KPMG New Zealand’s latest Financial Institutions Performance Survey (FIPS) shows the banks’ collective loan book has continued to grow – with a 16.86% increase in profits over the previous quarter. The strong performance of the banks goes hand-in-hand with the more buoyant outlook from Kiwi businesses.
Results of the December quarterly report provide reassurance to the market, given the New Zealand economy has come under criticism recently. In February, Standard and Poor’s expressed concerns about risks within the New Zealand market; while US economist Jesse Colombo warned the country was facing a housing bubble.
While those concerns are based on legitimate theories, they do not take into account the realities of the New Zealand environment, there are some “subtle differences” in our market. We have a lack of housing supply in New Zealand, which is driving prices up. That’s different to other countries where the housing market crashed, like Ireland and the US. They built housing to create jobs, and there wasn’t enough demand. There are whole tracts of land locked up in those countries where the owners have walked away, and the banks don’t pursue them.
The latest FIPS report wasn’t all good news for the banks, however. The pace of regulation continues to grow - with the introduction of the Financial Market Conduct Act 2013 and the Financial Reporting Act 2013, both which came into effect on April 1 2014.
For more about this latest FIPS Quarterly, contact John Kensington or Malcolm Bruce.