A review of things you need to know before you sign off on Monday; some rate changes, Co-op Bank profit up, NIMs stay up, and profits hold, China profits soft, swaps stable, NZD holds, & more

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE/LOAN RATE CHANGES
Nelson Building Society (NBS) trimmed its one and two year fixed rates by -10 bps.

TERM DEPOSIT/SAVINGS RATE CHANGES
In addition to the SBS Bank 9 month rise on Friday, today Kiwibank raised its 1 year rate to 6.10% and Westpac raised its 8 month rate to 6.05%. But Westpac also cut its nine month rate to 5.90%. Also, see this. And this.

CONSULTATION OPENS ON RESPONSIBLE LENDING CODE CHANGES
The Ministry of Business, Innovation & Employment has opened consultation on proposed changes to the Responsible Lending Code. Details are available here, with submissions sought by 5pm on June 10.

CO-OPERATIVE BANK ANNUAL PROFIT RISES
The Co-operative Bank's March year profit after tax and rebates rose 11% to $12.371 million. The bank held annual rebates, paid to customers/shareholders, steady at $2.5 million. Customer numbers rose 3% year-on-year, with home lending growing 8% and deposits increasing 7%. Co-op Bank recently took out the top spot for overall satisfaction for the third year in a row in Consumer NZ’s annual banking satisfaction survey. CEO Mark Wilkshire says a core banking system replacement is now being planned.

PRESERVING THE NIMs
Although banks continue to claim their net interest margins are under pressure, in fact they are holding steady above 2.3%. The latest data is for March 2024, and the industry rate was 2.31%. Yes, that is the least for any quarter over the past year, but the range is 2.31% to 2.38%, and is down from 2.34% a year ago. If there is pressure, banks are successfully changing to ensure that they are feeling little impact from it. Certainly operating expenses to total operating income are back down. We will get to see individual bank NIMs tomorrow when the RBNZ Dashboard data becomes available, but those are just to one decimal point, and that masks a lot. (S20 is to two decimal places.)

MORE IMPAIRED ASSETS, BUT NOT LOWER PROFITS
One area that the S20 data does show is a sharpish rise in the ratio of impaired asset expenses to total operating income. As at March 2024 that is now 3.0%. In December it was 1.2%. But then again, in March 2023 it was a high 7.6% so the recent rise is only half that. Net progress. In fact, return on equity and return on assets are both up, not only from December, but from a year ago as well.

PROFITS STAY QUITE LOW
China released industrial profit data today for April, and although this came in almost +14% higher than in April 2023, it is a very low base that enhances the apparent performance. Compared with April 2022, there profits are actually down -17%.

SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is still little-changed at 5.63%, a level it has hovered around for more than 70+ days. The Australian 10 year bond yield is down -3 bps to 4.32%. The China 10 year bond rate is now at 2.33% and la little firmer. The NZ Government 10 year bond rate is unchanged at 4.84% from this morning and the earlier RBNZ fix was at 4.78% and unchanged from Friday. The UST 10yr yield is down -2 bps from this morning at 4.45%. Their 2yr is now at 4.95%, so the curve has shifted out to -50 bps inverted which is a more of a move than we have seen in a while.

EQUITY MOSTLY UP
The NZX50 fell quite a bit at its open in morning trade but has clawed back most of that to be down just -0.1% near Monday's close. The ASX200 is up +0.7% in afternoon trade. Tokyo has opened up +0.3%. Hong Kong is up +0.4%, Shanghai is +0.3%, and Singapore is +0.1% at their respective opens. Remember, Wall Street is on its Memorial Day weekend holiday.

OIL FIRMS SLIGHTLY
The oil price is a touch firmer from this morning, now just over US$77.50/bbl in the US, while now also now at just over US$82/bbl for the international Brent price.

GOLD TURNS UP
In early Asian trade, gold has risen by +US$12 from this morning, now at US$2345/oz.

NZD HOLDS
The Kiwi dollar has firmed slightly to 61.3 USc today with a small +10 bps rise. Against the Aussie we are holding at 92.4 AUc. Against the euro we are unchanged at 56.5 euro cents. This all means the TWI-5 is now at 70.6 and little-changed.

BITCOIN REGAINS
The bitcoin price has risen today, now to US$69,123 which is up +2.1% from where we opened this morning. Volatility of the past 24 hours has been low at +/- 0.8%.

This soil moisture chart is animated here.

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