KPMG’s latest Financial Institution Performance Survey (FIPS) quarterly analysis highlights a net profit increase of 14.61% for New Zealand banks to $1,424 million, a change from last quarter’s 11.35% drop. The report highlights the shifts driving banks profitability over the last quarter and includes articles exploring sustainable reporting and customer experience in the financial services sector.
The increase in profit can be attributed to an increase in net interest income of $48 million and non-interest income by $77 million, paired with a decrease in impaired asset expense of $116 million and operating expenses of $7 million, with only an increase in tax expense offsetting the growth in profit.
Loan growth across the banks continued at a steady rate, with Heartland marginally ahead of TSB for the quarter and with year-to-date growth of 12.28% and 13.61% respectively. BNZ, ANZ and CBA also experienced an upwards trend in loan growth for the quarter with results greater than 1.5%.
Following a minor setback last quarter, asset quality appears to have recovered, with results showing lower impairment expense and relatively stable provisioning. This trend indicates that the downward spike in the previous quarter was likely driven by a variability of results rather than a clear signal of a turning point in the market cycle as speculated. However, given that provision levels have been held at these higher levels, this direction may still be an early indicator of coming change.
“The last two quarters have shown true volatility” says John Kensington, Head of Banking and Finance at KPMG. “It will be interesting to see how the next couple of quarter’s results behave as there are contradictory indicators – with, most notably, business confidence still down while other indicators are more positive” said Kensington.
This quarter we touch on two significant wider impacts; Better Business Reporting and Customer Experience Excellence. This continues an increased focus on balance scorecard type measurements in the reporting of results.
© 2020 KPMG, a New Zealand Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.