Hon Bill English
Minister of Finance

11 November 2009
Media Statement

NZ comes through financial crisis in good shape

New Zealand’s banking and finance sector is coming through the global financial and economic crisis in relatively good shape, Finance Minister Bill English says.

The Reserve Bank’s latest Financial Stability Report, issued this morning, shows the world is gradually recovering from the credit crisis that gripped it a year ago.

"In New Zealand the measures taken by the Government and the Reserve Bank have kept the financial system sound and operating in an orderly fashion,” Mr English says.

"While non-performing loans held by the banking sector are rising, they remain low both internationally and against past recessions. The financial sector is fundamentally sound.

"It is heartening banks are showing a renewed willingness to lend to one another, but the data shows the credit-fuelled boom of recent years is well and truly over with lending growth continuing to slow. That means future economic growth will be more dependent on savings and investment."

The report shows banks' net interest margins have broadly stabilised at low levels, compared with margins over the past 10 years.

"Looking further ahead, recent policy changes intended to promote financial stability are being reflected in market behaviour.

"The duration of wholesale funding is increasing and this is consistent with the Reserve bank’s prudential liquidity policy. The first stage of the new regulatory regime for non-bank deposit takers is now in place, and the full capital adequacy requirements will begin to take effect from September 2010

"These changes will further strengthen our financial system," Mr English says

ENDS

© Scoop Media