New Zealand Banking Perspectives: February 2014

Growth in banking profits indicate a confident New Zealand economy

New Zealand's five major banks have continued to show good growth in the second half of their 2013 financial years on the back of a confident economy, according to the findings of our New Zealand Banking Perspectives report.

Our regular analysis shows the performance of the big five majors mirrors a number of indicators showing New Zealand's economy is tracking in a positive direction. Corporate and household lending is up, customers are better able to service their debts and deposits are increasing. This strong market performance has tracked through into the banks' combined profits before tax, increasing by 10% to $2,704 million (with core earnings up to $2,882 million from $2,665 million for the previous six months).

This result is driven by increases in net income and other operating income, flat operating expenses and a decline in bad debt expenses. We can expect to see a continuation of this strong performance over the coming 12 months.

The challenge for the banks is to continue this momentum through 2014 and beyond as the affect of forecasted interest rate hikes, high loan to value ratio restrictions and the continued need to save takes hold.

New Zealand Banking Perspectives: Five major bank's combined performance for FY12 - FY13

Take a look inside our publication – one of the most detailed and comprehensive in the market – to learn the full story of our big five banks' performance.

We'd be happy to discuss our analysis personally with you, so please do let us know if you'd like to meet with our team.