Investors pour NZ$566 mln into finance companies in December quarter

Reserve Bank figures show household deposits in deposit taking finance companies (quarterly tab in C17) rose NZ$566 million to NZ$6.088 billion in the December quarter, snapping an 18 month losing streak as the government's guarantee announced in October reassured once-nervous investors. Finance company deposits had slumped 22% or NZ$1.580 billion between the peak in the June quarter of 2007 of NZ$7.102 billion and the three year low of NZ$5.533 billion in the September quarter as investors fled the sector in the wake of multiple collapses. However, savers are also ploughing money into the now government-guaranteed banks. The same Reserve Bank figures showed household deposits in banks rose NZ$4.189 billion to NZ$86.985 billion in the December quarter, although this included the transfer of NZ$1.859 billion from building societies because of the bank registration of SBS. The figures also show New Zealanders have been saving heavily in banks and finance companies since the recession started in the March quarter of 2008, although deposit growth was also strong in 2006 and 2007 as some households sold property and banked the proceeds. New Zealand households saved an extra NZ$9.100 billion over the four quarters of 2008, lifting total household savings in bank and non-bank deposit accounts to NZ$95.726 billion. This is above the NZ$8.589 billion growth in deposits in calendar 2007 and the NZ$9.183 billion extra banked in calendar 2006. * This article was first published yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.