The subsidiary of Australia's largest lender Commonwealth Bank of Australia (CBA) reported a profit before tax of $730million for the six months ending in December, up from the $659million reported in the previous corresponding period.
The net cash profit was up 6.3% to $507million from $477million and the statutory profit, the bank's preferred measure of profit measurement, was up 11% to $525million from $477million.
Total operating income was up 7.1% to $1.2billion.
Ms Chapman said the result was the product of strong momentum across the business.
''Despite some challenging market conditions, we've continued to see robust nationwide volume growth in our business, rural and retail lending portfolios.
''It has been particularly pleasing to see our people and teams right around the country deliver such a strong performance, with sustained growth in markets outside of Auckland.''
Home loans increased by 10% against the previous period and business, commercial and rural lending grew by 13%. Customer deposits grew by 5% , despite increased competitor intensity and slowing market growth, she said.
Operating income growth (on a cash basis) of 4%, combined with tight control of operating expenses, resulted in a cost to income ratio for the period of 35.5%, an improvement of 1.5% on the previous period.
ASB had continued to invest in building frontline capability in specialist areas. At the same time, the bank had maintained a focus on using technology to manage costs, improve productivity and simplify its business, Ms Chapman said.
The cash net interest rate margin decreased to 2.21%, predominantly reflecting higher costs associated with wholesale funding and increased costs relating to customers breaking fixed loan rates.
''As customers take advantage of the current low interest rate environment, we are seeing a continued preference for lower margin fixed rate loans.''
At the same time, banks were facing a changing dynamic around the increasing volume and cost of international funding needed to meet local lending requirements.
With the levels of local deposits failing to keep pace with the amount of lending banks were doing, the increased use of offshore funding had increased funding costs, reducing net interest margins, she said.
ASB's parent CBA is lifting some of its investor mortgage rates.
The bank, which said its first-half profit had risen 2.1% to $AUS4.9billion ($NZ5.24billion), is raising rates for interest-only investor loans by 0.12% and for viridian line of credit mortgages, that allow customers to use their equity for other investments, by 0.04%.
Commonwealth Bank's new interest only standard variable rate for investors will be 5.68% from April 3.
''As the nation's largest lender, Commonwealth Bank is committed to meeting its regulatory requirements while ensuring it can provide for the long-term sustainability of the Australian housing market,'' CBA said in a statement.
Under APRA regulations, banks are only allowed to increase the amount they lend to property investors by 10% a year.
