Debt leaves NZ banks vulnerable - S&P
New Zealand bank credit ratings are “robust” by international standards, and the outlook is stable for all the banks, according to ratings agency Standard & Poor's.
But the international credit rating agency said the banking system remained vulnerable to “external pressures”.
Despite sound and relatively stable ratings since the global financial crisis hit four years ago, the banks have had to navigate through a range of domestic and overseas issues that had “brought on downward rating pressure for the banking system”.
All the big, Australian-owned banks have strong “AA minus” stable credit ratings, including ANZ, ASB, BNZ and Westpac.
Similar to Australia, New Zealand's private sector is “highly indebted” S&P said, leaving it vulnerable to a downturn in global economic and financial market conditions.
“A severe downturn could result in downward pressure on a bank's stand-alone issuer credit rating, “S&P said.
But underpinning the present stable outlook was a rise in household savings relative to income levels and a fall in the appetite for debt, the credit rating agency said. That reduced the vulnerability of households to a worsening economy.