22 Sep 2010

Banking system being watched - Moodys

6:02 am on 22 September 2010

Moody's Investors Service says the outlook for the New Zealand banking system is stable, but it's watching areas of vulnerability closely.

The outlook is the credit rating agency's view on how credit conditions will track in the sector during the next 12 - 18 months.

The four major banks (ANZ National Bank, ASB Bank, Bank of New Zealand and Westpac) are considered to have solidified their market positions, with a slowing in the growth of asset impairment.

But lead analyst Merina Ip says that while the outlook's stable, there are still areas of vulnerability, including the commerical property sector.

Ms Ip says rural sector is susceptible to climate and price changes and offshore demand for milk solids.

Looking ahead, she says credit conditions will further stabilise as the economy recovers.