ASB Banks Mortgage Growth Returns in Second Half, Challenges Persist

Highlights:

• Mortgage Book Rebounds: ASB Bank's mortgage portfolio grew by over NZ$1 billion in the second half of the year, bringing the total to NZ$76.51 billion by June 30, 2024.
• Customer Support Initiatives: ASB supported over 40,000 customers in re-fixing their mortgages and facilitated home ownership for 4,600 first-time buyers amid rising interest rates.
• Profit Decline: Despite mortgage growth, ASB's net profit fell by 6.7% to NZ$1.46 billion, with net interest income down 3.8% and the net interest margin dropping by 16 basis points.

Mortgage Growth Amid Economic Headwinds

ASB Bank's mortgage book grew by over NZ$1 billion in the six months ending June 2024, reversing a decline seen in the first half of the year. By June 30, the bank's mortgage book stood at NZ$76.51 billion, marking a modest annual increase of NZ$488 million. According to Chief Executive Vittoria Shortt, the majority of ASB’s home loan customers are now paying interest rates above 6%, although around 20% are still on lower rates.

Support for Borrowers in Tough Times

ASB has actively reached out to more than 40,000 customers over the past year as they refixed their mortgages, providing support through over 10 reductions in home loan rates since November. Shortt highlighted the challenging environment for many New Zealanders but noted that most borrowers are managing their obligations. ASB has also facilitated home ownership for more than 4,600 first-time buyers and supported over 6,000 KiwiSaver customers in using their savings for home deposits.

Financial Performance Under Pressure

Despite the growth in its mortgage portfolio, ASB Bank's net profit for the year ended June 2024 fell by 6.7% to NZ$1.46 billion. This decline was driven by a 3.8% drop in net interest income to NZ$2.93 billion, alongside a 3% rise in expenses to nearly NZ$1.3 billion. The bank's net interest margin (NIM) also declined by 16 basis points from the previous year, reflecting the ongoing challenges in the financial environment. ASB's parent company, Commonwealth Bank of Australia (CBA), reported that ASB's NIM fell to 2.24% from 2.32% a year earlier, though it saw a slight recovery of 3 basis points between December and June.

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