Kiwibank says an increase in the size of its rural lending book over the past 12 months is not the start of a deep dive into the market.
According to Reserve Bank data the state-owned bank increased its rural lending 32% in the year to June, the largest percentage increase of the seven largest rural lenders.
However, the numbers remained small.
Kiwibank increased its rural loan book over the period by $8 million to $24m. Farming loans by the second-largest rural lender, Heartland Bank, were $716m, up $16m, or 2.3%, over the same period.
The rural loan book of the largest rural lender, ANZ, fell by $147m, or 1%, to $14.9 billion in the year to June.
Speculation has grown in recent months that Kiwibank could be directed by its shareholder to get more involved to address complaints of price gouging by the established rural lenders.
That speculation has only grown since Finance Minister Nicola Willis wrote to the chairs of Parliament’s Finance and Expenditure and Primary Production select committees in June asking them to begin an inquiry into competition in the rural lending market.
And it grew stronger still last month after Willis revealed she was seeking advice on a recapitalisation of the bank to give it the funds needed to take on the Australia-owned banks.
But in a statement last week a Kiwibank spokesperson said the rural lending market looked crowded with all four Australia-owned banks and Netherlands-owned Rabobank active participants.
“The rural lending market is primarily dominated by major Australian banks and specialist providers, which control most of the lending in this sector.
“Given this, we currently have no plans to enter the rural lending market and are focusing on our strengths, including driving competition in retail and business banking.”
Overall the Reserve Bank data showed agricultural lending growth was roughly flat in the year to June, up 0.2%, or $115m, to $61.5bn.
In a note to its clients, rural debt advisory firm NZAB said loan growth was stronger in the second half of the year, up 1.4%, or by $860m, as high early season dairy payments tapered off and principal repayments with them.
It noted market leader ANZ continued to lose market share, along with Westpac, which decreased its share of the rural lending market by 4% in the 12 months to June. Of the four Australia-owned banks, only BNZ increased its share of the market.
Rabobank was the major beneficiary, accounting for 40% of all new rural lending during the period, outpacing its market share of 21%.
