Category: MIL OSI

ASB today reported a cash net profit after tax (NPAT) of $1,550 million for the 12 months to 30 June 2023, an increase of $132 million or 9% on the prior year. The result reflects a strong first half, with performance softening for the six months to 30 June 2023, reflecting the more challenging operating environment.

Total operating income increased 12%, while operating expenses increased 13% reflecting continued investment in people, technology, and regulatory compliance.

Total lending for the 12 months to 30 June 2023 increased 4%, with home lending up 3% and business lending up 5%, while total customer deposits grew 3%. Cash net interest margin (NIM) increased by 22 bps.

ASB’s loan impairment expense increased by $23 million as a result of the impact of inflationary and interest rate pressures, and a decline in house prices.

When comparing the second half of the year to the first half, Cash NPAT declined 11%, due to a 7% decline in operating income, driven by a 16bp reduction in NIM.

ASB’s total capital, an important measure of a bank’s financial stability, increased by $0.9bn to $11.1bn with its Common Equity Tier 1 (CET1) ratio increasing by 2.0% to 14.3%. ASB’s CET1 ratio is now 0.8% above the 13.5% 2028 final target set by the Reserve Bank of New Zealand as part of its transition to higher capital requirements.

ASB Chief Executive Vittoria Shortt says, “We are seeing clear signs that growth is slowing which reflects the broader economic environment. However, our balance sheet remains strong and resilient which positions us well to continue to support our customers and the New Zealand economy.”

Supporting our customers

The current economic cycle has placed pressure on household budgets nationwide. ASB has taken proactive steps to provide customers with practical tools and guidance to help them make well-informed money-related decisions.

“We’ve proactively contacted more than 12,000 customers to provide support as they refix their home loan. While the majority seem to be well prepared and managing, we’ve deepened our support options for those feeling pressure.

“We have established a dedicated team to provide tailored assistance to customers who are concerned about their financial situation and we have grown our team of community bankers to improve access to banking services for those in vulnerable situations.  

“This financial year our specialists have completed more than 72,000 financial wellbeing reviews with customers and more than 400,000 customers have accessed our digital financial wellbeing tools.”

To improve the experience for customers, ASB has invested almost $95 million in new state-of-the-art lending and contact centre systems. Once fully embedded, these modern platforms will provide an enhanced experience, including reduced wait times, ‘request a call back’ capabilities and faster handling of customer queries as advice centre (branch) teams are able to assist the contact centre in supporting customer queries through phone and online channels.

“We have enhanced ASB’s mobile capabilities to provide more personalised experiences such as the ability to book in-person appointments with ASB bankers, and Card Tracker which enables customers to see their credit card subscriptions and other places their card details may be stored in one place.

“We completely removed monthly base fees and self-service transaction fees on advertised business transaction accounts in February. This move, combined with some fee removals on personal accounts, is expected to put more than $14 million back in customers’ pockets this year.”

Accelerating Ōhanga Māori is another important focus for ASB and involves collaboration with a broad range of stakeholders including Māori-owned businesses, community organisations, housing providers, and Government.

ASB’s specialist Māori banking team Te Waka Whaihua is partnering with Iwi and other Māori organisations to help fund housing developments across New Zealand, including papakāinga (community housing on Māori land).

Commerce Commission market study

ASB is actively engaged with the Commerce Commission in support of the personal banking market study into New Zealand banks announced in June.

“It’s important to us that New Zealanders have confidence in our banking system, and the study is an opportunity to provide this.”

Protecting customers from scams and frauds

As more New Zealanders are impacted by increasingly sophisticated frauds and scams, protecting customers remains a top priority.

“In addition to growing our financial crime and fraud teams by more than 60 people this financial year, we further invested in technology to prevent and manage online fraud and improve cybersecurity resilience. For example, a two-way push notification system introduced in April 2022 has helped more than 25,000 customers digitally respond to card fraud alerts.”

Education is another important element in helping to protect New Zealanders from scammers. ASB has worked closely with industry partners on campaigns to raise awareness of fraud and scams and help people to keep themselves safe and secure online. Partnerships include Cyber Skills Aotearoa, a collaborative initiative between the New Zealand Government and industry.

