Despite tough economic conditions, New Zealand bank customers are handling their financial responsibilities well, according to the New Zealand Banking Association’s latest retail banking insights for January to June 2024.
The NZBA figures show that there are 9.86 million unique banking customers. Of those, 9,267 customers applied for hardship status, up 1% from the period between July 2023 and December 2023. 5,968 customers were granted hardship status, up 6.9%.
Bank customers are managing their money relatively well in the current economic conditions according to retail banking insights released today by the New Zealand Banking Association.
The insights from January to June this year showed customers continued to use credit cards prudently and were maintaining home loan repayments.
Of the 2.23 million customers who had a credit card, who had an average monthly card spend of $2,072, 67.2% paid off their monthly balance in full without incurring any interest cost, up 0.6% compared to the previous six months.
Of the 1.38 million home loans across 1.14 million customers, the average loan value was $318,151. The average home loan value for first home buyers was $472,361. Only 1.4% of home loan customers were behind on their repayments, while 39.7% were paying more than their minimum repayments – down slightly from 41.4% in the previous period.
13,095 home loans switched from principal and interest payments to interest-only, down 6.9% from the previous period.
New Zealand Banking Association chief executive Roger Beaumont says: “We know that some people are experiencing financial difficulty in the current economic conditions. These insights provide a wider picture that shows, despite these headwinds, the vast majority of New Zealanders are managing their financial situation well.”
There are 9.86 million unique banking customers. Of those, 9,267 customers applied for hardship status, up 1% from the last period. 5,968 customers were granted hardship status, up 6.9%.
“Savers continued to make the most of raised interest rates from January to June, with the average interest rate on term deposits sitting at 6.1%. That will now likely decline with the Reserve Bank moving in August to start reducing the official cash rate. The next OCR update due on Wednesday is also widely expected to bring a further decrease,” says Beaumont. The average interest rate on savings accounts in the period was 3.8%.
The value of term deposits increased by 6.6% to $183 billion, with an average balance $107,800.
The full set of retail banking insights for January to June 2024 is available here: https://www.nzba.org.nz/wp-content/uploads/2024/10/Retail-banking-insights-January-to-June-2024.pdf
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The New Zealand Banking Association said banks have “dedicated hardship teams who can talk through available options”.
Banking Association chief executive Roger Beaumont said banks had responded to the minister in line with his February letter and were “discussing next steps”.
Hobbs said council had been working with the New Zealand Banking Association to see how they might be able to support people in negative equity, but it was case by case and homeowners should contact their bank to discuss options.
“Our banks know that some farmers are doing it tough in the current economic environment, so it made sense to fill the funding gap for the Farm Business Advice Fund, and to renew the annual sponsorship arrangement for the Rural Support Trust,” Beaumont said.
Banks are stepping up to fully fund the Farm Business Advice Fund for farmers who are under considerable business pressure, as well as continuing their sponsorship of the National Rural Support Trust.
The Farm Business Advice Fund was established in 2020 to provide up to $6,000 for farmers in need to obtain financial or business advice from an independent consultant. The fund is managed by the National Rural Support Trust.
The government, via the Ministry for Primary Industries (MPI), previously met half of the fund’s costs with the farmer’s relevant bank providing the other half. However, in December last year MPI made the decision to discontinue its funding. ANZ, ASB, BNZ, and Westpac are now stepping up to fully meet the fund’s costs.
Rabobank has confirmed it will continue with its original sponsorship of the Farm Business Advice Fund.
All five banks have also agreed to continue to provide the National Rural Support Trust with total sponsorship of $150,000 (plus GST) a year. The current funding agreement ends in November this year and will be rolled over for another three years.
National Rural Support Trust Chair Michelle Ruddell says: “Our struggling farmers and growers are going to directly benefit from the continuation of the Business Advice Fund. Thank you to the banks for recognising the importance of the Business Advice Fund, stepping up to fully fund it, and their continued sponsorship of Rural Support Trust.”
New Zealand Banking Association chief executive Roger Beaumont says: “Our banks know that some farmers are doing it tough in the current economic environment, so it made sense to fill the funding gap for the Farm Business Advice Fund, and to renew the annual sponsorship arrangement for the Rural Support Trust.”
For more information about the Farm Business Advice Fund, see https://www.nzba.org.nz/2020/02/25/new-fund-to-get-advice-for-struggling-farmers-is-now-open/.
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Earlier this year, NZ Banking Association chief executive Roger Beaumont urged telcos and social media platforms to take down fake websites.
Banks alone could not protect New Zealanders from scams and had asked the government for help, involving from police and other agencies, New Zealand Banking Association chief executive Roger Beaumont said.