FIPS Non-Banks: Review of 2016 | KPMG | NZ

FIPS Non-Banks: Review of 2016

FIPS Non-Banks: Review of 2016

Strong profitability in New Zealand’s non-bank sector during 2016 driven by increased consumer confidence and a focusing of bank lending.

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Partner - Audit, Head of Banking & Finance

KPMG in New Zealand

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Profits up but tougher times on the horizon

New Zealand finance companies and credit unions have again experienced strong growth in 2016. Key findings from the survey reveal:

  • The sector has delivered a strong performance, with net profit after tax up 8.17% to $207.78 million and total assets up 17.40% to $11.01 billion. 
  • Increased consumer confidence has been a key driver of the sector’s strong profitability, driven by house price growth, strong employment numbers and low interest rates. New Zealanders have felt confident about their wealth security, meaning they are more willing to borrow.  
  • New Zealand’s banking sector focused on business and mortgage lending, and as a result, finance companies and credit unions had a clear space in the market.   
  • Asset growth continues to be fuelled by the increase in the sector’s loan book as gross loans and advances increased from $7.72 billion to $8.77 billion. 

However, the coming year is going to be more challenging for the non-bank sector. In recent months some of the sector have found it more difficult to secure the funds they require and expected rises in offshore wholesale funding costs as well as competition for funds within the local deposits market, will increase this pressure.  

To help ensure growth in the coming years, many of the sector’s executives reported innovation and additional product offerings as key areas of focus. In response to the disruption caused by the growth of peer to peer lending, a number of participants are considering how Fintech partnerships might bring a new product or service to the market. 

Data analytics are also playing a greater role in identifying new business opportunities through the analysis of transactions. In the not too distant future, companies that have yet to embrace this trend might find themselves lagging behind.

Financial Institutions Performance Survey (FIPS)

KPMG's annual study of financial performance across the NZ banking and finance industry.

 
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