6 Dec 2011

Moody's maintains stable outlook for NZ banks

7:24 am on 6 December 2011

Moody's Investors Service is maintaining its stable outlook on the New Zealand banking system.

The ratings agency says a modest recovery in economic growth in 2012 and 2013 will help revive loan growth, which has been stagnant over the past year across all major categories.

It says it is concerned about the banks' dependency on wholesale funding, which could become a vulnerability if the eurozone crisis deteriorates.

Moody's says exposure to rural lending - around 15% of gross loans - is another major potential risk, given the volatility of that sector.

Moody's rates five of New Zealand's 10 locally incorporated banks.