Banks say biz as usual after the election
Whether National or Labour wins the election will make little difference to banks and financial institutions, BNZ’S agri-team leader in Manawatu¯ Brian Henderson says.
‘‘The BNZ has no official view,’’ he told about 25 people at a dairy farm discussion group.
‘‘But the unofficial view is the economy has kept on growing even during the dairy downturn. Forestry and tourism pulled the economy up.’’
Henderson said tourism was booming and more than 100,000 tourists a day were coming to New Zealand and more than three million a year.
He said confidence could be shaken, depending on the election result, rather than the economy bearing the brunt of change.
‘‘There will be no impact on markets or interest rates, but people might be concerned and there could be a loss of confidence.’’
Money flow was expected to tighten. Henderson said that meant less money might be available to lend, but he believed there would be no lift for at least 18 months, in the floating mortgage rates. ‘‘And long term interest rates, which are based on the United States, did go up when President Trump got in, and said he would create jobs. He hasn’t done anything he said he’d do, and as a result long term interest rates have come back half a per cent.’’
He said interest rates were dependent on the US market, which drove rates around the world.
Henderson was concerned about North Korea and said it had been ‘‘unsettled’’ for a long time.
‘‘There is uncertainty, and all bets are off if nukes [nuclear weapons] start to be used. At the moment we are seeing the rattling of sabres.’’
James Lindsay, rural manager from ANZ, said dairy farmers should use this season’s higher milk payout to pay back bank debt.
‘‘Probably most dairy farmers will have seen their equity eroded over the past few years, and they’ll be carrying more debt. With the payout rising, this year, they should use extra money to pay off some debt they will have accumulated.’’
He said that would give dairy farmers a better equity to debt position and they would have a better balance as a result.
ANZ has more dairy farmer clients than any other bank in New Zealand
Westpac’s agri-business manager, Palmerston North-based Dave Hutchinson, said uncertainty in a political sense was never good for farmers or the rural economy.
‘‘That’s the cloud hanging over people at the moment.’’
But there were positive signals for dairying and lamb and they were not driven by the New Zealand political situation he said.
‘‘If we see a change in government we will not see any change to interest rates, or any export-driven produce’’’