By Gareth Vaughan
Despite a high likelihood their bank will post record annual profit next month, ASB's senior managers won't be getting a pay rise.
Linley Wood, ASB's executive general manager for culture and community, told interest.co.nz via a bank spokeswoman the bank was currently completing performance reviews following the end of its financial year on June 30.
"Our most senior managers generally will not be receiving a salary increase at this time," Wood said. "For all other ASB people the annual salary review process is unchanged."
Her comments come after The Australian Financial Review (AFR) reported yesterday that ASB's parent, Commonwealth Bank of Australia (CBA), has frozen the pay of its chief executive Ian Narev and other senior managers in a bid to avoid wide-scale job cuts. Tens of thousands of CBA's employees had also been told to expect smaller wage increases than in previous years.
The CBA wage freeze will apply to the bank’s most senior employees. In addition CBA general managers who earn more than A$150,000 won’t get pay rises, with 400 to 500 staff expected to be affected, the AFR reported. Two of CBA's rivals have already announced job cuts this year with the ANZ Banking Group cutting 1,000 jobs and Westpac Banking Corporation about 750.
Freeze doesn't apply to bonuses
However, the newspaper said the pay freeze, which will take effect for the current financial year to June 2013, applies to base salaries, but not bonuses.
Narev, who replaced fellow New Zealander Ralph Norris as CEO last December, is paid a fixed annual salary of A$2.5 million. He's also eligible for short-term incentive payments with an initial annual target of A$2.5 million and may qualify for another A$2.5 million bonus if performance hurdles are met over the next four years. Norris received A$8.6 million in the 2011 financial year.
ASB's CEO Barbara Chapman, who took the reins on April 26 last year after Charles Pink's departure in November 2010, received A$2.2 million (NZ$2.8 million) in the year to June 30, well down from A$4 million the pervious year. Prior to becoming ASB's CEO Chapman was head of human resources at CBA. See more on Chapman's and other NZ bank CEO's pay here.
CBA is expected to report a record annual profit of about A$7.1 billion on August 15, however its earnings are said to be coming under pressure from weak credit growth and rising funding costs. ASB has been performing even better than its parent. It reported record half-year profit of NZ$372 million in February following on from last year's record annual net profit after tax of NZ$568 million.
For the half-year to December 31, ASB's return on equity rose to 21.2% from 17.2% in the year to June 2011, and its net interest margin rose 11 basis points to 2.19%. In contrast the CBA group's return on equity fell to 19.2% from 19.5% and its net interest margin dropped 10 basis points to 2.15%.
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