ASB Bank expects business lending to remain subdued as companies stay cautious and focus on deleveraging post recession. Revealing a flat full-year net profit of $428 million yesterday, ASB chief executive Charles Pink yesterday said market demand wa
ASB Bank expects business lending to remain subdued as companies stay cautious and focus on deleveraging post recession.
Revealing a flat full-year net profit of $428 million yesterday, ASB chief executive Charles Pink yesterday said market demand was subdued and he didn’t expect to see any immediate change.
ASB’s business lending fell just under 2% to $6.8 billion for the year, against a 7.3% decline in the market overall.
This was driven by the commercial property market slump, debt deleveraging by businesses and a reduction in economic activity post recession.
“There’s lots of talk about businesses being cautious for new projects and deleveraging after the boom,” said Mr Pink.
ASB was underrepresented in business banking, which comprised less than 10% of all its lending, he said.
“But we’re open for business lending and want to do more.”
ASB, owned by Commonwealth Bank of Australia, said its full-year result was impacted by the one-off $209 million tax charge settlement with Inland Revenue last year, which affected all major banks, and a $17 million perpetual dividend payment.
Stripping out those one-offs, net profit of $428 million for the year to June 30 was down just $3 million on the same time last year.
Mr Pink said there was no material impact on the result from the Stephen Versalko fraud case.
ASB grew retail deposits by 5%, yet competition for retail deposits remained brutally competitive as funding costs remained high now banks are required to raise more of their deposits locally following changes to the Reserve Bank’s core funding ratio.
An improving economy had seen ASB’s loan impairments almost halved to $125 million from $238 million.
Total assets declined by 2.6 5 to $63.6 billion over the year and lending grew 0.8% to $53.8 billion.
The bank's home loan market share remaining steady at 23%.
ASB is investing $100 million to open 25 new branches across the country – 12 of those within the next year -- and refurbish 117 over the next five years.
In July 2013 head office will relocate to a $160m building at Auckland's North Wharf in the Wynyard Quarter.
The bank was also spending $200 million to upgrade technology for its core banking systems.
In May the ASB KiwiSaver Scheme had reached $1 billion, making it the single largest scheme in the country.
