New Zealand banks have been hit with a 11.35 percent drop in profit for the quarter ending March 31, following record profits in the previous quarter.
An increase in net interest income was offset by a decline in non-interest income, an increase in operating expenses and an increase in impaired asset expenses combined for a 11.35 percent drop in net profit after tax to $1.242b, according to KPMG’s latest Financial Institution Performance survey.
Net interest income increased by $54m while non-interest decreased by $144m from the previous quarter.
Operating expenses experienced a $16m increase and impaired asset expenses increased by $122m.
“Many in the industry have been foreshadowing an increase in impairment numbers for some time and so the increased impairment is neither unexpected nor severe,” KPMG’s Head of Banking and Finance John Kensington said.
“The negative movement of both profits and impairment will be watched closely in the next quarter, particularly at a time when global markets and geopolitical factors show some signs of volatility and uncertainty.
“While it might be a pivot point, it’s certainly not a time to panic as the New Zealand banking sector as a whole remains strong.”