ASB has reported 3.3% while Rabobank has reported 2.4%.
They compare to ANZ’s 0.9% and BNZ’s 0.8%.
Banks are asking farmers to make principal and interest payments, after a period when interest-only payments were common.
Westpac, with the smallest share of the agri loans, has posted 0.6% as non-performing.
The Reserve Bank’s definition of a non-performing loan ratio is the number of impaired loans plus the number of loans 90 days overdue but not classed as impaired, divided by the bank’s total lending amount.
An impaired loan is defined as one impacted by events that cause a lender to believe it will not receive all the agreed future principal and interest repayments if a borrower has significant financial difficulty, bankruptcy or fails to make the payments and the loan becomes past due. It also includes restructuring the loan agreement or breaches of the loan‘s covenants.
Both ASB and Rabobank maintain their loan books remain solid.
A Rabobank spokesman said the bank continues to have a strong loan book with a very low level of loan write-offs.
With 16.7% agri market share Rabobank has about $10.3 billion of the total $60b rural loan market. Dairying accounts for $41.5b of the agri lending market.
“The ratio of non-performing loans as reported under the RBNZ dashboard reflects our conservative internal process for pro-actively identifying all problem loans under classifications early.
“A significant number of these do not ultimately translate into losses for Rabobank. This occurs under our internal classification framework and helps us to manage those loans effectively and address any concerns in a timely way.
“We believe this is a conservative approach by industry standards,” he said.
The bank also maintains the Reserve Bank dashboard must be considered in context.
In the calendar year 2018 Rabobank NZ’s provision of $35 million and write-offs of less than $1m were incurred from a total loan book of $11b.
“This confirms our view our loan book remains strong and our internal processes are effective.”
ASB’s rural general manager Richard Hegan said his bank’s non-performing loans level might appear high compared to other banks but that has to be considered in context.
“ASB takes a conservative approach to how it rates non-performing loans, an approach the RBNZ supports. This may be different from our peers.”
Each bank’s policy on how quickly an impaired loan is written off also varies.
“We work closely with our impaired customers on an individual basis.
“Sometimes this takes longer but we prefer to take the time to get the best possible outcome for our customers and we recognise that sometimes this takes longer to achieve.”
Rural professionals say they have noticed no increase in farm loans being called in.
However, they also acknowledged the tougher environment facing farming clients who are now required to make principal repayments and pay interest.
One valuer said the market is also proving extremely tough for dairy farmers seeking to offload dairy businesses, with single digit sale volumes being reported in some regions since Christmas.
