Cash (notes and coins)

The banking system comprises the majority of lending to the non-financial private sector in New Zealand (figure 2). Direct capital market funding (issuance of corporate bonds) and non-bank lending institutions (NBLIs) together account for only 6 percent of non-financial private sector borrowing.

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The New Zealand banking system is highly concentrated. While there are currently 27 registered banks, the four large Australian-owned banks (ANZ, ASB, BNZ, and Westpac) are responsible for 85 percent of bank lending (figure 2). The five New Zealand-owned banks account for 8 percent of bank lending.

For the Australian-owned banks, the New Zealand subsidiaries’ total assets represent between 9 and 16 percent of their respective Australian parent group’s total assets.These Australian-owned banks all have high credit ratings by international standards (a table of current credit ratings is presented here).

Despite the New Zealand financial system being dominated by banks, the banking system itself is relatively small by global standards. Total assets of the banking system were just over $614 billion NZD in September 2020, which at around 198 percent of GDP is at the lower end of the range for OECD countries.

A consolidated balance sheet of the banking system is presented in table 1. Loans and advances account for over 77 percent of banking system assets. Banks hold a small amount of trading securities and their holdings of derivatives are primarily for hedging purposes. Deposits account for over 64 percent of liabilities and equity.

Assets
Cash (notes and coins)	734	0.1
Deposits (with depository institutions)	30763	5.0
Debt securities (net)	62486	10.2
Loans and advances (net)	475844	77.5
Derivatives in an asset position	25233	4.1
Demand balances with central bank	18403	3.0
Other assets	656	0.1