Wednesday 20th August 2003
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This is the fourth consecutive year ASB Bank has achieved a greater than 20% increase in operating surplus.
Growth in all parts of the business has been at record levels. In the highly competitive home lending market the bank has increased its overall market share, both nationally and in the important Auckland market, advancing $6 billion in home loans. The vibrant housing market had a material impact on the levels of lending achieved, and the personal banking division and associated ASB home lending brands increased assets by 18% to $16.0 billion.
The bank's rural banking division has also performed exceptionally well. A 23% increase in rural lending for the year now positions ASB Bank as New Zealand's third largest rural lender, and good foundations are in place to further strengthen this segment of the bank's operations.
Good market share gains have also been achieved in institutional, commercial and business banking and ASB Bank is now a key banker to the business community. Lending to the business, commercial and institutional sectors increased by 12% to $3.7 billion.
Total assets increased by 13% to $27.5 billion.
ASB Bank's Internet banking service also continues to expand. An ongoing focus in this area has seen more and more customers transact their business through the Bank's Fastnet Internet channel, and now more than two million transactions are processed online each month.
An ongoing focus on productivity improvement saw the bank's cost to income ratio fall below 50% for the first time, reducing from 51.3% last year to 47.9%. During the period total operating expenses increased by 10% to $407 million.
Gross operating income for the bank at $851 million was up 18%, with $620 million coming from net interest margin. Other income at $230 million was up 7%. Income derived from transaction fees and services represented less than 10% of the bank's gross operating income.
Half the bank's total lending is self funded, with customer deposits increasing during the year by 15% to $14 billion and total deposits, including treasury deposits, increasing by 13% to $25.6 billion.
Income from the provision of financial services such as managed funds, insurances and sharebroking was $46.7 million, an increase of 16%. Funds under management at year-end had increased by 25% to $1.4 billion.
The bank's operating surplus allowed for provisioning for taxation of $140.8 million (up 28%) and for debt provisioning of $24.8 million (up 38%). Total doubtful debts provisioning at year end stood at $89 million.
Return on ordinary shareholders' funds for the year was 25.43% and return on total average assets was 1.07%. The risk weighted capital adequacy ratio was 10.26% against a Reserve Bank of New Zealand minimum requirement of 8%.
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