Episode Transcript
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Speaker 1 (00:00):
Now, ASB started slashing its mortgage interest rates, one of
three banks, just minutes after the Reserve Bank dropped the
official cash rate by a quarter of a percent this afternoon.
It's been a big day for ASB. Earlier this morning
it announced its run of record profits is over and
your profit dropped seven percent from last year's record high.
It's now down to one point five five nine billion
dollars in the year to the end of June. Victoria
(00:21):
Short is asb's chief executive. Hey Vittoria, Hey Heather, were
you surprised by the cut today?
Speaker 2 (00:27):
Well, actually, our ASP economics team we're picking a twenty
five basis point. CAT acknowledged it was going to be
finally balanced, but it is what they were picking. So
I think it's good news for New Zealand.
Speaker 1 (00:40):
Did you not, though, find yourself doing this because I
did and thinking, yeah, it should be a caut Everything
shows it should be a cut. But Adrian's got an ego.
Speaker 2 (00:49):
I think we looked at the fundamentals around you know,
we go back to why have the interest rates been
held high? To get inflation under control? And that's been
number one priority for all of us. So you know,
we've seen inflation coming down. The big question is is
it going to be coming down sustainably to a low
enough level. And that seems to be occurring, which is great.
(01:12):
But there's one call out that I think was important
in the sort of judgment, and that's material weakening of
the domestic economic activity. So I think they are you know,
they're calling that out as one of the reasons for
the cat So we can't walk past that.
Speaker 1 (01:32):
No, that's fair enough. I see you guys cut your
rates obviously immediately, which is great, but why are they
only taking effect next week?
Speaker 2 (01:39):
Yeah, we've got a little bit of time. We've got
sort of some legal processes, which means that we have
to adjust terms and conditions and make sure we get
all of our disclosures are ready to go, and so
that's why there's a little bit of a lag between
the announcement and when they are effective.
Speaker 1 (01:56):
Is it a relief to you? I mean, obviously, you
guys have this high interest rate environment has been heading
your profits. So are you relieved?
Speaker 2 (02:04):
So? I think it's a really good thing for New
Zealand households and New Zealand businesses. So we've already been
reducing our fixed home loan rates. We started doing that
last year, so we've reduced them already by sixty basis points.
So this is really a continuation for us. But I
think what it's signaling for the country is that inflation
(02:28):
is getting under control and therefore the ocr can start
to come down, and that's a really important signal.
Speaker 1 (02:35):
Are you of the view that we need to also
temper oury expectations though? Is everybody's going to get super
excited about this, but actually it's going to take us
a while to build ourselves back up.
Speaker 2 (02:44):
Yeah. Look, you know, to your point, it is going
to take time for this to really flow through the economy.
We are thinking that twenty twenty five is going to
be a really different year. We are expecting that credit
growth to build for businesses. We are expecting there to
be upward pressure on homelan prices as a result. So
(03:08):
we do think it's going to build over time, and
we don't think this is the last cart either.
Speaker 1 (03:13):
What are you expecting before the end of the year
another twenty five basis points?
Speaker 2 (03:18):
Yeah, so at this stage where we're still calibrating, will
definitely depend on the data and how we see the
data evolving. On inflation and also you know, economic activity.
But we have about another fifty basis points that we
think could come out before Christmas.
Speaker 1 (03:33):
Now, Victoria, listen, you got the ComCom report coming out
next week, the banking report. Are you guys going to
get hammered in this?
Speaker 2 (03:40):
Well? I think the interesting question is how different is
the final report going to be from the draft report?
And I guess the only person who can answer that
is really the head of ComCom.
Speaker 1 (03:50):
What have you heard.
Speaker 2 (03:53):
Nothing from ComCom? So you know we'll all be revealed
next week?
Speaker 1 (03:57):
Are you going to get hammered by the government with
its rural banking report?
Speaker 2 (04:01):
I'm really looking forward to to sort of answering some
of the questions that have been asked about the rules sector,
but also about business lending too. So, just like the
market study, I think it's a really good opportunity to get,
you know, the right questions on the table and really
get into them.
Speaker 1 (04:19):
Yeah, well, why do you want to answer those questions?
Is it because people have got themselves worked up unfairly
about you guys?
Speaker 2 (04:26):
Look, I think there's a lot of things that I
hear that I've got a view on, and so it's
going to be a good chance to actually share those views.
And that's the whole point of it.
Speaker 1 (04:37):
As a KEI, we do you support the capitalization of kiwibank.
Speaker 2 (04:43):
Ah. I don't think Kybank's a good topic for me.
So that's something that's the best left with those who
are in charge of that decision.
Speaker 1 (04:52):
Fair point. Hey, listen, I've got to ask you. I mean,
this is a key and I'm sorry, and nobody likes
talking about their pay but I've got to ask you
about it. How did you go over toy from two
million to five million in the space of a year.
Speaker 2 (05:04):
Yeah, Look, this year in terms of my rem, it's
a highly unusual rem. It includes payments related to multiple
years since twenty nineteen. But what you're really getting at
is that, you know, I recognize this that executive rem
is controversial and particularly in this environment. So it's set
(05:26):
by the board and it's based on the market benchmark,
and that's you know, that's really the approach to the
board takes.
Speaker 1 (05:32):
Not at all what I was getting at. I was
just trying to get a tip from you on on how.
Speaker 2 (05:36):
To do it. Well, it's like I say, it's multi
it's a strange year and it's multiple years starting from
twenty nineteen, so the ten consent through some data if
you're interested.
Speaker 1 (05:47):
Yeah, and who am I kidding? I'm not up five
million dollars in the media. Geez, Victoria, Thank you very much.
Vittoria short asb's chief executive. For more from Heather duplessy
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