“Cyber Skills Aotearoa provides classroom-ready challenges that develop students’ cybersecurity skills while empowering teachers to bring cybersecurity curriculum into their classrooms. We hope this will inspire students to consider further education and careers in this field.”

Investing for a more sustainable New Zealand

“ASB is committed to playing our part in New Zealand’s climate transition and sustainability by supporting our customers with appropriate financial advice and funding for climate adaptation and resilience.”

Across FY23, ASB introduced more practical support to help business, rural and corporate customers develop solutions that best match where they are on their sustainability journey. This has included targeted financing options such as our Sustainability Linked Loan for clients which requires the borrower to commit to key environmental, social and/or governance targets, through to sustainable land and water use initiatives enabling customers to invest in fencing, waterways or planting to improve their land’s ecology.

The new ASB Better Homes Top Up loan has so far helped more than 2,100 personal customers improve the warmth, dryness and energy efficiency of their homes or make the switch to an electric or hybrid vehicle.

The bank has supported agribusinesses to reduce their emissions through $600 million in sustainability lending, and also launched a new Business Sustainability loan in May. This new loan offers a discounted variable rate for business initiatives that will support positive environmental or social change.

“ASB is committed to supporting New Zealand’s climate transition and sustainability, and we were delighted to have our work recognised, as winner of the Corporate ESG Award at the 2023 Institute of Finance Professionals New Zealand (INFINZ) awards.

“Of course, sustainability is much more than climate. It encompasses environmental, social and financial wellbeing dimensions. For ASB, this shows up in how we’re contributing to positive change for our economy and communities. We are funding regional infrastructure initiatives, such as new hospital facilities, a new university campus and iwi social housing, and we are working with a range of community partners including Youthline, KidsCan and St John,” said Ms Shortt.

ASB will release its FY23 climate and sustainability reports in the coming weeks.

Financial overview

•            Advances to customers up 4% to $108 billion (stat basis)
•            Total deposits and other borrowings up 6% to $90 billion (stat basis)
•            Statutory NPAT of $1,559 million, an increase of 6%
•            Cash NPAT of $1,550 million, an increase of 9% on the prior comparative period
•            Cash net interest margin increased by 22bps to 244bps (cash basis)
•            Impairment losses on financial assets increased $64 million
•            Operating expenses increased 13% (cash basis)
•            Net interest income increased 16% to $3,002 million (cash basis)
•            Cost to income ratio (cash basis) of 36.3%, an increase of 60bps

Supporting customers

ASB specialists completed 72,000 Financial Wellbeing Reviews with customers in FY23, up 18% on the previous year.
Community Bankers delivered 184 workshops in FY23.
This financial year 404,000 customers have accessed ASB’s digital financial wellbeing tools, up 39% on the previous year.
During FY23, ASB’s Support Finder has been used by 24,000 customers, helping customers to access $14.3 million in additional government financial support.
Card Tracker, used to help manage paid subscriptions, has been accessed by more than 166,000 customers since launching in November 2022.
Our continued focus on behavioural science and testing through CCC direct marketing has resulted in more than 220,000 customers taking action to improve their financial wellbeing.

Supporting climate transition

Certified net carbonzero by Toitū Envirocare. In FY23 carbon credits purchased were sourced from two domestic greenhouse gas removal projects under the Permanent Forest Sink Initiative.
Performed Environmental and Social (E&S) assessment for 100% of loans to Corporate and Business Clients with >$30m exposure; expanded E&S assessment to Clients with >$1m exposure in high-risk sectors from June 2023.
Supported more than 2,100 home lending customers with the Better Homes Top Up designed to help make their property warmer, drier, or more energy efficient, or to purchase a hybrid or electric vehicle.

