ASB reviewing operations following scathing report
Bank reports 6 per cent boost in half-year profit
The ASB is reviewing its operations following the Australian Royal Banking Commission report which was scathing of behaviour by institutions, including the bank’s parent, the Commonwealth Bank.
ASB chief executive Vittoria Shortt said the bank was reviewing which of the 76 recommendations could apply here, but any that did would be tested against her company’s operations.
“Anything that does we will absolutely take on board and test our own model. It is something that we have always done [and] will continue to do.”
ASB yesterday reported a net profit of $630 million for the six months ended 31 December.
This represents a 6 per cent increase on the profit made during the same period the previous year.
Shortt noted that while the New Zealand economy remained sound, there were some concerns on the horizon. “We have observed a cooling housing market, weaker business sentiment and softening immigration, combined with an uncertain global outlook,” she said in a statement.
Despite its solid result, ASB did see loan impairment expenses, which includes write-offs for bad debts, increase by 73 per cent to $45m.
“Overall we have seen stable portfolio quality, supported by steady economic conditions, however, we have seen a slight increase in provisioning for our rural portfolio,” Shortt said.
The ASB result comes off the back of the Australian Royal Banking Commission report, which slammed the conduct of the banking industry for its treatment of customers.
ASB is owned by Australia’s Commonwealth Bank, which faced a grilling during the commission.
Shortt didn’t mention the report outright but did note that the local arm of the Australian-owned bank would take heed of recommendations from local regulators.
“The increasing expectations of our various stakeholders including customers, government, the community and regulators, is a responsibility we take extremely seriously,” Shortt said. “In the past few months, we have had the benefit of independent reviews undertaken by the FMA, RBNZ and APRA. This has allowed us to take stock of where we are today and has informed our future roadmap.
“We are committed to listening and learning from our customers as well as working productively with our regulators to implement their recommendations, all of which we believe will result in a better banking experience for our customers.”
Analysts widely predicted that the Royal Banking Commission would have an impact on the results of the Commonwealth Bank — and this does seem to be the case.
A report from the ABC notes the Commonwealth Bank saw a 6 per cent fall in its net profit A$4.6 billion, stemming from costs associated with fixing historic misconduct issues as well as tighter margins and rising costs. This result was slightly below expectations.
Anything that does [apply] we will absolutely take on board and test our own model.
Vittoria Shortt, ASB chief executive