Tax charge, impairments hurt ASB interim result
ASB Bank slumped to an overall loss of $10 million for the first half after taking a one-off tax charge and its underlying operating profit was down 16.5% on the same period last year at $199 million.
The drop in operating profit from $238 million in prior period was blamed on the tough economic conditions of the six months leading to December 31.
In a statement released today, the bank said its performance remained “solid” despite the tough trading conditions banks have been suffering from since the credit crunch began in late 2007.
However, ASB increased loan impairment charges across all asset classes during the period due to impacts from the recession.
The bank lifted loan impairment charges $60 million to $127 million compared to the December half last year.
In December, ABS reached a settlement with Inland Revenue that related to four structured finance transactions. The bank agreed to pay $264 million in tax and interest charges.
More than $200 million of the amount effects the taxation expense charge in this period. ANZ National, BNZ and Westpac also settled with the department.
ASB’s total assets decreased slightly by 1% to $64.6 billion, while the bank’s lending balanced grew by 3% to $54.1 billion. Home loan balances increased by 3.2% to $38.3 billion with market share remaining steady at 23.3%, with rural, commercial and corporate lending was up 2.5% to $13.5 billion.
ASB’s net interest margin deceased by one basis point from 1.64% in June 2009 to 1.63% in December. The bank blamed the higher cost of funding together with increased competition in deposits to local savers that intensified downward pressure on margins.
Total deposits increased to $57.6 billion up almost 1% on December 2008.
For the six-month period ordinary dividends totalling $70 million were paid to ASB’s New Zealand holding company.
No dividends were paid across the Tasman to the Commonwealth Bank of Australia – ABS Bank’s parent.