ASB posts profit increase despite big bump up in staff numbers as scam war continues

ASB's half-year profit climbed 2% as its net interest margin, the difference between what the bank borrows money at through the likes of deposits and what it lends it out at, rose nine basis points.

ASB's net profit after tax (NPAT) for the six months to December 2024 rose $14 million, or 2% to $763 million from $749 million in the same period of 2023.

The bank's net interest margin climbed nine basis points to 2.30%, with the bank saying favourable interest rate hedging helped this. Net interest income was up $73 million to $1.546 billion. Other income rose $5 million to $230 million. Total operating income rose $78 million to $1.776 billion.

Operating expenses climbed $50 million, or 8%, to $697 million, with higher staff costs a key factor. The bank's cost to income ratio surged 140 basis points to 40.7%, and its return on equity dropped 60 basis points to 13.5%.

Impairment losses on loans rose $7 million to $17 million, which was attributed to higher consumer finance write-offs, increased home loan collective provisions reflecting interest rate and cost of living pressures, plus house price volatility.

Loans at least 90 days past due, but not impaired, rose $45 million between June and December last year to $487 million.

ASB says its profit increase reflects the 4% operating income rise driven by increased lending volumes and favourable interest rate hedging, albeit this was partially offset by the operating expense increase. 

"New Zealand has been through the most difficult economic cycle in a generation, and we need to be patient with what looks like a gradual recovery. With lower interest rates and inflation providing some relief, and export incomes looking up for a number of sectors, our focus remains on supporting customers and providing capital for the next phase of economic growth," ASB CEO Vittoria Shortt says.

ASB's gross lending rose $2.565 billion, or 2%, between June 30 and December 30 last year to $112.194 billion. Home loan lending lifted $2.29 billion, or 3%, to $78.390 billion. That's 70% of the bank's total lending. Corporate lending, including rural lending, rose $319 million, or 1%, to $30.941 billion.

As of December 31, ASB's total regulatory capital stood at $11.987 billion, which was $5.348 billion more than its required minimum of $6.639 billion, the bank says.

Staff numbers jump

Between December 2023 and December 2024, ASB increased full-time staff numbers by 343, or 6%, to 6,272. This was attributed to managing financial and cyber-crime risk, mitigating the impact of fraud and scams, and supporting technology investment.

Salaries and other staff expenses increased $45 million, or 12%, to $429 million, with information technology costs up $13 million, or 10%, to $142 million.

"We are continuing to invest heavily in people, technology and awareness initiatives to protect Kiwis against fraud, scams, and cyber and financial crime and expect to spend another $140 million this financial year," says Shortt.

"While the volume of online banking fraud and scam cases increased 16%, customer losses were down a third in the year to December 2024. ASB stopped $29 million in suspicious card transactions in 2024 and responded to 18,000 after-hours calls to its 0800 ASB FRAUD hotline in the first year of 24/7 operations. Across the half year ASB identified and took down around 100 fake ASB websites, to prevent further harm from bank impersonation, a significant source of scams and fraud."

Commonwealth Bank of Australia, ASB's parent, posted a 2% rise in half-year cash NPAT to A$5.132 billion. A 5% dividend increase to A$2.25 sees 73% of cash NPAT paid out.

CBA's net interest margin rose two basis points to 2.08%, with its return on equity down 10 basis points to 13.7%.

ASB's paying $1.1 billion in half-year dividends, up from $800 million last year.

ASB's press release is here.

CBA's press release is here, its announcement is here, and CBA's presentation is here.