By Gareth Vaughan
New Reserve Bank regulations being introduced from the end of the month will cut the big four banks' returns on new residential mortgages by about one-fifth and could see Kiwibank gain marketshare, analysts at CIMB Group suggest.
In a research report CIMB's Sydney based banking analysts John Buonaccorsi and Ashley Dalziell note the big four banks face a double whammy at the end of the month with the Reserve Bank's loan to value ratio (LVR) restrictions beginning and new capital requirements taking effect.
"For the big four banks in New Zealand, we think that 'frontbook' (loans to new customers) mortgage returns could fall by about one-fifth," the CIMB analysts suggest. "This translates to a return on equity fall of almost 2% for their overall New Zealand businesses and 0.1% to 0.2% at the group level."
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