FIPS: Review of 2017 | KPMG | NZ

Financial Institutions Performance Survey: Review of 2017

FIPS: Review of 2017

New Zealand banks have recovered from last year’s profit reversal, with KPMG’s Financial Institutions Performance Survey (FIPS) revealing a 7.35% profit increase in 2017 and a new sector profit record.

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Partner - Audit, Head of Banking & Finance

KPMG in New Zealand

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An increase in net profit after tax (NPAT) saw banks make a cumulative profit of $5.19b, completely reversing last year’s $316.68m drop in profits.

The increase can be largely attributed to improvements in the dairy industry and national economy over the last 12 months driving a reduction in impaired asset expenses, paired with favourable gains on financial instruments increasing non-interest income.

Total assets for the sector continued to grow in 2017, reaching a new high of $504.19b with all five major banks reporting increases in their loan books of between 1.0% and 7.57%. However, major bank growth has slowed compared to last year and they appeared less competitive in the lending market with the non-major bank percentage lending growth outstripping the majors. 

For 2018, the industry retains its focus on new technology, remaining vigilant on cyber security while exploring emerging trends such as Blockchain and partnerships with Fintechs.

Key findings from the survey reveal:

  • The increase in profitability can be largely attributed to improvements in the dairy industry and national economy over the last 12 months driving a reduction in impaired asset expenses, paired with favourable gains on financial instruments increasing non-interest income.
  • Net interest margins fell 9 bps over the year, from 2.17% to 2.08%, despite net interest income increasing by 1.17%.
  • Total assets for the sector reached a new high of $504.19b.
  • Operating and personal expenses continue to increase, as banks continue their investment in technology and digitisation to meet the evolving expectations of customers’ banking experience.

 

Downloads

FIPS Banks Review 2017 - Interactive
FIPS Banks Review 2017 - Non-interactive

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