ASB profits drop 20%

The big four lender announced its annual results this morning, posting a net profit after tax of $987 million. 

The effect of the pandemic has led to increased impairment losses of financial assets to $306 million. “This substantial increase in provisioning levels reflects our current view of the impact of Covid-19," said chief executive Vittoria Shortt. 

The lender's cash net interest margin, the difference between the cost of deposits and income from loans, decreased by 12 basis points to 2.11%

The ASB boss warned of "challenging times ahead". 

“The global uncertainty due to the Covid-19 pandemic is causing significant economic and social disruption. Trade disputes and heightened political tension may further disrupt global trade and the business environment.

“We are also conscious of the impact of the physical and economic effects of climate change and the effectiveness of current and planned responses remains uncertain.

“While New Zealand had some encouraging signs of business confidence rebuilding, and spending levels rebounding, the change of alert levels announced by the Government last night demonstrated there is no room for complacency and economic recovery is more likely to be bumpy.

“We are anticipating difficult times ahead for businesses and people in the industries most impacted by COVID-19, in particular tourism, international education and retail. For confidence to be maintained, it’s more important than ever to find new solutions to minimise unemployment and help businesses reset and take action,” Shortt added.