Bank profits hit quarterly record high newstalkzb.co.nz - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from newstalkzb.co.nz Daily Mail and Mail on Sunday newspapers.
“Much of the improvement stems from lower impairment charges (or, in some cases, reversals) in the quarter, reflecting how the current credit quality of lenders’ books is significantly better than where they were predicted to be,” says John Kensington, KPMG’s head of banking and finance. Government support packages had a huge impact, he said, which had been understated when the first predictions were made about how the pandemic would effect banks. But the financial resilience of most New Zealanders has been much stronger than anticipated this time last year. The banks’ reduction in operating costs of $84.1 million – probably a result of increased working from home and a focus on essential services – also contributed to this increase in profits.
Bank profits fall amid Covid-19 pandemic rnz.co.nz - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from rnz.co.nz Daily Mail and Mail on Sunday newspapers.
The banks’ net interest margin – the difference between what they charge for lending and pay for saving – dropped from 2.1 per cent to 1.96 per cent. It is a bigger profit hit than suffered in the immediate aftermath of the global financial crisis. Then, profits slipped 1.2 per cent in 2007 and 0.1 per cent in 2008 before plummeting 98.8 per cent in 2009.
RNZ
The banking sector s finances have taken their biggest annual hit in in a decade. KPMG head of banking and finance John Kensington said banks would have been braced for a Covid-19 effect on their profits. While the increase in impaired assets was large, he said it was off a low base. They were calculated on a scenario of what could be expected to happen and many banks might find their books in much better shape in reality, he said.