Fitch write "The strength of New........>

NEW ZEALAND: Fitch write "The strength of New Zealand's 4 largest banks in

generating solid & sustainable profits through the cycle means they should be

well-positioned to meet the RBNZ's capital proposals. The banks' strong domestic

franchises also allow for a stable business model that helps to offset continued

high macroeconomic risks in the New Zealand (AA/stable). High household debt is

broadly stable but is a key risk. Households remain susceptible to a shock in

interest rates or the labour market, although this is not Fitch's base case.

Partly offsetting this risk is the low interest rate environment, which has

resulted in the percentage of household income used for debt-servicing remaining

lower than in '09. Fitch expects a modest deterioration in asset quality over

the next year, in part because impaired loan levels are around historical lows.

However, significant deterioration is unlikely to emerge unless there are large

external shocks. Earnings growth is also likely to remain under pressure due to

slowing credit growth & rising compliance & investment expenses. Nonetheless,

the agency believes the New Zealand's major banks will continue to outperform

similarly rated peers in Fitch's core profitability and asset quality metrics."