March 9, 2016 / 11:39 PM / a year ago

Moody's warns of credit risk to NZ banks from lower dairy payouts

WELLINGTON, March 10 (Reuters) - Ratings company Moody's said on Thursday that the fall in milk payouts was credit negative for New Zealand banks.

"The decline is credit negative for New Zealand banks because a lower payout reduces the income that farmers receive, thereby threatening the asset quality of banks exposed to the dairy sector," said Daniel Yu, vice-president senior analyst at Moody's, in a written statement.

The ratings agency said that ANZ, ASB and BNZ were the most exposed to the country's agricultural sector.

Global dairy giant Fonterra Co-operative Group Ltd on Tuesday lowered its forecast payout for its farmer shareholders, adding to pressure on New Zealand's beleaguered dairy sector.

Reporting by Charlotte Greenfield; Editing by Stephen Coates

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