ASB improves half-year result

Wednesday 9th February 2011

A drop in loan impairment expenses is seen as the main factor in an improvement in bank ASB's half year statutory net profit to $283 million.

ASB today said the impairment loss charge of $36 million for the six months to the end of December compared with $127 million for the same period in 2009, when the profit was $199 million before making a provision of $209 million for a conduit tax expense.

Net interest earnings rose to $622 million from $506 million, as interest income fell to $1.95 billion from $1.98 billion and interest expense also fell.

ASB chairman Gary Judd QC said the shift in the impairment loss charge was the main contributor to the improved first half year profit.

Total deposits remained steady, with $56 billion at the end of the half year, while retail deposits grew 5.8% year-on-year to $33 billion.

"Lending volumes have remained steady in an environment where consumers of credit are justifiably cautious," Judd said.

"This meant home loan balances were flat, with demand across the rural and business markets also being weak as we saw a continued business focus on debt deleveraging and contraction."

ASB said its half year operating performance - profit before impairment and tax - rose 7.1% in the latest half year to $440 million, while total assets reduced to $63 billion from $65 billion as ASB's home lending market share slipped to 22.4% from 23%.

Impairment provisions dropped 23.2% from a year earlier to $261 million at the end of December.

Collective and individually assessed impairment provisions dropped to 0.41% of total assets, down from 0.53% in December 2009.

Seven new branches opened during 2010, with another six due to be open by August, as part of a strategy to expand the network into areas of greatest customer demand, ASB said.

NZPA

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