By Gareth Vaughan
ASB says 346 additional staff, and greater use of contractors, are the reasons behind a NZ$44 million, or 16%, year-on-year increase in its salary and "other staff expenses" bill.
The increase, to NZ$314 million in the nine months to March 31 from NZ$270 million in the same period of the bank's previous financial year, was revealed in ASB's latest General Disclosure Statement (GDS).
John Barclay, ASB's chief human resources officer, told interest.co.nz in an emailed response that the bank was investing strongly in its business.
"So staff costs have increased as we employ and contract additional permanent employees," Barclay said.
"In addition to increased short-term resource requirements for projects, new people are required to provide the resource we need for our nationwide branch expansion programme and other customer service initiatives such as the ASB Virtual Branch (which the bank claimed as a world first). As at 31 March, ASB Bank's total staff numbers stood at 4,894, up 346 from the previous March. Contractor numbers also increased."
Other banks lifting staff numbers too as lending contracts
ASB is not the only bank that has been increasing staff numbers despite flat or falling lending growth. Westpac, the only other of the big four banks to have released its March quarter GDS so far, said salaries and other staff expenses rose by NZ$21 million, or 12%, to NZ$194 million in the six months to March from the same period of the previous year driven largely by an increase in frontline bankers. Westpac says it has 474 accredited business bankers and 1,158 accredited retail bankers.
"This investment is part of the bank's focus on delivering service excellence to customers in their local community, which also included the opening of two new community branches during the six months ended March 31, 2011 on top of the eight opened in the 2010 financial year," Westpac said.
KPMG's recently released annual Financial Institutions Performance Survey, covering 2010, noted overall bank employee numbers rose by 849 during the year. The biggest contributor to the increase was ANZ which added 234 staff. Next was BNZ with 219 additional workers. Total staff across all registered banks numbered 24,967, KPMG said.
Rural lender Rabobank added 42 staff, reflecting it accounting for nearly 65% of new rural lending last year.
"As other banks withdrew from the sector because of concerns about overexposure, Rabobank stepped in," KPMG said.
Overall KPMG said bank branch numbers across the country dropped by 10 to 1,217 last year, with Kiwibank shutting nine leaving it with 302.
Meanwhile, ASB's March quarter GDS also reveals that the bank paid its Australian parent, Commonwealth Bank of Australia, a NZ$200 million dividend in April and its lending contracted. See our earlier article here.
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8 Comments
Im currently a CUSTOMER of ASB but will be changing banks this year. In my case they really have proved to be a `fair weather ' friend over the past few years when times have been tough in the dairying sector. I have survived even with their added `risk' % they applied to my mortgage. 44 years of sound farming practise on my part means nothing to an under 30 yo rural manager.
Bernard.
Absolutely. I believe that many farmers who purchased or expanded their operations in recent years with large mortgages harbour resentment towards the banks that loaned them finance willingly when times were good then when hit with falling land values, low payout and extreme climatic swings imposed `unfriendly ' conditions such as increasing the interest rate margin on floating loans for farmers with less equity. Some banks inserted a clause into the mortgage agreement requiring the farmer to gain their permission to travel overseas.
Perhaps I am over influenced by my own situation but I believe that some banks have an `image' problem and will need to rebuild trust and as with any other service industries acknowledge that borrowers are customers and can shop elsewhere. I wonder if bank hierachy understand that life in a country area is different to a city due to the lower population . Farmers employ contractors and do business with people then socialise with the same people in sports clubs, Rotary, Lions etc so the relationship between customers and the service industry is one where reputations and loyalty are valued .
Borrowing and using someone elses money is a privilege but surely if the banks are prepared to lend to primary industry then they must understand there are swings and roundabouts due to weather and international prices and respond accordingly in a way that builds trust and loyalty not destroys it.
With regard to your question of using the higher payout to reduce debt. I cant offer any factual evidence but I think most farmers would now be operating without an overdraft and personally I am using the cash surplus from this current season and the 2011/2012 season to reduce debt. If the payout is still holding up for the 2012/2013 season then I think farmers will begin a cautious spend on farm maintenance and development. Of course any farmer with low indebtedness is already in a position to spend.
Why has the recession dragged on? Since the 60c increase in payout in February the banks MUST have been awash with farming funds . But the banks dont walk down the main street spending ..they send their profit to Australia and as we now know employ more staff for what purpose only the Lord and CEO's knows as by all accounts lending is stagnant or shrinking.
Cowhsit - Interesting you mention ASB - I have friends who recently moved from ASB. They had no debt and recently bought a 2nd farm. Their reason for moving was because when all was going well and they had their stash in the bank they were treated like the sh.t. Then once the 'hard times' rolled around the bank was wanting to be their best buddy.
The higher payout is certainly giving a lot of farmers choices about who they bank with.
We are looking at options for a new effluent system. Current analysis suggests we will need a budget of $150k for it. In our area there are another 139 farmers with effluent consent renewals in 2012 and many of them will be like us so I can't see a lot of 'consumer' spending from dairy farmers in our area either. Debt is the number one priority for those who have it.
staff numbers up - simply put business must be tough eh? most SME will consider their banks fair weather friends. the banks in pursuit of growing their mortgage books have forgotten what makes the economy tick and puts food on the table - SMEs. this is a large part of why lending is still contracting. individuals, SMEs are wary of skittish Banks.
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