ASB's flat June-year profit saw expense growth keep pace with income

UPDATED to include commentary from CEO Vittoria Shortt

ASB Bank reported a flat $1.35 billion cash net profit for the June year, down just 1% on the June 2024 year, and paid its Australian parent an extra $1 billion in dividend.

ASB paid Commonwealth Bank of Australia (CBA) $1.8 billion in dividends over the year, up from $800 million in FY2024.

Chief executive Vittoria Shortt said the $1.8 billion included a $700 million payment related to a previous capital injection from CBA.

The remainder of the payment was in line with ASB's normal payout approach of 70%-80% of earnings.

Net interest income was $2,925 million, up $129 million or 5%, and total operating income was $3,359 million, up 3%.

Operating expenses rose by 10% to $1,424 million, driven by higher FTE staff numbers, customer remediation payments, and higher technology costs.

Parent CBA's ASX announcement shows provision for ASB customer remediation payments of A$33m.

FTE staff numbers rose from 5,983 a year ago to 6,751. The bank said that was primarily to support investment in technology, managing financial and cyber crime risk, and mitigating the impact of scams and frauds.

Shortt said ASB had spent more than $100 million on cybercrime, fraud and scam prevention.

The loan impairment expense fell by 14% to $60 million, driven by "lower collective provisions reflecting declining interest rates and improvement in milk prices, partly offset by higher consumer finance write-offs and individual provisions."

Past 90 day impairments fell for both home loans and consumer lending, and Shortt said that direction was expected to continue as the impact of lower interest rates was felt.

ASB booked a $566 million tax expense, compared with $572 million in FY2024.

The ratio of cost to income was 42.4%, up from 39.6%.

Net interest margin (NIM) was 2.27%, up four basis point's from 2.23%.

Home loan growth of $5 billion or 7% was "above system," as was business and rural lending growth of $0.8 billion.

ASB hired 80 additional home loan specialists over the January-to-June to cope with "the largest number of refinances ever."

"We use 6% as a marker rate, and around 60% of our customers have rolled over onto less than 6%. That's on average an extra $350 a month for them."

The bank estimates that figure will have reached 80% by this Christmas.

Shortt said ASB had grown business lending more than any other bank over the past five years. The bank made more than $2 billion of new loans to the business and rural sectors during the year.

Agricultural and horticultural businesses tended to be paying down debt, so the majority of new lending was to non-rural businesses.

Customer deposits rose by 4% or $3.1 billion. KiwiSaver funds under management grew by 12% to $18.8 billion.

ASB's parent Commonwealth Bank posted a 7% higher A$10.13 billion net profit, citing lending volume growth, stable net interest margin, and lower impairment expense.

ASB's media release is here.

CBA's media release is here, and its investor presentation is here.