ASB today released its half-year result for the six months ended December 31.
It reported a record net profit after tax of $416 million.
The bank's loan book grew from $55.5 billion to $59.3 billion and there was growth in loans of 7% since December 2012. But Barbara Chapman said the fastest loan growth was in commercial and rural lending, which was increasing above market pace.
She said there was a lot of competition for business in the sub-80% home loan range. Banks must now keep their new loans to borrowers with a deposit of less than 20% to no more than 10% of their lending.
But she said demand was also strong and overall margins had improved.
Chapman said the bank would start to do more lending to borrowers with small deposits over the coming months.
All the banks have pulled back substantially – less than 6% of new loans were to borrowers with a deposit of less than 20% in December.
Chapman said: “We’ve taken the time to makesure we can comply with the Reserve Bank and have our processes and reporting right. We’ve pulled back quite a lot.”
She said ASB was now confident that it still had headroom to comply with the 10% rule across the first six months of the regulations and would have scope to lend to more low-deposit borrowers.
Chapman said the LVR rules had not been difficult to comply with but had required a change in processes. “You need to adjust your business settings to comply with banking standards, making sure settings are right, reporting is right and that you’re measuring it right. You don’t want to breach the conditions.”
Home loans were still something that most borrowers wanted to arrange face-to-face, she said, but over time they would likely turn to things such as mobile apps, which the bank was improving and developing.
