New Zealand’s retail lending to cross US$265bn in 2023, finds GlobalData

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Image: Christ Skelton // Fairfax NZ

New Zealand’s retail lending market is expected to record a healthy growth over 2019-23 to reach NZ$395.9bn (US$265.6bn) in 2023, according to GlobalData, a leading data and analytics company.

According to GlobalData’s latest report, ‘New Zealand Retail Banking: Opportunities and Risks to 2023’, New Zealand’s total retail loan balance outstanding (including credit card, personal loan, and residential mortgage balances) is set to grow from NZ$291.6bn (US$195.6bn) in 2018 to NZ$395.9bn (US$265.6bn) in 2023.

The total consumer debt (retail lending) in is New Zealand estimated at US$207.0bn in 2019, compared to China (US$6,839.1bn), Australia (US$1,422.3bn), Thailand (US$419.2bn), India (US$368.8bn), Hong Kong (US$286.6bn), Taiwan (US$283.1bn) and Philippines (US$73.6bn).

The majority of the New Zealand’s loan balance outstanding is from residential mortgage followed by personal loans and credit card balances.

Shivani Gupta, Senior Banking and Payments Analyst at GlobalData, comments: “Mortgage loans remain the largest and the fastest-growing segment supported by rising house prices, lower mortgage interest rates, and the government’s affordable housebuilding scheme, including the easing of loan-to-value (LTV).”

Personal loan growth, which is the second largest segment, was driven by rising alternative non-bank lenders in the country.

The New Zealand lending space is dominated by the big three banks: ANZ, ASB, and Westpac. However, they are facing increased competition from non-bank lenders, digital banks and digital lending platforms that are breaking into the market and offering lower interest rates and faster loan approval processes.

Shivani concludes: “With high consumer debt sitting at 164% of nominal disposable income in 2019 and weakening economic situation, retail lending market is expected to grow at a slightly lower rate over the forecast period.”

 

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