NZAB Banking Dashboard: Capital is moving again

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Capital is moving through New Zealand’s banking system again – and agriculture is right in the middle of it.

Over the past year, banks approved and established new facilities of around $17bn of new agricultural lending – up nearly 40%. Yet total agricultural “net” debt grew by only around $1bn.

This doesn’t look like a new agricultural debt boom. It looks like capital moving – through farm transactions, refinancing, investment and borrowers changing banks. At the same time, agricultural provisions have fallen 27%, dairy debt remains around $3.6bn below 2017 levels, and individual banks are showing markedly different growth appetites.

The result is a more competitive banking environment than we’ve seen for some time.

At NZAB, we track these movements through our Banking Dashboard – looking beyond interest rates to where banks are actually allocating capital, which sectors they’re growing in, how market share is shifting and what that means for agricultural and business borrowers.

Our latest Dashboard uses bank data reported through the Reserve Bank’s Financial Strength Dashboard and other RBNZ lending data, updated through to June 2026. We analyse it through an agricultural and commercial lens because “bank appetite” is never one thing. Different banks can be moving in quite different directions at exactly the same time.

For borrowers, that matters. Understanding where capital is moving can help identify which banks are competing, where appetite is strengthening, and where there may be opportunities around pricing, structure, flexibility and overall banking relationships.

If you’d like to dig further into the numbers below, drop me an email back and I’ll send you the full pack.

First, the banking system itself has changed gear

Across New Zealand, total bank lending increased by around $29 billion over the past year, taking the system to almost $596 billion.

That’s growth of just over 5%, and importantly, it’s reasonably broad-based. ANZ, ASB, BNZ and Westpac each added around $5.5-$6.7bn to their lending books. Kiwibank grew even faster in percentage terms, expanding by 8.5%.

After a period where lending growth had slowed materially, the banking system is expanding again.

In fact, the latest annual increase is the strongest in the series, with lending growth having accelerated sharply from the lows we saw in 2023 and 2024. There is more capital moving through the banking system.

The longer-run picture provides some useful context. Since 2016, household lending has increased by approximately $163bn, compared with around $36bn for business and just $4.5bn for agriculture. Agriculture’s share of total lending has consequently fallen from 14.5% to 10.3%.

Over the past decade, bank balance sheets have become substantially more weighted toward household lending than toward agriculture and business.

Against that backdrop, the recent lift in agricultural lending activity stands out.

Agricultural lending activity has suddenly surged

Banks established around $17bn of new agricultural lending during the latest year. That’s up from $12.2bn the previous year – an increase of 38% – and the highest level in the five years covered by this series.

Dairy has led the charge.

New dairy lending facilities increased from around $7.0bn to $10.3bn, accounting for roughly two-thirds of the $4.8bn increase.

But the recovery is broader than dairy. Sheep, beef and grain approvals increased from approximately $2.9bn to $3.9bn, although it’s worth noting that this RBNZ category also captures some dairy support blocks. That’s a very substantial amount of new lending activity.

However, the contrast with net agricultural debt growth is stark.

$17bn went through the front door. Agricultural debt only grew by around $1bn.

If banks drew $17bn of new agricultural lending, you might reasonably expect total agricultural debt to have risen significantly. It hasn’t. Total agricultural lending is now around $63.6 bn. That’s finally a new record – but only just.

The previous peak was $63.4bn in June 2019. Seven years later, agricultural debt is only around $129m, or 0.2%, above that previous high.

Put these numbers alongside each other: $17bn of new agricultural lending approvals vs around $1bn of net agricultural debt growth over the latest year. That gap tells us a lot about what’s happening underneath the headline numbers.

There is significant refinancing occurring. Debt is being repaid. Farms are changing hands. Capital is being reinvested. Borrowers are moving between banks. New investment is being funded while other facilities are being retired.

This looks much more like a capital movement story than a debt accumulation story.

Agriculture is also entering this cycle in a different position

The composition of agricultural debt has changed considerably over the past decade, particularly in dairy. Dairy debt has fallen from around $40.8 billion in 2017 to $37.3bn today – a reduction of approximately $3.6bn.

Over the same period, horticultural lending increased from $3.5bn to $8.5bn, while sheep, beef and grain lending increased from $13.4bn to $15.6bn.

So while total agricultural debt hasn’t changed enormously, where that debt sits has changed substantially. Dairy accounted for more than 68% of agricultural lending in 2017. Today it’s less than 59%.

Importantly, dairy is entering this period of renewed transactional and investment activity carrying materially less debt than it did in the previous cycle.

That matters to bank appetite.

The other big change is credit quality

One of the clearest indicators of what banks are experiencing inside their agricultural books is provisions – the amounts banks set aside against expected credit losses.

Over the past year, agricultural provisions fell from $547m to $398m – a reduction of $150m, or 27%.

And the improvement was broad-based. Provisions fell between roughly 25% and 36% across ANZ, ASB, BNZ and Westpac.

Provisions are now materially below where they were a year ago.

It points toward stronger underlying credit performance at exactly the same time as agricultural lending activity is increasing. Better profitability, lower leverage in parts of the sector and fewer stressed exposures give banks both the confidence and capacity to compete harder for good agricultural businesses.

