November 14, 2012 / 12:11 AM / 5 years ago

TEXT-S&P: New Report Discusses Issues Pressuring NZ Bank Ratings

(The following was released by the rating agency)

MELBOURNE (Standard & Poor's) Nov. 14, 2012--In Standard & Poor's Ratings Services' view, New Zealand bank ratings are robust by international standards. However, despite the sound and relatively stable ratings, since the global financial crisis the banks have needed to navigate through a range a domestic and external issues that have generally brought on downward rating pressure for the banking system.

In a new report titled: "New Zealand Bank Credit Ratings Remain Stable As Banks Navigate A Range of Market Challenges," Standard & Poor's notes that, similar to Australia, New Zealand's private sector is highly indebted, leaving it vulnerable to a downturn in global economic and financial market conditions. "The low credit growth outlook is expected to limit profit growth for New Zealand's banks in the medium term," says analyst Peter Sikora, in the report. New Zealand's domestically owned and locally incorporated banks are small market share players who largely compete across commoditized product and service segments in which they have limited competitive advantage over major banks. "Similar to Australia, the New Zealand banking system has a material reliance on offshore wholesale funding, although the position has progressively improved since 2009 on the back of increased retail deposit levels," says Mr. Sikora.

"Regulatory capital ratios for New Zealand's banks remain robust, and position the banks well to meet new Basel III capital requirements. Additionally, New Zealand bank ratings will not themselves be negatively affected by progression of an Open Bank Resolution policy." The report discusses how New Zealand banking sector will continue to face a range of existing and new credit issues that emerge in its domestic operating environment, or those brought on by the escalation or emergence of new external pressures.

"New Zealand Bank Credit Ratings Remain Stable As Banks Navigate A Range of Market Challenges," is available to subscribers of RatingsDirect at www.globalcreditportal.com. Members of the media may contact Richard Noonan for a copy.

RELATED RESEARCH

-- New Zealand Bank Credit Ratings Remain Stable As Banks Navigate A Range of Market Challenges, published Nov. 14, 2012

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