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

 


NZ banks set to stay profitable, Moody's says

NZ banks set to stay profitable in face of increasing competition, Moody's says

By Paul McBeth

July 30 (BusinessDesk) - New Zealand's banks should be able to maintain their strong levels of profitability, even as mounting competition puts pressure on their margins, according to ratings agency Moody's Investors Service.

The nation's banking system is stable, based on sustained growth expectations for the economy, and the relatively low level of bad loans on lenders' books, Moody's said in a report. Lower funding costs will help lender preserve their profits, even as the central bank increases interest rates and borrowers switch to fixed-rate loans, which typically have thinner margins for banks, it said. Lenders are also expected to benefit from lower costs to provide for impaired loans, and operating efficiencies.

"The banks' profitability metrics have likely peaked and may experience some marginal downward pressure in the coming 12 to 18 months," the report said. "Nonetheless, the industry's concentrated structure is likely to keep profitability at healthy levels."

In May, the Reserve Bank's twice-yearly financial stability report found that bank profitability was back to pre-global financial crisis levels, largely due to the fall in impairment charges, and future earnings would “likely be influenced by how borrowers respond to the outlook for higher domestic interest rates.”

The ratings company expects the big four banks - ANZ Bank New Zealand, Westpac Banking Corp, ASB Bank, and Bank of New Zealand - to continue their domination of the local market, accounting for about 88 pecent of all loans and 97 percent of deposits, as at March 31.

While that dominance supported the lenders' pricing power, competitive pressures will come from capital requirements driving demand for customer deposits, rising interest rates encouraging customers to switch to fixed-term mortgages, and banks not passing on interest rate increases to their customers.

Moody's today said funding conditions will likely stay favourable for New Zealand banks, with deposit growth likely to keep outstripping loan growth, albeit at a slowing pace.

The ratings company said the four Australian-owned banks benefited from support from their parents, while state-owned KiwiBank's benefited from the guarantee from parent New Zealand Post.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Restrictions Lifted: No Further Tau Flies Found

The Ministry for Primary Industries (MPI) confirms that all restrictions on the movement of fruit and vegetables in Manurewa, Auckland, due to the Tau fly, have been lifted as of 2.26pm on Sunday 7 February. More>>

Crowdfinding: Awaroa Beach To Become Public Land If Appeal Succeeds

Conservation Minister Maggie Barry says a privately-owned beach will become part of the Abel Tasman National Park if an online crowdfunding campaign to buy it succeeds... More>>

ALSO:

Meat Workers Union: Waitangi Mondayisation Flaunted By Large Employer Of Maori

At the AFFCO Talley owned meat plant in Rangiuru, the company has resorted to bullying and threats... saying they could be disciplined and their union sued for an unlawful strike if workers exercise their rights to a paid day off tomorrow. More>>

Earlier:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news