Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


S&P sees stable bank asset quality as interest rates rise

NZ banks expected to maintain sound asset quality as interest rates rise, S&P says

By Tina Morrison

Feb 13 (BusinessDesk) – New Zealand banks should be able to absorb any bad loans from borrowers under pressure as interest rates start climbing this year, maintaining their sound asset quality levels, Standard & Poor’s Ratings Services said in its 2014 outlook for the New Zealand banking sector.

New Zealand’s central bank is this year expected to start hiking interest rates for the first time in almost four years, starting next month and continuing through 2015. The country’s benchmark interest rate has been on hold at a record low 2.5 percent since March 2011 as the central bank sought to stimulate activity through cheap credit. Rates were last raised in July 2010.

“We expect mortgage interest rates to increase in 2014,” Standard & Poor’s said in its 2014 outlook. “Banks in New Zealand should be able to absorb such increases at the current rating level, noting that borrowers with stretched debt positions could experience debt-serving problems.”

The credit rating agency forecasts asset-quality levels for the New Zealand banking system will remain sound at around their current levels with non-performing loan levels and credit losses remaining flat after peaking at about 2.1 percent and 0.8 percent in 2009 to 2010 respectively following the global financial crisis.

Still, S&P said persistent house price inflation could heighten the risk of a sharp property price correction in the future. It expects central bank measures to limit high-debt mortgage lending may have a dampening effect on house price inflation, while rising mortgage interest rates and a pickup in housing construction should also reduce pressures.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Fonterra Slashes 2015 Milk Payout, Earnings Tumble 76%

Fonterra Cooperative Group cut its forecast 2015 milk price payout by about 12 percent, citing weaker global dairy prices and said there is a risk of further declines given strong global milk production. More>>

ALSO:

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news