I read a great story about Kobe Bryant over the Xmas break about the power of doing the basics well.

Bryant is an American basketball great famously renowned for his unequalled work ethic and competitive drive, something that lead him to 5 NBA championships, and even an Oscar when he turned his hand to directing soon before perishing in a helicopter crash early in 2020.

The story goes back to a basketball camp that Kobe ran for aspiring basketballers in the early 2000’s. One of the coaches in attendance asked if he could attend one of his individual workouts and was informed that he could, but would need to be in the gym at 4.00am! Looking to impress, the coach turned up at 3.30am, only to find the already 3x championship winner already amid a full-on session.

Other than the time of day, what really stood out to the coach was the content of Bryant’s workout. Expecting to be wowed by drills and exercises befitting a man of his abilities, the coach instead witnessed a workout focused on drills and skill work that he would have taught a 12 year old.

Inquiring of Bryant once he was done why he would work on such simple elements of the game, his reply was that without continuing to execute those basics on a consistent and high-level basis, he would not have the base he needed for anything else he may wish to attempt.

Welcome to 2022 and the latest edition of our NZAB Bank Dashboard - giving you all the insights into bank movements over the quarter and the year

In this edition (for the quarter ending Sept 2021), we have also added analysis and commentary as to what's happening in business lending.   Alongside our farming base, NZAB is being increasingly engaged in the business/commercial sector to assist with strategy, capital and finance - so it makes good sense to be providing some insights in that field as well.

Bank lending continues to break records and nearly all of it in the home loan sector- but the rate of growth is starting to slow, albeit still at very high levels.  

Agri credit quality continues to improve and loans are being repaid, faster than they can be written, particularly in the dairy sector

Business lending continues to have moderate growth for a second quarter in a row - with some noticeable movements in market share between banks with both ASB and Kiwibank growing well above the others.     

ANZ continues to lose ground in both Agri and business - with BNZ now consolidating their top spot in the business sector.

And it's probably no surprise to see the continuing debt repayment in Agri coming nearly solely from dairy. 

As we round out the year, I want to thank all of our clients and industry professionals that we deal with for your support this year.

Next year marks 5 years of NZAB. A tremendous milestone and one we are hugely proud of. 

As is natural at this time of year, I’m feeling a bit reflective so wanted to close the year out with a few of my own thoughts after 5 years of business ownership and leadership. 

Panic slowly

I heard this phrase the other day and it resonates with me. It was in the context of environmental regulation and changes that we will be required to make over the coming years. 

How I interpret this is that the key thing we can do is develop a mindset that is accepting that things will need to change, be open to all possible solutions, but be careful and deliberate with implementing them. Don’t rush, don’t react, but don’t ignore. When the time comes, execute carefully. But make sure you execute!

Head space

This ones personal for me. The old grey matter has been pushed to the limit this year, and for the first time I put up the white flag and asked for help. I also took some time off and deleted my emails off my phone. It was only for two weeks, but the difference it made was unreal. I had burned out. 

What I’ve learned is that you can be a leader and still need time off. You can be highly engaged in what you’re doing and still need time off. You can be in the middle of some really complicated problems and still need time off. You can put your hand up and ask for help and people don’t think less of you. Ironically I’ve found it really powerful and I’ve made more progress since as a result. 

People are everything

As many of us are finding, getting staff is more and more challenging. It makes you realise what good staff can do and how hard it is to run a business without them. Invest in the good ones, don’t take them for granted, and find ways to empower them. In my experience it’s not always about the pay, but how you can engage them in the vision of your business and show them how they can be part of it. 

Get closer to your customers

As farmers we’ve been lucky to have our products sold through large meat or milk companies. They’ve worked to create markets of customers for us and that has allowed us to grow. But we have to really listen now to understand what our actual end consumers want. A lot of the changes being asked of us are driven by customer demand. Ask yourself what would your consumers think if they had to come to you and buy direct? Why should they buy from you and not from someone else? What improvements would they like you to make to your product? What farm practices would they not like? 

Protect your brand

Your brand is everything. We’ve probably all learned this to some extent while dealing with banks over the last few years. Your ability to access funding is often more about your brand than your financials. 

If things are going well right now due to increased cashflow, don’t sway out of your lane too far. Stick to your plan. Stick to your strategy. If the strategy needs to change, then be deliberate about it. Make a plan and get buy in before executing. What you do now when the spotlight is off you will be analysed in great detail the next time things get hard. 

But most importantly

Enjoy the journey! I seem to have to learn this one over and over again, but find the fun along the way. The kids are only young once. There will always be things that are urgent. You’ll always be under pressure to succeed. Even if that pressure only comes from within. My dad worked his arse off to build a business that would allow him to have more time later. He dropped dead in the paddock. The plan wasn’t complete. 

To our readers, thanks for your regular feedback. We love getting your thoughts and insights. We also appreciate all of you that forward our emails on and encourage more people to sign up. 

Have a great Christmas, and see you out there next year!

We’re having a lot of discussions at present with our customers about fixing interest rates given the increase in rates via recent OCR changes plus expectations of further rate increases which are being forecast by most economists plus the RBNZ.  

We’re also seeing those expectations being played out in the swap curve, where 5-year swap rates have moved from historical lows of around 0% to a peak of c. 2.8% recently.  

This has led to plenty of discussion about the merits of fixing versus floating.

This short article is not about the merits of fixing versus floating (we will outlay some considerations on this topic in an upcoming article), but to highlight a significant discrepancy that we’re seeing between banks at present with their various fixed rates, even when standardised back to the same customer margin.

