Financial System Remains Resilient Amidst Economic Downturn

Risks to New Zealand’s financial system remain contained, Deputy Governor Christian Hawkesby says in releasing the November 2024 Financial Stability Report.

Financial stability is critical for economic wellbeing. Trust and confidence in our financial system is essential for ensuring New Zealanders can safely save, borrow, and manage financial risk.

Globally and in New Zealand, interest rates are declining as inflation subsides. Debt servicing costs are nearing their peak and beginning to decline, with advertised mortgage rates falling over the past six months. This shift will make mortgage costs more manageable for households.

However, domestic economic challenges remain. Many households and businesses are feeling financial pressure and rising unemployment is posing challenges for some borrowers. Banks anticipate a slight increase in non-performing loans, albeit still below levels seen in previous recessions.

“New Zealand banks are well positioned to continue supporting households and businesses, including effectively handling any potential loan defaults," Mr Hawkesby says. "Our financial institutions are well prepared to ensure that credit remains available for households and businesses. The strength of our financial system means we are able to weather economic uncertainties and challenges, including increased geopolitical tensions.”

We are supportive of efforts to improve competition in the banking sector – including the Commerce Commission market study and Parliament’s Select Committee enquiry. The Report outlines the initiatives we are undertaking to advance this work in our role as a prudential regulator and central bank.

The implementation of the Deposit Takers Act is progressing swiftly. Our efforts this year have focused on developing standards for deposit takers, with the Depositor Compensation Scheme on track to launch by mid-2025.

More information

• Read our November Financial Stability Report
• The November Financial Stability media conference starts at 1pm. See all event details. See full event details
• In this media conference, we will be taking questions from the public through an online chatbox connected to the livestream. Please note that questions from media representatives in the room will be prioritised.
• Read our update on the housing market
• Read our assessment of geopolitical risks
• Read about the results of the 2024 Reverse Stress Test
• What is the Financial Stability Report

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