February 12, 2025 • 6 mins
ASB is reporting a one percent increase in net profit, for last year's second half.
Profit margins remained flat, but home lending grew five percent and business and rural lending increased two percent.
CEO Vittoria Short says this is a sign the economy is turning a corner for the better after a lengthy downturn.
"Inflation's back in target range, we know that the OCR or interest rates are moving downwards to more neutral levels and what we can see is that our customers, who have been doing it tough and are stressed - our actions are helping."
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Speaker 1 (00:00):
Right now. ASB has declared a net profit after tax
of seven hundred and sixteen million dollars for the six
months to December. That is up one percent on the
same period the year before. The bank says home and
rural lending grew, but operating expenses have increased for everybody.
It comes as the government's investigating banks and whether they're
(00:20):
competitive enough. So I'm joined now by the asb's CEO,
Victoria Short. Hello Victoria, Hi Andrew, how are you good?
Nice little tick up from last year and so can
we take from that at corner has been turned in
the economy.
Speaker 2 (00:33):
Yeah, Well, the way that we're describing it is we
think that the economic recovery is beginning, and we know
that inflation's back in target range. We know that the
OCR or interstrates and moving downwards to more neutral levels.
And what we can see is that our customers who
have been doing it taugh in our stress the actions
(00:54):
are really helping actions. They're taking the actions that we
can take to support them, and so we are starting
to see customers moving out of stress situations.
Speaker 1 (01:03):
You have described any future recovery as gradual. What do
you mean by that it takes time?
Speaker 2 (01:10):
For some of these things to flow through. So, for example,
about eighty percent of our business or rural customers have
been on variable loans, and with variable loans, we pass
through those cash rates very quickly. But we know that,
for example, people with home loans are mostly fixed and
around forty five percent of our fixed blending homeowners will
(01:34):
they will go into a lower rate by June and
about seventy percent by Christmas, so it's taking some time
for the benefits of these lower rates to flow through
and be felt by our particular homeowers.
Speaker 1 (01:47):
You've also described it as the most difficult economic cycle
and a generation. So how bad has it been at
its worst?
Speaker 2 (01:56):
Yeah, I think you know what I say. Well, the
way that I'm really thinking about that is the global
financial crisis had some serious impacts around the world, but
wasn't felt as much in New Zealand. When we think
about what we've gone through recently with COVID and all
of the challenges with lockdowns and and the like, it
(02:18):
has been a really difficult period for businesses and households alike,
and they've been making a lot of adjustments. So that's
why we say that it really has been a particularly
difficult period, and then also a lot of confusion. You know,
rates have gone down quickly, they've come up quickly, they're
going back down again, and so key decisions around lending
(02:43):
and when to fix the weather to float. It's been
quite confusing for people.
Speaker 1 (02:47):
Now you've been dropping interest rates. Your lowest rate is
currently the eighteen month rate that's at five point one
nine percent. When do you think we'll break the five
percent barrier?
Speaker 2 (02:57):
Yeah, so hard to tell. I think you know what
we're saying. You know, our economists believe that we'll see
a fifty point decrease next week with the ocr call,
and we're expecting another two twenty five drops, so one
hundred basis points to climb in the cash rate for
this year. So that's our expectations. But we're also quite
(03:18):
quick to say, you know, people need to be thoughtful
because interest rates can change depending on world events, and
we've seen a lot of that over the last few years,
so we need to be.
Speaker 1 (03:29):
Cautious to Now, Shane Jones is waging a war against
what he calls woke banking. So what do you make
of his bill? It would limit who you can do
business with.
Speaker 2 (03:39):
Yeah, look, I think you know he's posing some good
questions that need a discussion, and I think it's important
that to start with, New Zealand has set a net
zero target and the government has actually reconfirmed its commitment
to their target, So it really starts there. You know.
For asb the way we think about it, it's about
supporting our customers and how they transition. So for our
(04:02):
customers who are fuel retailers, you know, this transition is
front and center of their business planning and thinking, and
we want to support them with those transition activities.
Speaker 1 (04:13):
But a service station operator who's just trying to do
an honest business and catering for a need that exists,
feels are done by.
Speaker 2 (04:21):
Well, we're supporting those customers. I guess that's the point
I'm trying to make. You know, we support fuel retailers.
We continue to and it's part of what we see
is our job in supporting a transition.
Speaker 1 (04:33):
Open banking now, the government is very hot on this.
Have you got it running? And if you do, oh
you have that's good people using it?
Speaker 2 (04:41):
Yes, so open banking. So yes, we delivered. The whole
industry delivered two big APIs as we call them, selets
that interfaces or technology, interfaces between ourselves and our customers,
information and FinTechs. In essence, we have five FinTechs that
(05:02):
are live using those that technology, if you like. But
I guess one of the things that we noticed from
around the world is open banking just really hasn't had
significant take ups. So what we want to make sure
we get right is the safety of customers data and information.
That's really important, and.
Speaker 1 (05:21):
The education obviously. And finally, you are a CEO of
a very big company which has international ownership. Do you
have an opinion on New Zealand's corporate tax levels and
whether they should be lowered and if they were, would
that attract more foreign investment?
Speaker 2 (05:36):
Yeah? Look, I think there's quite a lot in that question,
but you know, the government the government's job to understand
tax and make the appropriate settings based on how it
says the box. So I think I'll leave that sort
of job to the government. But I do think the
point around foreign investment is a really important one to consider.
(05:58):
New Zealand really needs international investment, and I think it's
important to make sure we're not sending mixed signals.
