CBA’s ASB, Sovereign boost first-half earnings by 57%

CBA’s ASB, Sovereign boost first-half earnings by 57%

By Paul McBeth

Feb. 9 (BusinessDesk) – Commonwealth Bank of Australia’s local units, ASB Bank Ltd. and Sovereign Ltd., lifted first-half earnings 57% as the banking arm cut impairment charges and the insurer boosted its premium income.

The bank cash net profit rose to $246 million in the six months ended Dec. 3, from $157 million a year earlier, and the insurer earned $45 million, up from $27 million, according to statements lodged with the ASX. Total New Zealand earnings climbed to $293 million from $186 million, including other related funding entities. They differ from the numbers put out by ASB, which exclude adjustments for preference dividends, hedging and intra-group charges.

CBA said ASB benefited from more customers switching to fixed interest rates from variable rates, which improved home loan margins, while charges for impaired assets dropped by almost three-quarters to $36 million in the period.

“Lending volumes have remained steady in an environment where consumers of credit are justifiably cautious,” ASB chairman Gary Judd said. “As the New Zealand economy slowly stabilises, we’ve seen loan impairment expenses reduce significantly.”

The falling cost of bad debts underpinned the performance of all four of New Zealand’s major banks. That comes in a period when the lenders were able to claw back tax after overpaying in the settlement of the $2.2 billion structured finance tax avoidance dispute with the Inland Revenue Department.

ASB lifted net interest income 22% to $538 million, with home lending holding steady at $37.5 billion as at Dec. 31. Other lending assets slipped 3% to $15.7 billion, and the bank held $65.9 billion in total assets. It deposit book increased 3% to $31.3 billion.

CBA’s Sovereign improved its earnings by paying out fewer claims on death, trauma and disability income products, while reducing the number of lapsed risk and health policies. It increased in-force premiums 7%. It has the biggest market share in life products, with 30.3%.

The insurer held $570 million of in-force premiums as at Dec. 31, compared to $535 million a year earlier.

Sydney-based CBA also released its own first-half results on the ASX, showing profit rose to A$3.05 billion in the six months ended Dec. 31, from A$2.91 billion a year earlier.

(BusinessDesk)

© Scoop Media