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

 

Moody's sees pressure on NZ banks' profitability


By Jenny Ruth

Aug. 20 (BusinessDesk) - Moody’s Investors Service says slow credit growth, low interest rates and rising costs will weigh on the profitability of New Zealand banks in the next 12 to 18 months.

That’s despite asset quality and capital remaining strong.

“We expect GDP growth to moderate as slowing growth in New Zealand’s key trading partners is raising external risk, while a subdued housing market will dampen household consumption domestically,” says Daniel Yu, a Moody’s senior analyst.

“Profit growth will also moderate as credit growth remains slow, spurring increased price competition and as low interest rates weigh on net interest margins,” Yu says in a statement.

Moody’s is forecasting New Zealand’s GDP will slow to 2.5 percent in both 2019 and 2020 from 2.8 percent in 2018 but remains high internationally.

The weaker housing market, coupled with slower economic growth, subdued wage increases and high levels of household debt, will also increase mortgage delinquencies but asset quality overall will remain strong, supported by low interest rates and healthy economic conditions, it says.

Deposit growth is likely to slow because of lower interest rates but weaker credit growth will mean that banks’ wholesale funding requirements are unlikely to change materially in 2019 and 2020.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Seeking 'Clarity': Crown To Appeal Southern Response Decision, Offers Costs

“It is our intention that the clarity that will come from the outcome of these proceedings will enable the Crown to work with Southern Response to provide a soundly based proactive solution to those people that are affected.” More>>

Thinking Of The Children: Plan For Classification For Commercial Video On Demand

Classifying on-demand video content will be made mandatory to bring it in line with other media and provide better guidance and protections to families and young people, says Internal Affairs Minister Tracey Martin. More>>

Cheques Out: Inland Revenue And ACC Push For Paperless

Inland Revenue and the Accident Compensation Corporation are calling ‘time’ on cheques. From March next year, IR and ACC will no longer accept payments by cheque from customers who are able to use alternative payment options. More>>

ALSO:

"Vision And Growth": Capital Markets 2029 Report

Broader participation by New Zealanders, greater access to growth capital for New Zealand enterprises, and more choices for investors drive the recommendations in the Capital Markets 2029 report released today. More>>

ALSO:

Forest & Bird: Call For More Funding To Stop Plague Of Wallabies

Wallabies could spread over a third of New Zealand within the next 50 years, unless control is increased dramatically, says Forest & Bird central North Island regional manager Rebecca Stirnemann. More>>

ALSO: