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Analysis released today shows New Zealand’s major banks continue to perform well in the face of increased operating costs and greater regulatory pressures.

The findings were contained in PwC’s Banking Perspectives report of the five major banks’ banks’ results for the second half of their 2012 financial years.

“The report shows our banks are among the best funded and regulated in the world, and that’s good for New Zealanders and the economy,” said New Zealand Bankers’ Association chief executive Kirk Hope.

The report notes a number of New Zealand banks appear in Global Finance Magazine’s World’s 50 Safest Banks list for 2012.

A 12 per cent increase in profits in the 2012 year compared to 2011 was largely driven by a reduction in banks’ bad debt expenses.

The average return on equity has decreased from 16 per cent in 2007 to 14 per cent in 2012. “We have found these returns fall in the middle of the pack compared to major NZX listed companies,” Hope said.

Bank operating expenses are up 16 per cent since the first half of 2010. This is in part driven by a significant volume of new regulation. This ranges from the enhanced anti-money laundering regime to needing to maintain higher capital levels and increasing reliance on domestic and longer term overseas funding. Other current regulatory initiatives include consumer and securities law reform, responding to US tax avoidance law, and preparing systems to help recapitalise a bank in case of potential failure.

Within this context competition remains high among banks, as does customer satisfaction at 92 per cent according to a Consumer NZ survey. “Banks work hard to attract and keep their customers,” Hope added.

New Zealand’s long awaited anti-money laundering laws are now in place, almost four years after Parliament passed the Anti-Money Laundering and Countering Financing of Terrorism Act.

Kirk Hope says there are a range of questions that need to be addressed in considering tools that restrict amounts that can be borrowed to buy houses.

Mortgagee sales continue to decline according to Terralink data for the September quarter released today.

There were 516 mortgagee sales in the three months from July to September this year, down 15 per cent from the June quarter.

Of the 1.4 million residential mortgages in New Zealand, there were 2265 mortgagee sales in 2011. Mortgagee sales account for around 0.2 per cent of all mortgages.

“Mortgagee sales are always the last resort for banks. It’s not in anyone’s interests that they occur,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“Banks work very hard with customers who find themselves in financial difficulty. People who are having trouble should speak to their bank as soon as possible.”

Kirk Hope talks to Firstline about fraud safety and the year in review.

In the lead-up to Christmas the New Zealand Bankers’ Association has reminded people how to avoid fraud and scams over the holiday season.

“This is a special time of the year to share with family and friends. Whether we’re shopping or away on holiday, it pays to take care. We all have an important role to play in protecting ourselves from financial crime,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“We always need to take care, and the holidays are a good time to remember a few simple ways to keep ourselves safe.”

Card safety:

When shopping and banking online:

If you use your mobile phone for banking:

Never give anyone your PIN or internet banking username or password said the New Zealand Bankers’ Association as we head into the summer holidays

“Your bank will never ask you for this confidential information,” said New Zealand Bankers’ Association chief executive Kirk Hope.

“You should never disclose passwords and other security information to anyone. If you do, you may be liable for unauthorised transactions.

“Online scammers use a range of ways to trick people into handing over personal information. Once they have that information, such as your account number, log-in details, or password, they can access your identity and your money.”

So called “phishing” attempts are usually made by email or phone. Text message phishing is called “smishing”.

“Phishers” try to disguise themselves as a bank, or other trusted person or agency, and use convincing reasons to get personal details. They say they require the personal information for reasons such as security upgrades, verifying account details, and offering refunds.

Tips to avoid phishing scams:

“Scammers are always developing new ways to get our money so it pays to be on guard. Beware lottery scams and offers of money from people you don’t know. If it seems too good to be true, it is. If you haven’t bought a ticket, you can’t win. Scammers have also been known to hack email accounts, pretend to be someone else, then email their friends asking for money,” added Hope.

Retail banks across New Zealand have stepped in to help school staff financially affected by the Novopay debacle.

“The Christmas period’s a special period for families, so the banking industry wanted to help people who hadn’t been paid and take out some of the stress from this period for them,” said Kirk Hope of the New Zealand Bankers’ Association.

New Zealand banks are wading into the Novopay disaster to offer interest-free overdrafts to teachers and school staff running short on cash.