Threats linger for banks – S&P
In a new report on the prospects for New Zealand banks in 2016, the ratings agency warns that house prices rises and a lengthy slump in dairy prices still pose ongoing risks to the banks.
Standard & Poor's credit analyst Nico de Lange said acceleration in house price growth would expose increased imbalances in the economy.
In turn, this would increase the vulnerability of the banking system to a sharp correction in property prices.
Exposure to dairy farming is another potential headwind for New Zealand's banks, De Lange said.
About 10% of New Zealand banks' lending is to the dairy sector, which accounts for two-thirds of agricultural loans.
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