The Reserve Bank of New Zealand’s Financial Stability Report released today has found that the financial system remains sound and is well placed to support economic expansion.

“The New Zealand banking industry is in good shape, remains strong, and is well capitalised and regulated,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“Recently reported bank returns are a sign of both the industry’s strength and our buoyant economy, especially compared to other parts of the world. That’s good for us at home and our reputation overseas.”

“Maintaining a successful banking sector is important because it supports economic growth by helping fund the needs of businesses and households and providing a safe place for us to save and invest.

“On housing affordability, the Reserve Bank acknowledges that credit growth has remained modest. Bank lending isn’t driving house prices. It’s the lack of housing supply in some parts of the country that’s the problem. The government’s steps to address supply issues will help here.”

The Reserve Bank also said it would review its bank and non-bank regulations to help improve their efficiency, consistency and clarity.

“We welcome this move. We need quality regulation that’s developed in a coordinated and consultative way, is robust, well-targeted and enforced, and is fit for New Zealand conditions.

“Banks make a significant contribution to New Zealand through direct investment and facilitating economic growth. Getting regulation right, and striking a balance between new rules and the need to support economic growth, is critical,” Hope said.

Productivity Commission

KPMG’s Financial Institutions Performance Survey analysis for the quarter to December 2013 released today has found that New Zealand’s economic development and the banking industry’s strength go hand-in-hand.

“Our strong and stable banking system provides a great platform for economic growth. That growth is possible because banks are providing funding to businesses across a range of sectors,” said New Zealand Bankers’ Association chief executive Kirk Hope

The strength of our banking industry has been recognised internationally. The World Economic Forum’s Global Competitiveness Report 2013-2014 rated New Zealand banks as the second most sound in the world after Canada. This is important because it helps our banks borrow money from overseas at good rates which can be passed on to New Zealand businesses and households.

The KPMG report also found the banks continued to face regulatory challenges.

“We need good regulation that’s developed in a coordinated and consultative way, is robust, well-targeted and enforced, and is fit for New Zealand conditions.

“We support quality regulation that is well-targeted and enforced. All regulation should achieve a clearly defined purpose without imposing unnecessary costs and unintended consequences on businesses and consumers.

“Banks make a significant contribution to New Zealand through direct investment and facilitating economic growth. Getting regulation right, and striking a balance between new rules and the need to support economic growth, is critical,” Hope said.

The Bankers’ Association chief executive Kirk Hope said New Zealand banks have no choice but to comply with the US law, but take confidentiality of client’s information very seriously.

New Zealand Bankers’ Association chief executive Kirk Hope said it was impossible for New Zealand companies to comply with Fatca without the agreement, because under current law they aren’t allowed to provide information to overseas tax departments.

ASB Bank chief executive Barbara Chapman has been elected chair of the New Zealand Bankers’ Association for 2014/15 and takes on the role today.

BNZ chief executive Andrew Thorburn was elected deputy chair.

“The association plays an important role representing the banking industry on a range of issues with a range of stakeholders,” said Barbara Chapman.

“Our banks are rated among the most sound in the world, and work hard to achieve consistently high customer satisfaction. That’s good for New Zealanders and our economy.”

ASB takes over the chair bank role from Westpac.

New Zealand Bankers’ Association chief executive Kirk Hope said, “I would like to acknowledge Peter Clare’s contribution as chair over the last year, and welcome Barbara Chapman to the role.”

The New Zealand Bankers’ Association is the industry’s voice and promotes policy outcomes which contribute to a successful banking system that benefits New Zealanders and the New Zealand economy.

Association membership is open to any bank registered under the Reserve Bank of New Zealand Act 1989. Currently the association has 14 members. The association’s governing body is its council, comprising the chief executive of each member bank

The banks argue that they are already responsible lenders and that the law changes should be targeted at loan sharks and lower tier lenders rather than them.

Bankers’ Association chief executive Kirk Hope says any farmers finding it tough should talk to their bank right away.

Drought-affected farmers should talk to their banks said the New Zealand Bankers’ Association in response to increasingly dry conditions in parts of Northland and Waikato.

“We encourage any farmers facing hardship as a result of the lack of rain to contact their bank to discuss options for assistance and how they can work through these challenging conditions,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“Banks work very hard with customers who find themselves in financial difficulty. Farmers who are having trouble because of the drought should speak to their bank as soon as possible.

“Bank relationship managers work very closely with their rural clients and they understand individual farmers situation and will work with them based on their needs.

“As well as talking to their banks, farmers can also seek advice about managing dry conditions from Rural Support Trusts, DairyNZ and Beef + Lamb New Zealand,” Hope added.

Questions to ask if you’re considering putting your money into a savings pool.