The Reserve Bank of New Zealand (RBNZ) warned that financial stability risks have risen over the past six months amid global uncertainties and said banks have enough buffers to cushion the economy should things get worse, according to its report published Wednesday.
"While the global economic environment has become more volatile, our financial institutions are in a strong position to support the economy," said RBNZ Governor Christian Hawkesby in releasing the May Financial Stability Report.
Trade uncertainties are the main threat to New Zealand's financial stability, with an expected impact on the export industry. Specifically, agricultural industries with "limited scope" to find buyers as alternatives to the US are more vulnerable, per the report.
The RBNZ observed soft household and business credit despite low interest rates, reducing the need for banks to raise funding in wholesale markets. Banks also remain profitable, with non-performing loans seen declining as mortgage rates reprice lower, the report stated.
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