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ASB focusing on sustainable growth

ASB focusing on sustainable growth

(14 August 2015 – New Zealand) ASB Bank reported a 7 percent rise in annual net profit to a record NZ$859 million (A$768.8 million) which chief executive Barbara Chapman said reflected the bank’s focus on sustainable growth.

Cash profit, which excludes volatile or one-off items, rose 9 percent to NZ$846 million in the year to June 30.

"This was an across the board performance with all areas of the business contributing to the result," Chapman said.

Operating income, which rose 5.8 percent to NZ$2.09 billion, was affected by hedging volatility following a sharp fall in wholesale interest rates.

"Excluding this volatility, underlying growth of 8 percent was influenced by strong business and rural lending growth of 14 percent on the previous financial year," Chapman said.

The bank's loan impairment expenses rose 59 percent on the previous year to NZ$89 million.

ASB said the increase was largely due to growth in impairments across all lending portfolios.

Home loan arrears rates were "stabilising" compared with decreases in the prior year, while rural provisioning had increased, the bank said.

Dairy farmers, many of whom have high debt levels, are facing financial pressure following a slump in commodity prices.

ASB said its net interest margin rose 0.06 percent to 2.44 percent year-on-year, while operating expenses rose 5 percent to NZ$805 million as a result of "inflationary-related salary increases and continued investment in frontline capability".

Total loans rose 8 percent to NZ$65.4 billion.

The bank's expense to income ratio of 38.6 percent was an improvement of 30 basis points.

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