Downturn warning to finance sector

Debt rating agency Standard and Poor's says the New Zealand finance sector appears to be in reasonably sound state, but has echoed warnings by New Zealand regulators of the risks it faces in a downturn.

S&P analyst Craig Bennett said in the current benign economic environment, most companies would generate profits sufficient to supports their ability to service their debenture issues. The levels of non-performing assets across the industry would remain manageable.

But an unexpected spike in interest rates or unemployment, deterioration in property prices, or an economic downturn, will take its toll on the finance company sector.