ASB's annual profit rose 6% to a record high as its net interest margin, which measures the income generated from loans against the money paid to depositors and other lenders to the bank, rose 22 basis points to 2.44%.
ASB says June-year net profit after tax rose $88 million, or 6%, to $1.559 billion from $1.471 billion in the June 2022 year.
Total operating income rose $305 million, or 10% to $3.489 billion, with net interest income up $446 million, or 17% to $3.045 billion.
Operating expenses increased $150 million, or 14% to $1.258 billion. ASB says, excluding the impact of a provision released the previous year stemming from historical holiday pay, expenses rose 8% driven by higher staff costs from wage inflation, higher staff numbers - up 137 to 6,016, higher IT expenses and increased investment spend. ASB's cost to income ratio rose 60 basis points to 36.3%.
ASB's net interest margin rose 22 basis points year-on-year to 2.44% helped by higher margins on deposits for the bank. Its return on equity rose 20 basis points to 15%.
The bank's loan impairment expense rose $23 million, or 56%, to $64 million with this attributed to the impact of inflationary and interest rate pressures, and a decline in house prices.
"We are seeing clear signs that growth is slowing which reflects the broader economic environment. However, our balance sheet remains strong and resilient, which positions us well to continue to support our customers and the New Zealand economy," ASB CEO Vittoria Shortt says.
Looking at the first half of the June year versus the second half, CBA says ASB's net interest margin fell to 2.36% from 2.52% due to lower margins, higher wholesale funding costs and customers moving to higher yielding deposits.
'Deepened support options for those feeling pressure'
In a rising interest rate environment, Shortt says the bank has "proactively contacted" more than 12,000 customers to offer support as they refix home loans.
"While the majority seem to be well prepared and managing, we've deepened our support options for those feeling pressure."
"We have established a dedicated team to provide tailored assistance to customers who are concerned about their financial situation and we have grown our team of community bankers to improve access to banking services for those in vulnerable situations," Shortt says.
According to its parent Commonwealth Bank of Australia (CBA), ASB grew home loans $2.038 billion, or 3%, to $74.093 billion in its June-year. It grew business lending $946 million, or 5%, to $21.484 billion, and grew rural lending $65 million, or 6%, to $11.695 billion. Customer deposits increased $5.212 billion, or 8%, to $67.876 billion.
CBA put ASB's home loans market share at 21.5%, down from 21.6% year-on-year, its business lending market share at 17.3% up from 16.9%, and its customer deposits share at 18.5% up from 18.3%.
ASB's home loans at least 90 days past due rose to 0.34% at June 30 from 0.22% at December 31 last year. Impairment expenses annualised as a percentage of average gross loans rose to 0.06% from 0.04%.
CBA itself reported annual cash net profit after tax up 6% to A$10.164 billion. Its net interest margin was up 17 basis points to 2.07%, its return on equity rose 130 basis points to 14%, annual dividends per share increased 17% to A$4.50. CBA's common equity tier one capital ratio (CET1), as a percentage of risk weighted exposures, increased 10 basis points to 12.2%.
ASB's CET1 rose to 14.3% from 12.3% versus a minimum requirement of 8%. With $11.143 billion of total capital at June 30, ASB says it held $5.480 billion of capital in excess of its minimum requirement.
Meanwhile, ASB paid $700 million of annual dividends, down from $975 million last year.
CBA's full results release is here.
CBA's presentation is here.
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