The RBNZ Financial Stability Report (FSR) is the Reserve Bank of New Zealand six-monthly review of financial stability. It started with a first edition on October 20, 2004. It covers the soundness and efficiency of the financial system. It tracks systemic risk, or stress that can spread across lenders, and macroprudential policy, or lending limits that protect the system.
It covers registered banks, non-bank lenders, insurers and key markets such as foreign exchange and bonds. It sets no Official Cash Rate (OCR), or policy interest rate, and forecasts no inflation. It rates no individual bank and covers New Zealand only. It differs from the IMF Global Financial Stability Report.
The Bank publishes 2 editions a year, in May and November, on Wednesday at 9:00am Wellington time. Each edition uses data available up to about 1 week before release and is never revised, so each report is a point-in-time view. Each release brings a media release, a live-streamed media conference, supporting notes, a chartpack summary and spreadsheet data. Full stress-test results, or severe-scenario checks on banks, follow in a Bulletin article, while markets read the headline judgment on resilience, not a number.
The report groups risks into 5 recurring blocks, though topics rotate between editions.
The November 2021 edition, using data up to October 27, 2021, called the system sound, with bank capital at record highs under the current framework. Most borrowers who deferred payments during COVID-19 had returned to principal repayments. Risk sat with recent buyers, as debt-to-income ratios rose sharply with house prices. Wealth gains were unevenly shared, leaving highly leveraged buyers exposed to price falls or higher rates.
Policy tightened loan-to-value limits: new investor lending above 60% was restricted, and the owner-occupier high-LVR share fell from 20% to 10% on November 1, 2021. Capital requirements were set to rise gradually from July 1, 2022. A 2021 test of the 5 largest banks, with 11.8% unemployment, pandemic lockdowns and a two-year drought, left capital above minimums and lending intact. Even after price growth, under 10% of borrowers would face negative equity, or loans above home value, after a 30% price fall.
Key point: the FSR and its stress tests are not a pass or fail score. They give qualitative resilience views, with no target, and set no OCR or inflation forecast.
No historical data available
