Fitch report: "Peer Review: New Zealand Major Banks - Strong Franchises but Rising Macro-Economic Pressure"

  • Expects NZ's banks to maintain market leading positions
  • mentions macro-economic chellenges to asset quality & profit growth
  • NZ banks have large exposures to dairy farmers & residential housing market, both of which are facing challenges

On dairy:

  • low payouts for a second season
  • Will impact cash flow & ultimately bank asset quality

Says NZ households are highly indebted and vulnerable to interest rates and employment shocks

However, a sharp deterioration in the operating environment is not Fitch's base case