 per cent, but the sector that performed outstandingly was rural lending, up 25 per cent, ASB said.

ASB's total operating income was up 14 per cent at $645 million while net interest earnings rose 19 per cent to $457 million for the year.

However one of ASB's traditional strengths, home mortgage lending, fell 5 per cent to $3.14 billion, a decline blamed on a static housing market.

The bank's total assets were $20.1 billion, up 16.5 per cent on a year earlier.

ASB said its entry into the securities advice and trading sector through ASB Securities had been "an outstanding success".

Parent company CBA yesterday booked a $A2.398 billion full-year net profit, 11 per cent down on the previous year, and warned of deteriorating credit quality resulting from the economic slowdown.

CBA said its corporate bad debts increased 24 per cent to $A385 million.

However, the bank said that on a cash basis, which takes account of its Colonial acquisition last year, its net profit after tax was $A2.262 billion, up 9 per cent from $A2.068 billion a year ago, but just below the forecast average.