ASB Raises Interest Rate Amid COVID-19 Uncertainties

  • March 02, 2021 06:58 PM NZDT
  • Team Kalkine
    Team Kalkine
    Team Kalkine
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ASB Raises Interest Rate Amid COVID-19 Uncertainties

Source: Freedomz, Shutterstock

Established in 1847 in New Zealand, as Auckland Savings Bank, commonly known as ASB, is a subsidiary of Commonwealth Bank of Australia (ASX:CBA). ASB is a provider of financial services like funds management, retail, business and rural banking, insurance, etc.

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Since long, deposit rates were only showing downwards trend amid COVID-19 scenario.

But, on 1 March 2021, ASB bank broke the monotony of 60 months and signaled out an increase of 1.75% on term deposits for 5 years. On the contrary, its peers- ANZ, BNZ, Kiwibank and Westpac are still offering 0.9% to their customers.

Revised Interest Rates for Savers

Apart from the 5-year deposit rate, the rates for deposit terms ranging from 9-48 months have also been increased by ASB. 

Let’s take a quick look at the revised rates effective from 2 March 2021.

Increased Value on Savings

Craig Sims, ASB’s Executive General Manager of Retail Banking stated that the move was made after due consideration to provide exciting term deposit options to the New Zealanders and at the same time, considering the needs of those borrowers who have been benefiting from low-interest rates for some time.

Further, Sims affirmed that since New Zealand has coped quite successfully with COVID-19 compared to most of the countries across the world, ASB is focused on helping its customers with enhanced financial progress by revising the term deposit rates.

Latest Lockdown to Cost $240 million a week

Following the detection of new strain of COVID-19 in Auckland, NZ’s biggest city is going through another level-3 lockdown since 28 February 2020.

According to ASB’s prediction, the latest lockdown might cause a loss of around $240 million a week on Aotearoa. Nick Tuffley, Chief Economist, ASB stated that though the above calculation might turn out to be untrue yet, it underlines the value in expenditure.

Tuffley expressed that this lockdown might have a considerable effect than the previous one as it covers portions of 2 weekends. Further, the services sector is going to be hugely impacted especially the hospitality and the events.

Interim Financials Report

On 10 February 2021, ASB while declaring its half-year results ended 31 December 2020, saw a decline of 1% in NPAT to $614 million on pcp.

There was a decline in cash NIM (net interest margin) by 6 basis points to stand at 209 basis points. This decrease demonstrated the low interest rate situation and plans to aid consumers most affected by the coronavirus.

Vittoria Shortt, ASB’s CEO stated there would be no compulsory sales of owner-occupied residential houses this year for the consumers, the bank is working with to solve the issues they are facing due to COVID-19 crisis.

 


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