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Banks and non-banks given clean bill of health

New Zealand's biggest banks and non-bank lenders remain in a robust position despite the pandemic, according to rating agency Standard & Poor's.

Thursday, April 15th 2021, 1:09PM 1 Comment

S&P's annual report on the NZ banking system – which includes a review of non-banks Avanti, Liberty and Asset Finance – views the lenders as "stable".

The agency said: "In our view, the economic risk trend for banks operating in New Zealand is now stable. The country's economy is recovering strongly after the Covid-19 pandemic."

S&P noted "limited losses to date" despite the pandemic, and predicted a steady recovery as the economic picture improves. 

"In our base case, we now forecast that the New Zealand banks' credit losses in the next two years will remain at about 0.30% of gross loans and advances, broadly in line with our expected long-term average for New Zealand banks," the agency said.

According to the report, the Government's sweeping housing reforms will lead to an "orderly slowdown" of property prices in the years to come. 

However, the ratings provider said downside risks would remain, "particularly if the policy support measures are unsuccessful".

S&P's team of forecasters say NZ lenders are well-placed to absorb potential credit losses and retain "headroom in their earnings". 

The company has left credit ratings for ANZ, ASB, BNZ, Westpac, Rabobank and Kiwibank unchanged.

Ratings for Avanti, Liberty and Asset Finance were also unchanged, according to the report.

The report also predicted a possible shake-up of the NZ banking landscape due to the Reserve Bank's new capital requirements.

The extra requirements could force other Aussie banks to dispose of their Kiwi subsidiaries, following the lead of Westpac, which has put its NZ business under a strategic review, S&P said.

"Another possible scenario is that the Australian owners decide to allocate less capital to their New Zealand subsidiaries or look to divest their New Zealand operations because of the higher proposed capital requirements, or for other reasons."

Tags: ANZ ASB Asset Finance Avanti BNZ Kiwibank Liberty S&P Westpac

« Economists react as OCR kept on holdPrivate fund activity grows »

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Comments from our readers

On 16 April 2021 at 9:47 am Jonny Good Guy said:
you do have to wonder about the world.
S and P said this in 2007 and look what happened.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 5.65 5.55 5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 6.75 6.40 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.49 6.49 6.49
TSB Special 7.89 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 ▼6.05 5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.02 5.79 5.69

Last updated: 8 November 2024 2:46pm

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