6 Jun 2019

Today's business news: What you need to know

12:51 pm on 6 June 2019
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Photo: 123RF

Latest - New Zealand's trade deficit with the European Union is the largest of all of our major trading partners.

New Zealand bought more from the EU than it sold there in the year to March, taking the total deficit between us to $5 billion.

The deficit was mostly due to importing vehicles and machinery from Germany.

In contrast, New Zealand has a $5.1 billion trade surplus with China, our largest trading partner.

Huawei posts lower annual profit

Huawei's New Zealand business has reported a lower annual profit for the year ended December of $5 million, compared with $5.7m the year before.

Its revenue increased to $188.6m, however so did the cost of its sales offsetting almost all of its revenue gains.

The amount of tax it paid also increased significantly, to $2.1m, from just $174,000 the year before.

SBS restricts lending

The bank is restricting lending to businesses and farmers - particularly in the North Island.

SBS chief executive Shaun Drylie says the bank wants to reduce its risk so is sticking to what it knows best, which is farming in the South Island.

The Reserve Bank's recent financial stability report once again highlighted the risk to highly indebted farmers, especially dairy, who would be at extreme risk in the event of a major downturn.

SBS says it already holds almost twice as much capital than it's required to, and has another 5 percent buffer on top of that.

However, it says the Reserve Bank's proposal to make banks hold significantly more capital would affect them.

Mr Drylie says if that plan goes ahead, it will look to further restrict lending to the agriculture sector.

Meanwhile, broking house Forsyth Barr says the RBNZ's banking plans might cause disruption to the business of the big four Australian-owned banks.

It expects them to limit credit to the most risky sectors - in particular, agriculture - which would slow economic growth.

Dairy prices fall again in global auction

Dairy prices have fallen for second consecutive time in the global auction.

In the sale the average price was down 3.4 percent at $US3423 a tonne.

It follows the previous auction's 1.2 percent drop, which was the first fall in six months.

Dairy prices had been sitting at two-year highs after posting consistent rises since late November.

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