Focus on customer support continues
Amidst challenging economic conditions, ASB is navigating a 12% drop in half-year profit.
Financial performance insights
ASB’s financial performance for the latter half of 2023 revealed a cash net profit after tax (NPAT) of $707 million, down 12%, or a decrease of $96m, from the previous year. This downturn reflects a challenging interest rate cycle and heightened bank funding costs, impacting the bank's net interest margin (NIM), which fell by 26 basis points.
ASB’s total lending decreased by 1% for the half-year ending December, with reductions across home, business, and rural sectors due to intense housing market competition and lower demand in agricultural and business lending.
Despite a competitive market leading to a slight decline in lending, ASB saw a 4% growth in customer deposits, benefiting from attractive term deposit rates.
“Bank profitability is inextricably linked to the New Zealand economy and the environment in which we are operating, and the interest rate cycle has been a big influencing factor on the results we’ve posted,’ ASB CEO Vittoria Shortt (pictured above) said.
A decrease in NIM led to an 8% drop in ASB’s total operating income, while operating expenses rose by 6% due to tech investments and higher salary costs. Despite the bank’s expenditures, ASB maintained a robust capital position of $10.9 billion by December 2023, achieving a 15.5% capital ratio, significantly surpassing the RBNZ's 12.5% requirement.
Supporting Kiwis and building a thriving NZ
Shortt stressed the bank’s proactive efforts to assist customers transitioning to higher interest rates. With over two-thirds of home lending customers facing rates above 6%, the bank's support initiatives include financial wellbeing tools and fee removals, improving customer experience and financial health.
ASB is intensifying its efforts to combat financial crime, dedicating nearly $100m this financial year to fraud prevention, cybersecurity, and financial crime deterrence. With a specialised team of more than 350, the bank is enhancing its 24/7 fraud hotline, 0800 ASB FRAUD, and launching awareness campaigns to educate New Zealanders on scam prevention.
ASB is also investing in sustainable and social housing initiatives, earmarking over $500m for projects including the Accelerated Housing Fund and CleanTech fund.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
