ASB owner Commercial Bank of Australia also increased its loan impairment expense due to exposure in the resources, commodity and dairy sectors.
ASB chief executive Barbara Chapman said the bank had taken a conservative position and had increased provisions in the dairy sector accordingly.
‘‘That said, we remain confident in the asset quality of our rural book and see farming customers responding well and managing their businesses in response to the conditions.’’
Some dairy farmers are feeling the pressure of reduced payouts from Fonterra, and other dairy companies, and the forecasts are below break even points.
ASB lifted its statutory profit by 6.3% to $913million in the year ended June. Total operating income, which is reported after interest expense is deducted from interest income, was up 6.7% to $2.2billion. The profit before taxation was up 6.5% to $1.3billion.
The bank’s cash profit was $908million, up 5% on the $864million reported in the previous corresponding period.
Ms Chapman said the result was a product of sustained growth in key market segments and a focus on providing exceptional experiences for customers.
‘‘We have achieved this result against the backdrop of a highly competitive market and some headwinds in the form of global market volatility and fluctuating commodity prices.
‘‘Despite this, we have remained focused on executing our strategy and pursuing initiatives to drive profitable growth across our business.’’
Customer advances were up 10%, reflecting strong lending growth across all key portfolios, including business, commercial, personal and home lending. Deposits grew 5% in the period.
The cash net interest margin fell slightly to 2.3% reflecting a highly competitive environment and the continued popularity of lower-margin fixed rate mortgages, Ms Chapman said.
A key pillar of the bank’s strategy was using technology to improve the way it interacted with customers. More than three-quarters of personal customers were accessing an increasing range of banking services through their mobile devices.
As a result, sales through the digital channels had more than doubled in the past two years, she said.
Meanwhile, Commonwealth Bank chief executive Ian Narev says weak wages growth and political uncertainty is threatening Australia’s ongoing economic strength as the bank unveiled a record cash profit of $A9.45billion ($NZ10.1billion).
The cash profit was up 3% but cash earnings per share remained flat at $A5.551 a share.
Australia’s biggest bank’s statutory profit for the 12 months to June 30 was up 2% at $A9.2billion, while loan impairment expense jumped 27% from a year ago to $A1.26billion, largely due to exposures to the resources, commodity and dairy sectors.
Net interest margin dropped slightly from 2.09% to 2.07% and the bank lifted its customer deposits by 8% to cover 66% of group funding.
Mr Narev said he remained ‘‘cognisant’’ of the impact of weaker demand, strong competition and increasing regulation on the bank, and indicated the recent official interest rate cut might not lift conditions.
‘‘Income growth inside and outside Australia remains weak, so people are not feeling better off.
‘‘When combined with ongoing global economic and political uncertainty this makes households and businesses cautious and hesitant to respond to monetary stimulus.’’
The bank will pay a fully tax-paid final dividend of $A2.22 per share, taking the full-year distribution to $A4.20, flat on the previous year.
