Comments from Moody's crossing the wires re NZ (Moody's just-published report "Banking System Outlook: New Zealand," an overview of credit trends affecting the banking system in the next 12-18 months):
- Outlook for the New Zealand (Aaa stable) banking system is stable, based on the banks' healthy capitalisation, strong asset quality and stable profitabilit, which offset the risks arising from weaker economic growth.
- "Stable employment levels and the low interest rate environment will continue to support New Zealand banks' good asset quality and stable profits over the next 12-18 months," says Daniel Yu, a Moody's Vice President and Senior Analyst.
- "The banking system's outlook is stable despite weak dairyprices, property market divergence and high household leverage," says Yu.
Moody's expects the banks' asset quality to remain healthy
- Strong capitalization buffering against potential losses
- In addition, the RBNZ's two consecutive 25 basis point policy rate cuts in June and July this year -- will help temper debt-servicing costs for New Zealand households
Moody's expects economic growth to decline slightly to 2.9% in 2015 and 2.5% in 2016, down from 3.3% in 2014
- Cites dairy prices continue to slide and pressure export incomes
- Says ongoing construction activity, high net migration and lower interest rates will support the broader economy
