Media release - 19 July 2013
FIPS March quarterly analysis
Following a strong increase in the previous quarter analysis of data from the country’s retail banks for the March 2013 quarter show net profits have risen by 12.9% to $971 million. This is up from $860 million in the previous quarter where profits increased by 11%.
KPMG’s head of Financial Services John Kensington says, “New Zealand Banks continue to have a solid performance reflecting the early signs of growth in the domestic economy. This combined with improved results from business confidence surveys points to an improving economic situation.
However the Banks (and other economic participants) will need to remain vigilant to the potential impact that the US tapering its quantitative easing program could have on the local economy and the increased warning signs of a slow down across the Tasman. ”
The net interest margin for the sector has decreased by 4 basis points to 2.24% showing that margins are still being impacted by the competitiveness being seen in the market.
The non-interest income increase is largely a result of favourable fair value movements in certain survey entities, a trend we also saw in the previous quarter and one that adds volatility to the sector result.
Gross loans and advances continue to show good growth both for the quarter and for the year, with increases of 1.08% and 4.87% respectively. The quality of the banks’ loan portfolios continues to improve as legacy impaired loans from the Global Financial Crisis have been realised or returned to ‘good book’.
Top earner for the quarter was ANZ, with a net profit after tax of $359 million, an increase of 21.3% from the previous quarter, followed by Westpac on $203 million. BNZ had the largest increase of profits during the quarter with a 36.5% increase since the last quarter.
The housing market continues to be overheated in Auckland and Christchurch. The RBNZ is not expected to use higher interest rates to ‘cool’ down the housing market and its potential impact on inflation and the economy generally, but rather has indicated it favours the use (if necessary) of macro-prudential tools.
Near the end of the quarter several Banks started increasing their long term rates in response to increases in wholesale interest rates.
All in all a strong result for the sector reflecting the comparative strength of the underlying New Zealand economy against many of our trading partners.
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