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ASB profit up 40% as home lending soars

ASB's yearly profit has surged to a record $1.32 billion, aided by a 12% increase in home lending in the year to June.

Wednesday, August 11th 2021, 11:13AM 3 Comments

The big four bank posted a 39% increase in statutory net profit after tax in the year to June 30.

ASB's profits were fuelled by a 10% increase in total lending. Home lending jumped by 12%, helped by a "buoyant property market", as the bank supported more than 15,000 first home buyers over the period.

Business lending rose by 9% compared to the prior year, while operating expenses grew by 5%. Loan impairments decreased by $311 million.

ASB chief executive Vittoria Shortt said the pandemic was far from over, despite the positive figures.

"A decisive response from government and our banking system supported Kiwi businesses and households to be resilient during the pandemic. While a balanced recovery is still a significant way off, ASB is in a strong position to keep supporting Kiwis as we work together towards a productive and sustainable New Zealand."

ASB's net interest margin improved by six basis points over the year, driven by "stable funding costs and changes in ASB's deposits and lending portfolios, with increased preference for fixed term loans and at call accounts in the low interest rate environment", the bank said.

The bank hailed its decision to limit investor lending over the year, and said it would continue to support first home buyers.

"We continue to offer low home loan rates and have taken a responsible approach to LVR settings."

The lender said its Back My Build 1.79% mortgage rate had been a hit with borrowers.

"Demand for Back My Build has significantly exceeded expectations – in just over a month, we received applications to support the construction of around 3,000 new homes," Shortt added.

Tags: ASB home loans Lending

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Comments from our readers

On 12 August 2021 at 10:09 am valkyrie6 said:
wouldn't this surge in profit also be accounted for by ASB closing down over 30 branches in Auckland alone, rent apart from wages would be one of its biggest overheads Yes ?
On 12 August 2021 at 1:07 pm Amused said:
Yes valkyrie6 that's definitely helped their cause. I would like to see ASB provide some stats as to the level of business they are receiving currently from mortgage advisers across every single region of New Zealand including submission to actual drawdown. I do not believe that more mortgage advisers are settling business now with ASB than they were 5 years ago.

When dealing with ASB nowadays as a mortgage adviser you really need to prepare yourself in advance for disappointment, pre-warn your customer AND have a back-up plan i.e. another lender option up your sleeve. ASB services levels to mortgage advisers and our customers nowadays are tragic because they simply don't have enough staff employed for the level of business been sent to them. What staff ASB do have are over worked, over stressed, not being supported and looking to move to another employer.

Operationally ASB has become a nightmare with them seemingly incapable of signing anything off at a local level without having to secure a credit manager's approval. ASB are continually asking their existing home loan customers for new valuations which speaks volumes about the bank potentially having capital constraints. Plus if you start encouraging your home loan customers to reduce their undrawn Orbit home loan limit by charging them a higher monthly fee it doesn't take a genius to understand what's happening there behind the scenes.

It really is a crying shame as ASB used to be such a fantastic organisation to deal with and to recommend to customers for a home loan. Was almost a no brainer 5 years ago to place business with them. Now unfortunately when looking out for your customer's best interests you really have to give ASB a wide berth unless you have any other option available to use which meets your customer’s financial objectives.

But hey as long as the bank's profit is up that's all that matters!
On 13 August 2021 at 1:09 pm Veteran Charles said:
Dear Amused - wait one, I would have said the same a year ago but recent experience with ASB broker channels has been much much better - to the extent that I have been using them with optimism and hope, and getting good results. Seriously, it seems to have turned around - certainly in the Wellington region.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.85 3.25 3.55
ANZ 4.44 3.20 3.59 4.00
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.60 2.99 3.40
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.85 3.25 3.55
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.85 3.25 3.55
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.55 3.45 3.85 4.15
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 ▲2.45 ▲2.85 ▲3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.75 ▲3.80 ▲4.00 4.34
Kiwibank - Offset 3.75 - - -
Kiwibank Special 3.75 ▲2.95 ▲3.15 3.49
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 2.99 3.39 3.59
SBS Bank Special - 2.49 2.89 3.09
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - ▲2.65 - -
The Co-operative Bank - Owner Occ 4.40 ▲2.85 ▲3.25 ▲3.49
The Co-operative Bank - Standard 4.40 ▲3.35 ▲3.75 ▲3.99
TSB Bank 5.34 3.35 3.75 4.05
TSB Special 4.54 2.55 2.95 3.25
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.59 3.45 3.85 4.09
Westpac - Offset 4.59 - - -
Westpac Special - 2.85 3.25 3.49
Median 4.54 2.95 3.25 3.49

Last updated: 28 September 2021 9:12am

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