Global credit rating agency Standard and Poor's has cut one part of the credit rating of the country's four largest banks due to increased risks from the persistent strength of Auckland's property market.
ANZ, ASB, BNZ, and Westpac banks have had their stand-alone credit profiles reduced by a notch.
S&P said a stand-alone credit profile is a component of a rating to provide information on an issuer's creditworthiness.
ANZ, Westpac and BNZ's credit ratings remained at AA-, but their stand-alone credit profiles fell from A- to BBB+.
ASB's credit rating was affirmed at AA-, while its stand-alone profile has been reduced from A to A-.
Standard and Poor's said most financial institutions would be adversely affected if house prices in Auckland fell sharply, even if they didn't lend much in that region.
The agency said that was because of Auckland's importance to the New Zealand economy, accounting for about 35 percent of national output and more than one-third of the country's population.
The Reserve Bank is tightening lending to investors in Auckland from October after warning the potential for a sharp correction in Auckland's property market had increased.
Despite the increased risk, Standard and Poor's said New Zealand was still a relatively low-risk banking system by global standards, with a resilient economy and conservative banking regulation.