Latest / Best of Business / Vittoria Short: ASB Chief Executive on the bank's full-year profit falling amid easing cash rate

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Vittoria Short: ASB Chief Executive on the bank's full-year profit falling amid easing cash rate · Best of Business

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  Speaker 1: You're listening to a podcast from NEWSTALKSB. Follow this and
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  Speaker 2: ASB started slashing its mortgage interest rates, one of three banks,
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  Speaker 2: just minutes after the Reserve Bank dropped the official cash
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  Speaker 2: rate by a quarter of a percent this afternoon. It's
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  Speaker 2: been a big day for ASB. Earlier this morning it
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  Speaker 2: announced its run of record profits is over and your
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  Speaker 2: profit dropped seven percent from last year's record high. It's
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  Speaker 2: now down to one point five to five nine billion
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  Speaker 2: dollars in the year to the end of June. Victoria
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  Speaker 2: Short is asb's chief executive. Hey Vittoria, Hey Heather, were
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  Speaker 2: you surprised by the cut today?
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  Speaker 3: Well, actually, our ASP economics team we're picking a twenty
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  Speaker 3: five basis point cat acknowledged it was going to be
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  Speaker 3: finally balanced, but it is what they were picking. So
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  Speaker 3: I think it's good news fin New Zealand.
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  Speaker 2: Did you not, though, find yourself doing this because I
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  Speaker 2: did and thinking, yeah, it should be a cut. Everything
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  Speaker 2: shows it should be a cut. But Adrian's got an ego.
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  Speaker 3: I think we looked at the fundamental around you know,
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  Speaker 3: we go back to why have the interest rates been
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  Speaker 3: held high to get inflation under control, and that's the
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  Speaker 3: number one priority for all of us. So, you know,
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  Speaker 3: we've seen inflation coming down. The big question is is
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  Speaker 3: it going to be coming down sustainably to a low
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  Speaker 3: enough level. And that seems to be occurring, which is great.
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  Speaker 3: But there's one call out that I think was important
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  Speaker 3: in the sort of judgment, and that's material weakening of
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  Speaker 3: the domestic economic activity. So I think they are you know,
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  Speaker 3: they're calling that out as one of the reasons for
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  Speaker 3: the cat so we can't walk past that.
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  Speaker 2: No, that's fair enough. I see you guys cut your
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  Speaker 2: rates obviously immediately, which is great, But why are they
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  Speaker 2: only taking effect next week.
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  Speaker 3: Yeah, we've got a little bit of time. We've got
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  Speaker 3: sort of some legal processes, which means that we have
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  Speaker 3: to adjust terms and conditions and make sure we get
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  Speaker 3: all of our disclosures are ready to go, and so
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  Speaker 3: that's why there's a little bit of a lag between
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  Speaker 3: the announcement and when they are effective.
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  Speaker 2: Is it a relief to you? I mean, obviously, you
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  Speaker 2: guys have this high interest rate environment has been heading
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  Speaker 2: your profits. So are you relieved?
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  Speaker 3: So I think it's a really good thing for New
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  Speaker 3: Zealand households and New Zealand businesses. So we've already been
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  Speaker 3: reducing our fixed home loan rates. We started doing that
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  Speaker 3: last year, so we've reduced them already by sixty basis points.
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  Speaker 3: So this is really a continuation for us. But I
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  Speaker 3: think what it's signaling for the country is that inflation
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  Speaker 3: is getting under control and therefore the ocr can start
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  Speaker 3: to come down, and that's a really important signal. Are
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  Speaker 3: you of the.
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  Speaker 2: View that we need to also temporary expectations though? Is
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  Speaker 2: everybody's going to get super excited about this, but actually
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  Speaker 2: it's going to take us a while to build ourselves
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  Speaker 2: back up.
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  Speaker 1: Yeah.
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  Speaker 3: Look, you know to your point, it is going to
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  Speaker 3: take time for this to really flow through the economy.
