"Bank submissions suggested that domestic......>

RBNZ: "Bank submissions suggested that domestic credit developments

post-lockdown have been predominantly demand-driven. Banks observed a decline in

demand for credit over the first half of 2020. Banks did experience an increase

in demand for loans for working capital from SMEs and corporates to meet fixed

expenses and sheep and beef farmers experiencing drought conditions. However,

demand for credit for capital expenditure has fallen. Banks noted low interest

rates may support credit demand, however, uncertainty about the strength of

future final demand is causing businesses to review their investment intentions.

Banks reported that they have tightened several lending standards, particularly

around serviceability requirements and interest rate margins across more risky

sectors. For some sectors (such as commercial property and dairy) this

represents a continuation of trends that precede COVID-19. However, banks

reported closely scrutinising new lending to sectors directly exposed to the

COVID-19 shock, such as tourism, retail, accommodation and construction. Banks

noted further tightening of lending standards is likely"