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Speaker 1: Now, ASB started slashing its mortgage interest rates, one of

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Speaker 1: three banks, just minutes after the Reserve Bank dropped the

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Speaker 1: official cash rate by a quarter of a percent this afternoon.

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Speaker 1: It's been a big day for ASB. Earlier this morning

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Speaker 1: it announced its run of record profits is over and

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Speaker 1: your profit dropped seven percent from last year's record high.

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Speaker 1: It's now down to one point five five nine billion

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Speaker 1: dollars in the year to the end of June. Victoria

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Speaker 1: Short is asb's chief executive. Hey Vittoria, Hey Heather, were

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Speaker 1: you surprised by the cut today?

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Speaker 2: Well, actually, our ASP economics team we're picking a twenty

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Speaker 2: five basis point. CAT acknowledged it was going to be

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Speaker 2: finally balanced, but it is what they were picking. So

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Speaker 2: I think it's good news for New Zealand.

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Speaker 1: Did you not, though, find yourself doing this because I

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Speaker 1: did and thinking, yeah, it should be a caut Everything

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Speaker 1: shows it should be a cut. But Adrian's got an ego.

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Speaker 2: I think we looked at the fundamentals around you know,

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Speaker 2: we go back to why have the interest rates been

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Speaker 2: held high? To get inflation under control? And that's been

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Speaker 2: number one priority for all of us. So you know,

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Speaker 2: we've seen inflation coming down. The big question is is

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Speaker 2: it going to be coming down sustainably to a low

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Speaker 2: enough level. And that seems to be occurring, which is great.

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Speaker 2: But there's one call out that I think was important

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Speaker 2: in the sort of judgment, and that's material weakening of

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Speaker 2: the domestic economic activity. So I think they are you know,

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Speaker 2: they're calling that out as one of the reasons for

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Speaker 2: the cat So we can't walk past that.

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Speaker 1: No, that's fair enough. I see you guys cut your

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Speaker 1: rates obviously immediately, which is great, but why are they

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Speaker 1: only taking effect next week?

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Speaker 2: Yeah, we've got a little bit of time. We've got

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Speaker 2: sort of some legal processes, which means that we have

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Speaker 2: to adjust terms and conditions and make sure we get

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Speaker 2: all of our disclosures are ready to go, and so

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Speaker 2: that's why there's a little bit of a lag between

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Speaker 2: the announcement and when they are effective.

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Speaker 1: Is it a relief to you? I mean, obviously, you

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Speaker 1: guys have this high interest rate environment has been heading

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Speaker 1: your profits. So are you relieved?

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Speaker 2: So? I think it's a really good thing for New

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Speaker 2: Zealand households and New Zealand businesses. So we've already been

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Speaker 2: reducing our fixed home loan rates. We started doing that

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Speaker 2: last year, so we've reduced them already by sixty basis points.

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Speaker 2: So this is really a continuation for us. But I

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Speaker 2: think what it's signaling for the country is that inflation

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Speaker 2: is getting under control and therefore the ocr can start

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Speaker 2: to come down, and that's a really important signal.

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Speaker 1: Are you of the view that we need to also

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Speaker 1: temper oury expectations though? Is everybody's going to get super

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Speaker 1: excited about this, but actually it's going to take us

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Speaker 1: a while to build ourselves back up.

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Speaker 2: Yeah. Look, you know, to your point, it is going

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Speaker 2: to take time for this to really flow through the economy.

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Speaker 2: We are thinking that twenty twenty five is going to

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Speaker 2: be a really different year. We are expecting that credit

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Speaker 2: growth to build for businesses. We are expecting there to

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Speaker 2: be upward pressure on homelan prices as a result. So

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Speaker 2: we do think it's going to build over time, and

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Speaker 2: we don't think this is the last cart either.

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Speaker 1: What are you expecting before the end of the year

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Speaker 1: another twenty five basis points?

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Speaker 2: Yeah, so at this stage where we're still calibrating, will

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Speaker 2: definitely depend on the data and how we see the

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Speaker 2: data evolving. On inflation and also you know, economic activity.

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Speaker 2: But we have about another fifty basis points that we

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Speaker 2: think could come out before Christmas.

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Speaker 1: Now, Victoria, listen, you got the ComCom report coming out

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Speaker 1: next week, the banking report. Are you guys going to

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Speaker 1: get hammered in this?

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Speaker 2: Well? I think the interesting question is how different is

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Speaker 2: the final report going to be from the draft report?

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Speaker 2: And I guess the only person who can answer that

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Speaker 2: is really the head of ComCom.

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Speaker 1: What have you heard.

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Speaker 2: Nothing from ComCom? So you know we'll all be revealed

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Speaker 2: next week?

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Speaker 1: Are you going to get hammered by the government with

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Speaker 1: its rural banking report?

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Speaker 2: I'm really looking forward to to sort of answering some

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Speaker 2: of the questions that have been asked about the rules sector,

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Speaker 2: but also about business lending too. So, just like the

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Speaker 2: market study, I think it's a really good opportunity to get,

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Speaker 2: you know, the right questions on the table and really

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Speaker 2: get into them.

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Speaker 1: Yeah, well, why do you want to answer those questions?

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Speaker 1: Is it because people have got themselves worked up unfairly

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Speaker 1: about you guys?

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Speaker 2: Look, I think there's a lot of things that I

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Speaker 2: hear that I've got a view on, and so it's

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Speaker 2: going to be a good chance to actually share those views.

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Speaker 2: And that's the whole point of it.

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Speaker 1: As a KEI, we do you support the capitalization of kiwibank.

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Speaker 2: Ah. I don't think Kybank's a good topic for me.

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Speaker 2: So that's something that's the best left with those who

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Speaker 2: are in charge of that decision.

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Speaker 1: Fair point. Hey, listen, I've got to ask you. I mean,

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Speaker 1: this is a key and I'm sorry, and nobody likes

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Speaker 1: talking about their pay but I've got to ask you

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Speaker 1: about it. How did you go over toy from two

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Speaker 1: million to five million in the space of a year.

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Speaker 2: Yeah, Look, this year in terms of my rem, it's

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Speaker 2: a highly unusual rem. It includes payments related to multiple

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Speaker 2: years since twenty nineteen. But what you're really getting at

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Speaker 2: is that, you know, I recognize this that executive rem

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Speaker 2: is controversial and particularly in this environment. So it's set

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Speaker 2: by the board and it's based on the market benchmark,

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Speaker 2: and that's you know, that's really the approach to the

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Speaker 2: board takes.

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Speaker 1: Not at all what I was getting at. I was

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Speaker 1: just trying to get a tip from you on on how.

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Speaker 2: To do it. Well, it's like I say, it's multi

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Speaker 2: it's a strange year and it's multiple years starting from

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Speaker 2: twenty nineteen, so the ten consent through some data if

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Speaker 2: you're interested.

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Speaker 1: Yeah, and who am I kidding? I'm not up five

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Speaker 1: million dollars in the media. Geez, Victoria, Thank you very much.

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Speaker 1: Vittoria short asb's chief executive. For more from Heather duplessy

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