27 Jul 2016

Banks still far from feeling pinch - report

2:29 pm on 27 July 2016

The banking sector is showing few signs of feeling any economic headwinds, with profits and growth in assets managing to maintain momentum.

Banking

Photo: 123rf

A report by accounting firm KPMG shows the sector's profit edged higher in the three months to March, even though margins were fractionally lower, bad debts were slightly higher and expenses fell.

The banks surveyed had a collective profit of nearly $1.2 billion for the March quarter, which was higher than the previous quarter, but down on the record near-$1.3 billion during the middle of 2015.

Lending was up fractionally, while assets stood at record levels.

But KPMG Head of Financial Services John Kensington said there were some potential concerns.

"Domestic saving has sort of stopped a little bit ... the deposit growth has stopped or slowed ... but the lending growth has accelerated," he said.

Mr Kensington said that meant a greater reliance on overseas borrowing.

"We have to go and get more funding from offshore which then makes us dependent on what's happening offshore and we give away a little bit of the control of our own destiny, because we become reliant on the rates that we are able to get from offshore," he added.

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