Sharechat Logo

NZ bank profits rebound as bad debts abate

Tuesday 24th April 2012

Text too small?

New Zealand bank profits rebounded strongly in 2011, mainly thanks to lower levels of bad debt since both businesses and households showed little appetite for new bank lending in a trend that could continue for some years, says accounting firm KPMG.

In the 25th edition of its annual Financial Institutions Performance Survey, KPMG said the deleveraging trend seen since the global financial crisis began in 2008 showed "no clear sign of abatement” and “could continue into 2013 and beyond”.

"In essence, New Zealanders who have money available but are not yet ready to starting spending and those who don’t are reluctant to borrow,” said John Kensington, KPMG's head of financial services. “For many, the global financial crisis was a wake-up call and people are now far more concerned about their debt levels and less likely to increase borrowing.

“For New Zealand – a nation with a woeful record for saving – this fiscal 'safe haven' imperative is arguably the only positive outcome from the GFC,” he said. “As a country we certainly could not continue the borrow-to-the-limit-and-beyond mindset of the past.”

Combined net profits from the country’s trading banks increased to $3.3 billion in 2011 from $2.8 billion in 2010, but it was too early to argue the worst of the global financial crisis had now passed.

Rather, there had been an improvement in asset quality through 2011, with reductions in gross impaired and passed due assets, the report said.

"Given the soft business confidence it is possible some industry sectors are struggling and, should conditions not improve, a deterioration of asset quality cannot be ruled out in the future," said Kensington.

The slow pace of rebuilding in Christchurch was also holding back lending, but the reconstruction was likely to provide a 10-to-15 year lending stimulus once it got under way.

(BusinessDesk)

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report