Speaker 1 (06:06):
Very good Victoria Shored, the CEO of the ASP I
thank you for your time today that
Speaker 2 (06:11):
For more from Heather Duplessy Allen Drive, Listen live to
news talks they'd be from four pm weekdays, or follow
the podcast on iHeartRadio
Right now. ASB has declared a net profit after tax
of seven hundred and sixteen million dollars for the six
months to December. That is up one percent on the
same period the year before. The bank says home and
rural lending grew, but operating expenses have increased for everybody.
It comes as the government's investigating banks and whether they're
(00:20):
competitive enough. So I'm joined now by the asb's CEO,
Victoria Short. Hello Victoria, Hi Andrew, how are you good?
Nice little tick up from last year and so can
we take from that at corner has been turned in
the economy.
Speaker 2 (00:33):
Yeah, Well, the way that we're describing it is we
think that the economic recovery is beginning, and we know
that inflation's back in target range. We know that the
OCR or interstrates and moving downwards to more neutral levels.
And what we can see is that our customers who
have been doing it taugh in our stress the actions
(00:54):
are really helping actions. They're taking the actions that we
can take to support them, and so we are starting
to see customers moving out of stress situations.
Speaker 1 (01:03):
You have described any future recovery as gradual. What do
you mean by that it takes time?
Speaker 2 (01:10):
For some of these things to flow through. So, for example,
about eighty percent of our business or rural customers have
been on variable loans, and with variable loans, we pass
through those cash rates very quickly. But we know that,
for example, people with home loans are mostly fixed and
around forty five percent of our fixed blending homeowners will
(01:34):
they will go into a lower rate by June and
about seventy percent by Christmas, so it's taking some time
for the benefits of these lower rates to flow through
and be felt by our particular homeowers.
Speaker 1 (01:47):
You've also described it as the most difficult economic cycle
and a generation. So how bad has it been at
its worst?
Speaker 2 (01:56):
Yeah, I think you know what I say. Well, the
way that I'm really thinking about that is the global
financial crisis had some serious impacts around the world, but
wasn't felt as much in New Zealand. When we think
about what we've gone through recently with COVID and all
of the challenges with lockdowns and and the like, it
(02:18):
has been a really difficult period for businesses and households alike,
and they've been making a lot of adjustments. So that's
why we say that it really has been a particularly
difficult period, and then also a lot of confusion. You know,
rates have gone down quickly, they've come up quickly, they're
going back down again, and so key decisions around lending
(02:43):
and when to fix the weather to float. It's been
quite confusing for people.
Speaker 1 (02:47):
Now you've been dropping interest rates. Your lowest rate is
currently the eighteen month rate that's at five point one
nine percent. When do you think we'll break the five
percent barrier?
Speaker 2 (02:57):
Yeah, so hard to tell. I think you know what
we're saying. You know, our economists believe that we'll see
a fifty point decrease next week with the ocr call,
and we're expecting another two twenty five drops, so one
hundred basis points to climb in the cash rate for
this year. So that's our expectations. But we're also quite
(03:18):
quick to say, you know, people need to be thoughtful
because interest rates can change depending on world events, and
we've seen a lot of that over the last few years,
so we need to be.
Speaker 1 (03:29):
Cautious to Now, Shane Jones is waging a war against
what he calls woke banking. So what do you make
of his bill? It would limit who you can do
business with.
Speaker 2 (03:39):
Yeah, look, I think you know he's posing some good
questions that need a discussion, and I think it's important
that to start with, New Zealand has set a net
zero target and the government has actually reconfirmed its commitment
to their target, So it really starts there. You know.
For asb the way we think about it, it's about
supporting our customers and how they transition. So for our
(04:02):
customers who are fuel retailers, you know, this transition is
front and center of their business planning and thinking, and
we want to support them with those transition activities.
Speaker 1 (04:13):
But a service station operator who's just trying to do
an honest business and catering for a need that exists,
feels are done by.
Speaker 2 (04:21):
Well, we're supporting those customers. I guess that's the point
I'm trying to make. You know, we support fuel retailers.
We continue to and it's part of what we see
is our job in supporting a transition.
Speaker 1 (04:33):
Open banking now, the government is very hot on this.
Have you got it running? And if you do, oh
you have that's good people using it?
Speaker 2 (04:41):
Yes, so open banking. So yes, we delivered. The whole
industry delivered two big APIs as we call them, selets
that interfaces or technology, interfaces between ourselves and our customers,
information and FinTechs. In essence, we have five FinTechs that
(05:02):
are live using those that technology, if you like. But
I guess one of the things that we noticed from
around the world is open banking just really hasn't had
significant take ups. So what we want to make sure
we get right is the safety of customers data and information.
That's really important, and.
Speaker 1 (05:21):
The education obviously. And finally, you are a CEO of
a very big company which has international ownership. Do you
have an opinion on New Zealand's corporate tax levels and
whether they should be lowered and if they were, would
that attract more foreign investment?
Speaker 2 (05:36):
Yeah? Look, I think there's quite a lot in that question,
but you know, the government the government's job to understand
tax and make the appropriate settings based on how it
says the box. So I think I'll leave that sort
of job to the government. But I do think the
point around foreign investment is a really important one to consider.
(05:58):
New Zealand really needs international investment, and I think it's
important to make sure we're not sending mixed signals.
Speaker 1 (06:06):
Very good Victoria Shored, the CEO of the ASP I
thank you for your time today that
Speaker 2 (06:11):
For more from Heather Duplessy Allen Drive, Listen live to
news talks they'd be from four pm weekdays, or follow
the podcast on iHeartRadio
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