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MELBOURNE (S&P Global Ratings) May 22, 2023--The orderly fall in property prices over the past 18 months has reduced the risk of a significant rise in credit losses for New Zealand banks.

That's according to S&P Global Ratings' report, titled "Banking Industry Country Risk Assessment: New Zealand," published today.

We have revised the economic risk trend for banks in New Zealand to stable from negative. The revised assessment remains consistent with our ratings and outlooks on banks and finance companies in New Zealand.

High interest rates should continue to support the orderly unwinding in property prices in New Zealand. Credit losses over the next two years should revert to their long-term historical average of about 10 basis points despite likely interest rate rises and house price falls.

"We consider the risk appetite settings of New Zealand's banks to be conservative," said S&P Global Ratings credit analyst Lisa Barrett. "The banking sector earnings are likely to remain adequate to absorb credit losses. However, the banking system's high share of net external borrowings remains a risk if a dislocation in international funding markets occurs."

Banking Industry Country Risk Assessment--New Zealand
To From
BICRA Group 4 4
Economic risk 4 4
Trend Stable Negative
Economic resilience Very low risk Very low risk
Economic imbalances High risk High risk
Credit risk in the economy Intermediate risk Intermediate risk
Industry risk 4 4
Trend Stable Stable
Institutional framework Intermediate risk Intermediate risk
Competitive dynamics Low risk Low risk
Systemwide funding High risk High risk
Government support Support uncertain Support uncertain
Note: Our BICRA groups are ranked on a scale of 1-10 with 1 denoting the lowest risk and 10 the highest risk.

Note: Our BICRA groups are ranked on a scale of 1-10 with 1 denoting the lowest risk and 10 the highest risk.

This report does not constitute a rating action.


S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).

The reports are available to subscribers of RatingsDirect at If you are not a RatingsDirect subscriber, you may purchase copies of these reports by calling (1) 212-438-7280 or sending an e-mail to Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at Members of the media may request copies of these reports by contacting the media representative provided.

Primary Credit Analyst:Lisa Barrett, Melbourne + 61 3 9631 2081;
Secondary Contacts:Sharad Jain, Melbourne + 61 3 9631 2077;
Nico N DeLange, Sydney + 61 2 9255 9887;
Media Contact:Richard J Noonan, Melbourne + 61 3 9631 2152;

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