The country’s non-bank sector is optimistic about business opportunities heading into the 2015/2016 year although overall net profits of $254.62m for 2015 were down 6.7% from 2014, according to KPMG’s recent Non-Bank Financial Institution Performance Survey covering 23 of New Zealand’s non-bank financial institutions.
Strong increases in interest and other income were offset by an increase of operating expenses of $48.49m including around compliance with regulation and improving the technological front-end of their businesses.
But KPMG’s head of financial services John Kensington says this was a solid performance considering the challenging environment.
“This performance is a remarkable achievement considering the current low interest rate environment; and the intense competition coming from both existing market players and new entrants, banks and peer-to-peer lenders.”
“New Zealand now has four P2P licensed to operate in the market…they’ve definitely arrived,” says John Kensington, referring to Harmoney, Squirrel
Money, LendMe and LendingCrowd.
“Executives we surveyed agreed that P2P lenders are the biggest disruptor in the personal/consumer market space at the moment.
“A number of executives we spoke to believe that this natural disruption will create some significant opportunities in the sector, given that some long-term relationships within those businesses have come to or are coming to an end.”
The report showed there has been less direct competition from banks this year with banks tending to fund non-bank entities with additional facilities or securitisation vehicles.