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RESEND: ASB first-half cash profit rises 9%, as favourable funding conditions fatten interest margin

ASB, the local unit of Commonwealth Bank of Australia, posted a 9 percent gain in first-half cash profit and said favourable funding conditions allowed it to fatten its net interest margin.,

Cash profit, which excludes accounting adjustments, rose to $429 million in the six months ended Dec. 31 from $393 million a year earlier, the Auckland-based lender said in a statement. Operating income rose almost 7 percent to $1.05 billion, driven by a 10 percent gain in net interest earnings to $850 million. Statutory profit climbed 7 percent to $444 million.

Cash profit at parent Commonwealth Bank rose 8 percent to A$4.62 billion, beating analyst estimates. Australia's largest lender by market value said lending growth was driven by prevailing low interest rates. ASB lifted deposits by 6 percent in the first half while lending across all its portfolios grew 6 percent, led by business and commercial loans. Its net interest margin widened by 15 basis points in the period to 2.5 percent.

"The improvement in NIM was driven by favourable funding conditions, offsetting continuing pressure on lending margins," chief executive Barbara Chapman said.

Loan impairment expense rose 76 percent to $37 million, which Chapman said reflected a sharp drop in the previous period that wasn't repeated and arrears had since stabilised.

"More broadly, favourable economic conditions, including relatively low interest rates and high employment continue to contribute favourably to impairments, Chapman said.

At ASB's wealth and insurance business, funds under management grew by 24 percent.

Total assets at ASB grew to $70.6 billion from $67.5 billion a year earlier. Advances to customers climbed 5.6 percent to $62.6 billion while customer deposits rose to $46.8 billion from $43.7 billion.