Latest / Best of Business / Vittoria Short: ASB CEO on the bank's interim net profit rising to $763 million

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Vittoria Short: ASB CEO on the bank's interim net profit rising to $763 million · Best of Business

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  Speaker 1: You're listening to a podcast from newstalk STB. Follow this
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  Speaker 2: Right now. ASB has declared a net profit after attacks
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  Speaker 2: of seven hundred and sixteen million dollars for the six
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  Speaker 2: months to December. That is up one percent on the
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  Speaker 2: same period the year before. The bank says home and
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  Speaker 2: rural lending grew, but operating expenses have increased for everybody.
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  Speaker 2: It comes as the government's investigating banks and whether they're
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  Speaker 2: competitive enough. So I'm joined now by the asb's CEO,
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  Speaker 2: Victoria Short. Hello Victoria, Hi Andrew, how are you good?
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  Speaker 2: Nice little tick up from last year and so can
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  Speaker 2: we take from that at corner has been turned in
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  Speaker 2: the economy.
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  Speaker 3: Yeah, Well, the way that we're describing it is we
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  Speaker 3: think that the economic recovery is beginning, and we know
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  Speaker 3: that inflation's back in target range. We know that the
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  Speaker 3: OCR or infrastrates and moving downwards to more neutral levels.
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  Speaker 3: And what we can see is that our customers, who
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  Speaker 3: who have been doing it tough in our stress, the
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  Speaker 3: actions are really helping actions. They're taking the actions that
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  Speaker 3: we can take to support them. And so we are
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  Speaker 3: studying see customers moving out of stress situations.
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  Speaker 2: You have described any future recovery as gradual. What do
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  Speaker 2: you mean by that?
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  Speaker 3: It takes time for some of these things to flow through. So,
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  Speaker 3: for example, about eighty percent of our business or rural
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  Speaker 3: customers have been on variable loans, and with variable loans,
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  Speaker 3: we pass through those cash rates very quickly. But we
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  Speaker 3: know that, for example, people with home loans are mostly
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  Speaker 3: fixed and around forty five percent of our fixed blending
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  Speaker 3: homeowners will they will go into a lower rate by
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  Speaker 3: June and about seventy percent by Christmas. So it's taking
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  Speaker 3: some time for the benefits of these lower rates to
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  Speaker 3: flow through and be felt by our particular homeowers.
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  Speaker 2: You've also described it as the most difficult economic cycle generation.
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  Speaker 2: So how bad has it been at its worst? Yeah?
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  Speaker 3: I think you know what I say. Well, the way
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  Speaker 3: that I'm really thinking about that is the global financial
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  Speaker 3: crisis had some serious impacts around the world, but wasn't
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  Speaker 3: felt as much in New Zealand. When we think about
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  Speaker 3: what we've gone through recently with COVID and all of
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  Speaker 3: the challenges with lockdowns and the like, it has been
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  Speaker 3: a really difficult period for businesses and households. Alike, and
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  Speaker 3: they've been making a lot of adjustments. So that's why
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  Speaker 3: we say that it really has been a particularly difficult period.
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  Speaker 3: And then also a lot of confusion. You know, rates
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  Speaker 3: have gone down quickly, they've come up quickly, they're going
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  Speaker 3: back down again, and so key decisions around lending and
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  Speaker 3: when to fix the weather to float. It's been quite
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  Speaker 3: confusing for people.
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  Speaker 2: Now you've been dropping interest rates. Your lowest rate is
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  Speaker 2: currently the eighteen month rate that's at five point one
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  Speaker 2: nine percent. When do you think we'll break the five
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  Speaker 2: percent barrier?
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  Speaker 3: Yeah, so hard to tell. I think you know what
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  Speaker 3: we're saying. You know, our economists believe that we'll see
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  Speaker 3: a fifty point decrease next week with the ocr call,
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  Speaker 3: and we're expecting another two twenty five drops, so one
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  Speaker 3: hundred basis points decline in the cash rate for this year.
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  Speaker 3: So that's our expectations. But we're also quite quick to say,
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  Speaker 3: you know, people need to be thoughtful because interest rates
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  Speaker 3: can change depending on world events, and we've seen a
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  Speaker 3: lot of that over the last few years, so we
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  Speaker 3: need to be cautious to now.
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  Speaker 2: Shane Jones is waging a war against what he calls
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  Speaker 2: woke banking. So what do you make of his bill?
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  Speaker 2: It would limit who you can do business with.
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  Speaker 3: Yeah, look, I think you know he's posing some good
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  Speaker 3: questions that need a discussion, and I think it's important
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  Speaker 3: that to start with, New Zealand has set a net
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  Speaker 3: deero target and the government is actually reconfirmed it's commitment
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  Speaker 3: to their target, So it really starts there. For asb
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  Speaker 3: the way we think about it, it's about supporting our
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  Speaker 3: customers and how they transition. So for our customers who
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  Speaker 3: are fuel retailers, you know, this transition is front and
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  Speaker 3: center of their business planning and thinking, and we want
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  Speaker 3: to support them with those transition activities.
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  Speaker 2: But a service station operator who's just trying to do
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  Speaker 2: an honest business and catering for a need that exists,
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  Speaker 2: feels are done by well, we're.
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  Speaker 3: Supporting those customers. I guess that's the point I'm trying
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  Speaker 3: to make. You know, we support fuel retailers, We continue
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  Speaker 3: to and it's part of what we see is our
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  Speaker 3: job in supporting a transition.
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  Speaker 2: Open banking now, the government is very hot on this.
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  Speaker 2: Have you got it running? And if you do, oh
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  Speaker 2: you have that's good people using it?
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  Speaker 3: Yes, so open banking. So yes, we delivered. The whole
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  Speaker 3: industry delivered two big APIs as we call infilets that
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  Speaker 3: interface or technology interfaces between ourselves and our customers, information
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  Speaker 3: and FinTechs. In essence, we have five FinTechs that are
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  Speaker 3: live using those that technology if you like. But I
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  Speaker 3: guess one of the things that we notice from around
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  Speaker 3: the world is open banking just really hasn't had significant
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  Speaker 3: take ups. So what we want to make sure we
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  Speaker 3: get right is the safety of customers data and information
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  Speaker 3: that's really.
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  Speaker 2: Important, and education obviously. And finally, you are a CEO
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  Speaker 2: of a very big company which has international ownership. Do
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  Speaker 2: you have an opinion on New Zealand's corporate tax levels
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  Speaker 2: and whether they should be lowered and if they were,
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  Speaker 2: would that attract more foreign investment?
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  Speaker 3: Yeah, look, I think there's quite a lot in that question,
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  Speaker 3: but you know, the government, the government's job to understand
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  Speaker 3: tax and make the appropriate settings based on how it
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  Speaker 3: saves the box. So I think I'll leave that sort
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  Speaker 3: of job to the government. But I do think that
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  Speaker 3: point around foreign investment is a really important one to consider.
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  Speaker 3: New Zealand really needs international investment, and I think it's
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  Speaker 3: important to make sure we're not sending mixed signals. Very good.
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  Speaker 2: Vittoria Short, the CEO of the ASB, I thank you
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  Speaker 2: for your time today that
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