ASB CEO sees 'more confidence in the economy' as rising costs hold down half-year profit increase despite net interest margin rise

ASB eked out a $2 million rise in half-year profit after forking out $135.6 million to settle a class action lawsuit, with CEO Vittoria Shortt saying the bank is now seeing more confidence in the economy.

ASB's net profit after tax for the six months to December 31, 2025 rose to $765 million from $763 million in the same period of the previous year. Its record high interim profit was $840 million in the six months to December 2022.

ASB's 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 six basis points year-on-year, and 11 basis points over the half-year, to 2.35%. The increase was attributed in part to higher home lending margins.

The bank's cost-to-income ratio jumped 490 basis points year-on-year, and 150 basis points over the half-year, to 45.7%.

ASB's operating expenses surged $144 million, or 21%, to $839 million. The bank's class action lawsuit settlement, increased staff numbers, wage inflation and higher technology costs were cited as reasons for the steep rise.

In October ASB agreed to pay $135.6 million, without admitting liability, to settle a class action for alleged breaches of the Credit Contracts and Consumer Finance Act relating to the home and personal loans of thousands of customers between June 2015 and June 2019. ASB's provisions were up $145 million year-on-year to $333 million.

The bank's fulltime equivalent staff rose by 625 to 6,897 at December 31 from 6,272 a year earlier. The increase was attributed to support for technology investment, managing financial and cyber crime and fraud and scam prevention. 

ASB's net interest income rose 9% to $1.602 billion, with total operating income up 8% to $1.835 billion. Its loan impairment expense fell to $3 million from $17 million.

"While the geopolitical outlook remains uncertain, we are seeing more confidence in the economy, supported by lower interest rates and good export earnings in key sectors. This is evident in the uptick we’ve seen in business lending, with more lending growth across small business, commercial and rural this half than in the previous financial year," Shortt says.

Figures from ASB's parent, Commonwealth Bank of Australia (CBA), show its New Zealand subsidiary's share of home lending rose 20 basis points between June 30 and December 31 last year to 21.4%. NZ business and rural lending market share fell 10 basis points to 17.3%, and NZ customer deposit market share was flat at 18.8%.

ASB says over the December year its home lending rose 8%, business and rural lending grew 4%, total customer deposits increased 5%, and KiwiSaver funds under management rose by about $1.7 billion to $20.6 billion.

As of December 31, total lending stood at $118.7 billion, a 6% year-on-year rise, and total assets were at $139.7 billion.

CBA says the percentage of ASB's home loans in arrears for at least 90 days dropped to 0.53% at December 31 from 0.71% at June 30. Consumer finance loans at least 90 days past due fell to 0.83% from 1.01%.

ASB's return on average total equity was 12%, down 60 basis points year-on-year. CBA says ASB generated A$689 million of organic capital for the group during the half-year. 

ASB's press release is here and an ASB presentation is here.

CBA's results release is here. CBA's investor presentation is here. And CBA's press release is here.