That stronger credit position is also showing up alongside more competition in the individual bank numbers.

Not every bank is moving in the same direction

Total agricultural lending grew by about $1bn, or 1.6%, over the year.

But look underneath that number and the differences between banks are significant. ASB increased its agricultural lending by $624m, or 5.9% – accounting for more than 60% of the system’s net increase.

ANZ added $366m, or 2.5%. BNZ was effectively flat. Westpac reduced its agricultural lending by $68m. Rabobank Group grew by $161m.

That’s a useful reminder that there isn’t really one single thing called “bank appetite.” At any point in time, individual banks can be heading in quite different directions.

And those differences become even clearer when we look at market share over a longer period.

8 years of market share shows how bank positions have shifted

The eight-year view allows us to step back from a single year and see how competitive positions have shifted since 2018.

ANZ remains New Zealand’s largest agricultural lender, with 24.0% market share.

But in June 2018 it held 28.5%.

Over that same period, Rabobank Group has been the clear structural winner, increasing its agricultural market share from 16.2% to 21.9%, putting it broadly level with BNZ.

BNZ has been comparatively stable, easing from 22.5% to 21.6%, while ASB has also been relatively steady over the full period, moving from 17.3% to 17.8%.

Westpac gained ground earlier in the period before falling back to 13.3%, broadly where it began.

The latest year also marks a change in direction for ANZ.

After years of declining agricultural market share, ANZ gained around 20 basis points over the latest year. The question is whether that marks a sustained turn.

ASB was the biggest market-share gainer, increasing around 70 basis points to 17.8%, consistent with the strong growth we’re seeing in its agricultural book and what we’ve been seeing with their activity on the ground.

A single year doesn’t necessarily make a trend. But ANZ’s movement matters because it represents the first meaningful break in what had been a long-running decline. Time will only be the judge of whether that can be sustained.

The bank that is most competitive for a particular agricultural business today won’t necessarily be the bank that is most competitive three or five years from now. Market share is the accumulated result of thousands of individual decisions – around appetite, pricing, risk, service, transactions and borrowers choosing to refinance.

Understanding that direction of travel can therefore be just as important as looking at today’s lending rates.

Business banking is moving too

While agriculture is obviously our primary focus, the business banking numbers are also worth watching.

Total business lending increased by around $6.0bn over the past year, or 5.4%, taking the market to approximately $118bn.  This is a notable indicator of investment activity which is re-assuring.

That’s considerably faster than agricultural lending growth of 1.6% and broadly in line with growth across the wider banking system.

The bank-by-bank numbers vary materially. BNZ added approximately $1.9bn, growing its business lending by 6.3%. Westpac grew 7.4% and ASB grew 5.7%. Kiwibank continued to grow quickly from a smaller base, increasing its business lending by 11.2%.

ANZ, by comparison, was effectively flat – growing just 0.2%.

That divergence is showing up in market share.

BNZ is now clearly New Zealand’s largest business lender, with 26.8% market share, compared with ANZ at 21.5%.

Over the latest year, ANZ lost 1.1 percentage points of business market share. Westpac gained 0.4 percentage points, while Kiwibank and the smaller-bank grouping also gained ground.

ANZ appears to have turned the corner in agriculture at the same time as its business lending has been well below system business lending growth. BNZ, meanwhile, has been relatively flat in agriculture while strengthening its position as the country’s largest business lender.

Again, it reinforces the point that there is no single bank appetite.

So what do we take from all of this?

For us, there are probably three big messages in the latest data.

Firstly, the wider banking system has clearly moved more strongly into growth mode. Bank balance sheets are expanding again and there is more capital moving through the system.

Secondly, agriculture is active again – but this isn’t a debt boom. The combination of $17 billion of new lending approvals and only around $1bn of net debt growth tells us there is a significant amount of capital being recycled through refinancing, transactions and investment. That’s quite different from a cycle simply being driven by ever-increasing leverage.

And the sector is entering this period from a stronger position in some important respects – dairy debt is materially below its previous levels and agricultural credit provisions have fallen sharply.

Thirdly, competition is shifting – and not uniformly. The eight-year agricultural market-share data demonstrates just how significantly competitive positions can change over time. And the latest agricultural and business lending numbers show individual banks moving in quite different directions today.

For borrowers, these differences have practical consequences. The difference between banks isn’t simply the interest rate being offered. It’s how each bank views the sector, how much capital it wants to allocate, its assessment of leverage, the amount of headroom it’s prepared to provide, the structure of the facilities, its willingness to fund the next investment – and ultimately how strongly it wants the business.

And those positions change over time. That’s one of the reasons we’ve built the NZAB Banking Dashboard and why we’ll continue to track it. Understanding where capital is moving – and where individual banks are moving with it gives us another lens into the banking market beyond simply looking at interest rates.

The NZAB Banking Dashboard is based on Reserve Bank of New Zealand Financial Strength Dashboard and associated lending data, together with NZAB calculations and analysis. Bank-reported data may subsequently be revised and movements in balances can reflect lending activity, repayments, transactions, portfolio transfers, reclassifications and other factors. This material is provided for information and discussion purposes and is not financial, investment, legal or credit advice.