RBNZ destroys bank profitability

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Via Ian Rogers at Banking Day:

A haircut for Australian bank profits – but the collapse of bank profitability in New Zealand.

That’s the take of Andrew Lyons, Ashley Dalziell and Desmond Tsao in a commentary from Goldman Sachs Australia yesterday on the Reserve Bank of NZ’s capital proposals.
Lyons and co estimated NZ banks’ average ROE of 15 per cent in FY18 “would fall by 5 per cent to 9 per cent assuming the needed NZ$19 billion increase in Tier 1 capital was entirely funded by ordinary equity.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.