New Reserve Bank data shows steady but unspectacular rise in bank net interest margins

Net interest margins at the country’s major banks rose by 25 basis points in the 12 months to August, according to new Reserve Bank data.

The Reserve Bank yesterday released new statistics on banking system interest income, expenses and margins. The figures are sourced from a new monthly Net Interest Margin Survey of registered banks.

The figures show net interest margins at the retail banks surveyed – ANZ, Bank of Baroda New Zealand, BNZ, Commonwealth Bank of Australia’s ASB, Kiwibank, SBS Bank, TSB Bank and Westpac – at 2.12% in August. That’s up from 1.87% in September last year, which is as far back as the series goes.

The August figure is up 2 basis points from 2.10% in July. The Reserve Bank says its survey obtains, monthly, six financial data items that are disclosed by the banks quarterly in their General Disclosure Statements GDSs). The central bank notes the GDSs are published with a three month publication lag, whereas its new data enables information to be published on a monthly basis.

These statistics are annualised three-monthly moving averages and will be published monthly.

The new data also includes quarterly aggregate ratios for interest income, interest expenses and net interest margin. This presents the same information annualised on a quarterly basis sourced from GDSs and will be published quarterly.

A spokeswoman told interest.co.nz that the Reserve Bank was also hoping to start releasing data, within two to three months, on banks’ weighted average interest rates for New Zealand dollar funding and foreign currency funding. For this it’s seeking information on hedging costs from the banks.

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