ASB grows core profit despite tighter lending margins
13th Feb 09, 9:22am
ASB Bank reported a 5% rise in core profit for the six months to December 31 despite tighter lending margins and higher provisions for bad debts. It cited higher Treasury trading income, tight cost control and relatively strong lending growth for the boost to its bottom line. ASB's net profit after extraordinary items fell 10.9% to NZ$238 million, but this included a NZ$41 million accounting loss linked to new IFRS rules. ASB said in its press release that its net interest margin fell to 1.5% from 1.8% a year ago, although the details in CBA's full release reported a 17 basis points squeeze in ASB's net interest margin. CBA said its 'management view rather than statutory view' of ASB's cash net profit after tax was that it rose 6% once adjusting for gains on hedges. ASB said its underlying business performed well with total assets growing 16.3%. Home loan balances rose 6%. "Trading income was strong, principally due to Treasury income derived through the management of short dated interest rate and foreign exchange risk exposures," it said. Total provisions for bad debts rose to NZ$157 million or 0.24% of assets from 0.18% at June 30. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.