Media release - 27 February 2013
Financial Institutions Performance Survey (FIPS)
KPMG’s 26th Financial Institutions Performance Survey (FIPS) finds banks in good shape with banking sector profits up 13.6% in the year to September 2012.
This needs to be viewed against the background of huge taxpayer bailouts of banks in the US and Europe, and the severe ‘fiscal austerity’ economic policies that have impacted people’s living standards in many of those countries.
John Kensington, head of financial services at KPMG comments, “New Zealand never rose to the dizzying heights of those economies before the GFC. Our banks did not become entangled in the complicated financial instruments that caused havoc in Europe and the US and as a result their credit ratings are among the highest in the world. So, borrowing rates for New Zealand businesses and consumers are at twenty-year lows.”
While in New Zealand banks are often criticised for making ‘too much’ profit, John also comments, “Profitability is a sign of health. The banks’ profitability allows them to offer New Zealand businesses the loans they need to build and expand – to the benefit of their shareholders, their communities, and the wider economy.
“Bank profitability also allows them to offer consumers the finance they need to do the things they want to do – currently, at very competitive rates. While the profit numbers for the banks look big, they are running large and complex businesses. They have billions of dollars invested in New Zealand.”
The landscape for banks has changed significantly. They no longer operate in a growing credit environment. The amount of money on deposit from ordinary customers has grown significantly (by $18.8 billion) as newly risk-averse investors pull money out of perceived higher-risk sectors.
The latest edition of FIPS also examines how New Zealand banks compare well with overseas banks, and are able to access funding from offshore on good terms. Combined with solid funding from local investors, the lending market is now very competitive.
John adds, “The banking sector doing well is actually great news for New Zealand. For businesses, the banking relationship is only one of the partnerships necessary for success. At KPMG we’re proud of our ability to help our clients to build their businesses, their communities and New Zealand’s future and we see banks working hard over the next year to maintain or improve their track record and play an important role in New Zealand’s economic growth story.”
For more information, contact:
External Communications Manager
+64 9 367 5977
+64 21 335 740
External Communications Manager
+64 9 363 3621
+64 27 258 6257
NOTES TO EDITORS
About the KPMG FIPS publication
The KPMG Financial Institutions Performance Survey is now in its 26th edition. Over the past 20 years it has developed into one of the most credible and widely-quoted surveys analysing the banking sector’s performance.
The latest edition provides our review of 2012 analysing the performance of New Zealand’s registered banks, major finance companies and savings institutions with balance dates between 30 September 2011 and 30 September 2012 KPMG also compiles a quarterly edition of FIPS, which analyses the quarterly results for the major New Zealand banks. These and other publications are available at www.kpmg.com/nz (go to Research).
About KPMG New Zealand
KPMG is one of New Zealand’s leading professional services firms; specialising in Advisory, Audit and Tax services. Our firm of over 800 professionals work with a wide range of New Zealand enterprises – from SMEs, privately owned businesses, to publicly-listed companies, government organisations, and not-for-profit bodies.
KPMG has offices in Auckland, Wellington, Hamilton, Tauranga, and Christchurch. Globally, KPMG operates in 144 countries; employing 140,000 people in member firms around the world.
The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.