Surge in lending growth for Kiwi banks

The result may come as a red flag for Reserve Bank Governor Graeme Wheeler, who announced yesterday he would be keeping a close eye on household credit growth.

But bank profits decreased 11% compared to the previous six months, due to increasing costs and strong competition in the lending market.

Customers haggling for better deals were cutting banks’ margins, PwC Partner Sam Shuttleworth said.

““Borrowing rates are dropping as homeowners and businesses aggressively renegotiate interest rates, even in the middle of fixed rate periods. In this competitive environment, the banks are playing ball as they focus on the longer game of increasing the value of their lending books by locking more customers into fixed rate mortgages and an easing of pricing to corporate customers. “