ASB’s Cash Profit Rises 1% as Lending and Deposits Climb
ASB’s half-year results show a modest 1% rise in cash net profit, driven by growth in home, business, and rural lending alongside a 5% increase in customer deposits. The bank is investing heavily in technology, customer experience, and social housing initiatives to support New Zealand’s long-term prosperity.
- Cash net profit after tax up 1% to $719 million
- Home lending grows 8%, business and rural lending up 4%
- Customer deposits increase 5%, net interest margin improves by 6 basis points
- Operating expenses rise 21% due to class action settlement and strategic investments
- KiwiSaver funds under management exceed $20.6 billion with top quartile performance
Solid Profit Growth Amid Lending Expansion
ASB, a major New Zealand bank and subsidiary of the Commonwealth Bank of Australia, reported a cash net profit after tax of $719 million for the six months ending 31 December 2025, marking a 1% increase compared to the previous year. This modest profit growth was underpinned by an 8% rise in home lending and a 4% increase in business and rural lending, reflecting a cautious but steady confidence in the New Zealand economy.
Customer deposits also rose by 5%, contributing to a stable funding base. The bank’s net interest margin improved by 6 basis points, benefiting from higher home lending margins and timing effects related to interest rate hedges.
Rising Costs Driven by Settlement and Strategic Investments
Operating expenses climbed 21% to $839 million, largely due to the settlement of class action proceedings under the Credit Contracts and Consumer Finance Act 2003. Beyond this one-off cost, ASB is investing heavily in people, technology modernisation, digital customer experience, and regulatory compliance. These investments aim to simplify banking processes and enhance service delivery, including expanding digital home loan application capabilities.
Commitment to Customer Experience and Fraud Protection
ASB is prioritising customer experience improvements, focusing on faster, simpler banking with enhanced transparency. The bank has extended digital home loan applications to joint applicants and allows customers to track progress and view indicative pricing via its mobile app. Recognising the persistent threat of fraud and scams in New Zealand, ASB has strengthened protections by participating in data-sharing initiatives among banks and maintaining a dedicated 24/7 fraud support line.
Backing New Zealand’s Productivity and Housing Needs
ASB is actively supporting New Zealand’s economic future through initiatives that boost productivity, particularly by partnering with universities and the New Zealand Product Accelerator to integrate artificial intelligence and data science into business operations. The bank’s rural lending growth outpaces competitors, supported by programmes like Every Hectare Matters and Smart Solar 0% lending to promote sustainable farming and renewable energy adoption.
Addressing the country’s housing challenges, ASB has doubled its commitment to $1 billion to accelerate social and affordable housing projects. This includes a recent $50 million commitment to a Māori social housing provider in Tāmaki Makaurau, aiming to deliver over 150 homes.
Growing Investment Funds and Financial Literacy Efforts
ASB’s KiwiSaver Scheme funds under management grew by more than $1.7 billion to over $20.6 billion, with multiple funds ranking in the top quartile for performance. The bank continues to promote long-term financial wellbeing through competitive investment options and initiatives to improve financial literacy among children, including reintroducing the Kashin moneybox and supporting nationwide education programmes.
Bottom Line?
ASB’s steady profit growth and strategic investments position it well to navigate economic uncertainties while supporting New Zealand’s evolving financial and social landscape.
Questions in the middle?
- How will ASB’s increased operating expenses impact future profitability?
- What are the expected outcomes and timelines for the technology modernisation initiatives?
- How will ASB’s expanded social housing commitments influence its risk profile and community impact?
