The big banks may need to get bigger piggy banks after their profits bounced back to pre-global economic crisis, but a report warns the outlook may not be so rosy.
An analysis by PricewaterhouseCoopers of the financial performance of ANZ, ASB, BNZ, Westpac and Kiwibank for the last six months of 2011 show their earnings rose by 25 percent to $2.8 billion.
The profit boost, up from $2.3b for the previous six months, was driven by more income from interest, growth in other income and reduced expenses says PwC analyst Sam Shuttleworth.
But expenses from bad debts rose in the period by $24 million, which Mr Shuttleworth says was remarkable considering the impact the Christchurch earthquake would have had on bad debt expenses in 2011. Bad debt for 2011 was down by $400m on 2010 levels.
The banks, which have largely self-funded themselves since late 2009, are now in a stronger position to cope with global uncertainty and another financial downturn.
"The rain clouds over Europe caused by the Eurozone debt crisis is the biggest concern facing our major New Zealand banks at this time, but the New Zealand banking sector feels well prepared," says Mr Shuttleworth.
NZN