Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
ASB and TSB cut floating rates by -15 bps. SBS cut by -20 bps. ICBC cut theirs by -41 bps to 6.09%. ICBC also cut its fixed rates. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
There were rate reductions announced today from TSB, ICBC, Xceda and Liberty Financial. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
SHRINKING
Fonterra is retreating from its consumer businesses by selling them to Lactalis for $3.8 bln, possibly more. The to French giant Lactalis will deliver a $3.2 bln tax-free boost for shareholders. It retains supply agreements for iconic dairy brands Anchor and Mainland
RAISING FINANCIAL SYSTEM RISKS
A parliamentary committee has asked the RBNZ to halt capital increases for banks 'immediately’. The Finance and Expenditure Committee members, pushed by the farmimg lobby, want the Reserve Bank to scrap all further increases in bank capital requirements and establish an independent committee to make prudential policy more market (farmer) friendly. If they get their way it will be a win for the banks to run more highly-leveraged operations, juicing their ROE, and setting back efforts to constrain those financial stability risks, which are very real. Taxpayers will have to underwrite this folly.
NET INTEREST EARNED BY BANKS TOPS $16 BLN FOR YEAR TO JUNE, A RECORD
Ahead of the revealing RBNZ Dashboard release on Monday, August 25, 2025, today the RBNZ released its S20/S21 series where we get to see the banking systems net interest income, and its net interest margin (the NIM). The NIM remains remarkably stable and clearly banks are managing to this metric. It has been at this current level since the end of 1999, settling there after a long run of being much higher. Net interest earned however continues to rise and in June was a new record at $4.047 bln in the quarter, and for the first time exceeding $16 bln for the year. How things shifted for individual banks (the winners & losers) will become clearer when the Dashboard is released.
A NEW FRAUD VECTOR ARRIVES
'Ghost tapping' contactless payments fraud is happening in here, with the police apprehending a Chinese tourist trying to buy luxury goods.
TRYING TO STAY UP WITH THE THREAT
The Serious Fraud Office (SFO) is seeking public feedback on its draft Long-term Insights Briefing (LTIB): Staying ahead of the curve: Responding to emerging trends in detecting fraud and corruption in New Zealand.
BRAZEN BUT CONVINCING
Scammers who have been using social media advertisements, particularly on Meta platforms, to impersonate New Zealand celebrities, journalists, politicians, have now turned to impersonating financial commentators and business leaders by creating fake profiles. Within the past week emails have gone out claiming to be from us wanting you click a link to get "invoice". The use of AI tools to make this sound credible is a negative development.
NZX50 ENDS WEEK WEAK
As at 3pm, the overall NZX50 index is down -0.7% so far today, ending the momentum after the OCR cut. It is now up +1.6% over the past five days and up +0.2% year-to-date. It is now sitting +5.0% higher year-on-year. Market heavyweight F&P Healthcare is down -1.6% today so far. Sky TV jumps +6% but SkyCity casino plunges -22%; a2 Milk, Heartland and Oceania Rise, while EBOS, Kathmandu and Vista decline.
PROFILE UPDATES
We have updated the profiles after the annual results for the following NZX50 companies: Skellerup, SkyCity casino, Heartland, Auckland Airport, and SkyTV. You can find them all here.
AI JUICES BUSINESS 'INVESTMENT'
New data out from the Australian statistics bureau shows their R&D investment grew by +18% to AU$24 bln in 2023-24. The strongest growth IT including spending on Artificial Intelligence, which grew by +142% since 2021-2022.
BROAD RANGE OF FORCES
There was a surprising dip in Japanese inflation in July. It eased to 3.1% from 3.3% in the previous month, the lowest reading since November 2024. Helping was that electricity prices fell for the first time since April 2024. But food prices jumped +7.6%, the most since February. Again, rice was the big culprit.
SWAP RATES SOFT AGAIN
Wholesale swap rates are will probably be little-changed today at the short end, steepening for longer maturities. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was down -12 bps at 3.02% on Thursday reflecting the OCR cut and dovish view. The Australian 10 year bond yield is up +5 bps at 4.32%. The China 10 year bond rate is back down -3 bps at 1.77%. The NZ Government 10 year bond rate is up +2 bps at 4.41% and up +5 bps at 4.40% in the earlier RBNZ fix* today. The UST 10yr yield is up +4 bps from yesterday, now at 4.33%. (* The RBNZ has bent to NZFMA/Bloomberg/etc pressure and will soon revert to end-of-prior-day reporting of benchmark rates, shifting back from the current 11am disclosures.)
