KPMG’s Financial Institutions Performance Survey (FIPS) reports have provided insights into New Zealand’s financial services sector for over 30 years. Each edition presents industry commentary and analysis on the performance of New Zealand registered banks, together with a range of topical articles from industry experts, regulators and our own business leaders.


Last quarter, banks reported record profits at $1,642.9 million. While this quarter saw a slight dip (11.63% to $1,451.9 million), it was still one of the strongest quarters ever and nearly double that of Q2 2020. It’s worth noting, however, that last year’s Q2 was the quarter most impacted by Covid-19. 

A release in provisioning continued, though there are two elements to this: collective provisions are being released, but individual provisions are now starting to increase as banks are better informed about which sectors will be most impacted by the tail effects of the pandemic. 


mortgage chart


Growth in mortgage lending has once again driven the strong result. Lending overall increased by 2.2% from the previous quarter to $473,671 million, but this rose to 6% for mortgage lending specifically. Each month of the June 2021 quarter saw over $8 billion of new residential mortgage lending, though March 2021 still retains the highest record for mortgage lending in one month. Consumer, business and agriculture lending, on the other hand, decreased.

Owner occupiers and first-time buyers (FTBs) fuelled the quarter’s lending growth, with over 9,000 FTBs stepping on to the property ladder. This is the second highest number on record, potentially suggesting that intervention in the market is starting to work. 


Regulation continues to be a major focus area, with significant programmes of work at the banks. The next on the agenda is due 1 October (pending potential delays due to lockdown) in the implementation and amendments to the Credit Contracts and Consumer Finance Act 2003.

This quarter has continued to see reports of regulatory breaches, some of which necessitating remediation payments or civil penalties. Yet the overall concentration on good customer outcomes in much of the recent and upcoming regulation has seen compliance move from ‘tick-box’ frameworks to a focus on culture.

New technology and products are also inciting regulatory debates within the financial services industry, with Buy Now, Pay Later (BNPL) gaining both popularity and attention.