FIPS Banks: Review of 2024

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

Banking sector growth in 2024:

KPMG’s survey of the banking sector results for 2024 reveals that the sector has demonstrated resilience despite ongoing economic challenges, with a net profit after tax (NPAT) of $7.22 billion for 2024 – a slight increase of 0.25% from 2023.

This relatively flat growth comes alongside a 2.23% increase in net interest income to $15.69 billion, fuelled by loan growth of 3.05% while net interest margins remained stable at 2.34%. However, the sector faced headwinds with an 8.07% rise in operating expenses driven by personnel costs, technology costs, and the impact of inflation, and slight relief from a 32.75% decrease in impaired asset expense.

FIPS: Financial Institutions Performance Survey

Banking Sector Review of 2024.

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2024 has been a year of resilience for the sector, with participants and their customers navigating the economic headwinds and focusing on maintaining stability. Despite these challenges, the sector has managed to sustain its profitability, reflecting the robustness of New Zealand’s banking institutions.

The clearest message we received from survey participants was that they see New Zealand’s sluggish economy, with low growth, poor productivity, and stretched infrastructure, as requiring investment - some of which will need to come from offshore. Participants stated that to attract such funding, we need to be investor-friendly with a stable and consistent set of policies.

John Kensington

Partner, KPMG New Zealand

Key figures:

Net profit after tax increased by $17.95 million (0.25%) to $7.22 billion;
Net interest income increased by $342.57 million (2.23%) to $15.69 billion;
Non-interest income increased by $30.75 million (1.40%) to $2.23 billion;
Operating expenses (including amortisation) increased by $557.43 million (8.07%) to $7.46 billion;

Net interest margin remained stable at 2.34%;
Impaired asset expense decreased by $209.55 million (32.75%) to $0.43 billion; and
Tax expenses increased by $7.49 million (0.27%) to $2.81 billion.