Chief executive Vittoria Shortt said the result was a reflection of the broad economy and the financial pressures its customers were under. Photo: Supplied
ASB Bank's full-year profit has fallen as a weak economy and housing market hit its lending and margins.
Key numbers for the year ended June compared with a year ago:
- Net profit $1.45b vs $1.56b
- Cash profit $1.36b vs $1.51b (excludes one-offs)
- Total income $3.39b vs $3.49b
- Provisions $70m vs $64m
- Net interest margin 2.23% vs 2.39%
The bank's run of record annual profits ended with a 10 percent fall in its cash profit as borrowing demand slowed, and it paid higher interest rates for deposits which squeezed its margins.
Chief executive Vittoria Shortt said the result was a reflection of the broad economy and the financial pressures its customers were under.
"The majority of our borrowers are managing in the current environment, although there is no question this is a challenging time for a lot of New Zealanders."
She said fixed rate mortgages had probably peaked but it has had to offer support to more borrowers.
Shortt said there was still about 20 percent of its borrowers on cheaper rates and needing to refix but increases would likely be less than expected.
Overall lending was up 1 percent to $1.1 billion, with demand affected by tougher competition and subdued demand.
Its net interest income, the difference between what the bank pays for its funds and what it lends at, fell 5 percent to $2.8b, while its net interest margin fell 16 basis points, which hit overall income.
The amount set aside for bad and doubtful debts rose to $70m from $64m last year.
Shortt said the bank has committed more than $100m spending on fraud and scam protection systems and cyber security has increased and would reach more than $100m this year.