Organisation warns when the real damage from the pandemic would become apparent
Kiwibank has increased lending by 8.8% in the year ended June 2020 despite the COVID-19 pandemic, according to the latest banking report by KPMG.
The report also revealed that Kiwibank had seen a 1.5% increase in loans in the June 2020 quarter compared to other banks, which saw a small decline in lending instead.
Overall lending remained resilient amid the pandemic, with substantial lending numbers driven by post-lockdown bounce and the Reserve Bank of New Zealand (RBNZ)'s decision to remove loan-to-value ratio (LVR) restrictions.
“It is worth remembering that June was a bumper month, and lending in July 2020 was actually ahead of July 2019, and the highest July since the Reserve Bank dashboard began recording this data,” said KPMG head of banking and finance John Kensington, as reported by Good Returns.
Kensington warned that the massive damage from COVID-19 would most likely emerge when the mortgage deferral programme ends.
“Loan defaults are still relatively low, but we won't see the true impact unfold until the mortgage deferrals, wage subsidies, and various government support packages come to an end,” he said.
“As the initial crisis phase comes to an end, regulators will need to redirect their attention to conduct. The RBNZ continues to make it very clear that it expects the banks to play a major part in how New Zealand deals with the current economic crisis, making sure vulnerable customers are protected.”
