KPMG’s Financial Institutions Performance Survey (FIPS) reports have provided insights into New Zealand’s financial services sector for over 30 years. Each edition presents industry commentary and analysis on the performance of New Zealand registered banks, together with a range of topical articles from industry experts, regulators and our own business leaders.
For organisations with balance dates of December and March, there was very little impact on their results. However, for those with June and September balance dates it is a different story, with the impact of Covid-19 becoming apparent.
Overall, the sector experienced a 7.97% drop in profit for the year, with net profit after tax sitting at $299.6 million. This can be largely attributed to a collective drop in profit of 22.92% between those with balance dates in June and September.
While growth in total assets across the sector increased by just 3.95%, this is a relatively strong result given the challenging operating environment. Although increases in provisioning and impaired asset expenses had the most significant impact on financial statements, many participants have reported past dues and arrears at levels similar to the prior year.
The non-bank sector has responded to the impact of Covid-19 in a number of ways, but the standout response has been the manner and speed in which they have assisted their customers with relief packages.
Early in the year, the Reserve Bank of New Zealand announced funding support for the bank sector to allow them to support their customers through the economic disruption. The same government support was not extended to the non-bank sector.
However, without regulatory help and support from the Government, non-bank sector institutions committed to providing their customers with the same level of relief and assistance as banks, via the strength of their own balance sheets.
This year, during the interviews we conducted as part of our research, two new topics featured in all of our conversations – taking care of people’s wellbeing (both staff and customers) and the rapid adoption of flexible working.
The impact of these on organisations’ culture and productivity have dominated the conversations that we have been having with the leaders in the non-bank sector - a marked change from the usual topics of lending growth, interest margins and credit risk. The shift in how, when and where people work has had a flow on effect across a range of considerations, such as more collaborative use of office spaces and the need to find new ways to measure productivity, support their staff and best service their customers.
As for many organisations both locally and worldwide, a key area for attention going forward will be the challenge of maintaining company culture and values across a flexible workforce and ensuring they continue to be reflected in service delivery as we have seen in 2020.