EQUITIES MIXED
The local equity market is now down -0.8% in late Friday trade. The ASX200 is down -0.2% in afternoon trade. Tokyo has opened little-changed. Hong Kong is up +0.5% at its open and Shanghai is up +0.6%. Singapore has opened up +0.3%. Wall Street ended its Thursday session with the S&P500 down -0.4%.
OIL FIRMISH
The oil price in the US is up +50 USc today, now just on US$63.50/bbl and the international Brent price is now just on US$67.50/bbl.
CARBON PRICE HARD TO KNOW WITH SO FEW TRADES
There have been few trades again today, in another dry patch, with the price holding down at $56. The next official carbon auction is on September 10, 2025. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD SOFTISH
In early Asian trade, gold is down -US$11 from this time yesterday at US$3333/oz.
NZD STABILE
The Kiwi dollar is unchanged from yesterday at this time, still down at 58.2 USc. Against the Aussie we are down -20 bps at 90.5 AUc. Against the euro we are up +10 bps at just on 50.1 euro cents. This all means the TWI-5 is holding at at 66.6.
BITCOIN HOLDS
The bitcoin price is now at US$113,244 and down -0.7% from this time yesterday. Volatility has been modest at just ovder +/-1%. The retreat from crypto investing by institutional investors in ETFs is large and causing the jitters,
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
22 Comments
So no fixed rate changes since the RBNZ reduction? Are the banks too scared to be first?
The fixed rates reductions happened before the OCR cut.
Interesting op-ed from the Land O'Lakes CEO Beth Ford. Dairy farmers around the world are facing extremely challenging economics, even though the specifics can differ by country.
The piece notes there are only 24,000 dairy farmers in the US, while in Japan the number recently dropped below 10,000 which is considered a crisis. There is no replacement for the nutrition and economic benefits to local economies that dairy provides.
Alongside this, Vietnam’s livestock industry has warned that heavy reliance on imported milk is threatening the sustainability of domestic dairy farming. It says herd size grew 17.7 percent a year from 2010 to 2015 but by just 3.3 percent between 2020 and 2024.
This shows that not everyone is benefiting from Vietnam’s embrace of free trade, which, while boosting Vietnam’s manufacturing and industrial sector, is coming at a cost to other parts of the economy.
https://time.com/7310865/storm-gathering-american-agriculture/
Well NZ is all in on international Dairy, only time will tell if tariffs and international food security will trump efficiency of NZ Farms
place your bets
Bonzai.... betting ends
New data out from the Australian statistics bureau shows their R&D investment grew by +18% to AU$24 bln in 2023-24. The strongest growth IT including spending on Artificial Intelligence, which grew by +142% since 2021-2022.
MIT research suggests 95% of business investment in AI has no measurable benefit or financial return. According to the MIT report titled "The GenAI Divide: State of AI in Business 2025," nearly all major U.S. corporate investments in AI - totaling $35–$40 billion in recent years - have produced zero return or impact on profits, with only 5% achieving significant business value or revenue growth.
https://www.entrepreneur.com/business-news/most-companies-saw-zero-retu…
You have to be very specific. I have seen AI creating summaries of call center conversations and also doing the same for medical underwriters, the results are amazing. AI cannot replace the entire chain of events but it can make massive productivity increases at certain points, that does come with a 10-20% reduction in staff in that area. It is going to reduce human staffing levels but at this point not replace human involvement completely, that's probably a 2028-30 story , then things get interesting....
People will fight back, power pylons will eventually fall. it is no surprise that Microsoft and others with Military connections want to house data centers within the confines of nuclear generators to ensure security of supply (three mile island).
I have seen AI creating summaries of call center conversations and also doing the same for medical underwriters, the results are amazing.
I can imagine. However, retail bank chatbots are a perfect example of reality. Most people don't use these chatbots because of their past experiences - pretty much useless at getting solutions to problems. Many users report that chatbots are quick and responsive but “infuriatingly limited.” Customers are often forced to repeat information, face rigid menu structures, and find the bots incapable of handling anything beyond routine queries. This lack of conversational intelligence undermines the user experience and reduces trust in the channel.
https://www.accenture.com/content/dam/accenture/final/industry/banking/…
Sounds like bad IVR systems.... done right and its scary good though.
I have seen it deployed, it works if you do the homework.
Sounds like bad IVR systems.... done right and its scary good though.
I believe you. However, I think my example is a good example of limitations. But your training data needs to be focused across all channels - for ex, chatbots, CS calls, face-to-face interactions - to reach the optimal solution. I don't know about you but I've never really had a satisfactory chatbot experience.
Now, if I compared that to a well-functioning financial product with minimal human interaction and more narrow parameters - Wise for ex - it's natural that AI implementation would be much easier.
