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' and the current low interest rate environment makes loan compliance easier.
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 intense competition 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 prior quarter.
Concerns about the housing market being overheated in the Auckland and Christchurch areas still feature in the news.
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.
In the quarter the fair pay on fees initiative gathered further pace with the announcement of an initial case to be lodged.
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