Take a look at the below graph, which is a data set of four of the main banks depicting the margin above the swap rate for each term of 1-5 years.

Now, its important to note a couple of things here:

1. This is based on a customer base margin of c. 2.5 above a typical BKBM for illustrative purposes only. We observe plenty of margins both higher and lower than this. 
2. The colours of the graph are meaningless versus the normal colours of the main banks.
3. This is only one data point and only one consideration out of many when discussing and then agreeing on an interest rate risk management strategy.

Some big upcoming restrictions on new home loan lending, combined with banks’ natural desire to keep growing their book is going to mean that credit is going to look for a home elsewhere.  

We think it’s going to be Agri.

So let’s set the scene with some recent bank jargon for you that is going to be talked about more and more.

1. CCCFA regulations
2. New DTI’s
3. LVR restrictions
4. Tax deductibility changes
5. Brightline tests

The last three you would have all heard, but the first two are yet to impact. I’ll touch on them shortly – but to start with - guess what all of these measures have in common?

Well, they’re all designed to take the heat out of the residential market given the drastic house price increases of late plus win back the political football that housing has become of late.

And guess what - they’re starting to bite.

Whilst credit growth in the home loan sector is still increasing month on month it’s useful to look ahead at expectations for change in future.  

One of the best gauges for those future expectations is the “Credit Conditions Survey”, conducted every six months by the RBNZ.  

This survey is relatively simple the RBNZ asks banks what they expect both the demand and supply of credit in each of their lending sectors (residential, consumer, SME, Agri, Corporate) will be over the next six months.  

They are sentiment based questions but given the banks do control the puppet strings of capital availability, its pays to take notice.

And the results are starting to show some very stark trends. The expected demand and more importantly, the expected supply of capital to the home loan sector is expected to significantly pare back over the next six months.

Continuing on with the theme of getting the next generation into farming, Tom Laming talks in this article about his own family story, and then lays out some mindset and capital structure considerations that might help.

My grandparents immigrated to New Zealand from the Netherlands in 1950. Like many of their countrymen, bruised and battered post-war, the idea of a fresh start on the other side of the world held great appeal. And so with four children in tow (including a six month old son), some personal belongings and a container of furniture that would follow later, they embarked on a journey to a new world.

With plans to work on the wharves of the best available port turned upside down by the 1951 waterfront dispute, my Grandfather turned to farming (an industry he had little to no background in) to provide for his growing family.

After moving around a few jobs in South Canterbury, he and my Grandmother and their now seven children settled in Waimate on their own farm in 1960. Talk about a land of opportunity – ten years after hitting the shores of New Zealand they were in a position to buy their own piece of land, having come to the country with little more than a desire to work hard and some good old-fashioned Dutch spirit.

I think you could categorically say that you wouldn’t find a story like that today, yet 60 years ago that pathway was pretty commonplace.

What’s really interesting is how our family’s ties to the rural sector have evolved since.

Of their four boys and three girls, three of the boys went farming, one became a vet and the three girls all married non-farmers (although they all maintained very close ties to the home farm).

Being prolific Catholic breeders, those seven children produced 30 of the next generation. And at the last count, only three of my generation are actively farming, with a few more of us retaining ties via professional endeavors to the land.

So, an industry that supported my grandparents into their own purchase in ten years, that provided such a great upbringing for many of us, has only held three in active farming roles.

And you will find many similar stories around the country. Where bright and driven minds brought up within farming businesses have left the industry altogether, taking their skills and the lessons learned from farm-life and parlaying those into success in other industries.

It has been a busy couple of months for NZAB! Our strategy of continuing to invest in hiring the best people and being accountable to our customers is continuing to pay off.

I'd like to introduce three new staff to our business and one internal promotion. We've also successfully concluded our first graduate programme intake and hired our first graduate who starts next year (more about that in a future email).

Cameron Black has relocated from our Christchurch office to Invercargill and has been promoted to Client Director. We are really proud of Cam, he was our first employee and has very much been a core part of our growth to date. It has always been a goal of his to get to a point where he could head back home to Southland and build a long term career helping farmers be successful. We can't wait to see what he achieves in this next phase!

Alongside Cam, we have also been joined by Jennifer Horn and Anna Case who have joined NZAB as Associate Client Directors to support Michael, Grant and Cam.

Southland has always been an important focus area for us, so it is really exciting to now have a team of five on the ground in Invercargill!

Additionally, we have been joined in Christchurch by James Schrader as an Associate Client Director supporting Nathan, Nick, Cam Blain and Jordain.

Scroll down to learn a bit about our new team members.

NZAB is now a team of 22. That's something we are pretty proud of. Thankyou to our customers for giving us the right to exist and grow alongside you.

Here's to the journey ahead!

That file is now populated with such gems as:

“treat a man who he is and he remains as he is, treat a man as he can and should be and he will become as he can and should be”,

“well behaved women seldom make history” (great for a guy with two strong willed daughters!), and

“the person with the greatest why will achieve any how”.

I came across a quote recently that really stood out to me and seems so very applicable to the world we live in. I follow a guy on twitter called Naval Ravikant, an Indian-American entrepreneur who seems to sideline as a philosopher.

The quote was “if you want to get paid in the future, live in the future”.

As someone who is constantly striving for enduring relevance, this quote really jumped out to me. And in a rapidly changing world where the way we get paid and thrive in so many industries seems under threat, it seems like a great way of re-framing how we approach our day-to-day lives, our businesses and our strategies.

So to get paid in the future (no matter what we do or produce), we need to live in the future. What does that mean?

Here are a few of my thoughts: