Quake cools deposit war: KPMG
Nevertheless, near zero lending growth, largely as a result of retail and business customers focus on paying down debt, is putting pressure on banks' net interest margins, although the trend from fixed-rate mortgages to higher-margin floating rate mortgages is helping to ameliorate this trend, KPMG says in its latest survey of financial institutions.
The banks are also actively repricing business and corporate loans but the full impact has yet to be felt. "We would expect some benefit to net interest margins," the accounting firm says.
"Banks are well-positioned with funding and ready to do business. However, that business remains hard to find," KPMG says.
Anecdotally, competition for retail deposits has eased. "Certainly, reduced lending opportunities ... lack of demand and the strong cash position of all the major banks has taken some of the heat out of the competition for funds," it says.
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