Lending growth drives ASB’s strong first half result

Wednesday, 13 February 2013, 11:10 am
Press Release: ASB Bank

Media Release
Wednesday 13 February 2013

Lending growth drives ASB’s strong first half result

ASB today reported Statutory Net Profit after Taxation (NPAT) of $365 million for the six months ended 31 December 2012, which represents a 2% decrease on the prior half of December 2011.

Cash NPAT was $348 million, an increase of 7% on the prior half of December 2011. Cash NPAT is the Group’s preferred measure of financial performance as it presents ASB’s underlying operating results and excludes items which introduce volatility and/or one-off distortions, and are considered not representative of ASB’s on-going financial performance.(1)

Commenting on the announcement, Chief Executive Barbara Chapman said ASB’s financial result was driven by solid balance sheet growth and the sustainable control of expenses. “This result builds on the positive momentum established in the previous financial year with good balance sheet growth across all customer segments including home, business and rural lending.”

Rural and Business lending both grew above market levels, recording growth of 12.7% and 9.4% respectively. “The performance of these two key market segments is a reflection of growing confidence among farmers and business owners as business conditions in New Zealand steadily improve,” said Ms Chapman.

ASB has remained focused on developing its Wealth and Insurance business through offering customers professional and trusted advice along with a full range of investment and insurance solutions. ASB Kiwisaver, as New Zealand’s largest KiwiSaver scheme with around 370,000 customers, achieved 31% growth in funds under management over the 12 month period to December 2012, which compares to 44% growth over the prior year.

“ASB has reinforced its position as a leading bancassurance provider with a significant rise in new accounts for General and Life Insurance over the period,” said Ms Chapman.

“Customer deposits, with growth of 3.6% on December 2011, have increased steadily,” said Ms Chapman. “Lifting our New Zealand deposit base has contributed to funding the lending growth, although competition has increased the cost of deposits. The launch of our new saving product – Savings on Call - has been well received by customers.”

Operating expenses increased 2.3% over the December 2011 period. This increase is primarily a product of inflation driven staff and property costs, and additional technology costs, partly offset by productivity improvements across the business.

Loan impairment expense for the half year ended 31 December 2012 was $28 million. Coming off cyclical lows, this was an increase of 100% on the prior comparative period. Arrears across the retail lending portfolio continue to trend downwards and are currently at the lowest level seen in recent years.

Ms Chapman said: “Our strong performance assists us to maintain our community support at over $12 million. In addition to continuing to support a wide range of charities and sports across New Zealand, including St John, Starship Children's Hospital, football and tennis, at the end of 2012 the ASB GetWise financial literacy programme passed the important milestone of reaching 250,000 children through our school-based saving and budgeting workshops.”

ASB has been focusing investment on upgrading infrastructure and developing new services to reinforce the Bank’s leadership in innovation, particularly in relation to online and mobile services. ASB Mobile has quickly become New Zealand’s most popular banking app with over 140,000 registered devices. “We have continued to push the boundaries, becoming the first bank to launch Facebook payments in New Zealand and allowing app users to pay for items bought off Trade Me directly from their smartphone,” said Ms Chapman. “Our focus will remain on looking for new ways to simplify banking for our customers to make it possible for them to enjoy the widest range of services whenever and from wherever they choose.”

ENDS

(1) Items include hedging and IFRS volatility, the notional cost of capital charged by the Commonwealth Bank of Australia (the ultimate parent of ASB Bank Limited) and other material non-recurring items. These items are calculated consistently period on period and do not discriminate between positive and negative adjustments. Refer to the Consolidated Performance in Brief for a reconciliation of the statutory and cash net profit after taxation, and for further information on these items.

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