Banking on assets and capital growth

It’s always hard to know whether rising household debt levels are due to overspending on luxuries or servicing everyday essentials.

Let’s hope it’s the former, because at least that sort of behaviour is easier to curtail. Whichever is the cause, indebtedness is becoming a major headache for the banks, causing Moody’s to downgrade their credit ratings outlook this week.

The good news is that banks are better capitalised and their assets are looking strong. In that they appear to have joined other world banks in making sure they have learned some of the lessons of the global financial crisis.

Scratch the surface of Moody’s report however, and there are hints of economic stress. A dairy sector still in trouble despite rising milk prices, and weaker economic growth.

Both terms hide human misery, and if banks are to learn more of the lessons of the GFC, then now is the time to step up to the mark and support those industries which are facing tough times.

It would be a clever approach to take, as there is still plenty to be hopeful about in the New Zealand economy and money to be made, even in the face of stiff, overseas competition

This week in Sunday Business we report on the Energy Excellence awards, which are a showcase for some of NZ’s most innovative businesses, striving to make Kiwi inventions make a difference at home and abroad. Banks can take inspiration from pioneers such as Dr Rosalind Archer of Auckland University, who was the first woman to become head of an engineering department there.

She says New Zealand leads the world in geothermal energy and is working with the Ministry of Foreign Affairs and Trade to consider exporting expertise to developing countries as part of aid. A perfect example of commercial success and corporate responsibility.