Despite the global recession, New Zealand’s five major banks all reported an increase in core earnings – from $2.3 to $2.8 billion – in the second half of last year.
ANZ National, ASB, Kiwibank, Westpac and Bank of New Zealand flourished, bucking the 2010 trend of increasing expenses and bad debt, due to a number of factors including a growth of net interest income, operating income and increases in equitable returns, the PwC New Zealand Banking Perspectives report shows.
The banks' operating income grew four percent to $227 million during the second half of 2011. Meanwhile, a $246 million net interest income increase was attributed to refocusing on credit risks, households switching from fixed to floating mortgages and decreased borrowing rates.
Combined, they took a combined net profit of $3 billion over the 2011 financial year.
Nonetheless, both ANZ and Westpac have recently announced they will be cutting hundreds of jobs each in Australia, despite posting net profits of A$5.36 billion and $6.99 billion respectively.
The report says a lack of significant overseas investment in Europe means New Zealand banks are unlikely to be directly affected by the Eurozone crisis. However, exporters' decreasing business confidence and increasing exchange rates will reduce demand.
It’s not just exports that have lost their mojo; the second half of 2011 saw a decrease in business and consumer confidence. The report attributes this pessimism to our recent natural disasters and Eurozone fears and states there is a possibility this will encourage households to return to fixed mortgage rates.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.