Profitability still takes a blow
ASB has reported modest gains in its half-year financial results, reflecting a cautiously optimistic economic outlook for New Zealand in 2025.
It reported a cash net profit after tax of $716 million, marking a 1% increase from the previous period, and statutory net profit after tax at $763 million (a 2% increase).
Key drivers of ASB’s financial results
The growth in profit was attributed mainly to a 4% increase in operating income, bolstered by higher lending volumes and favourable interest rate hedging.
However, this was somewhat offset by an 8% rise in operating expenses. Specifically, home lending saw a 5% increase, while business and rural lending grew by 2%.
Despite these gains, margins across lending and deposits remained stable.
Capital investments and shareholder returns
Despite the increase in profits, ASB’s profitability, measured by return on equity, fell by 0.6%. This decline was largely due to additional capital requirements, with the total capital ratio climbing by 80 basis points to 16.3%.
During this period, shareholders invested an additional $700 million, bringing total shareholder investment in ASB to $11.4 billion, a move aimed at supporting further growth in New Zealand.
ASB commentary on economic conditions
Vittoria Shortt (pictured above), chief executive of ASB, commented on the bank’s role during challenging economic times.
“New Zealand has been through the most difficult economic cycle in a generation, and we need to be patient with what looks like a gradual recovery,” Shortt said.
She highlighted the bank’s commitment to supporting its customers through lower interest rates and inflation, which provide some relief as export incomes begin to improve across various sectors.
