Tests find New Zealand banks ‘robust’ to dairy stress
Five largest lenders to dairy sector found to withstand further drops in payout and land values
New Zealand’s banking sector has emerged “robust” from a dairy stress test run by the country’s central bank, according to an article published in its bulletin today (March 16).
The five largest dairy sector lenders participated in the test in late 2015. The severe scenario assumed the dairy payout would fall to 3 New Zealand dollars (US$1.9) per kilogram of milk solids in 2015/2016 and remain at or below NZ$5 until the 2019/2020 season. Land prices would also fall by 40%.
Under the two scenarios
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