ASB's annual net profit fell slightly due it a big one-off settlement with the Inland Revenue Department, but the bank nearly halved loan impairment charges and held its interest margin steady.
(Update adds comments from ASB to those from CBA earlier).
ASB said June year net profit fell to NZ$428 million from NZ$431 million last year due to a NZ$209 million charge to settle its structured finance transaction dispute with the IRD, and NZ$17 million perpetual dividend payout.
The bank said its net interest margin was stable at 1.6%.
Total assets slipped 2.6% to NZ$63.6 billion, which ASB blamed on volatility in the derivative instrument market.
Lending rose 0.8% to NZ$53.8 billion. Business lending fell 1.9% to NZ$6.8 billion compared to an overall 7.3% fall in the total business lending market, increasing ASB’s market share by 0.5% to 9.3%. Rural lending was flat, the bank said.
Loan impairment charges fell 47.5% during the June year to NZ$125 million from NZ$238 million in the previous year.
“This sizeable reduction reflects both New Zealand’s emergence from the current economic cycle and the underlying quality of the ASB loan book,” ASB chairman Gary Judd said.
ASB said retail deposits rose 5.3% to NZ$31.5 billion and home loan balances increased 2% to NZ$38 billion with market share steady at 23%. The big banks are scrapping hard for retail deposits to help meet the Reserve Bank's core funding ratio (CFR). Introduced in April, the CFR sets out that banks must source 65% of their funding from retail deposits or bonds of a duration of at least 12 months.
"For the 12 month period ordinary dividends totalling NZ$160 million were paid to ASB’s New Zealand holding company," Judd said. "No ordinary dividends were paid on to parent company Commonwealth Bank of Australia, reflecting CBA’s commitment to support and grow its businesses in New Zealand."
After a strategic review in 2009, Judd said ASB now had a range of initiatives underway.
"Key initiatives include the decision to upgrade our already market-leading core banking systems by investing over NZ$200 million in technology renewal, leveraging the more than NZ$0.5 billion investment in its systems being made by our parent, CBA; planning for our July 2013 move to a NZ$160 million new sustainable ASB head office building based at Auckland’s North Wharf in the Wynyard Quarter; and committing to an additional NZ$100 million investment in our branch network through the opening of 25 new ASB branches and refurbishment of a further 117 over the next 5 years," said Judd.
"Twelve of these new branches are planned to open over the next 12 months."
Earlier parent CBA said its New Zealand annual cash net profit fell 14% to NZ$461 million, due to tightening credit markets increasing funding costs and the impact of the recession on on banking and insurance businesses. However CBA said ASB's second-half year profit, for the six months to June, climbed 41% to A$227 million from A$161 million in the six months to December 2009.
CBA's own annual statutory net profit rose 20% to A$5.6 billion with cash net profit up 42% to A$6.1 billion. The group will pay out A$4.5 billion in 2010 financial year dividends.
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