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Moody’s keeps negative outlook on NZ banking system
August 13th, 2009Ratings agency Moody’s Investors Service said it continued to have a negative outlook on the New Zealand banking system in a fresh report that highlighted the risk for banks from dairy farm lending and higher unemployment.
Moody’s said its outlook for most banking systems globally was negative and its outlook for New Zealand reflected its concerns about the global economic and financial systems.
“Accordingly, impairment levels have risen noticeably so far in fiscal 2009 — albeit off a low base — thereby reducing net profit growth and internal capital generation capabilities,” said Moody’s assistant vice president Marina Ip, adding a rise in unemployment to 7.5% would also add to mortgage borrower stress.
“In addition, soft commodity prices will impact exports, and much lower dairy prices for 2009-10 — compared to the past 2 years — will hurt dairy farmers, resulting in potential cash flow problems,” said Ip. “With agriculture lending comprising 15% of the system’s gross loans, the potential impact to bank’s delinquency rates will not be insignificant,” she said.
“But, despite the challenges it faces, the banking system remains sound and the Reserve Bank of New Zealand (RBNZ) has been proactive in reinforcing financial stability in the system.”
Moody’s rates the four largest banks in New Zealand (ANZ National Bank, ASB Bank, Bank of New Zealand and Westpac New Zealand). Due to their “entrenched position in the banking system,” the four rated New Zealand banks’ Aa2/Prime-1 ratings carried a stable outlook, Moody’s said.
Tags: ANZ National, ASB, BNZ, Moody's, National, Westpac
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August 13th, 2009 at 11:00 am
Even a blind idiot could see that NZ financial and economic outlook is negative and not positive. So Moody is no great seer (or anything else for that matter) Telling us what we already know (or at least suspect) is no great feat of intelligence.
However their comment : “But, despite the challenges it faces, the banking system remains sound and the Reserve Bank of New Zealand (RBNZ) has been proactive in reinforcing financial stability in the system.” still remain to be seen if true.
Meanwhile the theme of the month is “THANK GOD FOR AUSTRALIAN BANKS “
August 13th, 2009 at 12:11 pm
Hello and Malo e lelei to readers here,
Here is something that I have noticed which still eludes some. People (and that includes myself), would often have a go at economists for producing unsound/unreliable forecastings/projections and at the same time, those same people fully endorsed the services of rating agencies such as Moody and Fitch, etc…. How could they be? Are people simply ignorant , lack of knowledge or perhaps naive? The types of modeling methods that are adopted by these rating agencies in their risk assessments (such as Monte-Carlo and the likes) are the same ones frequently used by economists to do forecasting. In other words, people would call one modeling hogwash if it is economic forecasting but fully endorse them (indirectly without them knowing) when the same ones are being used in risk assessment (by rating agencies)? This strikes me as odd.
Why not just completely ignore the services of rating agencies altogether since their methods are based on some questionable math and also questionable assumptions? I know that the modern world can’t survive without rating agencies. IMO, I would use them despite the shortcoming of the models. Assessing risks using models can still beat risk assessment based on intuitions alone most of the times, and as I said, models are still superior in this area despite their shortcomings.
Just a thought. Any bank manager out there who has a take on this, ie, do the services of rating agencies really needed ?
November 12th, 2009 at 6:49 pm
It’s all myth Kin. The big 4 are as safe as a wet paper bag. Why else did Rudd rush in with a blank cheque? Ignore the rating agencies. They cannot be trusted.
November 12th, 2009 at 7:21 pm
As to who cannot be trusted. It is my wife, amongst others….
Just put Edith Piaff’s “No Regrets” on the CD player.
Just loves her singing since we PAID our WAY to PARIS this year.
I keep telling her…..HONE-Y that is not appropriate for the PARTY today.
The PARTY is over.
Maybe she will listen, maybe she won’t….she has a mind of her own….
But then I think…it is a bit like a crepe–suzette and ..creme brule…..
JUST DESSERTS.
So who am I to to tell anyone what to do or say or THINK.
Party Politics, Party on the house, by the POOL.
She forgets…I still pay the BILLS….and the Peters and the Carter. and the FERRYMAN.
JOHN.
Party over.
November 12th, 2009 at 8:00 pm
You mean, this John, sorer looser,…..( cheers,Chris de Burgh)
“A lifetime spent preparing for the journey;He is close now and the search is on,Reading from a map in the mind,Yes there’s the ragged hill,And there’s the boat on the river,And when the rain came down,He heard a wild dog howl,There were voices in the night – “Don’t do it!”Too many men have failed before,