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ASB lauds fixed rate rollovers

ASB talked up its investments in digital technology, such as its fixed rate rollover tool, when it announced its first-ever $1 billion profit, but one of its first ventures into offering new services to customers looks doomed.

Wednesday, August 9th 2017, 6:09PM

ASB says around 70% of its fixed rate rollovers are being done on its online platform.

Chief executive Barbara Chapman highlighted the rollover tool when the bank released its annual profit results.

ASB has, for the first time, cracked the $1 billion profit mark. [Details on the numbers here]

She says it’s been a “phenomenal success”. The tool is, she says, an example of where ASB is making investments in technology and innovation.

With the online functionality “customers no longer require staff assistance to re-fix their home loan rate. Instead, they can access personalised pricing and complete their re-fix when and where it suits them.”

The tool hasn’t been well-received by mortgage advisers.

While the bank was investing in new tools its earlier foray into banking without branches and using internet tools looks doomed.

Bank Direct was established in 1997 and originally offered lower home loan rates and higher rates on savings accounts because it didn't have branches and used the internet.

It was set up for early adopters of technology and was fronted with high profile people such as Fine Young Cannibal's singer Roland Gift.

Chapman suggested the future of its subsidiary bank, Bank Direct, was uncertain as it wasn't living up to its promise.

“I worry Bank Direct isn’t living up to its promise.”

She said its customers would now get a better offering through ASB Bank.

She didn’t give a definitive answer on the future of Bank Direct.

Lending volumes up

On the lending front home loan volumes were up 7% compared to the previous year, while commercial and rural lending was up 11%.

“This contributed to an increase in total customer lending of 8% on the previous financial year. At the same time, customer deposits grew by 6% in a highly competitive market for bank deposits.”

While other banks have highlighted issues with the funding gap, and the need to raise money offshore, Chapman wasn’t concerned.

She says funds were readily available offshore, albeit more expensive than local funding.

Overall, the bank’s net interest margin remained under pressure, falling by 15 basis points. “This reduction was driven by a combination of increased funding costs and higher net costs relating to customers breaking fixed rate loans,” Chapman says.

ASB, like other banks, introduced a series of home loan rate hikes earlier this year to help restore margins.

Previously, ASB had talked about its positioning in the home loan market and how, at times was holding back.

This time the answer was “I wouldn’t want to signal our intentions to competitors.”

Chapman said the Reserve Bank’s lending restrictions had been working, especially in Auckland and that was good.

When asked if it was time for the restrictions to be eased she responded: “I’m not going to give any guidance to the Reserve Bank.”

ASB recorded a positive experience its loan impairments reducing by 47% (-$61m), primarily due to the continuing recovery of the dairy sector.

ASB’s parent company CBA provided a detail breakdown of its loan portfolios for CBA and subsidiary Royal Bank of Scotland. Other banks in New Zealand, including ANZ and BNZ release this information too

TMM has requested a breakdown of ASB’s loan portfolio, but this hasn't been forthcoming.

Tags: ASB banks Barbara Chapman Lending Mortgage Advisers Reserve Bank technology

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

Last updated: 13 July 2020 7:38am

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