Financial services in good health

By Phil Boeyen, ShareChat Business News Editor

Wednesday 21st March 2001

New Zealand's financial services sector has been given a positive rating by Standard and Poor's.

The ratings agency says the outlook for the country's financial services sector remains generally sound despite increasingly challenging operating conditions.

However S&P spokesman, Gavin Gunning, says there will be a moderate weakening in the sector's overall financial strength in the medium-term.

"The global trend for financial services companies has been distinctly negative over the past 10 years.

"Although the New Zealand financial services sector demonstrates some characteristics that undoubtedly will contribute toward stabilization of financial strength in the medium term, the sector will be challenged in its capacity to swim against the global tide."

Mr Gunning says current indications are that the outlook for the banking and non-life insurance industries are slightly better than for the life insurance industry.

"Underpinned by a comparatively sound economic and industry risk environment, credit quality within the New Zealand banking sector remains sound by international standards.

"While there are signs of impending financial stress following strong increases in credit growth, foreign borrowings, and private-sector indebtedness in recent years, potentially adverse developments should remain manageable."

The agency says it will be closely monitoring the introduction of a so-called "People's Bank" later this year.

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