ASB assets under management fell almost $2 billion last year as shaky markets exacted a toll on the Commonwealth Bank of Australia (CBA)-owned funds business.
According to the CBA six-monthly accounts released last week, total ASB funds under management (FUM) dropped 8 per cent over 2022, ending the year at almost $20.4 billion compared to $22.2 billion at the start of the period and close to $21.4 billion at the half-way mark.
More than half of the ASB funds came courtesy of its KiwiSaver scheme, which held $13.7 billion as at December 31, according to new figures from Morningstar.
But the funds operations remains a tiny drop in the ASB ocean, which saw the NZ bank book a net profit after tax of some $822 million on income of $1.8 billion for the six months to the end of last year.
CBA reported operating income for its funds and insurance divisions of just A$28 million in the last half of 2022, most of which is likely sourced from the ASB investment arm. The bank sold its general insurance unit last September, leaving ASB as the only contributor to this revenue line.
Funds revenue also decreased after the “removal of KiwiSaver administration fees from October 2021”, the CBA report says.
ASB lost its status as a KiwiSaver default provider as at the end of November 2021 but the fund business has implemented several reforms over the last couple of years such as outsourcing investment management and advice to BlackRock while shifting custody and administration to BNP Paribas Securities Services NZ.
The Australian bank has largely exited its once significant wealth management holdings bar the ASB funds business and a 45 per cent stake in superannuation and investment firm, Colonial First State (CFS). US private equity player, KKR, paid A$1.7 billion to purchase the majority share of CFS in December 2021.
However, CBA is still nursing a hangover from its ill-fated foray into wealth management and financial advice, clocking up a remediation bill of almost A$2 billion from historical misdemeanours and further associated costs of close to A$1.4 billion.
The latest half-year report says CBA has about A$518 million of outstanding customer repayments due (although some of this relates to remediation for banking related breaches) with a raft of legal actions also in train.
In a release, ASB chief, Vittoria Shortt, said the bank was preparing for a “challenging” time ahead as rising interest rates bite.
Shortt said the bank had also made significant progress on climate-related reporting, which will become mandatory this financial year for many NZ financial institutions.
“We’ve modelled preliminary physical and transition risks across 85% of our portfolio,” she said.
ASB had set a target for sustainable lending of $6.5 billion for the 2030 financial year, Shortt said.