Fitch: NZ regional lenders' solid performance to continue; macro risks rising

The US ratings agency, Fitch Ratings published a special report on New Zealand’s regional lenders, highlighting that risks in the operating environment are rising.

Key Points from the report:

“New Zealand's regional lenders (Regionals) are likely to continue their adequate performance over the next year or two, although risks in the operating environment are increasing.”

“Fitch upgraded the Long-Term Issuer Default Rating and Viability Rating of The Co-operative Bank Limited and affirmed the ratings of four other New Zealand-based regional lenders earlier in September 2016.“

“All of the Regionals have a Stable Outlook.”

“Fitch believes the macro risks within the Regionals' operating environment are increasing. New Zealand household debt levels continue to rise and are high relative to other developed economies - this, along with high and increasing property prices, remain the key risks to the financial system.”

“Fitch expects earnings and profitability pressure to persist in FY17 due to the easing interest rate cycle, strong competition for loans and increasing competition for deposits.”