Supporting social progress

ASB has provided funding to enable partner Youthline to expand its midnight to 8am crisis line to a full phone and text Helpline, enabling full support 24 hours a day, every day of the year. This is expected to be fully operational by October 2023.
Women hold 42% of all ASB senior leadership roles (Head of Department or higher).
Over one million tamariki (children) now trained on injury prevention and how to respond in an emergency through the ASB St John in Schools programme.
Launched first Māori and Pasifika internship pilot at ASB as part of our rangatiratanga pou enabling employment and development pathways for tangata whenua.

9 August 2023 – Essential has launched a new monthly poll tracking voting intention and public attitudes to political and social issues in New Zealand.

The Essential Report Aotearoa New Zealand will be published on the second Wednesday of every month at essentialreport.co.nz.

Questions will be discussed with the Guardian. They will change from month to month and include emerging and topical issues.

New Zealand civil society organisations will can also check in with Kiwis by purchasing their own private questions in the poll.

“In our inaugural New Zealand poll, we’ve heard loud and clear that Kiwis think New Zealand is on the wrong track. While National are ahead, voters aren’t feeling great love for either Mr Luxon or Mr Hipkins,” Essential’s Managing Director Peter Stahel said.

“It’s clear that cost of living issues are biting hard. People across age groups, gender and geography are seeking policies to address the rising cost of living on groceries, housing and job security.

“Essential will seek to avoid fuelling the polling horse race, by publishing figures that represent voters who are unsure of their final vote. It is important to note that the seat projections are based on an assumption that these voters will either not vote, or vote in line with those who have already made up their mind.

While Essential is an Australian company, our Kiwi poll will be conducted by our Auckland-based researcher, who has over 20 years of experience conducting social research and political polling in New Zealand.

“We’ve been helping Australians keep their finger on the pulse through our Essential Report for over two decades. We’re thrilled to be extending this offering into New Zealand,” Mr Stahel said.

The Essential Report New Zealand will survey approximately 1,100 Kiwis every month, asking questions about everything from understanding of the big political announcements to awareness of pop culture trends.

“While we don’t expect our poll to get to the bottom of who can rightly claim ownership of pavlova, Russell Crowe or Quade Cooper, we do expect to have some fun with it along the way,” Mr Stahel said.

Read Peter Stahel’s analysis in the Guardian. https://www.theguardian.com/world/2023/aug/09/most-say-new-zealand-is-on-the-wrong-track-can-it-avoid-a-drift-to-populism

Despite global challenges, the European economy shows resilience, driven by lower energy prices, reduced supply constraints, improved consumer sentiment, and a strong labor market. During the first quarter (Q1) of 2023, the EU expanded by 0.1% on a quarterly basis following a contraction of 0.2% in the fourth quarter (Q4) of 2022. Based on all these factors, the region’s risk score decreased from 33 in Q4 2022 to 32.9 in Q1 2023 out of 100, reveals GlobalData, a leading data and analytics company.

In the 20th update version of GlobalData’s “Global Risk Report Quarterly Update – Q1 2023,” among the 41 countries evaluated in the European region, 17 countries were identified in the very low-risk zone, 13 countries in the low-risk zone, 10 countries under manageable risk, one country under high risk.

EU’s overall inflation rate eased to 7.1% in May 2023 from a peak of 11.5% in October 2022. Food inflation declined to 15% in May 2023 from a high of 19.5% in March 2023, while energy inflation dropped to (-)0.3% in May 2023 from its previous peak of 41.1% in June 2022.

Consumer confidence in the EU was bolstered by lower inflation, resulting in nine consecutive months of improvement in the consumer confidence index until June 2023, according to OECD data. However, business confidence remained weak due to high financing costs and decreased external demand, leading to five consecutive months of decline in the index until June 2023. Despite this, the labor markets in Europe remained robust, with unemployment reaching a record low of 5.9% in May 2023.

Maheshwari Bandari, Economic Research Analyst at GlobalData, comments: “Although few indicators highlight economic green shoots in Europe, economic recovery is uneven, with varying performance among countries. The region must continue its stride on tackling high core inflation, sustain growth, and ensure financial stability. If only Eurozone is considered, the region was in a technical recession with real GDP contraction in Q4 2022 and Q1 2023 and tightening monetary policy further adding to financial risks. However, factors like lower energy prices and a strong labor market offer hope for gradual improvement in 2023.”

