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


NZ banks' performance indicate confident and growing economy

News release

The performance of New Zealand’s banks indicate a confident and growing economy

New Zealand’s five major banks (ANZ Bank New Zealand, ASB, Bank of New Zealand, Kiwibank and Westpac) have continued to show good growth in the second half of their 2013 financial years (2H13).

According to New Zealand Banking Perspectives, today released by PwC New Zealand, profit before tax increased by 10% or $244 million to $2,704 million in 2H13. These results were driven by increases in net interest income and other operating income, flat operating expenses and a decline in bad debt expenses.

PwC Partner and Banking Sector Leader Sam Shuttleworth notes how the growth in banking profits mirrors a confident New Zealand economy. Mr Shuttleworth expects to see a continuation of this performance in the coming twelve months on the back of the reported results for 2H13.

“Net interest income showed a modest 2% lift in 2H13 and increased from $3,706 million to $3,791 million. Longer term, we don’t expect to see any great changes in net interest margin as a largely short term interest rate re-pricing book should be enough to stop any major decline, while tight competition in the market should prevent any significant increase,” says Mr Shuttleworth.

“However, the increase in other operating income, including trading income specifically is of particular note. Trading income increased by 46% to $309 million in 2H13, while fee income was down 3% or $30 million to just over $1 billion for the period. There was also a 17% decrease in losses on financial instruments held at fair value in 2H13.

”Bad debt expenses dropped by 13% ($27 million), to $178 million, over the same period which was dramatically below the $1.3 billion peak experienced in 2H09. This is a further indicator of a growing economy and that borrowers are servicing their debt at these historically low interest rates” Mr Shuttleworth adds.

The second half of the 2013 financial year also saw both lending and, to a lesser extent, deposits increase.

“The corporate lending market has recorded its fourth consecutive period of growth with an increase of 2.2% for 2H13, while household lending continues to show growth of between 2% and 3% each half year since the first half of 2012,” Mr Shuttleworth says.

On the back of this growth, this is the first time that there has been a slight net cash outflow with customers since 2009.

“We’ve seen the continuation of mortgage holders beginning to move off floating interest rates to fixed interest rates over the period, with now only 44% on floating interest rates at September 2013, down from 63% in March 2012. Interestingly, this migration has occurred at the short end of fixed interest rates with approximately three quarters of mortgages either at floating or fixed interest rates for less than a year. This position should ensure a competitive mortgage market continues throughout 2014.

“The challenge for New Zealand’s major banks is to continue this momentum through 2014 and beyond as the affect of forecasted interest rate hikes, high loan to value ratio restrictions or ‘speed bumps’ and the continued need to save takes hold. With increasing demands to harness innovative technology to meet customers’ expectations, we are all set for an interesting period of time and change,” concludes Mr Shuttleworth.

© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news