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  Speaker 3: We are thinking that twenty twenty five is going to
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  Speaker 3: be a really different year. We are expecting that credit
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  Speaker 3: growth to build for businesses. We are expecting there to
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  Speaker 3: be upward pressure on homelan prices as a result. So
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  Speaker 3: we do think it's going to build over time, and
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  Speaker 3: we don't think this is the last cart either.
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  Speaker 2: What are you expecting before the end of the year
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  Speaker 2: another twenty five basis points?
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  Speaker 3: Yeah, So at this stage where We're still calibrating and
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  Speaker 3: it will definitely depend on the data and how we
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  Speaker 3: see the data evolving on inflation and also you know,
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  Speaker 3: economic activity. But we have about another fifty basis points
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  Speaker 3: that we think could come out before Christmas.
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  Speaker 2: Now, Victoria, listen, you got the ComCom report coming out
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  Speaker 2: next week, the banking report. Are you guys going to
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  Speaker 2: get hammered in this?
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  Speaker 3: Well? I think the interesting question is how different is
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  Speaker 3: the final report going to be from the draft reporter?
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  Speaker 3: And I guess the only person who can answer that
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  Speaker 3: is really the head of ComCom.
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  Speaker 2: What have you heard.
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  Speaker 3: Nothing from from ComCom? So you know we'll all be
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  Speaker 3: revealed next week?
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  Speaker 2: Are you going to get hammered by the government with
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  Speaker 2: its rural banking report?
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  Speaker 3: I'm really looking forward to to sort of answering some
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  Speaker 3: of the questions that have been asked about the rules sector,
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  Speaker 3: but also about business lending too. So, just like the
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  Speaker 3: market study, I think it's a really good opportunity to
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  Speaker 3: get you know, the right questions on the table and
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  Speaker 3: and really get into them.
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  Speaker 2: Yeah, well, why do you want to answer those questions?
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  Speaker 2: Is it because people have got themselves worked up unfairly
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  Speaker 2: about you guys?
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  Speaker 3: Look I think there's a lot of things that I
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  Speaker 3: hear that I've got a view on, and so it's
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  Speaker 3: going to be a good chance to actually share those views.
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  Speaker 3: And that's the whole point of it.
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  Speaker 2: As a KEI, we do you support the capitalization of kiwibank.
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  Speaker 3: Ah? I don't think Kibank's a good topic for me.
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  Speaker 3: So that's something that's the best left the with with
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  Speaker 3: those who are in charge. I did that decision, fair point.
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  Speaker 2: Hey, listen, I've got to ask you. I mean, this
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  Speaker 2: is Ikey and I'm sorry, and nobody likes talking about
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  Speaker 2: their pay but I've got to ask you about it.
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  Speaker 2: How did you go Victoria from two million to five
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  Speaker 2: million in the space of a year.
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  Speaker 3: Yeah, look, this year in terms of my REM, it's
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  Speaker 3: a highly unusual REM. It includes payments related to multiple
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  Speaker 3: years since twenty nineteen. But what you're really getting at
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  Speaker 3: is that, you know, I recognize this that executive rem
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  Speaker 3: is controversial and particularly in this environment. So it's set
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  Speaker 3: by the board and it's based on a market benchmark,
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  Speaker 3: and that's you know, that's really the approach to the
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  Speaker 3: board takes.
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  Speaker 2: Not at all what I was getting at. I was
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  Speaker 2: just trying to get a tip from you on on
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  Speaker 2: how to do it.
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  Speaker 3: Well. It's like I say, it's multi it's a strange
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  Speaker 3: year and it's multiple years starting from twenty nineteen, so
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  Speaker 3: the ten consent through some data if you're interested.
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  Speaker 2: Yeah, and who am I kidding? I'm not up five
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  Speaker 2: million dollars in the media, Vittoria. Thank you very much,
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  Speaker 2: Victoria short asb's chief executive.
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