New Zealand

Details

  • Service: Audit
  • Industry: Financial Services
  • Type: Survey report
  • Date: 13/12/2012

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John Kensington 

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Matt Prichard 

Head of Audit

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Financial Services

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FIPS non-banks - review of 2012 

fips non banks

 

Financial Institutions Performance survey - non-banks

 

The resilient have survived, now it's time to re-group before the final push.

 

The survey participants that remain in the sector have survived the endurance test of the global financial crisis (“GFC”).  They've consolidated their positions in the market and are now looking ahead to growing their lending portfolios by acclimatising to the current environment, checking over the existing practices and looking forward to the climb into new market segments.


Asset growth in the sector remains flat, and competition for new lending is intense as sector participants compete with the banks in a deleveraging environment. With the intense competition from the banks being seen again in the sector, we expect to see pressure on margins over the coming 12 months.

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Survey participants still remain cautious after the GFC, and are focused on maintaining good asset quality but at a level that does not constrain the growth of assets through overly conservative lending practices.

 

The failures of finance companies are stark reminders of the risks involved in this sector.

 

The past five years have seen numerous receiverships as depositors fled, and lending assets went sour. Receivers continue to seek to recover funds for depositors left out of pocket, but asset recovery has proved difficult.

 

The resilient have survived and are now preparing for the challenges to come, in a significantly more regulated and condensed industry.


A snap shot of the performance of the sector

 

  • Asset growth is starting to recover, as growth outweighs the deleveraging or run off of lending assets,

 

  • Profits have seen a healthy increase, fuelled by an improved net interest margin and substantially decreased impairment expense.

 

Participants are also seeing improvements across all major credit quality measures as distressed assets of the past are exited or written off and carefully managed, although management remain cautious around the writing of new business.

Financial Institutions Performance Survey - FIPS surveys and quarterly updates produced by KPMG's Financial Services team. 
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