I am talking about AI watching humans and helping not interfacing with client humans directly, its very very good and almost free, it can summarize a 30 min conversation in 15 seconds, that would have taken 10-15 mins and tied up that human, 10of 60 mins is an instant productivity gain as the human op can return instantly to the next call. This means 16% less humans needed.
Its a brutal gain and is happening... offshore call centers are in real trouble
If it works, it works. But half working is not good enough. I was asked by a global automotive company to use a speech to text tool for Indonesian, Thai, Vietnamese to English to transcribe technical conversations. They were convinced it would work. Quick pilot showed accuracy <10%.
KPMG built an AI TaxBot agent for cross-border M&A: It required a 100-page prompt and reduces work time from 14 days to 1 day. It took months to create (and did so with dozens of employees collecting country tax best-practices from their offices around the globe). The bot requires 4-5 specific inputs and then generates a 25-page first draft reviewed by analysts and client. KPMG only allows its tax experts to use the bot because “output is not suitable for people without deep tax expertise”.
Important to note that this is still in pilot.
https://www.theregister.com/2025/08/20/kpmg_giant_prompt_tax_agent/
You are 100% trying to convince me that the US Equity market is dot com toppy then....
I was yours at hello
My daughter refuses to use chatbots. Because they are useless.
I agree.
I am not talking about chatbots, I am talking about AI summarising a conversation between an experienced human and the client, so that the agent can move straight to the next call...
Peter Thiel going big on Ethereum. Feels like y'day when you could buy ETH around USD100. Hindsight would say a good time to back up the truck. You could even pivot back to the Ponzi with the proceeds.
The venture-capital investor has been among those piling into ether, betting that the token’s underlying blockchain, Ethereum, could become Wall Street’s platform of choice to launch new financial products and services.
Unlike bitcoin, which has limited supply and is largely used as a digital store of value and means of speculation, there is no hard cap on ether’s supply. But the digital token is increasingly being used for transactions on Ethereum, an open-source platform where developers build and operate applications that can be used to trade, lend and borrow digital currencies.
https://www.wsj.com/finance/currencies/peter-thiel-ether-investors-39b3…
hedge funds have created the biggest short position ever on Ethereum.
Place your bets BONZAI
betting is over
For sure. Bring on the short squeeze. Few months back, ETH was the most hated crypto out there and being written off forever. That was a buy signal to me. My reckon is the most hated cryptos among the top 10 will likely outperform at some point, much to the chagrin of the ratty zealots. Just for entertainment purposes, winding up the BTC cult is fun.
I am to conservative to bet on a crypto short squeeze, but i think South Africa by 7.5
Hard to find something more hated than ADA! But I think most of it is because of Charles Hoskinson. He really winds people up. But it does seem to out perform other chains
NOW PLAYING • Government spends $2.7 billion on new aircraft | NZ Herald News Update: August 22, 2025
“The sort of hopeful recovery that people were looking for this year, it’s clear it hasn’t really turned up. The mantra last year was very much ‘survive until ‘25′, and now we’re getting through 2025 and you’ve got a lot of businesses treading water.”
He said some businesses have tried hunkering down but have now come to a point where they have run out of cash and can no longer trade.
This week, premium kitchen and laundry appliance company Kitchen Things went into receivership, popular Palmerston North eatery Cafe Cuba went into liquidation, Fletcher Building posted a net loss of $419 million for the past year, SkyCity reported a 42% drop in profits, Sky TV reported a 59% drop, and a new report showed there were 16,000 fewer construction jobs in the past two years.
“You saw signs with the Reserve Bank statement earlier this week around cutting interest rates again ... It does help to sort of ease some of the cost-of-living pressures for households,” Kiernan said.
“But housing is still unaffordable, house prices are still relatively high, and rental yields don’t look great from an investor point of view. So it’s hard to see a lot of demand coming back into the housing market, and therefore the construction and residential construction industry, any time soon.
another herald articles tells us like it is.
Things will turn once we reach the bottom.
Not sure much of the the $2.7 bil will go to any NZ Companies.
We now have this plus the 3bil to landlords plus the ferries but nothing to local business?
You are really about to deserve what you get
Despite the Ponzi seemingly running on all cylinders, Aussie consumer spending per person is 2.3% below the peak of 2022. Inflation, interest rates, and a high tax take are all crushing household budgets.
The “headline” numbers may look steady, but only because of record population growth via migration. Rents keep climbing.
Mortgage payments remain painfully high, even after a slight dip in interest rates.
https://www.commbankresearch.com.au/apex/researcharticleviewv2?id=a0NOa…
The peak was pretty bananas though, people lost their minds.
I think millennials might be the last great consumer generation.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.