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ASB Net Operating Profit Up 11 Pct To $532m

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Aug 13 NZPA - ASB Bank, a unit of Commonwealth Bank of Australia (CBA), is reporting a full year net operating profit up 11 percent to $532 million.

ASB said the underlying strength of the corporate, business and rural markets had cushioned it against the rapid decline in residential housing activity in recent months.

The bank favours the operating profit as an indicator of its performance. That figure excludes some accounting adjustments which, when included, put net profit for the year to the end of June down 3.2 percent to $515m.

Chairman Gary Judd QC said the operating result was pleasing in an economy which, while slowing and undergoing change, remained fundamentally sound.

"Home lending activity has declined sharply this calendar year, although ASB has experienced less of a fall in volumes than the market," he said.

"Our financial markets, business and rural businesses continue to expand, demonstrating ASB's ability to take advantage of the economy's underlying resilience and depth."

ASB increased its loan impairment charge during the year to $40m, with total provisions on the balance sheet at $109m -- 0.18 percent of total assets. That reflected the overall high quality of the loan book, the bank said.

During the year ASB opened 10 new branches, relocated and upgraded another two, and increased employee numbers by 6 percent on a fulltime equivalent basis.

"As a result, and despite the subdued market, ASB has increased its retail market share, while also growing its business operations by 16 percent and its rural business by 31 percent," Mr Judd said.

Total deposits increased during the year by 13 percent to $54 billion, including several long term debt issues. Assets rose 12 percent to more than $59b.

CBA today lifted its reported profit by 7 percent and said volatility in financial markets was putting pressure on its funding costs.

Net profit for the year ended June 30 rose to $A4.791 billion ($NZ6.07 billion) while the bank's preferred measure of profitability, cash earnings, rose 5 percent to $A4.733 billion.

Australia's biggest bank by value said its impaired loan charge for the full year was $A930m, which was $A496m higher than in the previous year and up from $A333m in the 2007/08 first half.

NZPA WGT AAP mjd nb

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