The ASB Bank raised a few eyebrows when it announced its profit yesterday, not for the profit itself but for the accompanying comments.
ASB reported an operating profit of $425 million for the 12 months ended June, down 17.5% on the previous corresponding period.
Chairman Gary Judd said in a statement ASB had demonstrated its long-term commitment to supporting its customers by delivering a reduced after-tax profit of $425 million.
The words "reduced after-tax profit of $425 million" were highlighted in dark type.
ABN Amro Craigs broker Chris Timms was taken aback by the statement.
"I'm sure that was the first thing that went through their heads - `let's report a reduced profit and help our customers'," he said, when contacted.
"The tone they took was condescending.
There is nothing wrong with the quality of the profit, but it's hard to believe they didn't make as much money this year because they decided to look after their customers."
Mr Judd said that while the profit might appear to be large, despite being significantly reduced, it should not be viewed in "purely absolute terms" or in isolation from other relevant industry measures.
As a major New Zealand-registered bank, ASB had a substantial asset base to support and a strong capital base to maintain.
ASB's return on assets was 0.68% and its return on equity was 14.9%.
Both numbers were low on average compared to other major New Zealand companies.
The profit ASB made represented the return due to its shareholders for investing in its business.
"In this respect, the common perception of an Australian shareholder bank reaping profits for its own benefit is far from the reality.
"In truth, our underlying shareholders are the 777,000 Australians and New Zealanders who hold 80% of the shares in [owner] CBA, both directly and indirectly, through pension, superannuation and other managed funds."
Those shareholders needed to derive a reasonable return on their investments to help them to achieve their savings and retirement aspirations, Mr Judd said.
The accompanying financial statements showed ASB's net interest margin fell from 1.78% in June last year to 1.57% this year.
Total assets increased 9.9% to $65.2 billion, lending balances grew by 4.4% to $53.4 billion and total deposits increased 5.1% to $56.7 billion.
ASB's parent, Commonwealth Bank of Australia (CBA), which is run by New Zealander Sir Ralph Norris, reported a cash profit of $A4.42 billion ($NZ5.56 billion), down 7%.
The net profit of $A4.72 billion was little changed. The dividend was cut 25%.
