Halfyear profit drop of 1% shows NZ resilience, ASB says

AUCKLAND: ASB’s cash net profit dropped just 1%, or $6 million, to $614 million for the six months to December 31.

The bank’s operating income rose 1% to $1.404 billion, while its expenses were up 3% to $521 million.

ASB chief executive Vittoria Shortt said the result reflected the continued resilience of the New Zealand economy in the face of Covid19.

The bank had a big boost to its home loan business, the value of which rose 9% to $64.45 billion.

Business lending was up 3% to $18.1 billion, while rural lending was flat at $11 billion. Deposits rose 6% to $63.64 billion.

Its net interest margin fell 6 basis points from a year earlier to 2.09% but was flat compared with the June half year.

The biggest percentage rise was in its loan impairment expense, which rose from $22 million to $30 million comparing the December 2020 half to the December 2019 half year, bringing the total provision to $604 million.

Arrears for both its home loans and consumer finance ticked up over the year. Home loan arrears past due by more than 90 days rose from 0.14% to 0.18%.

For consumer loans, arrears past 90 days rose from 0.59% to 0.74%.

Ms Shortt said the bank remained confident about New Zealand’s ability to remain resilient to the challenges of Covid19, but the past 12 months had taught it to expect the unexpected.

‘‘That is why we have made a conscious decision to continue to provision for the uncertainties surrounding the pandemic and its possible longterm effects.’’

The number of fulltime equivalent staff rose 6% to 5381.

The bank this week announced there would be no forced sales of owneroccupied family homes this year for ASB customers.

Ms Shortt said banks played an important role in the financial wellbeing of New Zealanders, and it knew the year ahead would be difficult for some.

‘‘That is why ASB is making a commitment today to keep Kiwi families in their homes.

‘‘Mortgagee sales are uncommon, and they are always the last resort, however, we are taking this step to give customers added peace of mind during what is a very worrying time for some.’’

ASB parent Commonwealth Bank of Australia’s net profit after tax fell 21% from $A6.16 billion ($NZ6.5 billion) to $A4.88 billion for the six months to December 31.

Its cash profit was $A3.89 billion, down 11% from $A4.36 billion.

It will pay a dividend of $A1.50 per share. — The New Zealand Herald