Profit dipped by 11% in the second half due to a challenging operating environment
ASB has reported a cash net profit after tax (NPAT) of $1,550 million for the 12 months to June 30, a 9% lift (or $132 million) on the prior year, reflecting a strong first half and an 11% profit decline in the second half due to a more challenging operating environment.
The bank’s total operating income jumped 12%, while operating expenses had a 13% increase, due to continued investment in people, technology, and regulatory compliance.
For the 12 months to June 30, total lending grew 4%, which included a 3% lift in home lending and a 5% rise in business lending, while total customer deposits increased 3%. Cash net interest margin (NIM) was up by 22 bps.
ASB lifted its provision for impaired debts by $23m due to inflationary and interest rate pressures, plus a decline in house prices.
Compared to the first half, cash NPAT during the second half dropped 11%, due to a 7% decline in operating income, driven by a 16bp reduction in NIM.
ASB also increased its total capital, an important measure of a bank’s financial stability, by $0.9bn to $11.1bn with its Common Equity Tier 1 (CET1) ratio rising by 2% to 14.3%, which was now 0.8% above the 13.5% 2028 final target set by the Reserve Bank of New Zealand as part of its transition to higher capital requirements.
“We are seeing clear signs that growth is slowing which reflects the broader economic environment,” ASB CEO Vittoria Shortt (pictured above) said. “However, our balance sheet remains strong and resilient which positions us well to continue to support our customers and the New Zealand economy.”
Shortt said the bank has taken proactive steps to help customers who were pressured by the current economic cycle.
“We’ve proactively contacted more than 12,000 customers to provide support as they refix their home loan,” Shortt said. “While the majority seem to be well prepared and managing, we’ve deepened our support options for those feeling pressure.”
ASB now has a dedicated team to provide tailored assistance to customers who are concerned about their financial situation. The bank has also grown its team of community bankers to improve access to banking services for those in vulnerable situations.
ASB is actively engaged with the Commerce Commission personal banking market study into New Zealand banks announced in June.
“It’s important to us that New Zealanders have confidence in our banking system, and the study is an opportunity to provide this,” Shortt said.
ASB said it will release its FY23 climate and sustainability reports in the coming weeks.
Below is a financial overview for ASB in FY23.
- 72,000 financial wellbeing reviews with customers have been completed, up 18% on the prior year.
- 184 workshops have been delivered by community bankers.
- 404,000 customers have accessed ASB’s digital financial wellbeing tools, up 39% on the prior year.
- ASB’s Support Finder has been used by 24,000 customers, helping them access $14.3m in additional government financial support.
- Card Tracker, used to help manage paid subscriptions, has been accessed by more than 166,000 customers since its launch in November 2022.
- More than 220,000 customers have taken action to improve their financial wellbeing, due to the bank’s continued focus on behavioural science and testing through CCC direct marketing.
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