By Gareth Vaughan
Leverage, or the number of times assets exceed shareholder funds at New Zealand banks, has fallen to its lowest level since interest.co.nz started compiling the data six years ago.
Based on figures from the bank's general disclosure statements for the period ending March 31 this year, the weighted average leverage ratio across nine of the country's banks was 11.2 times. That's the lowest it has been since interest.co.nz began tracking bank leverage ratios in March 2008.
The initial weighted average leverage ratio in March 2008 across eight banks - the Co-operative Bank was added to our database in 2010 - was 13.7 times. It peaked at 16 times in March 2009, and fell to 11.3 times in both the September and December quarters last year before dropping slightly further in the March quarter.
In the March quarter the individual bank with the lowest ratio was Rabobank at 8.7 times, which is a major turnaround given back in March 2008 Rabobank had the highest leverage ratio at 23.1 times, and peaked at 26 times in the December 2009 and June 2010 quarters. Rabobank's 8.7 times is also the lowest ratio recorded by interest.co.nz for any bank in the time we've been tracking leverage.
The highest ratio in the March quarter was Kiwibank at 16.8 times, which is the lowest Kiwibank has been since interest.co.nz started compiling leverage ratios. Kiwibank was at 22.4 times in March 2008, and peaked at 32.3 times in December 2008, which is the highest ratio recorded by any bank in any quarter.
Among the big four banks, ANZ has consistently had the lowest leverage ratio, which at 10.5 times, continued into the March quarter. The lowest ANZ has been is 10.2 times in the December quarter of 2011. In the March quarter BNZ was the highest of the big four at 13.2 times. And among the big four, ASB has reduced its leverage ratio the most, coming in at 12.4 times in the March quarter having regularly scored above 20 in the first few quarters we tracked the data.
| Bank | Leverage ratio at March 31 |
| ANZ | 10.5 times |
| ASB | 12.4 times |
| BNZ | 13.2 times |
| Kiwibank | 16.8 times |
| Rabobank | 8.7 times |
| SBS | 11.9 times |
| TSB | 11.9 times |
| Westpac | 11.0 times |
| Co-operative Bank | 11.3 times |
| Weighted average | 11.2 times |
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