NZ Banks enjoy good year
(24 April 2012 – New Zealand) New Zealand banks enjoyed a "very good year" as profits jumped more than 19 percent to NZ$3.3 billion (A$2.60 billion) in 2011 on the previous year.
Bad debts reduced and profit margins on lending rose in 2011, equating to banks achieving an overall net profit after tax to average equity ratio of 14.37 percent, up from 13.26 percent in the previous year. Despite this increase the equity ratio still fell well short of the average of 18 percent achieved in the four years leading up to the GFC.
KMPG’s latest report on the banking sector shows that banks' average interest margin increased 11 basis points to 2.2 percent in the year, up from 2.09 percent in 2010.
'Despite soft confidence ... the low-interest-rate environment and concerns over the troubles in Europe and the US, New Zealand banks have had a ... very good year,' KPMG said, though there was no guarantee that would continue.
The reduction in official interest rates in recent years has seen many more people coming off fixed-rate mortgages and moving to lower floating-rate mortgages, which has assisted in the lift in bank profits, as the interest margins tend to be better on variable loans.
2011 showed an improvement in asset quality and impaired asset expenses fell almost NZ$450 million in the past year. In 2009 and 2010 banks posted significant bad loans and increased provisions in the wake of the global financial crisis.
Impairment expenses in 2011 were NZ$824 million, compared with NZ$2.19 billion in 2009, KPMG said.
KMPG’s latest report on the banking sector shows that banks' average interest margin increased 11 basis points to 2.2 percent in the year, up from 2.09 percent in 2010.
'Despite soft confidence ... the low-interest-rate environment and concerns over the troubles in Europe and the US, New Zealand banks have had a ... very good year,' KPMG said, though there was no guarantee that would continue.
The reduction in official interest rates in recent years has seen many more people coming off fixed-rate mortgages and moving to lower floating-rate mortgages, which has assisted in the lift in bank profits, as the interest margins tend to be better on variable loans.
2011 showed an improvement in asset quality and impaired asset expenses fell almost NZ$450 million in the past year. In 2009 and 2010 banks posted significant bad loans and increased provisions in the wake of the global financial crisis.
Impairment expenses in 2011 were NZ$824 million, compared with NZ$2.19 billion in 2009, KPMG said.
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