Tighter margins shrink NZ bank profits
(13 July 2017 – New Zealand) Net profit slipped 2.9 percent to NZ$1.2 billion (A$1.13 billion) in the three months ended March 31 for the country's licensed banks, with five of the nine lenders surveyed reporting smaller earnings, KPMG's quarterly financial institutions performance survey (FIPS) shows.
Net interest income shrank three percent to NZ$69 billion and net interest margin shrank 9 basis points in the quarter to 2.01 percent.
"The overall dip in profits is just a recognition of the competition in the market, the slightly uncertain geopolitical times and a reflection on the New Zealand economy as a whole: resilient, going well, but not booming," KPMG said.
"A common theme across the sector is continued investment in technology enhancements to improve both customer delivery and productivity to meet performance objectives."
New Zealand's lenders have faced shrinking margins over the past year as intense competition for mortgages left them with little wiggle room in boosting interest income.
Greater regulatory capital requirements and the prospect of tighter global monetary policy have also pushed up their own borrowing costs.