Germany saw the swiftest rise in ranking in the Q1 2023 GCRI due to the easing semiconductor shortage, decreased energy prices, and increased demand from China. Conversely, Russia experienced a notable decline, falling three places since the last update, as the impact of extensive sanctions became evident.

Several European countries (Switzerland, Denmark, Sweden, Norway, Finland, and Germany) are on the list of the top 15 lowest-risk countries out of 153 nations in the Q1 2023 GCRI update. Meanwhile, Ukraine, Bosnia and Herzegovina, and Moldova, were the nations having the highest risk in the European region in the same update.

The migration crisis in the European Union (EU) continues into 2023, with a significant number of irregular border crossings and asylum applications remaining at high levels. According to the International Centre for Migration Policy Development (ICMPD), there was a notable increase of 64% in irregular border crossings and a 46% rise in asylum applications in 2022 among EU member states. This trend is anticipated to persist, placing continued pressure on destination countries to effectively handle the influx of refugees and irregular migrants.

Bandari concludes: “Europe is currently experiencing a slow recovery after a substantial downturn. Though there is a slight improvement in growth, financial conditions remain difficult. Achieving the 2% inflation target is still a distant goal. The energy crisis initially raised concerns, but it has also prompted positive outcomes, such as a shift towards green energy with increased efficiency and accelerated green policies.”

Notes

• Quotes provided by Maheshwari Bandari, Economic Research Analyst at GlobalData
• The information is based on GlobalData’s Macroeconomic database.
• The Country Risk Index (GCRI) model analyses several political, economic, social, technological, legal, and environmental factors and calculates the amount of risk an investor accepts when doing business in each country and region worldwide. This is then represented by an overall ‘score’.

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.

As Donald Trump’s efforts to overturn the 2020 election are examined in court, a recent paper sheds light on why some political leaders fight back after losing an election.

A paper published in the Journal of Conflict Resolution looks at why, following an election, a losing incumbent may be reluctant to depart gracefully and highlights the vital role of electoral integrity in ensuring the smooth transition of power in democracies.

The study by University of Auckland economics academics, Dr Chanelle Duley and Professor Prasanna Gai, shows how the threat of protest by citizens, clarity around election results, and transparent electoral processes interact to determine whether an incumbent might try to retain power.

Examples of disputed elections in Kyrgyzstan, Kenya, The Gambia, and the US are referenced in the paper, which uses game theory to explore strategic behaviour by citizens and politicians to establish conditions that may see an incumbent refuse to cede office.

Dr Duley and Professor Gai say that once there’s genuine uncertainty about election results (as was seen following the 2020 US presidential election), incumbents in advanced democracies may be reluctant to step aside.

Also according to the paper, the ability of people to coordinate and threaten an incumbent with mass protests plays an important role in ensuring compliance with electoral rules. However, uncertainty about the process behind election results hinders people’s ability to coordinate protests, and citizens may be unsure about the actual popularity of an incumbent and about what others believe.

With less common knowledge about where their sentiment sits in relation to other people, Duley says a person is less able to accurately predict the size of protests.

“By diminishing peoples’ ability to threaten costly, large-scale protests, concern over electoral probity may embolden an incumbent to ignore electoral rules.”

Meanwhile, if an election result is so strong that a politician is certain that protests will be minimal, they are less likely to step down, according to the authors, who note that shadows cast over an election result due to gerrymandering, social media campaigns, foreign interference or litigation over electoral processes weaken the role of protest and embolden incumbents to subvert electoral rules.

Duley and Gai say the link between the informativeness of an election result and the enforceability of electoral rules highlights the critical role of transparency and trust in the electoral process.

“If there’s mistrust in electoral institutions, concerns about voting arrangements, or meddling by foreign powers, then citizens may doubt the integrity of the electoral process,” says Duley, “and if doubt over electoral integrity prevails, office-seeking incumbents quite deliberately reject electoral rules.”