Moody's notes improvement in NZ banking industry outlook
Moody's Investors Service has changed its outlook for the New Zealand banking industry to stable from negative.The credit rating company said the change reflected New Zealand's steady recovery from its mild recession between January 2008 and March 2009.Th
Moody's Investors Service has changed its outlook for the New Zealand banking industry to stable from negative.
The credit rating company said the change reflected New Zealand's steady recovery from its mild recession between January 2008 and March 2009.
The major banks still had significant funding wholesale requirements, at around 40% of total funding, and the four major banks were well under way to meet Reserve Bank liquidity policy requirements coming into effect in April.
New Zealand banks had used both government guaranteed and non-government guaranteed markets to raise money.
"Whilst we feel non-performing loan rates may have peaked, we will continue to closely monitor these levels in coming months, as some exposures may become delinquent over time," Moody's said.
There was still a concentration of borrowing, particularly in the property sector, where development has slowed and final completion or settlement has been delayed due.
But a recovery in dairy prices this year was helping improve the portion of performing loans in that sector.
Moody's expects New Zealand's real gross domestic product to grow by 3 percent in 2010.
The credit rating company noted that dramatic monetary policy action was taken by the Reserve Bank during the global financial crisis, when it cut the official cash rate from 8.25 percent in June 2008 to its current 2.50 percent to stimulate the economy.
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