MSN -NZ Money AAP 14 August 2013
ASB Bank, the New Zealand unit of Commonwealth Bank of Australia, has reported a record cash profit of nearly $700 million.
It boosted its full-year cash profit 12 per cent as it grew its wealth and insurance business and kept a lid on costs.
Cash profit, which excludes one-time items that don't reflect the underlying business, rose to $699 million in the 12 months ended June 30, the company said in a statement on Wednesday.
The bank's wealth and insurance business posted income growth of 22 per cent.
"ASB's strengthened performance over the past financial year was achieved against the background of a steadily improving New Zealand economy," ASB chief executive Barbara Chapman said in a statement.
The earnings "have been underpinned by our continued focus on executing our long-term strategy while at the same time maintaining disciplined cost control and a prudent risk management profile."
Commonwealth Bank, Australia's largest lender, posted a record annual cash profit of $A7.82 billion ($NZ8.91b) on higher earnings from retail banking, fees and trading income.
As the first of Australia's big four banks to report profits, Commonwealth Bank is seen a barometer for upcoming industry earnings.
In the latest year, ASB said it had a strong net interest margin performance, rising to 2.25 per cent from 2.16 per cent a year earlier.
Despite uncertainty about the European and US economies, Ms Chapman said she was confident ASB would continue to deliver profitable growth.
ASB's Wealth and Insurance business improved as investment in its KiwiSaver scheme grew 29 per cent to $2.9b.
The New Zealand business had seen a reduction of operating expenses as a percentage of total income to 41.1 per cent from 42.6 per cent, the company said.
Customer deposits increased 6 per cent to $41.3b, while loans to customers rose 8.9 per cent to $57.7b.
ASB set aside $56 million for bad debts, up 19 per cent on the year earlier. The company said the increase was expected as provisioning returned to more normal levels from a low in the prior period.
Australia & New Zealand Banking Group is scheduled to report third-quarter earnings on August 16 and National Australia Bank announces its quarterly results on August 20.
Westpac doesn't update investors on its quarterly performance. For Commonwealth Bank, the fiscal year ends in June, compared with September for its main competitors.