26 Sep 2014

Boom unlikely to last - banking expert

8:49 pm on 26 September 2014

A banking expert says the boom times enjoyed by banks in the last quarter are not likely to continue.

The latest KPMG report shows profits in the sector rose more than six per cent in the three months ended June compared with the March quarter, driven by lending and asset growth.

Associate Professor David Tripe from Massey University said profits had been swelling as banks became more confident and reduced their buffer zones for bad loans.

But he said that carried some risk: "A very slight bit of downturn, a slight bit of problem, means they no longer have the coverage for that."

Mr Tripe said net income from interest was also reducing as borrowers moved to fixed rate loans.

He said the impact may be felt as early as the September quarter.

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