New Zealand's RBNZ's 2023 Climate Stress Test reveals banks' profits could drop 25% and dividends by 40% under severe long-term climate risks.
New Zealand's Reserve Bank (RBNZ) has found that climate-related risks need to be actively managed to maintain the resilience of the financial system. The central bank's 2023 Climate Stress Test revealed that while the top five banks' capital ratios were secure, their profits could drop 25% and dividends by 40%, and their ability to cope with major economic downturns would be reduced. The stress test scenario, called 'Too Little Too Late,' included high physical and transition risks over a 28-year period, testing banks' resilience to severe but plausible long-term climate-related challenges.
April 21, 2024
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