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.
-Ends-

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Scoop Business: NZ Broadcasters Launch Battle Against Global Mode ISPs

New Zealand broadcasters have confirmed they’ve launched legal proceedings against internet service providers who give customers’ access to “global mode”, which allows customers access to offshore online content, claiming it breaches the local content providers’ copyright. More>>

ALSO:

Sanford: Closure Of Christchurch Mussel Processing Plant Confirmed

The decision comes after a period of consultation with the 232 staff employed at the Riccarton site, who were told on 9 April that Sanford was considering the future of mussel processing in Christchurch. Recent weather patterns had impacted on natural spat (offspring) supply... More>>

ALSO:

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news