What a very smart move by ASB. Their pledge to set aside $1 billion for cheap (5%) loans to small and medium businesses (and farmers), if it will save and create jobs is inspired.
Yes, it will mean a dip in profits in the short term. But it will do wonders for their brand, which will be of greater value in the long term. Especially doing it at a time when people are very negative on banks.
The Herald reports:
The “concessionary” rate would affect ASB’s profitability, Mr Pink said, “but obviously we are still looking after our shareholders”.
“There is a balance between profitability and the needs of customers and the community. I guess we’ve just swung that balance towards the needs of customers and the community.”
ASB has moved to seize the moral high ground in the competitive banking business by announcing the fund days before the Government’s jobs summit on Friday.
Prime Minister John Key welcomed the plan as “just the sort of creative private sector idea I have been seeking in the lead-up to this week’s jobs summit”.
The PM did say a number of times, that he expected banks to be socially responsible, in exchange for the government guarantees on their deposits. I suspect he’ll be pretty delighted with this as a response.
“As I’ve said many times, the summit is not only about what the Government can do. It will bring together people at the coalface of the economy who can make a real difference as we navigate these difficult economic times.”
Too many people think the Government can just wave a magic wand, and create jobs. It can’t. The Government can help create an environment which is job friendly, but it can not force consumers (both globally and domestically) to spend more money on NZ produced goods and services.
ASB is showing what the private sector can do.