ASB's annual profit dropped 7% from last year's record high as income and its net interest margin fell and expenses rose.
ASB's June-year net profit after tax dropped $104 million, or 7%, to $1.455 billion from $1.559 billion in the 2023 June-year.
The bank's annual net interest margin, which measures the income generated from loans against the money paid to depositors and other lenders to the bank, fell 16 basis points to 2.23%.
Total operating income fell $96 million to $3.393 billion, with net interest income falling $117 million, or 4%, to $2.928 billion. Operating expenses rose $38 million, or 3%, to $1.296 billion, and loan impairment losses rose $6 million to $70 million.
ASB's cost to income ratio rose 300 basis points to 39.8%. Its return on equity fell to 12.5% from 14.7%.
The bank said higher expenses reflected its "continued investment in customer experience initiatives, technology platforms and people, and further investments to prevent fraud and scams and enhance financial crime capability."
'Challenging economic conditions'
ASB Chief Executive Vittoria Shortt says the annual results reflects challenging economic conditions, and the bank's strength to continue supporting its customers.
"We believe fixed term home loan rates have now peaked, which is positive, however we are conscious most of our home loan customers are now on interest rates above 6%. Around 20% of customers are yet to roll off rates below this but we expect increases for the majority of them to be small if interest rates continue to drop," says Shortt.
"The majority of our borrowers are managing in the current environment, although there is no question this is a challenging time for a lot of New Zealanders. We are hearing this in conversations with our customers, whether they are personal banking customers, farmers or business owners. We are seeing an increasing number of our customers needing extra support and our teams are assisting these business and personal customers in a variety of ways, depending on their individual circumstances. I would encourage anyone who is feeling concerned to please call us."
"We have increased proactive calls to business and personal customers, including reaching out to more than 40,000 customers over the past year as they refix their mortgages, and our team is working with thousands of customers on financial wellbeing reviews each month," says Shortt.
Loans at least 90 days past due rise
ASB says its home lending grew 1% over the 12 months to June 30, as did business and rural lending, with total customer deposits up 5%.
Gross lending rose just $584 million year-on-year to $109.629 billion, with housing lending up $448 million to $76.1 billion which is about 69% of total lending.
Individually impaired assets increased $52 million to $373 million, a small slice of ASB's $127.089 billion of total assets. However, loans at least 90 days past due rose $186 million, or 73%, to $442 million. Within the 90 days past due total, the home loan share increased $163 million, or 77%, to $376 million.
Figures from ASB's parent Commonwealth Bank of Australia (CBA) show ASB's loan loss rate unchanged year-on-year at six basis points, below the CBA Group's nine basis points.
ASB's total deposits and other borrowings increased $2.735 billion to $92.449 billion, with term deposits up $5 billion, or 13%, to $41.845 billion.
Shortt says combatting fraud and scams is "a real priority for us."
"This financial year we’ve spent around $100 million with the aim of protecting our customers against fraud, scams, financial and cyber crime. We now have a team almost 400 people dedicated to this work and expect to spend at least another $100 million in the year ahead, including advancements to our fraud monitoring system which uses machine learning to spot suspicious transactions," she says.
ASB's paying annual ordinary dividends of $800 million, up $100 million year-on-year.
CBA reported a 2% fall in annual cash net profit after tax to A$9.836 billion. Its annual dividends rose 3% to A$4.65 a share, equivalent to 79% of cash profit. CBA's net interest margin slipped eight basis points to 1.99%, and its cost to income ratio rose 3% to 45%.
CBA's press release is here, and its investor presentation is here.
23 Comments
The sheeple of this country are on their knees praying for interest rates to come down quickly but are absolutely clueless how that short respite will actually screw up our economy even further in the long run.
There is a reason why such economic downturns were labelled "corrections" as they force market participants to mend their ways. This is just us having to pay the piper for poor economic choices and living beyond our means.
Nah, we'd rather the government and central bank pump billions into the economy, which at this point will be similar to dropping the price of alcohol at the bar on a sinking ship that doesn't have enough lifeboats.
The bank's annual net interest margin, which measures the income generated from loans against the money paid to depositors and other lenders to the bank, fell 16 basis points to 2.23%.
They should stop fighting the RBNZ. In a raising rates environment banks have to be savage to cling to margin, if they aren't they'll slip back into bad habits like discounting.
As I'm sure we all know by now...
"Banks don’t spend money into existence, they lend it into existence, which means that someone must be liable to repay it. With liability comes risk, and with risk comes interest. In reality, banks can’t create money until they’ve received something of value FIRST. However, what they get first is not someone else's deposit. It’s possible for a bank to open its doors on its first day of business and make a loan before it’s received a single deposit. There is nothing that prevents a bank from lending without first taking deposits. So what does the bank get in value that justifies the creation of dollar credits it creates?
YOU.
YOU are the thing of value that the bank receives, or more precisely your promise to repay along with your history and capacity to do so."
Note: It is not the Collateral that a bank lends against. That is Last Resort Security. It is YOUR capacity to repay the loan they lend against, and that is all.
Short deconstruction
1. Empathize with the people and feign concern for their plight
2. Convey to the people that you share their pain through lower profits
3. Position as a martyr by stressing that your actions are a sacrifice for the people
4. Ensure that it is communicated that you wear the pants. Deliver the message subtly and in a 'be kind' persona. Remember the sheeple need you. Not the other way around.
That's the whole idea of the shiny trinkets Z. To make you happy.
I think they need to tone down their virtuous narrative to kids about saving. While saving itself is not necessarily a bad thing, they don't communicate to the kids that the purchasing power of their savings is being decimated, largely through expansion of the money supply. As the Bank of England admitted, the tangible expansion of the money supply is largely through the pumping of asset prices through the Ponzi. No different across the Anglosphere.
How will they pay their customers that they will need to pay back from the class action law suit that they continue to fight. Most other banks just pay up.. but these guys continue fighting. They wrongfully charged their customers interest between 2016 and 2019 but keep appealing. Why haven't interest.co.nz published the updates?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.