Strong business boom for non-banks in 2019

by Ksenia Stepanova17 Dec 2019

Business has boomed for New Zealand’s non-banks over 2019, which have recorded over $324 million in net profit after tax – up by 16.49% compared to last year.

The statistics come from KPMG’s latest survey of 24 of New Zealand’s non-bank lenders, with partner John Kensington noting that the strong performance was driven by a significant increase in interest margin, and a 7.5% increase in non-banks’ lending books.

Mortgage lending was the biggest area of growth for non-banks, and non-bank personal loans also saw a major uptick. The sector saw a number of new entrants over the past year – lenders such as Prospa, Pepper Money and Payright, which have entered the market at a “relatively stable” time of low interest rates and reduced funding rates.

“The other key trend has been consolidation,” Kensington said. “Avanti purchased Branded Finance, and then after the date of the report, four credit unions and Co-Op Money all merged together. To see that much aggregation from the sector is unusual.”

In terms of what non-banks can expect for 2020, Kensington says New Zealand’s current environment has created some strong opportunities for more fintechs to break into the lending market.

“I think you should expect a lot [from 2020],” Kensington said.

“The first trend will be around some rules and regulations that are not directly applied to this sector, and those are the new capital rules for banks. That will see banks lending less, and some people will have to come to the non-bank sector to get the credit that they require. That will definitely have an impact, and it will play out as the rules become clearer.”

“We’ll also see more new players and products,” he added. “New Zealand has been a little slow to adopt some of the fintech-type products, and so there is opportunity for new players to bring new products to the market.”

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