ASB has announced its half-year profit is down 12%, reporting a cash net profit after tax of $707 million.
It said its $707m profit for the six months to December 31 2023 was a decrease of $96m — or 12% — on the year prior.
The bank said its statutory net profit after tax is $749m for the six months to December 31 2023, a decrease of $91m or 11% on the prior period.
Last year ASB had announced a jump in profits.
"Bank profitability is inextricably linked to the New Zealand economy and the environment in which we are operating, and the interest rate cycle has been a big influencing factor on the results we've posted," ASB chief executive Vittoria Shortt explained.
"The past five years have seen the official cash rate fall to a record low, followed by the steepest increase in the history of the OCR. This increase has had an impact on bank funding costs, including higher offshore funding costs."
Shortt said ASB's total lending for the six months to December 31 declined 1%. Home, business and rural lending was down 1%, while total customer deposits grew 4% as customers took advantage of higher term deposit rates.
"This financial year we've offered some of the best term deposit rates New Zealand has seen in 15 years. We have more than 1.2 million savings and deposit customers, compared with around 230,000 customers with home loans and we've been pleased to see deposit customers benefiting from increased interest rates, after a period of low interest rates."
However, reduced net interest margin had resulted in a decline in total operating income of 8%. Short said operating expenses had increased 6% to $648m, including further investment in technology and increased salary and wage costs.
Shortt pointed out that despite this, the bank's capital position remains very strong — total capital of $10.9 billion at December 2023.
She explained this represents a capital ratio of 15.5%, which is "well above" the 12.5% required by the Reserve Bank of New Zealand.
Support as customers move to higher interest rates
Shortt said the bank was "proactively" contacting business and personal lending customers to provide support as they move to higher interest rates.
She explained more than two-thirds of ASB's home lending customers are now paying rates higher than 6%.
"We are pleased the vast majority are managing well. I would really encourage any customers who do have concerns to reach out to us, our team is here to help."
Shortt said the bank had launched Spend Tracker in November to help customers better understand and manage their finances.
"We also recently removed a range of fees, including Visa Debit account fees, on around 800,000 accounts, in addition to removing monthly fees on around 160,000 business and personal accounts in the prior financial year."
Efforts to prevent fraud, scams, financial crime
Shortt said ASB expects to spend almost $100m this financial year on preventing fraud and scams, financial crime and on cybersecurity.
She said from the end of February the bank would extend its fraud line — 0800 ASB FRAUD — to operate 24/7.
The bank had invested $43m in the prevention of financial crime including fraud, scams and cybercrime.
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