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

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

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