KPMG’s Non-Bank Financial Institutions Performance Survey (FIPS) 2018 has revealed another strong year for the non-banking sector with continued growth in profits and lending. Net profit after tax (NPAT) achieved an increase of $44.34 million (22.97%) over the year resulting in a total NPAT of $232.61 million.

The review surveyed 25 of New Zealand’s non-bank financial institutions, revealing key industry trends and providing analysis of the sector’s performance to September 2018.

“The real story behind the profit growth was the strong growth in lending during the period combined with the margin on that lending improving slightly “says John Kensington, KPMG’s Head of Banking and Finance.

Lending growth across the sector continued in 2018 with an increase of 14.24% and appears to have been targeted towards each entity’s particular niches. Survey results revealed that participants were increasingly conscious of understanding their markets and customer needs.

Asset quality experienced a slight decrease for the year, continuing the trend from 2017 and indicating that 2016 may have been a cyclical low.

Kensington says, “While much of the increased provisioning was due to the collective impact on a growing book for the sector, there is no doubt that we are starting to come off cyclical lows in relation to the levels of provisions carried”.

The increased presence of “buy-now-pay-later” schemes in New Zealand is just starting to have an impact on the non-bank sector, both through increased lending occurring through these schemes, and borrowers then having a decreased capacity to borrow from more traditional lenders.

“It will be interesting to see how the regulators react to this type of currently non-regulated lending, given the minimal information obtained by these schemes from borrowers and the fact that many earn significant amounts of their income from late fees” says Kensington.

Peer-to-Peer lenders increased to eight providers over the year, enjoying a strong period of growth with issued loans rising $177.19 million (63%) to $489.27 million.

This year’s review also includes insights from KMPG’s Fintech lead James Dowle on the evolution of Open Banking and the opportunities and implications for New Zealand’s financial services providers.

For more information, please contact:

John Kensington

Head of Banking and Finance

KPMG New Zealand

T: 09 367 5866

E: jkensington@kpmg.co.nz