New Zealand banks have recovered from last year’s profit reversal, with KPMG’s Financial Institutions Performance Survey (FIPS) revealing a 7.35% profit increase in 2017 and a new sector profit record.
An increase in net profit after tax (NPAT) saw banks make a cumulative profit of $5.19b, completely reversing last year’s $316.68m drop in profits.
The increase can be largely attributed to improvements in the dairy industry and national economy over the last 12 months driving a reduction in impaired asset expenses, paired with favourable gains on financial instruments increasing non-interest income.
Total assets for the sector continued to grow in 2017, reaching a new high of $504.19b with all five major banks reporting increases in their loan books of between 1.0% and 7.57%. However, major bank growth has slowed compared to last year and they appeared less competitive in the lending market with the non-major bank percentage lending growth outstripping the majors.
For 2018, the industry retains its focus on new technology, remaining vigilant on cyber security while exploring emerging trends such as Blockchain and partnerships with Fintechs.